The Attorney General of Texas 

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, 

who is not deemed an WemployeeD 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 6 p~~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 whole cr any part of tha wak to. . . 

GjG&contractor, then in the event my employd of 

such s&-contractor sustains an injury in the course of 

his employmmt ha stmR be &emed to be md taka 

fa~purpasesofthblarr~DbeemplogCofthe 

srbscriba. . . . (Emphasis added) 

Section 6 has 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 tms s&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. 861 
Honcrablr Jimmy Mankln - P-r Two @W- 271) 

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Imurance Association v. Harper, 249 S.W. id 677 (Tax. Civ. App. - Dallas l952, writ 

rePd nr.e.X II the Nwontractor’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 that a contractor utilized a s-tractor la the purpose of 

avoid@ liability, however, it dses not follow that the contractor has my obligation 

with mspect to the s&contractor, as opposed to the s&contractor2 employees. 

Article 8307, section 6 may, for purposes 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 Air Service, Inc., 325 8.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 did not 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 Cw a s&contractor who chooses 

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. As we stated above, article 8307, secticn 6 applies cnly to 

a s*contractor% employees. Since your question assume3 that the partnership turn no 

employees, the partnership could be deemed en “employee” of the general contractor 

c&y if the partners themselves are employees. However, as the court stated in Powell 

v. Vigilant lrwurence Company, 577 S.W. td 364 tTex. Civ. App. -Tyler 1879, no mr 

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. 

p. 862 
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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 ~1 the 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 such eqwnses in addition to 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 Article 5.80 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 

which 

The Texss Workmen’s Compensation and Employers’ Liability Insumnce Manual, 

is published by the National Council cn Compensatmn, recognizes that premiums 

based upon factors other than payroll would nscessarily be inflated. It requires that 

premiums QI workers’ compensation policies be calculated ~1 the basis of services 

rendered by employees. We are 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, 359 S.W. 2d 62 (Tex. Civ. 

4~. - Austin l962), e, 367 S.W. 2d 322 (Tex. 1963). We therefore 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 on the gross payment to the s&contractor. 

verYmverYtP& 

MARK WHlTE 

Attorney General of Texas 
Honomblo Jimmy Yankim - Page lour (M-271) 

JOHN W. FAINTRR, JR. 

wst Assistant Attomey Qeneral 

RICHARD IL GRAY Ip 

Executive Assistant Attorney General 

Prepared by Jan Bible 

Assistant Attorney General 

APPROVRlh 

OPlNlON COMMKTRR 

Susan L. Garrison, Acting Chairman 

Jon Bible 

Rick Gilpin 

Charles J. Maddox, Jr. 

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P. 864 

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