Longshoreman Insurance Questions and Answers
I HAVE A SMALL COMPANY AND ALL WE DO IS GO TO THE SHIP AND PICK UP PAYROLL REPORTS WHEN THE SHIP IS "AT DOCK." OUR CONTRACT SAYS WE HAVE TO HAVE LONGSHOREMAN INSURANCE. DO WE HAVE TO HAVE LONGSHOREMAN INSURANCE?
This question comes up often. We often employ an 8 question test in order to ascertain whether or not you need to have longshoreman insurance. The questions are follows:
1. Is the operation a political subdivision... a part of the Federal, State or Local Government?
2. Is any work performed on, over or adjacent to any body of water?
3. Is the body of water 100% landlocked AND wholly within one state?
4. And we have the business; choose which best describes the employer
Shipyard, Stevedore, Harbor Worker or Ship Breaker; Boat or Yacht Builder or Mfg, Boat Repair; Sales, Cleaning, Maintenance and any other services; Marina; Restaurant or Caterer; Yacht, Boat Club or Camp; Boat or Vessel Operator; Fish Farmer or Processors; Marine Contractor or Other.
5. Does the operation EXCLUSIVELY build retaining seawalls?
6. Does the operation include any traditional captain and crew of vessels?
7. Is any work performed on or from any vessels in navigation?
8. Are there any sea trials or demonstrations?
Based on the answers to these 8 questions, we can determine what types of insurance might be required. Workers Compensation alone, Longshore and or Jones Act and other Admiralty coverages such as MEL or crew P&I coverages. A quick call to our offices and we can tell you what might be needed.
IS THERE A MINIMUM PREMIUM COST FOR LONGSHOREMAN INSURANCE?
Usually, the cost for longshoreman coverages will start $12,000 and go up from there.
Phone: (844) 667-6640
www.oceaninsurance-us.com
The Jones Act provides seamen with a personal injury negligence remedy, and the Longshore and Harbor Workers’ Compensation Act is a workers’ compensation statute. The two are mutually exclusive in their coverage. The Jones Act covers seamen (masters or members of a crew of a vessel) and the Longshore Act covers land based maritime workers.
As a practical matter, there’s an overlap in coverage that causes problems for employers who must have the correct insurance coverage and for injured workers who must choose the correct remedy.
The courts struggle with this. The federal Fifth Circuit Court of Appeals has observed, “Thus, despite our continued insistence that a Jones Act ‘seaman’ and a ‘crew member’ excluded from the Longshore Act are one and the same (in other words that the statutes are mutually exclusive) we recognize that in a practical sense, a ‘zone of uncertainty’ inevitably connects the two Acts” .
COVERAGE
The Longshore Act has a status and a situs requirement for coverage. Section 902(3) provides that the term “employee” means any person engaged in maritime employment, including any longshoreman or other person engaged in longshoring operations, and any harbor worker, including a ship repairman, shipbuilder, and ship breaker. Section 903(a) states that a claim must occur upon the navigable waters of the United States or on an adjoining landward area customarily used by an employer in loading, unloading, repairing, dismantling, or building a vessel. Coverage includes a wide range of occupations, in addition to the traditional maritime occupations of longshoreman and shipbuilder, and includes maintenance and repair workers, construction workers, contractors of all kinds, and everyone whose work requires them to be on the navigable waters.
The Jones Act uses an occupational test for coverage, related to a worker’s relationship to a vessel. The worker’s duties must contribute to the function of the vessel or to the accomplishment of its mission, and the worker must have an employment connection to a vessel in navigation, or to an identifiable group of vessels under common ownership, that is substantial in both duration and nature.
Is a worker land based (Longshore Act) or is he sea based with his employment relationship connected to a vessel (Jones Act)? This is a fact intensive inquiry, and frequently it can go either way. Courts often resort to a 30% rule of thumb. If a worker spends less than 30% of his total work time aboard a vessel or in the service of the ship then he is probably not a Jones Act seaman.
JURISDICTION
There’s a big difference here.
The Longshore Act is administered by the U.S. Department of Labor. It provides for no fault, prompt payment of statutory wage replacement benefits and medical treatment. It is designed to be predictable for the employer and quick for the worker. The Department of Labor offers informal dispute resolution services, formal adjudication at the Office of Administrative Law Judges, administrative appeals to the Benefits Review Board, and judicial review by appeal to the United States Circuit Courts of Appeal.
