By Kevin L. Connors, Esquire
“We demand rigidly defined areas of doubt and uncertainty!” Hitchhiker’s Guide to the Galaxy.
A recent decision by the Pennsylvania Commonwealth Court addresses the issue of extra-territorial jurisdiction when employment is not principally localized in Pennsylvania.
The case was decided by the Pennsylvania Commonwealth Court on September 15, 2015.
The case is William Watt v. WCAB (Boyd Brothers Transportation).
The Claimant appealed decisions by the Workers’ Compensation Judge and the Appeal Board, denying and dismissing the Claimant’s Claim Petition for lack of jurisdiction under the Pennsylvania Workers’ Compensation Act, as the Claimant challenged the WCJ’s findings that his employment was not principally localized in Pennsylvania.
The Claimant also argued that his employment contract, which stated that his employment was principally localized in Alabama (Go Crimson Tide!), was unenforceable and against public policy, further arguing that Section 305.2(d)(5) of the Workers’ Compensation Act, which is the Section dealing with extra-territorial jurisdiction for worker’s compensation claims, was unconstitutional.
“Don’t panic, and always carry a towel,” Hitchhiker’s Guide to the Galaxy.
The Commonwealth Court affirmed the decisions of both the Appeal Board and WCJ, denying the Claimant’s Claim Petition on jurisdictional grounds.
By way of background, the Claimant was an interstate truck driver, employed by Boyd Brothers Transportation, and he alleged that he sustained a work injury in New Jersey.
Filing a Claim Petition seeking workers’ compensation benefits under the Pennsylvania Workers’ Compensation Act, the Employer’s Answer to the Claim Petition denied jurisdiction for the claim in Pennsylvania, and it was further denied that the Claimant was either injured or hired in Pennsylvania, averring that the Claimant was already receiving workers’ compensation benefits under Alabama’s workers’ compensation laws, pursuant to the terms of the Claimant’s employment contract with Boyd Brothers.
In support of his Petition, the Claimant testified that he was employed as a truck driver for Boyd Brothers in 2010 and 2011, sustaining a work injury while untarping a cargo load on April 12, 2011.
The Claimant then began receiving workers’ compensation benefits through Alabama’s workers’ compensation system for injuries to the Claimant’s right shoulder, right arm, and right hand.
Testifying that he was a Pennsylvania resident, the Claimant testified that he had completed an online application for employment with Boyd Brothers, while using his personal computer in Pennsylvania. He then passed a driver’s test, obtaining a CDL license, with the Claimant being contacted by telephone by an Employer representative, scheduling the Claimant for orientation in Ohio.
The Employer representative advised the Claimant that he would be paid $400.00 per week during orientation and training, with the Claimant then receiving an e-mail confirming that he was accepted into the orientation program for Boyd Brothers.
Attending driver orientation in Ohio, the Claimant was put through training and various tests, with the Claimant also being presented with a document titled “Workers’ Compensation Agreement” which the Claimant gleefully signed.
After completing his orientation, the Claimant returned to Pennsylvania, after which he began working as a long haul truck driver for Boyd Brothers.
Testifying that over the course of his employment with Boyd Brothers, the Claimant had kept daily logs of his trips, as required by DOT regulations, the Claimant testified that he only drove in the state of Alabama on four occasions, with the Claimant calculating that he had driven a total of 35,124 miles while employed by Boyd Brothers, with the Claimant testifying to the following state-specific mileage:
- 6,196 miles in Pennsylvania;
- 5,031 miles in Virginia;
- 4,689 miles in Ohio;
- 2,346 miles in Tennessee; and,
- Lesser amounts in 22 other states.
The Claimant testified that he accumulated a total of 678.25 hours driving truck for Boyd Brothers, calculating that his state-specific driving hours were:
128 hours driving in Pennsylvania;
80.75 hours driving in Ohio;
64.75 hours driving in Virginia;
42 hours driving in Tennessee;
37 hours driving in Maryland;
34.75 hours driving in West Virginia;
33.5 hours driving in Indiana;
31.25 hours driving in Texas; and,
Lesser amounts of hours driving in 18 other states.
Opposing the Claimant’s Petition, the Employer presented extensive documentary evidence, including the signed WC Agreement, which stated that all workers’ compensation claims would be administered from Boyd Brothers administrative offices in Clayton, AL, and that workers’ compensation claims would be subject to the laws of the State of Alabama.
Before the workers’ compensation Judge, the Claimant and Boyd Brothers oddly enough stipulated that all workers’ compensation claims would be governed by the workers’ compensation laws of the State of Alabama, and that the Claimant’s employment was principally localized within the state of Alabama, as the company’s principal place of business was in Alabama.
Opposing Claimant’s Petition, testimony was presented by an Employer representative, a student recruiter, and from the director of recruiting, with all testifying that a prospective driver would not be officially hired until they had cleared orientation. Orientation required a prospective driver to pass a road test, a physical agility test, a drug test, and other written tests, over a period of five days of orientation.
