Opinion ID: 2181533
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Heading: The Maryland Workers' Compensation Act

Text: The Maryland Workers' Compensation Act (hereinafter the Act), which is currently codified under Maryland Code, Sections 9-101 to 9-1201 of the Labor and Employment Article (1991, 1999 Repl.Vol.), was first enacted in 1914, as its title suggests, to compensate employees who were injured on the job. Harris v. Board of Education of Howard County, 375 Md. 21, 28-29, 825 A.2d 365, 370 (2003); Honaker v. W.C. & A.N. Miller Dev. Co., 278 Md. 453, 454, 365 A.2d 287, 288 (1976) (hereinafter Honaker I); see also Brady v. Ralph Parsons Co., 308 Md. 486, 496, 520 A.2d 717, 723 (1987); Honaker v. W.C. & A.N. Miller Dev. Co., 285 Md. 216, 222-23, 401 A.2d 1013, 1016-17 (1979) (hereinafter Honaker II ). The Act was designed as a delicate balance: on one hand, the Act took away employees' rights to sue employers for negligence, yet, on the other hand, it ensured employees the right to quick and certain compensation for injuries sustained during the course of their employment, regardless of fault. Brady, 308 Md. at 496, 520 A.2d at 723 (quoting Johnson v. Mountaire Farms, 305 Md. 246, 250, 503 A.2d 708, 710 (1986)). Accordingly, with exceptions not relevant here, the Act provides the exclusive remedy for an injured employee against his or her employer, as set forth in Section 9-509 of the Act: (a) Employers. Except as otherwise provided in this title, the liability of an employer under this title is exclusive. (b) Covered employees and dependents. Except as otherwise provided in this title, the compensation provided under this title to a covered employee or the dependents of a covered employee is in place of any right of action against any person. Whether an employee-employer relationship exists in the context of workers' compensation depends typically on the common law rules of the master and servant relationship. See Brady, 308 Md. at 499, 520 A.2d at 724 (citing Edith A. Anderson Nursing Homes, Inc. v. Walker, 232 Md. 442, 444, 194 A.2d 85, 85-86 (1963)). When certain conditions are met, however, the Act broadens the definition of employer to cover principal contractors that ordinarily would not be considered the worker's employer under the common law rules of master and servant. See Brady, 308 Md. at 499-500, 520 A.2d at 724. To that end, Section 9-508(a) of the Act states: (a) In general. A principal contractor is liable to pay to a covered employee or the dependents of the covered employee any compensation that the principal contractor would have been liable to pay had the covered employee been employed directly by the principal contractor if: (1) the principal contractor undertakes to perform any work that is part of the business, occupation, or trade of the principal contractor; (2) the principal contractor contracts with a subcontractor for the execution by or under the subcontractor of all or part of the work undertaken by the principal contractor; and (3) the covered employee is employed in the execution of that work. We used the term statutory employer in State, to Use of Hubert v. Bennett Building Co., 154 Md. 159, 162, 140 A. 52, 53 (1928) to describe the impact of these provisions: The effect of this provision, when brought into operation through the designated state of circumstances, is to impose the absolute liability of an employer upon the principal contractor, when he was not in law the employer of the injured workman. The result then is that where the prescribed conditions exist, the principal contractor becomes by the act the statutory employer of any workman employed in the execution of the work. Therefore, an injured worker's exclusive remedy against a principal contractor is the compensation available under the Act. See Para v. Richards Group of Washington L.P., 339 Md. 241, 253-54, 661 A.2d 737, 744 (1995) (In return for providing workers' compensation coverage, the principal contractor is immune from civil liability for injuries suffered by covered employees.); Brady, 308 Md. at 502, 520 A.2d at 726 (stating that the injured worker's exclusive remedy against [a statutory employer] is under the [Act]). Principal contractors who do not meet the requirements of Section 9-508 are not employers and, as a result, do not benefit from the tort immunity created by the Act. Controversies over whether a principal contractor meets the requirements of Section 9-508, therefore, commonly arise when an injured worker seeks to bring a claim for negligence against a principal contractor rather than seek compensation under the Act. See RICHARD P. GILBERT & ROBERT L. HUMPHREYS, MARYLAND WORKERS' COMPENSATION HANDBOOK § 3.3-1 (2d. ed.1993). In order to determine whether one qualifies as a statutory employer under the Act, this Court has separated the requirements of Section 9-508 into four elements. As we first expressed in Honaker I, the entity seeking tort immunity must be: (1) a principal contractor (2) who has contracted to perform work (3) which is a part of his trade, business or occupation; and (4) who has contracted with any other party as a subcontractor for the execution by or under the subcontractor of the whole or any part of such work. Honaker I, 278 Md. at 459-60, 365 A.2d at 291; see also Para, 339 Md. at 249, 661 A.2d at 741-42; Brady, 308 Md. at 503, 520 A.2d at 726-27. We have interpreted these requirements to mean that there must be two contracts, one between the principal contractor and a third party whereby it is agreed that the principal contractor will execute certain work for the third party, and another between the principal contractor and a person as subcontractor whereby the subcontractor agrees to do the whole or part of such work for the principal contractor. Honaker I, 278 Md. at 460, 365 A.2d at 291. In more recent opinions, we have used the terms antecedent undertaking, antecedent contract, or principal contract to refer to the contract between the principal contractor and a third party. Para, 339 Md. at 250, 661 A.2d at 742; Lathroum v. Potomac Elec. Power Co., Inc., 309 Md. 445, 449, 524 A.2d 1228, 1230 (1987); Brady, 308 Md. at 504, 520 A.2d at 727. The subcontract is the contract that the principal contractor enters into with another entity for that entity to do the whole or part of the work that the principal contractor has an obligation to complete. See Brady, 308 Md. at 504, 520 A.2d at 727; see Great Atlantic & Pacific Tea Co., Inc. v. Imbraguglio, 346 Md. 573, 599, 697 A.2d 885, 898 (1997).