Do temporary employees need safety training? Are subcontractors covered for workers’ compensation?

If your workforce includes temporary employees or independent subcontractors, you may have questions like these.

Even these workers need safety training and workers’ compensation coverage. Here are a few things you should know about hiring subcontractors and temporary employees, and their workers’ compensation coverage and safety.

Hiring temporary workers

When you hire a temporary employee, you need to be sure that the outside temp agency will be liable for payment of workers’ compensation benefits in the event of a work injury.

Beware of scanty contracts, either deliberately or unwittingly silent on important legal considerations including workers’ compensation coverage. Consider having contracts from temp agencies reviewed by an employment attorney before you sign them.

Keeping temporary workers safe

Give temporary employees the same safety training you give regular employees. Don’t skimp on safety training just because someone will only be working with you for a short time.

“The most common causes of injuries we see among temporary employees include workers not being properly trained for the jobs they’re performing, or the physical abilities of the individual do not match the task,” said Lee Wendel, SFM Director of Loss Prevention.

Here are a few suggested questions employers should ask their temp agencies to keep workers safe:

• Will the agency provide personal protective equipment for the temporary employees?
• What safety training will be provided by the agency?
• Does the temporary employee require any additional help to perform the job?
• Is worker safety a company priority?
• Will you visit the worksite and conduct a safety assessment?

For more resources on temporary worker safety, visit OSHA’s Protecting Temporary Workers page .

Hiring subcontractors: Are they covered for workers’ compensation?

Hiring subcontractors that are uninsured can pose a significant liability to your organization.

Anyone working independently for your organization needs to be covered for work injuries. An independent contractor working alone may or may not carry workers’ compensation insurance.

If contractors say they have coverage, you’ll need to get certificates of insurance at the time they are engaged. Your SFM premium auditor will look for these certificates at the time of your premium audit. If a subcontractor does not provide a certificate of insurance for work comp, we will typically include their
payroll in the calculation of your premium.

Some entity types with no employees may not be required to carry workers’ compensation insurance. If this is the case then you’ll need to get insurance certificates for general liability with adequate minimum limits of coverage.

Are subcontractors truly ‘independent’?

You’ll need to verify that the individual meets the state’s legal criteria to be considered an independent contractor. The specific requirements vary by state, and an employment attorney is your best resource to make sure your contractors meet them.

In addition to verifying coverage and determining “independent” status, SFM attorneys recommend having a subcontractor agreement drawn up by an employment attorney for all subcontractors to sign before they go to work for you.

For more information on Minnesota’s guidelines, see SFM’s General contractor’s liability Legal Advisory and Hiring subcontractors CompTalk.

Determining whether a subcontractor could be considered an employee

The first thing you need to know is that your state and the IRS may have different criteria for establishing whether a subcontractor can be considered an independent contractor (for which you don’t need to provide workers’ compensation coverage) versus an employee (for which you must provide coverage in most states).

This means even subcontractors that qualify as independent contractors for tax purposes, might still be considered employees by state standards.

Every state is a little different, but most require that the subcontractor have control over the method and manner in which the work is completed, among other criteria to be considered independent contractors.

Here’s information on classification of workers in some of SFM’s core states:

• Minnesota
• Wisconsin
• Indiana
• Iowa
• Kansas
• South Dakota
• Tennessee

This is not intended to serve as legal advice for individual fact-specific legal cases or as a legal basis for your employment practices.

By Aaron Schmidt, Managing Counsel at SFM’s in-house law firm

The Minnesota Supreme Court issued the long-awaited opinion of Chrz v. Mower County and Minn. Counties Intergovernmental Trust on March 8, 2023.

Ryan Chrz was a Deputy Sheriff in Mower County, Minnesota, who had been diagnosed in 2019 with work-related PTSD, major depression and moderate to severe alcohol disorder, after witnessing several traumatic events at work. In May of 2020, he filed a claim petition requesting workers’ compensation benefits.

An independent medical exam of Chrz was requested in December 2020 by his employer and insurer, and that doctor opined that Chrz did not meet the criteria for PTSD under Minn. Stat. Section 176.66, subd. 1.

