The Louisiana Fourth Circuit Upholds Statutory Employer Clause in Contract and Clarifies its Holding in Prejean v. Maintenance Enterprises, Inc.
In Abdul v. Touro Infirmary & Hebrew Benv. Assn., 23-494 (La. App. 4 Cir. 10/5/23), ___ So. 3d ___, 2023 WL 6475450, the Louisiana Fourth Circuit Court of Appeal considered the validity of a contractual statutory employer provision. The dispute arose out of a claim for damages brought by Plaintiff against Touro Infirmary & Hebrew Benevolent Association (“Touro”) for injuries suffered by Plaintiff while she was working as a cashier at Touro’s parking garage. At the time of the accident, Plaintiff was employed by Central Parking System of Louisiana, Inc. (“Central Parking”). Plaintiff filed a workers’ compensation claim against Central Parking, her direct employer, and filed a tort suit against Touro.
Touro alleged that the Plaintiff was a statutory employee of Touro, thereby limiting any recovery against Touro to workers’ compensation. Touro referred to a Management Agreement that it had entered into with Central Parking whereby Central Parking would operate Touro’s parking garage, and which explicitly included a statutory employer provision.
Touro moved for summary judgment based upon the statutory employer defense. Ultimately, the trial court relied upon Prejean v. Maintenance Enterprises, Inc., 08-364 (La. App. 4 Cir. 3/25/09), 8 So. 3d 766, in denying Touro’s motion. In Prejean, the Fourth Circuit found a statutory employer provision invalid because it purported to confer tort immunity while renouncing the obligation of solidary liability. Importantly, the Fourth Circuit, in Prejean, stated that, “In order for a contract to validly confer the status of statutory employer upon a principal, its terms and conditions cannot relieve a party of the statutory obligations which arise from such status unless the Legislature explicitly provides otherwise.” Id. at 776 (emphasis in original). In denying Touro’s summary judgment, the trial court found the statutory employer provision in this case was invalid because the language improperly sought the benefits of the tort immunity while avoiding the direct obligations with the purported statutory employee.
On appeal, however, the Fourth Circuit found that this case was distinguishable from Prejean. The Fourth Circuit noted that the doctrine of ‘statutory employer’ is codified in La. R.S. 23:1061, which provides that when a valid written contract recognizes the existence of a statutory employer relationship, a rebuttable presumption of that relationship is created. Here, the Fourth Circuit found that the statutory employer provision in the Management Agreement was valid because both parties agreed to be liable jointly and in solido to pay workers’ compensation benefits.
The Fourth Circuit’s decision in Abdul v. Touro Infirmary & Hebrew Benv. Assn. clarifies that its ruling in Prejean v. Maintenance Enterprises, Inc., which found a statutory employer clause invalid, applies in situations where a party purports to establish a statutory employer relationship while also contracting away its solidary obligations. Further, this case is another example of the Prejean decision not being followed.