Lovely v. Baker Hughes, Inc.

EMPLOYMENT LAW

Natalie Howard

In Lovely v. Baker Hughes, Inc., the supreme court held that for purposes of the Alaska Workers’ Compensation Act (AWCA), a project owner must actually contract with a person to perform specific work as well as enjoy the beneficial use of that work. Several construction workers received workers’ compensation from their employer after exposure to a hazardous chemical working on a facility. The workers separately brought a negligence action against three related corporations: Baker Hughes Oilfield Operations, Inc.(construction), Baker Petrolite Corporation (operations), and Baker Hughes, Inc. (parent corporation). The superior court granted the three corporations’ motions for summary judgment, rejecting the workers’ argument that to be protected under the exclusive liability provision of the AWCA as a project owner each corporation needed to be party to the contract with their employer, and accepting the corporations’ argument that they were protected due to indemnity provisions in the contract. The supreme court rejected the superior court’s interpretation of the statute, holding instead that to “engag[e] the services of a contractor” requires actually contracting for the specific work. Furthermore, it held that contractual provisions assigning liability for securing payment of compensation had no bearing on whether someone was a project owner. Thus, the supreme court reversed the lower court and remanded for consideration of whether each corporation was party to the contract, because the meaning of “project owner” under Alaska’s Worker’s Compensation Act was limited to someone who actually contracts with a person to perform specific work.

Lovely v. Baker Hughes, Inc.

EMPLOYMENT LAW

Natalie Howard

In Lovely v. Baker Hughes, Inc., the supreme court held that for purposes of the Alaska Workers’ Compensation Act (AWCA), a project owner must actually contract with a person to perform specific work as well as enjoy the beneficial use of that work. Several construction workers received workers’ compensation from their employer after exposure to a hazardous chemical working on a facility. The workers separately brought a negligence action against three related corporations: Baker Hughes Oilfield Operations, Inc.(construction), Baker Petrolite Corporation (operations), and Baker Hughes, Inc. (parent corporation). The superior court granted the three corporations’ motions for summary judgment, rejecting the workers’ argument that to be protected under the exclusive liability provision of the AWCA as a project owner each corporation needed to be party to the contract with their employer, and accepting the corporations’ argument that they were protected due to indemnity provisions in the contract. The supreme court rejected the superior court’s interpretation of the statute, holding instead that to “engag[e] the services of a contractor” requires actually contracting for the specific work. Furthermore, it held that contractual provisions assigning liability for securing payment of compensation had no bearing on whether someone was a project owner. Thus, the supreme court reversed the lower court and remanded for consideration of whether each corporation was party to the contract, because the meaning of “project owner” under Alaska’s Worker’s Compensation Act was limited to someone who actually contracts with a person to perform specific work.