2025 Update: Pennsylvania Supreme Court Upholds Statutory Employer Doctrine in Yoder v. McCarthy Construction, Inc.
Recently, in Yoder v. McCarthy Construction, Inc., 2023 Pa. Super 13 (2023), the Superior Court found that the statutory employer defense had been preserved as a defense and proven at trial by Margolis Edelstein Partner, Glenn Ricketti. In Yoder, the plaintiff/appellee, Jason Yoder, obtained a verdict against defendant/appellant, McCarthy Construction, Inc. On appeal, McCarthy requested the Superior Court determine whether McCarthy qualified as Yoder’s statutory employer.
McCarthy, a carpentry company was asked by a local public library to remove and replace the library’s roof, in addition to completing other projects at the property. McCarthy subcontracted with a roofing company for part of the roofing work. Yoder worked for the roofing subcontractor and was injured when he fell through an uncovered hole in the roof.
The first issue that the Superior Court needed to resolve was whether the statutory employer defense had been properly preserved by McCarthy. The Superior Court held that the statutory employer defense is non-waivable because it goes to the trial court’s jurisdiction over the subject matter. In fact, the Superior Court, citing Sheard v JJ DeLuca Co., Inc., 92 A.3d 68 (Pa. Super. 2014), went so far as to state that the statutory employer defense may be raised at any time so long as the proceedings are still open.
The Superior Court next examined the five factor McDonald test. Fortunately, McCarthy’s trial counsel, Margolis Edelstein Partner, Glenn Ricketti made certain to adduce evidence of each of the five factors even though the trial court had ruled on a motion in limine that the statutory defense could not be raised at trial.
In its 1925(a) opinion, the trial court focused on the fact that McCarthy failed to meet the fifth element of the test – whether Yoder was an employee of the roofing subcontractor. As such, the Superior Court started with the fifth factor in its McDonald test analysis. With respect to this factor, the Superior Court found as dispositive the evidence that Yoder had received workers’ compensation benefits from the roofing subcontractor. As such, Yoder was judicially estopped from claiming he was independent contractor of the roofing subcontractor.
The Superior Court then examined the remaining elements. Notably, as to the first element – an employer who is under contract with an owner – the Superior Court held that a contractor does not have to be a general contractor, in the typical sense, to qualify under this first element as a statutory employer. The second element – that McCarthy occupy or control the premises – and third element – a subcontract made by McCarthy – were easily met. There was ample evidence at trial of both occupation and control of the premises by McCarthy. Yoder did not dispute the third element.
Finally, as to the fourth element – that McCarthy entrusted a part of its regular business to the roofing subcontractor – the Superior Court rejected arguments that simply because a general contractor does not actually perform the work subcontracted on a regular basis, that it cannot meet the fourth element. Rather, the Superior Court looked at the fact that McCarthy was in the business of acting as a general contractor on similar projects and that roofing work was usually part of its contracts with owners, even though it was regularly subcontracted out.
You should take away from Yoder that the statutory employer defense can be raised almost at any time. Second, be certain that you introduce testimony and other evidence to satisfy each of the five elements of the McDonald test, even if your efforts to raise the defense at trial are stymied by the trial judge. This will preserve the issue on appeal. By Kevin Monastra and Glenn Ricketti