The following March, he was examined again by his treating doctor, who concluded that his condition had improved. As a result, Chrz’s treating doctor changed his diagnosis from PTSD to “other specified trauma and stress related disorder” caused by work.
The matter went to hearing in June 2021, and the compensation judge found that Chrz had sustained work-related PTSD and awarded him ongoing payment of wage loss. She further held that his treating doctor had diagnosed PTSD from April 2019 through March 2021, but that from March 2021 forward, Chrz no longer had PTSD. However, Chrz had argued that despite a diagnosis change, he remained disabled from a mental illness.

The employer and insurer appealed, and the Workers’ Compensation Court of Appeals (WCCA) reversed the compensation judge’s decision, stating that Chrz was no longer entitled to ongoing benefits because he no longer met the criteria for having a personal injury under Minnesota workers’ compensation law.

Chrz appealed to the Minnesota Supreme Court, which affirmed the WCCA, holding that an employee is not entitled to workers’ compensation benefits under Minn. Stat. Section 176.66, subd. 1, when the employee no longer has a diagnosis of PTSD by a licensed professional using the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders as required by Statute.

This opinion provides clarity in defining the nature and extent of PTSD claims in Minnesota, and a definitive interpretation in limiting the narrow application of Minn. Stat. Section 176.011.

This is not intended to serve as legal advice for individual fact-specific legal cases or as a legal basis for your employment practices.

By John Hollick, Chief Defense Counsel with SFM’s in-house law firm

The Minnesota Supreme Court addressed the statutory presumption of posttraumatic stress disorder (PTSD) in Juntunen v. Carlton County in December 2022, significantly impacting the criteria for compensability of certain workers’ compensation claims.

Generally, an injured employee has the burden to prove the elements of a workers’ compensation claim, including that the employee has an occupational disease. However, the state’s PTSD presumption under Minnesota Statute Section 176.011, Subdivision 15(d)(e) and effective January 1, 2019, relieves certain employees of at least part of the burden of proving that they suffer from a compensable occupational disease. Law enforcement employees are among the professions specifically included in the presumption.

In this case the employee, Doug Juntunen, worked as a deputy sheriff for Carlton County, during which time he claims he experienced several traumatic events, both professionally and personally. He was diagnosed with PTSD by a licensed psychologist in September 2019. The day after he received his diagnosis, the deputy informed his supervisors and was placed on leave. The employer and insurer later denied liability of Juntunen’s workers’ compensation claim, and the case went to litigation.

At a subsequent hearing, both sides presented differing medical opinions concerning Juntunen’s diagnosis. The treating provider felt that he did qualify for PTSD benefits, while the psychologist brought in by the insurer for an Independent Medical Evaluation (IME) felt that he did not meet all the requirements of PTSD, but rather suffered from severe depression.

The facts revealed that Juntunen had experienced several potentially traumatic experiences during his career, including events both at work and in his personal life. The IME doctor admitted that he was only relying on the employee’s symptoms for 30 days prior to the IME examination, however the compensation judge accepted the IME’s medical opinion and denied the claim for benefits based on a PTSD diagnosis.

The case was appealed, and the Workers’ Compensation Court of Appeals (WCCA) reversed the opinion. In December 2022, the Minnesota Supreme Court affirmed the reversal by the WCCA and awarded benefits for the PTSD diagnosis.

The PTSD presumption in Minnesota Statute 176.011, Subdivision 15(d)(e) states that an employee (1) must be employed in one of the enumerated occupations, (2) be diagnosed with PTSD by a licensed psychiatrist or psychologist, and (3) must not have been diagnosed with PTSD previously.

Once Juntunen offered a diagnosis of PTSD from a licensed psychologist, the PTSD presumption applied. This fact, along with the unchallenged findings of the compensation judge that Juntunen was a deputy sheriff and had no previous PTSD diagnosis, triggers the presumption that Juntunen had a compensable occupational disease.

