Mitigating the risk of Defense Base Act insurance.

• Author: Stafford, John G.
• Position: Ethics Corner

* The Defense Base Act (DBA) requires many U.S. government contractors and subcontractors to provide workers' compensation insurance to their overseas-based employees working on U.S. military bases and government projects.

DBA insurance provides benefits to employees for injury or death when working overseas, and limits contractor liability for employee injuries or death while employed overseas. Understanding the Defense Base Act is therefore not only an important part of any robust compliance program, but also an important step in mitigating potential liability arising from covered employee activities.

This World War II-era law requires federal contractors and subcontractors to provide workers' compensation insurance to: employees engaged in employment on overseas U.S. military bases or land otherwise used for U.S. military purposes; on a "public work" contract overseas; on a contract performed overseas funded by the Foreign Assistance Act; or providing morale or welfare services to the U.S. armed forces overseas. Employees injured or killed during such employment are entitled to disability compensation and medical benefits, entitled to death benefits, and are not permitted to sue employers or the U.S. government.

DBA coverage is broader than the act's title suggests, extending to any U.S. contract for overseas "public work" that is a government-related construction project or connected to national defense, or any service contract employment that supports these activities. The Defense Base Act also covers foreign nationals, though the amount and type of benefits available is more limited for employees who are not U.S. or Canadian residents. Work for private employers on U.S. military bases outside the United States is covered, as is U.S.-funded overseas work on foreign government contracts under the Foreign Assistance Act, which provides for the sale of military equipment, materials and services to U.S. allies. The DBA also covers employees during transport to or from covered overseas employment, including such travel in the United States.

As one example of the breadth of the act, the Department of Labor benefits review board reversed an administrative law judge's denial of DBA coverage for an employee teaching Asian history to Navy personnel on Navy ships. A claimant must show involvement with a "public work," i.e., that his work is related to national defense, war activity or construction. In that case, the claimant furthered national...