United States: One's Company, Two's A Crowd, And Three's Liability: O.C.G.A. § 34-9-2(a)(2) After Wills v. Clay County

The State of Georgia has made even the smallest of small businesses subject to the Workers’ Compensation Act. The general rule dictating whether an employer is subject to the Workers’ Compensation Act is outlined in O.C.G.A. § 34-9-2(a)(2). Specifically, this statute reads in relevant part, “[t]his chapter shall not apply to... any person, firm, or private corporation, including any public service corporation, that has regularly in service less than three employees in the same business within this state, unless such employees and employers voluntarily elect to be bound[.]” As a practical matter, this statute is not regularly used as a defense because an employer that has workers’ compensation insurance in Georgia elects to be bound by the Workers’ Compensation Act.

However, employers in Georgia with three or more employees are subject to the Workers’ Compensation Act. In reality, many employers do not have the luxury of consistently having either more or less than three employees employed on a regular basis. Instead, a situation commonly arises when an employer employs more than three employees at one time and less than three employees at another time for one reason or another. In these situations, the court must decide whether the employer is subject to the Workers Compensation Act. Recently, the Court of Appeals found an employer exceeding only 3 employees for a brief period only 2-3 times per year made an employer subject to the Workers’ Compensation Act, seemingly eliminating this defense for employers. However, all hope may not be lost for employers as they can look to the past when moving forward.

Since many employers fluctuate between more or less than 3 employees throughout any given year, this simple rule codified in O.C.G.A. § 34-9-2(a)(2) has been the subject of litigation since the beginning of the 20th century. In fact, one of the most significant cases on the topic dates back to 1933. In 1933, an employer was subject to Workers’ Compensation Act if the employer employed had “regularly in service” 10 or more employees (as opposed to 3). In Jones v. Cochran, the employer was a seasonal business. Understandably, the employer’s number of employees fluctuated between more than ten employees in a busy season and less than ten employees during a slow season.¹ During the busy season when the employer employed more than 10 employees, a traveling salesman suffered an accident and injury while selling baked goods. The Court of Appeals held that:

The Court in Jones found the Employer was subject to the Workers’ Compensation Act. While providing very little analysis when arriving at this conclusion, the Court seemingly believed the employer was subject to the Workers’ Compensation Act because the number of the employer’s employees exceeded the statutorily defined amount for the busy season, which regularly occurred season-after-season.

In 1940, the Court of Appeals was faced with adapting the rule in Jones to a factual scenario unrelated to a seasonal business. In McDonald v. Seay, the Employer was a sawmill that regularly employed between 8 and 12 employees depending on whether or not the sawmill was logging as well.³ During a period when logging was not taking place, and less than the statutorily defined amount of employees were employed, an employee had an accident and filed a workers’ compensation claim. The employer defended the claim based off of not employing the statutorily defined amount of employees, which at the time was still 10 employees. In litigation, the employer conceded to logging for 30% of year, but at undefined periods of time - thus not making the employer a seasonal business. The Court found the employer was subject to the Workers’ Compensation Act because the employer planned and needed to employ more the statutorily defined amount of employees when logging was taking place (approximately 30% of the year). In other words, to quote Jones, the sawmill exceeded the statutorily defined amount of employees in an “unvarying . . . practice, . . . steady or uniform in course, and steadily pursued.”⁴

In 2016, the Georgia Court of Appeals was asked to examine the rule in Jones once again in Willis v. Clay Cty.⁵ In Willis, the employer was an individual that had a history of hiring the claimant to assist with individual jobs over a period of seven years. During the job giving rise to the suit, the employer hired the claimant as well as two other individuals. This meant the individual employer exceeded the statutory requirement that an employer have workers’ compensation insure if the employer has more than 3 employees. The claimant was injured during that job. The employer defended the claim by arguing the Workers’ Compensation Act was inapplicable to the employer because it did not “regularly” employ more than three employees, even though he had more than 3 employees for this particular job. During litigation, there was evidence presented the employer had 3 employees 2-3 times per year and recently employed 4 employees for 2 jobs just before the claimant’s accident. The Court held the employer was subject to the Workers’ Compensation Act since his “practice” was to hire 3 or more employees if a job required that amount of employees. In essence, 2-3 recent times in 1 year constitutes an “unvarying . . . practice, . . . steady or uniform in course, and steadily pursued.”⁶

After Wills, the trend is certainly for the Court to find an employer is subject to the Workers’ Compensation Act - even when the employer predominantly employs less than 3 employees. Nonetheless, there remains hope for employers. Perhaps, the answer can be found by turning back to the beginning of the 20^th century. In 1940, the Court of Appeals found the employer was not subject to the Workers’ Compensation Act in Martin v. Veal.⁷ While the facts of the claim are relatively unknown, the Court of Appeals noted that over a two year period the Employer only employed in excess of the statutorily defined amount of employees for a two week period directly before the employee’s accident. Since the employer’s number of employees only exceeded the statutory limit during a single occurrence without the threat of becoming a regular occurrence due to seasonal demands, the employer was not subject to the Workers’ Compensation Act. In other words, to quote Jones, it was “merely casual or for a particular occasion, and which has not the characteristics of permanency.”

Moving forward after Wills, employers would be better served to focus on the defense outlined in O.C.G.A. § 34-9-2(a)(2) by arguing the employer’s employment of more than three employees was casual and for a single, particular occasion, as opposed to an occurrence that happened on a regular basis.

Footnotes

1 Jones v. Cochran, 46 Ga. App. 360, 167 S.E. 751 (1933).

2 Id. at 36.

3 McDonald v. Seay, 62 Ga. App. 519, 8 S.E.2d 796 (1940).

4 Jones, at 36.

5 Wills v. Clay Cty., 339 Ga. App. 79, 793 S.E.2d 432 (2016).

6 Jones, at 36.

7 Martin v. Veal, 66 Ga. App. 702, 18 S.E.2d 776 (1942).

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