Interestingly, in the opinion, the Minnesota Supreme Court stated that “ultimately, the PTSD presumption represents a balancing between two competing policies: prompt payment of employee’s medical expenses for PTSD treatment and stewardship of public monies. The legislature determined that employees suffering from PTSD need timely access to medical care, and the PTSD presumption puts the onus on employers to quickly resolve such claims.” As the IME did not evaluate Juntunen until 10 months after he notified Carlton County of his diagnosis, the Minnesota Supreme Court stated, “that is too long to leave employees’ benefits claims unresolved.”

This is not intended to serve as legal advice for individual fact-specific legal cases or as a legal basis for your employment practices.

When you purchase a workers’ compensation insurance policy, a coverage called employer liability insurance is also included.

Sometimes called Part 2 or Coverage B, this insurance is rarely used in most states, and makes up a very small part of the workers’ compensation insurance premium.

Because of this, you might just pass over this coverage if not for the need to choose employer liability limits.

The basic employer liability limit is usually $100,000/$500,000/$100,000. That’s $100,000 per accident, $500,000 per policy, and $100,000 per employee.

Since an employer liability claim is unlikely, other considerations usually factor into decisions to increase the limits above the basic $100,000/$500,000/$100,000 level.

What employer liability insurance covers

There are only a few rare cases where employer liability insurance coverage might be used by a policyholder.

Some states permit spouses and dependents of injured employees to sue an employer. Employer liability insurance would provide coverage in those cases.

A more common (but still rare) example of when employer liability limits might be used is when an injured employee sues a negligent third party, and that third party sues the employer for contributory negligence.

For example, say a factory worker was injured while using machinery that his employer purchased from another company, and the employee claims the manufacturer was to blame for the injury. The employee might try to sue the manufacturer for damages. The manufacturer might then sue the employer saying the machine had not been properly maintained or the employee wasn’t properly trained to use the equipment. This is called a third party over action. At that point, the employer liability insurance would cover the employer’s possible settlement and damages costs up to the stated policy limits. The employer liability insurance would also cover defense costs until the policy limits have been met by settlement or damages payments. Defense costs are paid outside the policy limits.

Just as with the workers’ compensation insurance portion of the policy, a claim can only be eligible for coverage under the employer liability portion if it stems from an injury determined to be work-related, as defined by state statute.

Choosing employer liability limits

The basic employer liability limit is usually $100,000/$500,000/$100,000.

Oftentimes policyholders who choose to increase their limits do so because of contractual requirements or requests from their umbrella carrier.

For example, a general contractor might require all subcontractors to set their employer liability limits at a particular level. Or, a policyholder’s general liability or umbrella carrier might have similar requirements and ask for increased limits.

For those reasons, it is common to see employer liability limits increased to $500,000/$500,000/$500,000 or $1 million/$1 million/$1 million.

Because the coverage is rarely used, increasing coverage limits is typically inexpensive.

For example, the cost to raise the limits to $500,000/$500,000/$500,000 is 0.8 percent of premium in most states. The cost to increase the limits to $1 million/$1 million/$1 million is 1.1 percent of premium in most states.

Employer liability limits can be confusing, and every policyholder is different, so consult with your agent if you have questions about your specific situation.

This is not intended to serve as legal advice for individual fact-specific legal cases or as a legal basis for your employment practices.

By Cheryl Howland Bowsfield, Senior Defense Counsel with SFM’s in-house law firm

While the federal mandate that large employers must vaccinate employees against COVID-19 was struck down by the U.S. Supreme Court, employers can still encourage or require employees to vaccinate against COVID-19.

This raises the question of compensability for adverse reactions from the COVID-19 vaccine, and related medical treatment and time lost from work. A key factor for workers’ compensation compensability is whether the vaccination was required by the employer.

As with the flu vaccine, the Equal Opportunity Employment Commission and the Occupational Safety and Health Administration have both confirmed that employers can mandate that their workers receive the COVID-19 vaccine as a condition of employment. Those employers that choose to mandate the COVID-19 vaccine will need to accommodate waivers or exemptions for employees objecting on health or religious reasons. Other employers may decide to encourage the vaccine, but not mandate it, by offering on-site vaccinations, payment or reimbursement of vaccine costs, monetary incentives, or as a part of an employer’s wellness program to encourage employees to be vaccinated.