Evidence was then presented that the Claimant’s employment began with Boyd Brothers when the Claimant completed orientation, and that his date of hire was recorded as November 24, 2010.
Testimony was also presented from an Employer representative, responsible for managing the Claimant’s orientation, that the Claimant had been read and explained the terms of the WC Agreement during the orientation process, for purposes of establishing that worker’s compensation claims would be administered through the laws of the State of Alabama.
An Employer representative was also present to testify as to the Claimant’s mileage, for the period that he was employed, from November 29, 2010 through April 9, 2011, with it being calculated that the Claimant had driven 34,581 miles for Boyd Brothers, with the state-specific mileage being broken down as follows:
- 50.35.9 miles in Virginia;
- 4,721.4 miles in Ohio;
- 4,010.6 miles in Pennsylvania;
- 2,301.1 miles in Tennessee;
- 2,032.8 miles in Maryland; and,
- Lesser amounts in 21 other states in the District of Columbia.
In denying the Claimant’s Claim Petition, the WCJ found the testimony of the Employer witnesses to be “competent, credible, and worthy of belief,” with their testimony being accepted as to the Employer’s policies and procedures in recruiting, testing, and hiring drivers for employment.
Reviewing the evidence of record, the WCJ, found that the Claimant had sustained a work injury in the course of his employment in New Jersey, although the Claimant was working under a contract of hire entered into in Ohio, and that the Claimant and Boyd Brothers had agreed, under the WC Agreement, that the Claimant was provisionally hired in Alabama, and that his employment was principally localized in Alabama, with the WCJ holding that he was “constrained to find as fact that Claimant’s employment was principally localized in the State of Alabama,” for purposes of determining the Claimant’s eligibility for worker’s compensation benefits under the Pennsylvania Workers’ Compensation Act.
So holding, the WCJ concluded that he lacked jurisdiction over the Claimant’s Claim Petition, denying and dismissing the Claim Petition on jurisdictional grounds.
The WCJ’s decision was affirmed by the Appeal Board, with the Claimant appealing to the, Commonwealth Court, in the course of which the Claimant argued that his employment was principally localized in Pennsylvania, because he lived in Pennsylvania, and because he worked in Pennsylvania more than in any other state.
He also argued that the WC Agreement’s choice of law provision was unenforceable, with the Claimant alleging that it violated public policy.
Not to be outdone with speechless arguments, the Claimant also argued that Section 305.2(d)(5)(d) the Act, dealing with extraterritorial jurisdiction over workers’ compensation claims, was unconstitutional, and that the provision violated the Full Faith and Credit Clause of Article IV of the U.S. Constitution.
Addressing the appellate arguments raised by the Claimant, the Commonwealth Court, in an opinion authored by Judge Simpson, noted that the issue of whether employment is “principally localized,” in this or another state, is dependent on:
“(i) if it was his employer’s place of business in this or such other state and he regularly works at or from such place of business, or (ii) having worked at or from such place of business, his duties have required him to go outside of the State not over one year, or (iii) If clauses (1) and (2) foregoing are not applicable, he is domiciled and spends a substantial part of his working time in the service of his employer in this or such other state.”
Seeking benefits under this Section of the Act, a Claimant must show that he worked from Pennsylvania “as a rule, not as the exception,” in order to establish that employment is principally localized in Pennsylvania. Atkins v. WCAP, 651 A.2d 694 (Pa. Cmwlth. 1994).
Arguing that his employment was principally localized in Pennsylvania under clause (iii) of Section 305.2(d)(4), the Claimant argued that he spent a substantial part of his working time for Boyd Brothers in Pennsylvania.
In support of that argument, he argued that he maintained his trusty truck in Pennsylvania, and that he was occasionally dispatched by Boyd Brothers from his home in Pennsylvania.
“Would it save you a lot of time if I just gave up and went mad now?” Hitchhiker’s Guide to the Galaxy.
Contrary to Claimant’s arguments, the Commonwealth Court held that the Claimant’s evidence did not support findings that the Claimant spent “a substantial part of his working time” in Pennsylvania, as the Commonwealth Court drew a pie chart, based on the WCJ’s findings with regard to the Claimant’s state-specific mileage, evidencing that the Claimant only spent a fraction of his total time in miles in Pennsylvania, as his mileage in time of Pennsylvania only represented 17% of his total time driving as a long haul truck driver for Boyd Brothers.
While the 17% was greater than any other single state, in terms of time and mileage, the Commonwealth Court did not conclude that the Claimant spent a “substantial part of his working time” in Pennsylvania, holding that the Claimant, comparatively speaking, only spent a relatively small percentage of his time in Pennsylvania compared to some of the other high totaling states, such as Virginia and Ohio.
Stating otherwise, the Commonwealth Court held that the Claimant did not work from Pennsylvania “as a rule”, such that the WCJ did not err in concluding that Claimant’s employment was not “principally localized” in Pennsylvania.
