WHO SAYS FARMERS DON’T NEED WORKER’S COMP INSURANCE?

Despite efforts to provide a safer work place on the farm, history has shown that agricultural activities are still among the most dangerous in terms of job-related injuries. Indiana law requires most employers to provide worker’s compensation insurance coverage for the benefit of employees. That insurance pays for necessary medical care, lost wages, and permanent impairment from injuries arising out of the employment. It also pays the employer’s costs of investigating and defending the worker’s comp claim, which itself can be expensive.

Disputes often arise as to the nature and extent of an employee’s claimed injury, its cause and whether it actually arose out of the employment. Those issues can be thorny, but this article focuses on whether farm or agricultural employers should have worker’s comp coverage.

Some employers are exempted from having to provide worker’s comp coverage. Among the exempted are those who hire independent contractors, casual laborers, household employees, and some volunteer and student workers. Indiana law also exempts those who employ “farm and agricultural employees.” Ind. Code § 22-3-2-9(a)(2) Because of this exemption, many farmers – and even some insurance agents who regularly serve farm clients – believe they don’t need to carry worker’s comp insurance. That can be an expensive miscalculation.

Because the term “farm and agricultural employees” is not defined in the statute, courts have had to construe its meaning. A recent Indiana case considered whether an injured farm worker was entitled to comp benefits. In Gerlach v. Woodke, 881 N.E.2d 1006, on reh’g 886 N.E.2d 41 (Ind. Ct.App. 2008), an employee of a hog and grain farm spent most of his time maintaining buildings and equipment. But he also sometimes hauled feed, operated planting and harvesting equipment, and sorted and loaded hogs. He even supervised the farming activities in the owner’s absence. The employee was seriously injured when run over by a farm tractor and brought a worker’s comp claim. His employer asserted that as a farm employee no comp benefits were due. After considering the evidence the Worker’s Compensation Board ruled he was not a “farm employee” in this context. Hence, he was awarded the statutory benefits for his injuries and damages.

In the employer’s appeal of the award, the Court of Appeals initially noted that the words “farming” and “agriculture” are essentially synonymous. It then defined farming as “the art or science of cultivating the soil, including the planting of seed, the harvesting of crops, and the raising, feeding and management of livestock or poultry.” This definition is perhaps too narrow given the various activities on a modern farm. But since this employee was primarily a maintenance worker, rather than one who regularly worked in the fields or with livestock, the court held that the employer was not protected by the farm employee exemption.

In determining eligibility for coverage, our courts do not consider the nature of the employer’s business or the work being performed at the time of injury. Rather, the determination is based on the principal character and nature of the employee’s job as a whole. In other words, just because the employer is a traditional farm doesn’t decide the question. The facts relating to the employee’s overall job activities will control. If he does not primarily work in the fields or with livestock, he’s entitled to the benefits of worker’s comp coverage.

The message is clear, at least until the law is changed by the General Assembly or Indiana Supreme Court. Even if they occasionally work in the fields or with livestock, those employed mainly in other capacities (for example, as mechanics, maintenance workers, carpenters, truck drivers, office personnel, etc.) do not qualify as “farm employees” within the meaning of the worker’s comp statute. If injured on the job, they are entitled to comp benefits.

Farm owners who fail to provide this coverage do so at their peril. If no insurance coverage is in effect for an otherwise valid claim, the employer will owe the value of the benefits due. The Board also has the authority to further penalize employers for not having the required coverage.

Some insurance companies write farm policies that cover tort and premises liability as well as worker’s comp. Some offer a form of contingent coverage in the event a worker’s comp claim arises. But many standard farm policies still exclude coverage for all worker’s comp claims. Farmers who think they have “full coverage” are often surprised to find this gap in their protection.

Farm and other agribusiness owners should review their particular circumstances with agents who are familiar with this specialized area of insurance. It’s too late to have that conversation after an injury has occurred.

The article regarding current Indiana law was written by Kent Frandsen (kfrandsen@parrlaw.com), a partner with the law firm of Parr Richey Obremskey Frandsen & Patterson with offices in Lebanon and Indianapolis who regularly defends Indiana coops and businesses in liability suits. Readers are encouraged to discuss their particular circumstances with their own attorney.