As used in the Workers' Compensation Act, unless the context otherwise requires, where any employer procures any work to be done wholly or in part for him by a contractor other than an independent contractor and the work so procured to be done is a part or process in the trade or business or undertaking of such employer, then such employer shall be liable to pay all compensation under the Workers' Compensation Act to the same extent as if the work were done without the intervention of such contractor. The work so procured to be done shall not be construed to be "casual employment".
History: 1953 Comp., § 59-10-12.15, enacted by Laws 1965, ch. 295, § 15; 1989, ch. 263, § 16.
ANNOTATIONSSpecial employer and statutory employer distinguished. — The special employer doctrine applies to situations where an employee of one employer, the general employer, works temporarily for another employer, the special employer and typically arises where a labor contractor or a labor service provides temporary workers to other employers. The statutory employer doctrine applies to situations where an employer must procure work to be done by a contractor other than an independent contractor and the work must be a part of the trade or business of the employer and typically arises where an employer procures work to be done for him by a contractor. The conclusion that the statutory test is not met does not foreclose the court from considering whether the special employer test is applicable. Hamberg v. Sandia Corp., 2007-NMCA-078, 142 N.M. 72, 162 P.3d 909, aff'd, 2008-NMSC-015, 143 N.M. 601, 179 P.3d 1209.
Analysis of special employer and statutory employer distinction. — Cases involving statutory employers must be analyzed in terms of the dual test of Section 52-1-22 NMSA 1978 from the perspective of the relationship between the contracting employer and the employer of the worker as well as from the perspective of the type of work being done. When analyzing the relationship between the contracting employer and the worker, the issue will generally not be whether the contracting employer is a statutory employer, but rather whether the contracting employer is a special employer, borrowing employer, or regular employer. Rivera v. Sagebrush Sales, Inc., 1994-NMCA-119, 118 N.M. 676, 884 P.2d 832, cert. denied, 118 N.M. 585, 883 P.2d 1282.
Purpose of section. — The primary purpose of the statutory-employer provision is to make the general or prime contractor liable for compensation benefits to employees of its subcontractor; the second function is to allow a general or prime contractor who qualifies as a statutory employer to take refuge under the Workers' Compensation Act's exclusivity provision, which makes it immune from a tort action. Romero v. Shumate Constructors, 1994-NMCA-137, 119 N.M. 58, 888 P.2d 940, rev'd in part on other grounds sub nom. Harger v. Structural Servs., 1996-NMSC-018, 121 N.M. 657, 916 P.2d 1324.
The purpose of the provision on casual employment is to make clear that, once the two key requirements of statutory employment are met, i.e., that (1) the subcontractor in question is not an independent contractor and (2) the subcontractor's work is "part or process in the trade or business or undertaking" of the general contractor, such work will not be deemed casual employment as to the general contractor. Romero v. Shumate Constructors, 1994-NMCA-137, 119 N.M. 58, 888 P.2d 940, rev'd in part on other grounds sub nom. Harger v. Structural Servs., 1996-NMSC-018, 121 N.M. 657, 916 P.2d 1324.
Employer-employee relationship, to which the act applies, is one created by contract between the parties; consequently, if the employer in this case seeks to avail itself of the Workmen's (Workers') Compensation Act as a bar to a common-law action, then it must show a valid contract of employment between it and the minor employee. Maynerich v. Little Bear Enters., Inc., 1971-NMCA-079, 82 N.M. 650, 485 P.2d 984.
Qualification as statutory employer. — To qualify as a statutory employer under this section, a contractor must meet two express conditions. First, the general contractor must procure work, wholly or in part, to be done by a contractor other than an independent contractor. Second, the work to be done must be a part or process in the trade, business, or undertaking of the general contractor. Quintana v. University of Cal., 1991-NMCA-016, 111 N.M. 679, 808 P.2d 964, cert. denied, 111 N.M. 678, 808 P.2d 963.
In enacting this section, the legislature expressed its intent to afford immunity under the Workers' Compensation Act to statutory employers. Meeting the statute's requirements, however, is a prerequisite to being considered a statutory employer. Quintana v. University of Cal., 1991-NMCA-016, 111 N.M. 679, 808 P.2d 964, cert. denied, 111 N.M. 678, 808 P.2d 963.
It is the relationship between the general contractor and the employer of the claimant that is dispositive of whether the general contractor is a statutory employer, not the relationship between the general contractor and the claimant. Romero v. Shumate Constructors, 1994-NMCA-137, 119 N.M. 58, 888 P.2d 940, rev'd in part on other grounds sub nom. Harger v. Structural Servs., 1996-NMSC-018, 121 N.M. 657, 916 P.2d 1324.
Casual employment ordinarily deals with the relationship between the claimant's alleged immediate employer and the claimant. Romero v. Shumate Constructors, Inc., 1994-NMCA-137, 119 N.M. 58, 888 P.2d 940, rev'd in part on other grounds sub nom. Harger v. Structural Servs., 1996-NMSC-018, 121 N.M. 657, 916 P.2d 1324.
A general contractor seeking to qualify as an employer of a subcontractor's employees under this section, and thus qualify for immunity from tort, must show that the subcontractor is not an independent contractor and that the work so procured to be done is a part or process in the trade or business or undertaking of the general contractor; a general contractor seeking immunity as an employer under this section may not rely solely on the fact that it has provided workers' compensation coverage to its subcontractor's employees by paying the cost of that coverage. Chavez v. Sundt Corp., 1996-NMSC-046, 122 N.M. 78, 920 P.2d 1032.