Further arguing that the WC Agreement constituted a waiver of his statutory rights under the Pennsylvania Workers’ Compensation Act, which will not permit an agreement between an employer and an employee to diminish the applicability of the act, or to limit a Claimant’s entitlement to workers’ compensation benefits, the Claimant argued that the WC Agreement violated public policy, being the humanitarian objectives of the Act, and that it was unenforceable as a matter of law.
Eviscerating the Claimant’s public policy argument, the Commonwealth Court held that when an injury occurs outside the territorial limits of Pennsylvania, as was the case in Watt, such an agreement between an employee and employer is enforceable, provided the parties agree that the employment is, as the Claimant and Boyd Brothers had agreed, was principally localized in a state other than Pennsylvania in the course of entering into such an agreement as to jurisdiction.
As for the enforceability and constitutionality of the WC Agreement, the Commonwealth Court held that there is a distinct difference between claims involving injuries that occur in Pennsylvania, and claims that involve injuries occurring in other states, as Pennsylvania typically does not allow the parties to “overcome the Act’s coverage pertaining to a subsequent, in-state injury,” through the use of a choice-of-law agreement, when an employee’s job duties require interstate travel. McIlvaine Trucking Company v. WCAB, 810 A.2d 1280 (Pa. 2002); Neff, Inc. v. WCAP, 624 A2d 727 (Pa. Cmwlth. 1993).
Holding that the WC Agreement did not abridge the Claimant’s rights under the Pennsylvania Workers’ Compensation Act, or otherwise violate public policy, the Court held that the WC Agreement must be given full force and effect, and that the WCJ had not erred in relying upon the WC Agreement, in finding that the Claimant’s employment was, in fact, principally localized in Alabama.
With the Claimant arguing that Section 305.2(d)(5) of the Act was unconstitutional, claiming that it violated the Full Faith and Credit Clause of the U.S. Constitution, the Commonwealth Court dismissed the Claimant’s constitutional argument, finding that the Employer’s corporate headquarters and principal place of business in Alabama constituted sufficiently significant contacts that application of Alabama law to the Claimant’s workers’ compensation claim was neither unfair nor unexpected, particularly when the Claimant’s employment was not principally localized in Pennsylvania, and the Claimant’s injury had not occurred in Pennsylvania.
For those reasons, the Commonwealth Court found that there was no constitutional problem with the parties haven chosen that the workers’ compensation laws of Alabama would govern the Claimant’s workers’ compensation claim, as opposed to Pennsylvania law.
Dismissing Claimant’s appeal, the Commonwealth Court held the Claimant was not entitled to benefits in Pennsylvania for an extraterritorial injury, as the Claimant had been unable to prove that his employment was principally localized in Pennsylvania.
His appeal was also denied on grounds that the WC Agreement determined that the Claimant’s employment was principally localized in Alabama, and that the WC Agreement was in full conformity and compliance with Section 305.2(d)(5) of the Act, and was not violative of public policy.
Moreover, the constitutional argument advanced by the Claimant was rejected by the Commonwealth Court, finding that the WCJ had given the WC Agreement full force and effect, in determining that Pennsylvania lacked jurisdiction over the Claimant’s workers’ compensation claim.
“Time is an illusion. Lunchtime doubly so.” Hitchhiker’s Guide to the Galaxy; highly recommended for existential orientation by the undersigned.
What are our takeaways from this case?
First, given the mobility of the trucking and logistics industries, routinely crossing state lines, agreements between employers and employees, as to where the employment is “principally localized,” can be enforceable, under Pennsylvania law, so long as the employee is not injured in Pennsylvania, as, in that instance, Pennsylvania will assert jurisdiction over a workers’ compensation claim.
Another takeaway is that such jurisdictional agreements will survive challenges as to enforceability and constitutionality, absent a different ruling by the Pennsylvania Supreme Court, with it being anticipated that the Supreme Court will affirm the Commonwealth Court, in the course of denying any appeal that might be taken by the Claimant in this matter.
“For a moment, nothing happened. Then, after a second or so, nothing continued to happen,” our final citation from Hitchhiker’s Guide.
Trust us, we just get it! It is trust well spent!
Defending workers’ compensation claims throughout Pennsylvania for employers, self-insureds, insurance carriers, and third party administrators, our 100+ years of cumulative experience defending our clients against compensation-related liabilities, empowers our workers’ compensation practice group attorneys to be more than mere claim denials, entrusting us to create the factual and legal leverage to expeditiously resolve claims, in the course of limiting/reducing/extinguishing our clients’ liabilities under the Pennsylvania’s Workers’ Compensation Act.
With every member of our workers’ compensation practice group being AV-rated, our partnership with the NWCDN magnifies the lens through which our professional expertise imperiously demands that we always be dynamic and exacting advocates for our clients, businesses, corporations, and insurance carriers, seeking our trial and compensation acumen, navigating the frustrating and form-intensive minefield pervasive throughout Pennsylvania workers’ compensation practice and procedure.