Oregon Court of Appeals Exposes Dangerous Loophole in Workers' Compensation Laws
March 12, 2012
OverviewIf you or your company (any type of business entity) is a member of a Limited Liability Company (LLC) that employs people in Oregon, you need to be aware of this new ruling. On February 29, the Oregon Court of Appeals ruled that LLC members can be sued directly for negligence by injured employees of the LLC. In Cortez v. Nacco Materials Handling Group, Inc., et al (2/29/2012), the Court ruled that while an LLC is protected by Oregon's workers' compensation laws, limiting workers to comp claims, the members of the LLC are not protected by that "exclusive remedy" doctrine and may be sued in court, with jury trials. This applies to Oregon members of LLC's. Other states may have different laws applicable to LLC's. We believe the legislature will close this loophole in the future, but in the meantime, you need to make sure that your LLC's commercial liability policy covers members of the LLC, and that it covers claims by injured workers directly against LLC members.
RECOMMENDED ACTION: Read your insurance policy, check with your insurance agent, and/or let us review your policy to see if you are covered. We are always ready to assist you in risk management, liability, or insurance issues.