VOLUME I Chapter 5 Workers' Compensation

• Jurisdiction: South Carolina

Chapter 5 Workers' Compensation¹Grant Burnette LeFeverBurnette Shutt & McDaniel, PA

I. Workers' Compensation Overview

Workers' compensation in South Carolina is a no-fault system which provides medical and indemnity benefits (temporary and permanent disability) for employees who suffer on-the-job injuries. The strict liability system is an injured employee's exclusive remedy and prevents an injured employee from suing the employer in tort, with certain exceptions. Workers' compensation law in South Carolina is governed by Title 42 of the Code of Laws of South Carolina. The Workers' Compensation Commission further promulgates its own regulations under Chapter 67. In addition to the employer and the injured employee, the system involves workers' compensation insurance carriers and medical providers, as well as other parties who service the insurance industry.

II. The South Carolina Workers' Compensation Commission

The South Carolina Workers' Compensation Commission is the administrative agency charged with administration and enforcement of the South Carolina Workers' Compensation Act, Title 42 of the Code of Laws of South Carolina. The Commission is responsible for promulgating rules and regulations necessary to implement the Workers' Compensation Act, hearing cases, conducting informal conferences, and approving settlements, among other duties essential to administration of the Act.

The Commission consists of seven members appointed by the Governor, with the advice and consent of the Senate, for terms of six years. The Governor, also with the advice and consent of the Senate, designates one commissioner as Chairman for a term of two years. The Chairman is the Chief Executive Officer of the Commission and is responsible for executing the policies established by the Commission.²

The Commissioners are responsible for hearing and determining all contested cases, approving settlements, and hearing appeals. The State is divided into seven districts for administrative purposes. Commissioners generally are assigned to a district for a period of two months before they are reassigned to another district, and they rotate to serve in each of the State's 46 counties.

III. Coverage and Jurisdiction

The Workers' Compensation Commission has subject matter jurisdiction only where an employer-employee relationship exists at the time of the alleged injury for which the claim is made.³ Every employer in the State with four or more employees regularly employed in the same business (except those employers exempt pursuant South Carolina Code Section 42-1-360) is presumed to have accepted the provisions of the South Carolina Workers' Compensation Act. This includes the State and any municipal corporation or political subdivision thereof.⁴

The term "employee" is defined in Section 42-1-130. The term includes "every person engaged in an employment under any appointment, contract of hire, or apprenticeship, expressed or implied, oral or written." It also includes legally and illegally hired aliens, minors, and certain prisoners injured while in private employment. State officers and employees are covered, as are officers and employees of municipal corporations and political subdivisions of the State and members of the State and National Guard, with specifically outlined exceptions. Sole proprietors and partners of a business may elect to be included as employees under certain circumstances.⁵

The broad classes of persons and employers who are statutorily excluded from the South Carolina Workers' Compensation Act are specifically outlined and described in detail in S.C. Code Section 42-1-360. Pursuant to Section 42-1-360, the Act does not apply to the following:

(1) Casual employees not employed in the course of the employer's trade, business, profession, or occupation;
(2) Employers with less than $3,000 in total annual payroll during the previous calendar year, regardless of the number of individuals employed during that period;
(3) State and County Fair Associations;
(4) Agricultural employees;
(5) Railroads, railroad employees, railway express companies, or railway express company employees;
(6) Persons engaged in selling agricultural products for the producers thereof on commission or for other compensation, paid by the producers, when the product is prepared for sale by the producer;
(7) Licensed real estate sales agents selling, leasing, or renting real estate for a licensed real estate broker under a signed independent contractor agreement and on a straight commission basis;
(8) Federal employees in South Carolina; and,
(9) Certain individuals involved in the motor carrier industry.⁶

Exempted employers may waive the exemption and voluntarily elect to provide coverage to their employees.⁷

IV. Compensability of Claims

For a case to be compensable under the South Carolina Workers' Compensation Act, four elements must be present:

(1) An employment relationship;
(2) An injury by accident;
(3) The injury by accident must arise out of the employment; and,
(4) The injury by accident must arise in the course of the employment.⁸

A. Employment Relationship

No award is authorized under the South Carolina Workers' Compensation Act unless an employer-employee relationship existed at the time of the injury.⁹ The existence of the employer-employee relationship is a jurisdictional question and can be raised at any time.¹⁰ The relationship cannot be waived, even by agreement. It is contractual in nature but requires no formality; it can be written, oral, or even implied from conduct. All that must be shown is that the parties recognize each other as employer and employee or that the facts and circumstances surrounding the employer's conduct are such that they would lead the claimant, as a reasonable person, to believe that he is being employed.¹¹ Importantly, the existence of a contract, not the commencement of actual work, establishes the employer-employee relationship.¹²

1. Independent Contractor and Sole Proprietor

An injured person who is an independent contractor and not an employee is not within the scope of the Workers' Compensation Act in the absence of a statutory provision to the contrary.¹³ However, an independent contractor who is a sole proprietor or partner of a business whose employees are eligible for benefits under Title 42 may elect to be included as an employee under the workers' compensation coverage of the business if they are actively engaged in the operation of the business and if the insurer is notified of their election to be included.¹⁴

In determining whether an injured person is an employee or an independent contractor, the emphasis is on the nature of the relationship as opposed to the actual work performed. The general test is whether the alleged employer has "the right and authority to control and direct the particular work or undertaking, as to the manner or means of its accomplishment."¹⁵ South Carolina generally has recognized four factors which bear on this decision:

(1) Direct evidence of the right or exercise of control;
(2) The method of payment;
(3) The furnishing of equipment; and,
(4) The right to fire.¹⁶

Each factor is considered with equal force, and the mere presence of one factor indicating an employment relationship is not dispositive of the inquiry.¹⁷

An independent contractor is "one who, exercising an independent employment, contracts to do a piece of work according to his own methods, without being subject to the control of his employer except as to the result of his work."¹⁸ Language in a contract between the parties that attempts to create an independent contractor relationship may be considered but does not necessarily control.¹⁹ The courts have emphasized repeatedly that the question of whether a worker is an employee or an independent contractor is a fact-specific question that is resolved by applying the four factors above and considering all relevant facts.

2. Casual Employees

Pursuant to S.C. Code Sections 42-1-130 and -360(1), "casual employees" are exempted from coverage under the South Carolina Workers' Compensation Act. Under Section 42-1-130, persons whose employment is both casual and not in the course of the trade, business, profession or occupation of the alleged employer are excluded.

The question of what constitutes a "casual employee" is largely fact specific and has given rise to much litigation. In general, casual employment is defined as being irregular, unpredictable, sporadic and brief in nature.²⁰

3. Statutory Employer/Employee

The South Carolina Workers' Compensation Act imposes liability on owners, contractors and subcontractors for compensation benefits to workers with whom they are not in privity of contract.²¹ These provisions are intended to protect employees working on a job undertaken by an owner or principal contractor in the event that a financially irresponsible "downstream" contractor or subcontractor does not provide coverage for its employees. Doubts about the worker's status are to be resolved in favor of including the worker and employer under the Workers' Compensation Act.²²

An employee may have more than one statutory employer, but the provisions of the Act are not intended to enlarge the scope of liability of the statutory employer beyond that which would have existed if the worker was the statutory employer's direct employee. A recovery from a subcontractor is exclusive and shields other statutory employers from liability.²³ When the principal contractor is liable to pay compensation under Sections 42-1-400 through -450, he is entitled to indemnity from any person who would have been liable to pay compensation to the injured worker independently of those sections or from an intermediate contractor.²⁴

The statutory employer status may be used as both a sword and a shield, and the issue generally arises in two situations:

(1) When the injured employee of a contractor or subcontractor who has no workers' compensation insurance files a workers' compensation

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