A second key factor for compensability is whether the side effects that occurred from undergoing a COVID-19 vaccination rise to the level of an injury or illness, temporary or permanent. To date, the reported COVID-19 vaccine side effects mirror those that have been seen with the flu vaccine. The most common side effects of the COVID-19 vaccine include swelling or pain at the injection site, tiredness, muscle pain, chills, joint pain and fever. These are usually mild in nature and resolve on their own in a few days. Severe allergic reactions to the COVID-19 vaccination requiring treatment have been reported as rare according to the Centers for Disease Control and Prevention .

What does all this mean in the context of workers’ compensation? Is an adverse vaccine reaction compensable? The answer is that it depends.

To determine whether an adverse reaction is compensable will require an investigation into the facts of each claim, receipt of medical records and consideration of the following:

• Was the vaccine mandated by the employer?
• Was undergoing the vaccine a condition of employment?
• Was there something specific to the employment and/or job duties that put the employee at an increased risk for exposure to COVID-19?
• Does undergoing the vaccine in some way further the business of the employer?
• Is the employee working with COVID-19 positive patients?
• Is the employee required to work with the public?
• Was the vaccine administered at work while the employee was working and being paid?
• Did the employee, for personal reasons outside of their employment, undergo the vaccine?

In states such as Wisconsin, Iowa, Nebraska, South Dakota and Kansas, consideration of the specific circumstances of the vaccination that caused the adverse reaction, as suggested by the questions above, will help to guide the determination of compensability.

For Minnesota claims, there is an additional statutory provision that may need to be considered. MN Stat. 176.011, Subd. 16 specifically states “an injury or disease resulting from a vaccine in response to a declaration by the United States Department of Health and Human Services to ‘address an actual or potential health risk’ related to the employee’s employment is an injury or disease arising out of and in the course of employment.” Thus, in Minnesota where the COVID-19 vaccine reaction rises to the level of an injury or disease, and was related to the employee’s employment, the medical treatment and any lost time from work most likely would be compensable.

If an employer mandates vaccination, or strongly encourages the employee to obtain the vaccine for work-related reasons, the scales will more likely tip in favor of compensability.

The COVID-19 vaccine-related reaction claims may contain varying facts and medical situations. Please contact your attorney before making any employment or workers’ compensation liability determinations.

This is not intended to serve as legal advice for individual fact-specific legal cases or as a legal basis for your employment practices.

On Feb. 3, 2022, Minnesota Gov. Tim Walz signed a bill into law that reinstated and extended the rebuttable COVID-19 presumption under Minnesota’s occupational disease statute.

Minnesota Statutes Section 176.011, subd. 15(f), reinstated what has become known as the COVID-19 presumption law, creating a rebuttable presumption for certain first responders, corrections workers and COVID-19 healthcare workers who contract COVID-19.

The new presumption is not retroactive, which means any first responders, corrections workers and COVID-19 healthcare workers who contracted COVID-19 after Dec. 31, 2021 (the date the previous presumption sunsetted) through Feb. 3, 2022, were not covered under the presumption. However, they were still potentially covered under other existing occupational disease or injury provisions of Minnesota’s Workers’ Compensation Act.

When not covered by the presumption, workers in Minnesota who believe their COVID-19 infection is a direct result of their employment are able to file a claim to pursue compensation under the existing occupational disease and personal injury provisions.

In summary, the reinstatement and extension of Minnesota’s COVID-19 workers’ compensation presumption law provides:

• A defined list of occupations covered by the presumption of COVID-19 as an occupational disease:  firefighter; paramedic; nurse or health care worker, correctional officer, or security counselor employed by the state or a political subdivision at a corrections, detention, or secure treatment facility; emergency medical technician; a health care provider, nurse, or assistive employee employed in a health care, home care, or long-term care setting, with direct COVID-19 patient care or ancillary work in COVID-19 patient units.
• Those on the list of covered workers can show they contracted COVID-19 by a positive laboratory test or, if a test is not available for the employee, by diagnosis and documentation from a licensed physician, physician’s assistant, or advanced practice registered nurse (APRN);
• The presumption is rebuttable by the employer and insurer only by a showing that the employment was not a direct cause of the disease;
• The date of injury for this presumptive COVID-19 is either the date the employee was unable to work due to the diagnosis, or due to symptoms that were later diagnosed as COVID-19, whichever occurred first;
• If an employee who has contracted COVID-19 does not fall under the new presumption, they still have the right to file a claim under the existing occupational disease and personal injury provisions of the Minnesota Workers’ Compensation Act.

