Accidents at work on construction sites are the order of the day. For large, multi-year projects with tens of millions of dollars in budget, even contractors with the best safety practices can expect dozens of injuries and related incidents to be reported in any given year. Many other incidents are not reported, either because the incident is not considered significant enough or for other reasons, including the immigrant status of the injured.

Each state has developed a form of workers’ compensation insurance that protects the statutory employers of these workers in the event of an industrial accident. Although the general structures in each state are similar and offer a relatively broad level of protection for those involved in a construction project, there are pitfalls that must be considered and protected from.

Developers rarely need to consider liability for certain violations at the project site, as they are generally excluded from liability under applicable state laws when relinquishing control of the means and methods of building the project to a general contractor. In addition, developers typically transfer any project safety obligation under the main contract to the general contractor and require all workers on the construction site to have workers’ compensation insurance. For example, the American Institute of Architects building contracts between an owner and a general contractor require that the general contractor take responsibility for the safety of a project and indemnify the owner from any claims arising from accidents at work.

Meanwhile, general contractors are usually able to limit liability for injuries to workers on the construction site by securing workers’ compensation for their employees and requiring subcontractors to provide similar coverage. Worker compensation immunity typically extends vertically from contractor to subcontractor (and vice versa) and horizontally from subcontractor to subcontractor. The benefits attributed to workers’ accident laws, including no-fault coverage and recognized benefits, are extremely important in the case of construction site accidents, as claims related to construction site accidents are the order of the day.

However, there are a number of ways in which developers and contractors can be held liable for injuries on construction sites, even if they have workers’ compensation insurance. Some of these events are rather unexpected. Both developers and contractors are well advised to familiarize themselves with these pitfalls and apply rigorous institutional controls on projects to ensure that the following scenarios are avoided.

Hiring workers without a cover

Subcontractors occasionally employ sub-contractors without informing the general contractor and without ensuring that the sub-contractor is included in the insurance program of the project when the project is insured through an insurance program controlled by the owner or contractor (OCIP or CCIP or wrap policies) is. If a subcontractor does not enroll a particular worker in workers’ compensation insurance, immunity may be lost and the general contractor and subcontractor may be held liable for uninsured workers. Therefore, contractors need to know exactly who is working on the project at all times to ensure coverage for everyone.

When projects do not use wrapping policies, it is important to have contractual stipulations that subcontractors maintain employee compensation and, more importantly, that the contractor require all subcontractors to include similar language in their subcontracts regarding employee compensation . The idea is to create an unbroken vertical chain of contractual requirements in order to obtain and maintain adequate insurance. In general, it is critically important to implement on-site controls to ensure workers do not slip through the cover.


For certain tasks outside of the framework contract, third parties are often commissioned, such as material workers, material suppliers, safety training or supervisory companies or certain non-construction craftsmen such as artists. Workers’ accident insurance, which covers the contractor and subcontractors, does not usually extend to these third parties, which in most cases serves as an exception to immunity. Therefore, when admitting third parties to the project outside of the contractor’s remit, it is crucial to ensure that these third parties are covered by independent workers’ compensation and general liability insurance and that the owner, contractor and subcontractor are contractually compensated and for any injuries to these third party employees held harmless and harmless.


Employee compensation does not offer blanket immunity. There are exceptions, and although they vary from state to state, the most common exception is the deliberate tort exception. This exception usually applies if a substantially similar injury or incident occurred earlier in the project and the general contractor or subcontractor subsequently does not take steps to prevent a similar action from occurring before it occurs again. To avoid this exception, contractors (and subcontractors) must pay special attention to incidents that have already occurred on a project to ensure that no further breach occurs in substantially similar circumstances that would otherwise claim immunity to one been.


For larger projects, developers typically employ project managers to routinely monitor construction progress and handle buyouts, changes in project scope, and general accounting issues. Occasionally a developer may feel that the project is not progressing at a sufficient pace and may begin to exercise more control over the operation of the project and, in some cases, even control the means and methods of construction. Although it is understandable, a builder must be careful not to get involved and dictate the construction process in such a way that he loses the protection of the owner.

In fact, in these scenarios, if the builder exercises too much control, he runs the risk of inadvertently assuming liability for the safety of the project site and being exposed to liability claims without claiming workers’ accident immunity. Maintaining sufficient control to ensure progress while avoiding liability can be a delicate balance, and developers would be well advised to seek country-specific advice on this issue, especially on larger projects where the daily presence of a Developer is expected on a project.

While developers and contractors typically avoid litigation and traditional liability issues related to industrial accidents through their respective state industrial accident laws, there are a variety of ways plaintiffs’ attorneys can argue that one or both of them remain liable for industrial accidents. It happens more often than you think. In order to avoid direct liability for unforeseen circumstances outside the Workers Injury Act, property developers and general contractors should ensure that their general public liability insurance largely covers liability for injuries related to the project. To the extent that third parties are invited to perform work or services in connection with a project, it is also crucial to ensure that these third parties are adequately insured to cover possible liability arising from their services or injuries to their employees and agents. In short, there needs to be the right insurance in place to cover the unexpected and proper risk management is key to ensuring that owners and contractors get the full benefit of all insurance policies taken out to protect their respective businesses.

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Reposted from, April 26, 2021, a publication by Associated Builders and Contractors. Copyright 2021. All rights reserved.

The content of this article is intended to provide general guidance on the subject. Expert advice should be sought regarding your specific circumstances.