As Employers, Ranch Owners Should Consider Workers Compensation Coverage

Posted on Sep 24, 2018

In Texas, it is common for large landowners to engage in ranching as a business. The reasons may vary from providing the sole or major source of income for the owners to retaining certain tax exemptions for the property. Regardless of the reason for engaging in ranching operations, there are certain risks and liabilities to doing so, especially in relation to individuals hired to assist with operating the ranch. Some of these concerns were recently highlighted in Raul Amparo Zuniga Rodriguez et al. v. Conway Waak Jr. et al., out of the Texas First Court of Appeals located in Houston.

The Waaks owned a cattle ranch in Fayette County, Texas and hired several ranch hands. While moving a bull to a different pasture, one of the ranch hands, Raul Amparo Zuniga Ortiz, Jr. (“Zuniga”), was killed. Zuniga’s family sued to recover damages, asserting wrongful death and survivor claims.  The ranch did not carry workers compensation insurance.

To avoid liability, the ranch argued that it was protected under the Texas Farm Animals Activities Act (“FAAA”). The FAAA provides a statutory waiver from suit in certain situations involving “farm animal activities.”  However, the court determined that the FAAA did not apply to the above situation based on various definitions within the statute, including Zuniga’s classification as an employee rather than a “participant.”  Broadly stated, the FAAA is intended to limit liability for activities related to livestock shows and associated activities, or veterinary services.

In a separate defense, the Waaks wanted the court to find that the ranch was not an employer under the Texas Workers’ Compensation Act (“TWCA”).  Texas does not require employers to carry workers compensation insurance.  However, if a business is an employer under the TWCA and does not carry workers compensation insurance, certain defenses to claims by an injured person that are normally available to a defendant are not available to the employer. One of the important defenses that is lost is the argument that the employee’s own negligence contributed to his being injured.  This defense, if available, could potentially lessen or eliminate the employer’s responsibility to pay damages to the injured party or, in this case, the surviving family members. Accordingly, the Waaks wanted the court to rule that the ranch was not covered by the TWCA, so that it would retain its common law defenses, including contributory negligence.

To avoid application of the TWCA, the Waaks attempted to show that Zuniga was not really an employee but was instead an independent contractor.  Generally, the TWCA does not apply to independent contractors.  If the Waaks were able to show Zuniga was an independent contractor, then it would retain its common law defenses, including the argument that Zuniga’s conduct contributed to his injuries and death.

Relating to ranching activities, the TWCA provides that an independent contractor is one who contracts with the ranch for services, and “ordinarily, acts as the employer of the employee by paying wages…,” such as a ranch services company that provides the labor to conduct the ranching work.  In the above case, Zuniga was hired directly by the ranch and paid by the ranch.   He was not employed and paid by anyone else for his services.  Thus, he was not an independent contractor under the TWCA.

In addition to not applying to independent contractors, the TWCA does not apply to ranch employees under certain limited circumstances.  Relative to the above case, the TWCA would not have applied if the ranch had had less than 3 employees (excluding seasonal and migrant workers), or if the annual payroll for the ranch (other than to family members) was less than $25,000.00 (seasonably adjusted since 1993).  The ranch employed 3 workers.  Because none of the workers were independent contractors, and the ranch did not employ less than 3 employees, the limited exception in the TWCA for ranches did not apply.  (It does not appear that the annual payroll was less than $25,000).

Takeaway. When the TWCA applies, it provides the exclusive remedy for workplace injuries.  Employers covered by the TWCA cannot be sued for ordinary negligence that leads to an employee’s workplace injury.  In this instance, if the ranch had had workers compensation insurance, much, or all, of the liability would be paid through the insurance.   However, because the ranch did not carry workers compensation insurance, it is in the middle of a wrongful death suit, and certain of the defenses that it would normally be able to assert are waived by statute.  Accordingly, the ranch will be liable for all damages incurred if its negligence is found to have contributed in any way to the death of the worker.

Also, as this case points out, simply calling someone an independent contractor does not make it so. Landowners engaging in ranching operations involving the hiring of workers should strongly consider carrying workers compensation insurance unless they are confident that the TWCA does not apply to the ranch.  If this is something we can assist you with, please feel free to contact Keith Sieczkowski, Labor & Employment Lawyer with Branscomb | PC, at ksieczkowski@branscombpc.com or (361) 886-3800, or Sandra White, Labor & Employment Lawyer with Branscomb | PC, at swhite@branscombpc.com or (210) 598-5400