Oregon court narrows protections of LLCs in workers' compensation claim

May 10, 2013

Oregon court narrows protections of LLCs in workers' compensation claim

Article provided by Hansen Malagon
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In 2012, an Oregon appellate court addressed the issue of whether workers' compensation benefits were the exclusive remedy for an employee of a Limited Liability Company injured while working.

Exclusive remedy provision

Under Oregon law, workers' compensation offers the exclusive remedy for workers injured on the job. This means that a worker may not sue an employer for negligence if the employee is injured while working. State law notes that a corporation's agents, employees, officers and directors are all protected by the exclusive remedy provision of the law. However, other business entities that do not have the same delineation of roles that a corporation has may not have the same protections.

Forklift injury

In Cortez v. Nacco Materials Handling Group, a case handled by Peter Hansen, an employee filed a claim for workers' compensation benefits from a member-managed LLC after he was hit by a forklift while working. He then brought a suit for negligence against one of the member managers. The member brought a motion for summary judgment, arguing that the workers' compensation benefits the employee received were the sole remedy for his injury. The trial court agreed, granted the member's motion for summary judgment and dismissed the suit.

The employee appealed, however, arguing that the member was not his employer. Rather he was only a "member" of the member-managed LLC, so the exclusive remedy provision did not apply to this case. The appellate court agreed, reasoning that it would not read protections into the law and equate LLC members with officers and directors of corporations where the language the legislature used offered no intent to extend such limitations of liability.

Implications of the decision

Up to this point, many had assumed that members of an LLC had the same protections as those who owned or ran corporations, and that they were not exposing themselves to personal liability for employee injuries. However, the decision in Cortez shows that employees may pursue damages from LLC members if the employees suffer injuries while working.

Talk to an attorney

Workers' compensation laws are notoriously complex. Employers and insurers routinely deny claims to try to limit the amounts they have to pay out -- even when the claims are legitimate. Navigating the workers' compensation system may seem overwhelming to an employee trying to recover from an injury.

If you have been injured while working, seek the assistance of a seasoned workers' compensation attorney who can discuss your situation with you and help you recoup the benefits you need to recover from your injury.