The word "undertaking" is defined as something undertaken: a business, work or project which one engages in or attempts; the deepening of an irrigation pond was an undertaking within the ordinary meaning of that term. Abbott v. Donathon, 1974-NMCA-073, 86 N.M. 477, 525 P.2d 404.
New Mexico is unique in having added the words "or undertaking" to the commonly used phrase "part of the trade or business"; even if a given kind of work is not "part or process of the trade or business" of the contractor, it meets the second requirement of this section if it is part of the contractor's "undertaking." Romero v. Shumate Constructors, Inc., 1994-NMCA-137, 119 N.M. 58, 888 P.2d 940, rev'd in part on other grounds sub nom. Harger v. Structural Servs., 1996-NMSC-018, 121 N.M. 657, 916 P.2d 1324.
Test for independent contractor. — In keeping with the purpose of the Workers' Compensation Act and the particular purpose of the statutory-employer provision, both the right-to-control test and the relative-nature test must point to independence before a contractor will be deemed an independent contractor. Romero v. Shumate Constructors, Inc., 1994-NMCA-137, 119 N.M. 58, 888 P.2d 940, rev'd in part on other grounds sub nom. Harger v. Structural Servs., 1996-NMSC-018, 121 N.M. 657, 916 P.2d 1324.
The term "independent contractor" in this section should be construed as a common law term; in determining whether a person is or is not an independent contractor, the principal consideration is the right to control. It is the character of the control that is the distinction between employees and independent contractors; the employer may control the result the independent contractor achieves, but when the control descends to the details or to the means and methods of performance, then the independent contractor becomes a servant or employee. Harger v. Structural Servs., Inc., 1996-NMSC-018, 121 N.M. 657, 916 P.2d 1324.
"Relative nature of work" test is a better test than "right to control" test in determining whether workmen's (workers') compensation claimant was an employee or independent contractor. "Relative nature of work" test examines, first, the character of plaintiff's work or business, and second, the relationship of claimant's work to the purported employer's business. Therefore, claimant hired by insurance company as "storm trooper" or "catastrophe adjuster" was an independent contractor not eligible for workmen's (workers') compensation funds, even though insurance company had right to fire him at any time, where claimant received a fee rather than wages, paid his own personal expenses, set his own hours, used his own equipment, was not subject to deduction for withholding tax or social security, set his own methods of investigation and could refuse to take claims. Burton v. Crawford & Co., 1976-NMCA-070, 89 N.M. 436, 553 P.2d 716, cert. denied, 90 N.M. 7, 558 P.2d 619.
Whether employment is in usual course of employer's business is decisive question. Where the business is ranching, water is a prime necessity and here it is to be produced by means of windmills. It follows that a windmill repairman's employment is covered by the act. Bailey v. Farr, 1959-NMSC-071, 66 N.M. 162, 344 P.2d 173 (decided under former law).
Trade or business not separate concepts. — In considering whether a workman (worker) was or was not an independent contractor, where the work to be done was an "undertaking," the court is not concerned with trade or business as separate concepts. Abbott v. Donathon, 1974-NMCA-073, 86 N.M. 477, 525 P.2d 404.
Not casual employment where necessary part of process. — Where the decedent was hauling away dirt obtained from the excavation of a pond by defendant, and the hauling of dirt was a necessary part of the process of excavation, the decedent was not a casual employee. This work, which was not casual employment under this section, was also not casual employment under Section 52-1-16 NMSA 1978. Abbott v. Donathon, 1974-NMCA-073, 86 N.M. 477, 525 P.2d 404.
Injured work-release program prisoner deemed "employee". — A prisoner who voluntarily participated in a work-release program and was injured while under the direction of a private business was an employee of that business and thus entitled to workers' compensation benefits. Benavidez v. Sierra Blanca Motors, 1995-NMCA-140, 120 N.M. 837, 907 P.2d 1018, rev'd in part on other grounds, 1996-NMSC-045, 122 N.M. 209, 922 P.2d 1205.
Applicability of exclusive remedy provisions. — An employer responsible for paying workers' compensation benefits under this section may claim the immunity conferred by the exclusive remedy provisions of Sections 52-1-6, 52-1-8 and 52-1-9 NMSA 1978, provided the employer has complied with the insurance provisions; if an employer has failed to comply with the insurance provisions, the injured employee may sue under this chapter or, in the alternative, sue in tort. Harger v. Structural Servs., Inc., 1996-NMSC-018, 121 N.M. 657, 916 P.2d 1324.
Law reviews. — For note, "Trends in New Mexico Law: 1994-95: Workers' Compensation Law New Mexico Clarifies the Meaning of a Special Employer as Distinct from a Statutory Employer: Rivera v. Sagebrush Sales, Inc.," see 26 N.M. L. Rev. 655 (1996).
Am. Jur. 2d, A.L.R. and C.J.S. references. — 82 Am. Jur. 2d Workers' Compensation §§ 121 to 125, 133, 207.
99 C.J.S. Workmen's Compensation §§ 69, 70, 90 to 111, 294.