This COVID-19 presumption legislation is effective for employees who contract COVID-19 on or after the day following enactment (April 8, 2020) through Dec. 31, 2021, and once again is effective the day following enactment (Feb. 3, 2022) through Jan. 13, 2023.

For more information on the law, see the Minnesota Department of Labor and Industry’s Frequently Asked Questions document .

This is not intended to serve as legal advice for individual fact-specific legal cases or as a legal basis for your employment practices.

By Peter F. Lindquist, Esq. Defense Counsel with SFM’s in-house law firm

The Minnesota Supreme court issued two companion decisions on October 13, 2021 – Musta v. Mendota Heights Dental Center, and Bierbach v. Digger’s Polaris – addressing a burning question on the minds of many in the Minnesota workers’ compensation world: Can an employer and insurer be required to pay for an injured worker to treat their work-related condition with the use of medical cannabis, even if the use of medical cannabis is prohibited by federal law?

In these cases, the Minnesota Supreme Court answered “No.” Due to issues of “federal preemption,” Minnesota employers and workers’ compensation insurers cannot be compelled to violate the federal Controlled Substances Act by providing for an employee’s use of medical cannabis, even if use of medical cannabis a is legal under the Minnesota Medical Cannabis Therapeutic Research Act.

By way of background, the employees in both Bierbach and Musta had been certified to treat their work-related injuries with medical cannabis by their treating doctors. That treatment was unsuccessfully disputed by the employer and insurer in the Bierbach case, but reasonableness and causal relationship was stipulated to in the Musta case. The primary issue in both cases was the federal preemption defense. The compensation judges in both cases found that the Minnesota Medical Cannabis Therapeutic Research Act was not preempted by the federal Controlled Substances Act.

On appeal, the Workers’ Compensation Court of Appeals determined that they did not have jurisdiction to decide issues relating to the applicability of federal laws and could not decide the federal preemption issues. They therefore upheld the award of medical cannabis in both cases.

The Minnesota Supreme Court noted that the compensation judges’ order made it impossible for the employers and insurers to comply with both state and federal laws. The Court reasoned that ordering the insurers to reimburse for medical cannabis was tantamount to requiring them to aid and abet the commission of a federal crime. Because the Supremacy Clause of the US Constitution states that when “there is any conflict between federal and state law, federal law shall prevail,” the Court ruled that the compensation judge’s order is preempted by the federal law and reversed the appeals court and compensation judge’s award of reimbursement for medical cannabis.

These decisions create a new bright-line rule regarding the compensability of medical cannabis in workers’ compensation claims. Following to these decisions, insurers now have an almost absolute basis to deny a request to reimburse expenses for medical cannabis, as they cannot be required to violate federal law. This applies even if the treatment with medical cannabis is found reasonable and necessary from a medical provider.

The employees in both cases have the right to appeal these decisions to the U.S. Supreme Court, and as of the writing of this article it appears that they are likely to do so. It will be some time before there is any indication as to whether the Supreme Court decides to hear the appeal. Unless the U.S. Supreme Court overturns the Minnesota Supreme Court’s decisions, the only remaining means for the federal preemption defense to be changed or limited would be for U.S. Congress to pass, and the President to sign, legislation modifying the Controlled Substances Act.

Given how divided the federal government and nation have been on the issue of marijuana legalization, I do not think we should expect for there to be any change in this manner for the foreseeable future.

Click here to read the Supreme Court’s decision in Musta v. Mendota Heights Dental Center

Click here to read the Supreme Court’s decision in Bierbach v. Digger’s Polaris.