The Jones Act is a negligence remedy, enforced by filing a complaint in court. There is the right to a jury trial. There is no government agency involved. Factors for recovery include pain and suffering, past and future wage loss, past and future fringe benefit value, medical expenses, loss of quality of life, and a host of other damage measures. Note: The stakes were raised a bit higher recently when the U.S. Supreme Court held that punitive damages may be available under the general maritime law if an employer or carrier willfully or wantonly denies maintenance and cure to a seaman.
CHOICE
A Jones Act recovery can be much greater than a workers’ compensation benefit. An injured worker can be expected to seek his Jones Act rights even if there is only a small possibility that he could qualify as a seaman. The injured worker can be expected to seek recovery under both the Jones Act and the Longshore Act, either simultaneously or sequentially.
The worker must be aware of the time limits for filing his claims and the possible effects that filing a claim under one Act may have on his rights under the other Act. The courts have acknowledged this: “Well recognized are the difficulties faced by the injured maritime workers who must choose whether and by what means they will pursue remedies that in substantive theory are perfectly mutually exclusive (the Compensation Act which for present purposes applies to all but seamen, and the Jones Act, which applies only to seamen), but which seem in practice to frequently overlap each other’s borders”. The court could fairly have included maritime employers among those faced with this difficulty.
The courts have not achieved uniformity on the application of such issues as res judicata and collateral estoppel – that is, when and how a claim under one Act will be affected or precluded by a claim under the other Act. It does seem likely that the acceptance of voluntary payments under the Longshore Act will not preclude a Jones Act suit by the injured worker. A final Order of a court, however, which adjudicates the factual issue of seaman status, awarding damages under the Jones Act will likely preclude a Longshore Act claim. Likewise, a final administrative Award under the Longshore Act, which fully adjudicates the worker’s non-seaman status, will likely preclude a subsequent Jones Act suit.
So what’s the difference between the Jones Act and the Longshore Act? The Jones Act gives seamen a negligence remedy and the Longshore Act is a workers’ compensation law for land based maritime workers. You’re either one or the other since the two laws are mutually exclusive, but it’s often hard to tell where an injured worker belongs.
And the broader the definition of vessel becomes, and the less seaman status has to do with vessel navigation, the more problematic it will be sorting out coverage issues in the “uncertainty zone”. This is an area where it is advisable to consult experts, either an organization that specializes in maritime insurance coverages or an experienced maritime attorney.
If your subcontractor does not have coverage for Longshore you absolutely become liable for unpaid benefits regardless of whether you have or do not have coverage. See Section 904(a) of the Act.
One of our soon to be clients called me today and this is what he said. "You know, I know my industry is 'high risk' in terms of insurance. People can get hurt. I understand that. I also know that when I call my agent, I get put on hold and then they ask me questions in a rude way. I want you to give me a quote and if you are anywhere near to what I am paying, I am going to change to you." "I am tired of my 'snooty' agent!" Wow! Can you believe that? He goes on to say that he spends good money with his soon to be prior agent and then the agency treats him "like dirt!" We believe in treating you right. Give us a try! We have been doing this for almost 30 years...28 to be exact. I was raised on a small farm in North Alabama and know what it is to work hard "by the sweat of the brow" type stuff.
A sole proprietor who has no employees can be exempt from Longshore. However a business is not considered a sole proprietor under Longshore if working “at the direction of another”, which removes most sole proprietor from this exemption.
Longshore insurance must be purchased from an insurance carrier approved by the U.S. Department of Labor to write Longshore insurance. It is best to use an agent who is familiar with Longshore to help guide you through that process.
LongshoremanInsurance.com specializes in Longshore and other marine insurances.
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Old National Insurance specializes in U.S.L.& H., Jones Act, Stevedores Insurance; Maritime Employers Liability. They can be reached at (844) 667-6640
or by email at: [email protected]
The following are examples, which have all been categorized as Longshoreman type -jobs and require Longshoreman benefits by law.
