Opinion ID: 2824208
Heading Depth: 2
Heading Rank: 3

Heading: The Insurance Coverage Requirements of the WCA

Text: [¶16] Because the statutes at issue in this case are unambiguous, we need go no further in our examination of them than their plain meaning. [¶17] Title 39-A M.R.S. § 401 provides, in relevant part: 1. Private employers. Every private employer . . . is subject to this Act and shall secure the payment of compensation in conformity with this section and sections 402 to 407 with respect to all employees, subject to the provisions of this section. . . . 3. Failure to conform. The failure of any private employer . . . to procure insurance coverage for the payment of compensation pursuant to sections 402 to 407 constitutes failure to secure payment of compensation provided for by this Act within the meaning of section 324, subsection 3, and subjects the employer . . . to the penalties prescribed by that section. . . . [¶18] Title 39-A M.R.S. § 403 similarly provides: An employer subject to this Act shall secure compensation and other benefits to the employer’s employees in one or more of the ways described in this section. The failure of any employer subject to this 10 Act to procure insurance coverage for the payment of compensation and other benefits to the employer’s employees in one of the ways described in this section constitutes failure to secure payment of compensation provided for by this Act within the meaning of section 324, subsection 3 and subjects the employer to the penalties prescribed by that section. [¶19] Title 39-A M.R.S. § 324, which is referenced in sections 401(3) and 403, provides in relevant part: 3. Failure to secure payment. If any employer who is required to secure the payment to that employer’s employees of the compensation provided for by this Act fails to do so, the employer is subject to . . . penalties . . . . The failure of any employer to procure insurance coverage for the payment of compensation and other benefits to the employer’s employees in compliance with sections 401 and 403 constitutes a failure to secure payment of compensation within the meaning of this subsection. [¶20] Holyoke and the AIU each argue that the legislative intent animating the WCA’s coverage requirements is apparent from the plain language of sections 401 and 403, but they disagree about what that language means. [¶21] Holyoke contends that an employer complies with the requirements of sections 401 and 403 by purchasing a workers’ compensation policy that will pay benefits to any worker who is entitled to receive them. It maintains that an employer’s classification of workers for payroll purposes and the premium that the employer pays to its workers’ compensation insurer are not relevant to the employer’s compliance with the WCA’s coverage requirements. 11 [¶22] The AIU argues that Holyoke’s interpretation of sections 401 and 403 “would foster abuse of the workers’ compensation system” by allowing employers to classify a single worker as an employee and pay workers’ compensation premiums that do not reflect the number of workers who are in fact employees or the risks posed by those workers to the workers’ compensation system. 4 It contends that an employer fulfills the obligation to “secure . . . compensation” for all employees only by correctly classifying its workers at the time that it purchases a workers’ compensation policy and paying premiums during the policy period that reflect the remuneration paid to all employees. [¶23] Contrary to the AIU’s contention, the plain language of sections 401(1) and 403 does not require an employer to correctly classify workers for payroll purposes and to pay workers’ compensation premiums based on those classifications. Those sections make no reference to the timing or manner of worker classification or the timing of premium payments, but simply require an employer to “secure the payment of compensation” for its employees pursuant to 39-A M.R.S. §§402 and 407 (2014). The text of sections 401(1) and 403 unambiguously obligates an employer to make arrangements for the payment of 4 The potential for abuse of the workers’ compensation system through worker misclassification is mitigated when, as in this case, an insurer requires predeterminations of independent contractor status as a prerequisite to insuring an employer who classifies some workers as independent contractors. 12 workers’ compensation benefits to its employees. It does not require that the employer do so at any particular time. [¶24] Section 403(1) provides that an employer complies with its obligation to “secure compensation” to its employees “by insuring and keeping insured the payment of such compensation . . . under a workers’ compensation insurance policy . . . .” Title 39-A M.R.S. § 407 likewise provides that “[a]n employer with a currently approved workers’ compensation policy . . . is deemed to be in compliance with this Act . . . .” Pursuant to these sections, an employer complies with the WCA’s coverage requirements by purchasing workers’ compensation insurance that will provide coverage for all workers. The Act does not require an employer to obtain a policy with premiums based on all workers, including those initially deemed to be independent contractors.5