# The Attorney General ofTexas November 12, 1980 MARK WHlfE Atlomey aenenl

Tel-.5uiam Mm. TX. 75505 El4m34544

miTmlh.Euims Usuk TX 7-1 515a55~7 Honorable Jimmy blankim

Chairman, House Employment Practices Committee House of Representatives Austin, Texas 787ll Dear Mr.Xankim: Opinion No. W-271 Rer Obligations of a general contractor to a s&contractor mder the workers’compensation laws

Ycu bve asked three questions concern* a general contractorb obligations to a subcontractor m&r the workers’compensation laws, article 6306, et set, V.T.C.8. We will assume for purpaes of this discussion that the &contractor you inquire abcut b a bana fide independent contractor, whoisnot deemed anWemployeeD within section 1,article 6309, V.T.C.S. Your first question is whsther, pursuant to article 8307, section 6, V.T.C.S., a general contractor is responsible for obtainhg workers’ compensation imurance fa a s&contractor who obtains oDverage for his employees but not for himself. Article 8307, section 6p~~idss in pertinent part: lf **my** s\bscriba to this law with the cur- md

intention of avoidi~r my liability impmed by its terms s&lets the wholecr any part oftha wak to.
. . GjG&contractor, then in the eventmy employd of such s&-contractor sustains an injury inthe course of his employmmt ha stmRbe &emed to be md taka fa~purpasesofthblarr~DbeemplogCofthe srbscriba.

. . . (Emphasisadded) Section 6has not been amended since its enactment in 1917. The mderllned language clearly indiclrtes that a &contractor% employees are deemed to be employees of a general contractor cnly when the contractor ulilizxe a s&uzontractor “with the purpcee ad Intentian of avoid& any Rabilitf imposed by the workers’ compensation laws. Abosnt proof that the contractor tmss&let work with such purpose md intention, the s&contractor% employees will not, in the event the course of they sustain h&y ln contractor. Un

p. 861Honcrablr Jimmy Mankln - P-r Two @W- 271) **i**

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Imurance Association v. Harper, 249 S.W. id 677 (Tax. Civ. App.- Dallas l952, writ rePd nr.e.X IItheNwontractor’r employees are not considered to be employees of the general contractor, then the iatter ha IID ob&ation to obmin workers’ compensation &trance fa them. Even if it is proven thata contractor utilized a s-tractor la the purposeof avoid@ liability, however, it dses not follow that the contractorhas my obligation with mspect to the s&contractor, as opposed to the s&contractor2 employees. Article 8307, section 6 may, forpurposes of the workers’compensation laws, transfam a subcontractor% employees into employees of the general contractor, but it does not perform the same frnction with respect to the &contractor himself. As the court observed in Houston Fire &Casualty Company v. Farm AirService, Inc., 3258.W. 2d 860 (Tex. Civ. App.- Austin 1959,writ rePd n.r.e.h

(Section 61 does not purport to mske the s&contractor such employee but anly makes an injured employee of the sticontractor sn employee of the s&scriber la all purposes of the

.compensation law. Here appellant cndertakes to extend the provisions of the section 5) Bs to make the independent contractors (s&contractors) employees of the s&sa~ber. This would be writing a pmvision into the section that the Legislature didnot see fit to include therein.

. . . 325 S.W.2d at 665. Accordi@y, because section 8 &es not make a s&contractor an “employee” of the general contractor, we conclude that the latter would mt be obligated to obtain workers’ compensation insurance Cwa s&contractor whochooses not to obtain such coverage fa himself. Your second question is whether a general contractor must obtain wrxke& compensation irwurance la a Meontractor which b a partnership consisting of three persons snd no employees. Aswestated above, article 8307,secticn 6 applies cnly to a s*contractor% employees. Since your question assume3that the partnership turnno employees, the partnership could be deemed en “employee” of the general contractor c&y if the partners themselves are employees. However, asthe court stated inPowell v.Vigilant lrwurence Company, 577S.W.td 364tTex. Civ. App.-Tyler 1879,nomr

A partner is usually held to be w employer and therefore he cannot be slid to be m employee es contemplated by the Wakers’ Compensation Act.

. . unless the iruursnce contract shall specifically include the partner by endorsement thereon. Art. 8309,sec. 1~ 577 S.W. 2d at 366 (citations omitted). Since the ticontractor is a partnership with no employees and the psrtners themselves are rot ‘employeesa within ths workers’ compensation laws, we conclude that a general contractor )as no obliption to obtain workers’ compensation coverage for the partnership.

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-. ,,. Honombie Jimmy Hankins - Page Tlwe (HJ-271)

Your last qusstion b whether, if a Fneral contractor &es obtafn worka& compensation lrawsnce for 

### a s&contractor ad his employees, an insurance company may base its premium ~1the gross payment to the sticcntractor. Since dcontrac~ usually state a firm oontract price la the completed wcrk, the gross payment to the s&contractor will likely include items such m overhead, equipment, material and other sucheqwnsesinadditionto dada. The statutes provide little @dance in this inquiry. Article 5.55, et se& of the Insurance Code, which vests control over premiums la workers’ compensation irwurance in the State Board of bwurance, merely requires that mtes be just and reasonable Article5.80 pmvicks that the barrd “shall determine tmzards tg classes and fix suoh rates of premium spplicable to the payroll in each of such classe~.~ (Emphasis addedL
whichThe Texss Workmen’sCompensation and Employers’ Liability Insumnce Manual, ispublishedby the National Council cn Compensatmn, recognizes that premiums based upon factors other than payroll wouldnscessarily be inflated. It requires that premiums QI workers’ compensation policies be calculated ~1 the basis of services rendered by employees. Weare informed that the Manual is consistently relied rpcn by the State Rcard of lrwurance and that it accurately mflects the board’s understandirg of the legal requirements in this area. Courts will generally @old interpretations placed upon laws by an agency charged with the enforcement of those laws. Tarry Moving&Storage Co. v. Railroad Commission, 359S.W. 2d 62 (Tex. Civ. 4~. - Austin l962),e, 367 S.W.2d 322 (Tex. 1963). Wetherefore conclude that an insurance asrrier may mt base its premiums a~ the gross payment to the s&contractor. SUMMARY

A general contractor is not obligated tmder article 8307, section 6, V.T.C.S., to pu&ase workers’ compensation hwmance for a &contractor who chooses mt to obtain coverage for himself, nor is a general contractor required to obtain workers’ compensation average for a subcontractor which b a partnership consisting of three persons ad rp employees. lf a general contractor &es obtain workers’ compensation insurance for a s&contractor ad the s&contractor’s employees, an ~insmce company may mt base its premiums onthe gross payment to the s&contractor.



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MARK WHlTE Attorney General ofTexasHonomblo Jimmy Yankim - Page lour (M-271)

JOHN W.FAINTRR,JR. wst Assistant Attomey Qeneral RICHARDILGRAYIp Executive Assistant Attorney General Prepared byJan Bible Assistant Attorney General APPROVRlh OPlNlON COMMKTRR Susan L.Garrison, Acting Chairman Jon Bible Rick Gilpin Charles J. Maddox,Jr.

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