A Bookkeeper. But you say, “this is clearly a clerical job”! However, this bookkeeper collects invoices and drops off packing crates in the warehouse. What about the security guard who patrols the warehouse? The Longshoreman Insurance Act excludes “security,” but courts have said that the word “office” modified the word “security.” What this means now is that ONLY “office security guards” are excluded but the security guard making rounds in the warehouse or out near the water is NOT EXCLUDED. It is probably safe to say that not many marine guards confine their security work to the office only.
Or what about an artisan tile contractor who has been hired to tile the cruise ship terminal bathroom?
Ok. Let’s look a moment at subcontractors. If the subcontractors do not have his or her own insurance, then that subcontractor is insured by the General Contractor or the marina, or the entity hiring them to do some work whether or not the General Contractor or marina know it! What this means is that if the subcontractor does not have his own insurance (uninsured subcontractor), then come audit time the entity doing the hiring will be responsible for paying USLH or longshoreman insurance premiums on the subcontractor who did the work. Or it could be that the subcontractor says, "I have general liability insurance and also workers compensation!" However, the subcontractor does not have longshoreman insurance (USLH) unless he specifically told his insurance agent or broker that he required USLH coverage. Hopefully, the hiring entity does have USLH insurance in case of an accident, injury or mishap. If not, then we are talking EXPENSIVE for both the subcontractor and the General Contractor, Marina or hiring entity! Sometimes we run into situations whereby the General Contractor is EXEMPT from having to have USLH insurance. However, the subcontractor does a job that required them to have USLH insurance, and then the marina or hiring entity then becomes liable for any unpaid USLH benefits! Pretty scary stuff indeed!
Yes. Most businesses will have employees who do not qualify for Longshore benefits (clerical/sales etc) but even if you do not have these classes of employees W.C. provides the insurance necessary to do business in a particular state. The good news is that in most cases with a combined W.C. Longshore policy, the only charge for WC is the normal charge associated with excluded employees.
March 30, 2020
Corona Virus and the Payroll Protection Plan
A: The qualifications are straight forward and simple. If you were in business before February 15, 2020, employ less than 500 employees and have been impacted by the coronavirus, you qualify.
A: Small business owners can receive 2.5 times the monthly payroll average to use for things such as payroll, rent, utilities, and health care benefits. The loans are based on a 12-month trailing payroll average. For example, if your company had an annual payroll of $144,000 for the 12-month period from February 2019 to February of 2020, then taking the monthly average of $12,000 and multiply by the 2.5 your company would qualify for a loan of $30,000. Also, if you pay 1099 contractors, their wages are to be included in the formula.
A: It is suggested that you approach the business bank that you have been working with where you have your checking accounts and so forth. Every bank that is FDIC insured will be able to work with these loans.
A: Once you receive the funds, then an 8-week clock starts for the small business owner to use the funds on payroll, rent, utilities, and health benefits. There are other things that may qualify as well. The load is designed for you to be able to keep the doors open and to keep your employees on the payroll. The borrower has to show evidence that it actually spent money on the things that are eligible for loan forgiveness.
A: Based on the preliminary criteria for determining loan amount and the qualifications for forgiveness, we would expect that customers will need financial and payroll information, such as:
- Payroll reports for 2019 and 2020 year-to-date showing the following by employee and/or officers:
- Gross wages
- Paid time off
- Paid vacation
- Pay for family medical leave
- State and local taxes (form 940, 941, or 944)
- 1099s for independent contractors (if applicable)
- Complete 2019 or 2018 tax return OR
2019 Profit and Loss Report and Bal- Payments for group health care benefits including premiums paid
- Rent Payments
- Utility Payments
March 27, 2020
A: As it stands today, yes. This question came up when Cause of Loss codes were updated this week to include a code for COVID-19.
Every injury has a Cause of Loss code. It's how rating bureaus and other agencies track what types of injuries are happening. Except for the code for claims arising from the 9/11 attacks, none of them have been given special treatment in experience rating.
It is worth noting that it was March 2002 before the rules relating to excluding 9/11 claims were approved. IF rules excluding COVID-19 claims are coming, we would expect them well after the outbreak is considered over.
If you have other questions concerning Longshoreman Insurance and COVID-19, please click above or call Longshoreman Insurance at (205) 221-5466