A Review of the Longshore and Harbor Workers Compensation Act

1972 LHWCA Amendment

The problems with the 1927 LHWCA prompted Congress to amend the Act in 1972. The 1972 amendment does the following.

• Prohibits injured maritime workers subject to the LHWCA from filing suit against the vessel owner on the basis of the "unseaworthiness" of the vessel. However, suit can still be brought against a third party (including the vessel owner) on the basis of negligence.
• Makes hold harmless agreements between maritime employers and vessel owners unenforceable.
• Prohibits third-party-over suits.
• Increases LHWCA benefit levels to the point that they are generally higher than those offered under state compensation laws.
• Establishes "status" and "situs" tests as prerequisites for coverage under the LHWCA.

The "status" and "situs" tests have become the most controversial aspects of the 1972 amendment. For an injured worker to collect under the LHWCA, he or she must be an "employee" as defined in the Act (status), and the injury must occur at a location under the jurisdiction of the Act (situs).

According to the 1972 amendment, an "employee" is "any person engaged (in whole or in part) in maritime employment, including any longshoreman or other person engaged in longshoring operations, and any harborworker including a ship repairman, ship builder, and shipbreaker but such term does not include a master or member of a crew of any vessel, or any person engaged by the master to load or unload or repair any small vessel under 18 tons net or any officer or employee of the United States or any agency thereof or any state or foreign government or any political subdivision thereof." In recent years problems have arisen from the fact that, while persons engaged in maritime employment are clearly covered under the Act, the Act contains no precise definition of "maritime employment." The courts have often interpreted this phrase broadly and have granted status to clerical workers, airline pilots, and construction workers, to name a few.

Prior to the 1972 amendment, an injury had to take place "upon the navigable waters of the United States (including dry dock)" to be compensable under the LHWCA. This meant that a maritime worker traveled out of LHWCA jurisdiction and into the less lucrative state workers compensation jurisdiction every time he stepped onto land to perform his employment duties, despite the fact that the risks inherent in the work were essentially unchanged. Congress attempted to alleviate this problem by redesigning the "situs" test in the 1972 amendment. According to the new situs test, compensation is payable under the LHWCA "only if the disability or death results from an injury occurring upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing, or building a vessel)." The courts have interpreted this provision very liberally. The term "adjacent" has not been interpreted to mean "next to" as one might expect, but rather "close to or in the vicinity of." In addition, the phrase "customarily used by an employer in loading, unloading, repairing, or building a vessel" has been interpreted to mean "customarily used by any employer." In other words, it does not mean that the employer of the injured worker has to use the area for these operations.

These liberal court interpretations have resulted in the LHWCA being applied to more workers and more work locations than Congress originally intended. In 1984 Congress once again amended the Act, in part to put a halt to this trend of expanding coverage.

1984 LHWCA Amendment

The 1984 amendment to the LHWCA renames the Act the "Longshore and Harbor Workers Compensation Act." In this amendment, Congress attempted to limit shoreside coverage under the Act by excluding certain types of workers from the definition of "employee." The law now expressly excludes the following individuals when they are covered under a state workers compensation law.

• Individuals employed exclusively to perform office clerical, secretarial, security, or data processing work
• Individuals employed by a club, camp, recreational operation, restaurant, museum, or retail outlet
• Individuals employed by a marina and who are not engaged in construction, replacement, or expansion of such marina (except for routine maintenance)
• Individuals who (a) are employed by suppliers, transporters, vendors; (b) are temporarily doing business on the premises of a covered employer; and (c) are not performing work normally performed by employees of that employer
• Aquaculture workers
• Individuals employed to build, repair, or dismantle any recreational vessel less than 65 feet in length

Insuring LHWCA Exposures

According to the LHWCA, an employer is "required to secure coverage under this Act either through an authorized insurance carrier or by becoming an authorized self-insurer." If an employer fails to do so and an LHWCA claim arises, the employer will be subject to a fine of up to $10,000, imprisonment of up to 1 year, or both. Furthermore, when the employer is a corporation, the president, secretary, and treasurer of the corporation are each subject to this fine and/or imprisonment in addition to any fine levied against the corporation itself. These officers are also personally liable, jointly and severally, with the corporation for any compensation or benefit that may accrue under the LHWCA to an employee for a covered injury. The fact that no exposure under the Act was anticipated is not an excuse for the failure to secure coverage under the Act or set up a proper self-insurance program.

Employers with known LHWCA exposures, such as stevedoring contractors, have had trouble securing insurance coverage from private insurers in recent years. For the employer who cannot obtain insurance through private insurers but wishes to purchase coverage, state funds, assigned risk plans, and assigned risk pools offer an alternative source of coverage. For the employer who wishes to self-insure the exposure, permission must first be obtained from the U.S. Department of Labor.

As a precautionary measure, it is desirable for an employer with no known LHWCA exposure to attach the Longshore and Harbor Workers Compensation Act Endorsement to its workers compensation policy. If an injured worker is found to be afforded coverage under the LHWCA, the employer will then have insurance coverage and will avoid possible fines and/or jail terms. Many insurers are willing to attach this endorsement on an "if any" basis for little or no extra premium. If an exposure arises during the policy period, it will be discovered during the annual premium audit, and a premium will be charged at the appropriate classification and rate.

Extensions of the Longshore and Harbor Workers Compensation Act

The provisions of the Longshore and Harbor Workers Compensation Act have been extended to three additional types of workers through the Outer Continental Shelf Lands Act, the Defense Base Act, and the Nonappropriated Fund Instrumentalities Act.

Outer Continental Shelf Lands Act

In 1953 the U.S. Congress passed the Outer Continental Shelf Lands Act (OCSLA) (http://epw.senate.gov/ocsla.pdf). This Act extends the benefits of the LHWCA to workers injured or killed upon fixed structures permanently attached to the outer continental shelf for the purpose of natural resource exploration or development. The outer continental shelf is generally defined as all submerged lands that lie beyond the coastal states' territorial boundaries. These territorial boundaries normally extend 3 miles, except in Florida and Texas, where seaward boundaries extend 10 miles. Employers can obtain coverage for this exposure by adding the Outer Continental Shelf Lands Act Coverage Endorsement to the workers compensation policy.

Defense Base Act

The Defense Base Act (http://defensebaseact.com/) extends LHWCA benefits to civilian employees doing work at any military, air, or naval base that was acquired after January 1, 1940, from any foreign government. Also covered by the Act are those employees engaged in public work projects outside the continental United States. The insurance or authorized self-insurance requirements of the LHWCA apply. Coverage can be obtained for this exposure by attaching the Defense Base Act Coverage Endorsement to the workers compensation policy.

Nonappropriated Fund Instrumentalities Act

The Nonappropriated Fund Instrumentalities Act (http://www.dol.gov/owcp/dlhwc/nfia.htm) applies the LHWCA to civilian employees of certain instrumentalities of the United States under the jurisdiction of the armed forces conducted for the pleasure and improvement of armed forces personnel. Those covered under this Act would include civilian employees of the Army and Air Force Exchange Service; Army and Air Force Motion Picture Service; Navy, Marine, and Coast Guard Exchanges; and Navy Ship Stores. Those with an exposure under this Act can obtain insurance coverage by adding the Nonappropriated Fund Instrumentalities Act Coverage Endorsement to their workers compensation policy.