When can general contractors claim workers' compensation immunity from tort suits? Nichols v. Jacobsen Construction Explained

In Nichols v. Jacobsen Construction, the Utah Supreme Court addressed when general contractors can claim immunity from tort suits under the Workers’ Compensation Act’s exclusive remedy provision. The case arose after Rick Nichols, an employee of subcontractor Safway, was injured when scaffolding collapsed at a construction site managed by Jacobsen Construction.

Background and Facts

Jacobsen served as general contractor for the City Creek Center project and required subcontractors to participate in a contractor-controlled insurance program (CCIP). When Nichols was injured while unloading scaffolding, Jacobsen claimed immunity as an eligible employer under Utah Code § 34A-2-103(7)(f)(iii)(B). The district court granted summary judgment for Jacobsen, but the court of appeals reversed, finding a factual dispute about whether Jacobsen properly “secured payment” of workers’ compensation benefits.

Key Legal Issues

The court addressed three requirements for eligible employer status: (1) whether Jacobsen “procured work” as part of its business; (2) whether Jacobsen “secured payment” of workers’ compensation benefits; and (3) whether Jacobsen maintained required workplace safety programs. The central dispute focused on whether “securing payment” requires actual benefit payments or merely maintaining insurance coverage.

Court’s Analysis and Holding

The Supreme Court held that Jacobsen met all three requirements. First, procuring work includes supplying, erecting, and dismantling scaffolding as part of the construction process. Second, “securing payment” is satisfied by maintaining qualifying insurance coverage—actual payment of benefits is not required. The court emphasized that Utah Code § 34A-2-201 requires employers to “insure” payment, not “ensure” actual payment occurs. Third, Jacobsen’s comprehensive safety program met all statutory requirements, including written agreements establishing control rights over subcontractors.

Practice Implications

This decision provides important guidance for construction industry practitioners. General contractors can obtain workers’ compensation immunity by maintaining proper insurance coverage without guaranteeing that benefits are actually paid promptly. However, contractors must ensure comprehensive documentation of insurance enrollment, safety program implementation, and contractual provisions establishing control rights. The court’s broad interpretation of “procuring work” extends protection to contractors using subcontractors for various construction-related activities, not just traditional labor services.