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Defense Digest

Statutory Employer Immunity Lives On: Pennsylvania Supreme Court Reaffirms General Contractor Protection

Defense Digest, Vol. 32, No. 1, March 2026

March 1, 2026

by John Paul Abda

Key Points:

  • Statutory employer immunity is still a powerful shield for general contractors. The court declined to overrule the doctrine and left any policy change to the General Assembly, preserving a major tort-exposure limitation on construction losses.
  • The defense is “jurisdictional” and not waivable. Reaffirming LeFlar, the court reiterated that the Workers’ Compensation Act deprives common pleas courts of jurisdiction over negligence suits against employers/statutory employers, so the issue can be raised even if not timely pled.
  • The court reaffirmed the five-part McDonald test and the importance of allowing a defendant the opportunity to build a record to meet it.

On October 23, 2025, the Pennsylvania Supreme Court issued an important decision in Yoder v. McCarthy Constr., Inc., 345 A.3d 668 (Pa. 2025), reaffirming the strength and continued viability of the statutory employer doctrine under the Pennsylvania Workers’ Compensation Act. The court held that general contractors who satisfy the statutory employer test remain immune from third-party negligence claims brought by injured subcontractor employees, even where workers’ compensation benefits are paid by another entity. For insurers and employers in the construction industry, the decision provides welcome clarity and reinforces a critical limitation on tort exposure arising from workplace injuries.

It is important to understand the concept behind this legal framework. The general notion is that an injured worker’s proper avenue for relief is the Workers’ Compensation Act. Thus, because an injured worker can seek relief pursuant to the administrative processes provided in the Act, the employer is generally afforded immunity from tort claims relating to the injury. The Act further provides a framework to address a situation where a subcontractor fails to pay benefits to an injured worker. In this scenario, the general contractor is held secondarily liable as a statutory employer. Of course, in exchange for this liability, the general contractor is awarded the same tort immunity the subcontractor enjoys. This all makes perfect sense, but what happens when an injured employee of the subcontractor is receiving benefits from the subcontractor pursuant to a workers’ compensation claim? Courts have held that the statutory employer immunity still protects the general contractor from tort liability, and in the instant case, the Pennsylvania Supreme Court resisted efforts to overturn that precedent.

In the case at issue, McCarthy, a general contractor, entered into a construction contract with the Borough of Norwood to perform work on the Norwood Public Library. Included in the work to be completed was the installation of a new roof, and McCarthy subcontracted with RRR Contractors, Inc.. Yoder was an employee of RRR working on the project when he fell through an uncovered hole in the roof of the building, sustaining permanently disabling injuries.

Yoder filed a complaint for negligence against McCarthy on May 10, 2018. On February 6, 2020, McCarthy filed an answer and new matter asserting affirmative defenses, seeking to bar or limit Yoder’s claim. Yoder moved to strike McCarthy’s answer and new matter as untimely, a request the trial court granted. McCarthy sought to preclude Yoder from presenting evidence on liability based on a statutory employer defense and Yoder argued that McCarthy had waived that defense. The trial court granted Yoder’s motion to preclude McCarthy’s statutory employer defense, ruling that McCarthy had not established he was a statutory employer and, thus, was not afforded immunity. The case went to a jury trial, where McCarthy was found negligent, awarding Yoder $5 million.

Following the verdict, the trial court denied McCarthy’s post-trial request for a judgment notwithstanding the jury’s verdict and entered judgment in favor of Yoder. McCarthy appealed to the Superior Court, who vacated the trial court’s judgment and remanded the case for entry of judgment in favor of McCarthy. In doing so, the Superior Court first concluded that the trial court erred in denying McCarthy’s motion for post-trial relief, holding that the precedent in LeFlar v. Gulf Creek Industrial Park #2, 515 A.2d 875 (Pa. 1986) established that a lack of subject matter jurisdiction in the context of common law actions in tort for negligence against employers is not a waivable affirmative defense. The defense may be raised at any time and may be raised by the court sua sponte. The Superior Court then went through each of elements set forth in McDonald v. Levinson Steel Co., 153 A. 424 (Pa. 1930) to determine whether McCarthy satisfied the five-part statutory employer test. The court concluded that McCarthy did. Specifically, McCarthy established that it was under contract with the borough, it occupied or controlled the premises, it entered into a subcontract with RRR, it entrusted a regular part of its business to RRR, and Yoder was an employee of RRR. Accordingly, the Superior Court found that McCarthy was a statutory employer of Yoder and, thus, immune from tort liability.

On appeal to the Pennsylvania Supreme Court, Yoder raised three issues. He first argued that the court should overrule Fonner v. Shandon, Inc., 724 A.2d 903 (Pa. 1999). In Fonner, the court had addressed the argument that the amendments to the Act in 1974 limited the tort immunity enjoyed by general contractors to only instances where the statutory employer actually pays benefits to the subcontractor’s employee. The court was not persuaded by Yoder’s arguments and reaffirmed the holding in Fonner. The general notion behind the holding in Fonner was that if the General Assembly had intended for the 1974 amendments to limit tort liability for general contractors to only those contractors who paid benefits to an injured subcontractor, they would have amended the statutory employer provision in Section 302(b) of the Act.

Next, Yoder argued that the court should overrule their decision in LeFlar, specifically the holding that the statutory employer defense is unwaivable, as it is a challenge to the common pleas court’s subject matter jurisdiction. Again, the court was not persuaded, reasoning that in order to overrule prior precedent, the principles of stare decisis apply, requiring the court to find a special justification for overruling LeFlar. The court found that Yoder was unable to establish any such justification.

Lastly, Yoder argued that McCarthy failed to establish the first, second, and fourth elements of the McDonald test. The court got into a lengthy legal discussion about whether the Superior Court abused its discretion by exceeding its scope of review on appeal, ultimately finding that it did. However, they also held that the trial court improperly divested McCarthy of an opportunity to develop the record when they denied his motion for summary judgment based on the statutory employer defense without explanation. Thus, the case will go back down to the trial court level where it will be determined whether McCarthy satisfies the McDonald test.

Therefore, in a practical sense, the Pennsylvania Supreme Court held that general contractors will continue to enjoy tort liability from injured subcontractors, regardless of whether they are paying benefits to an injured subcontractor. Additionally, a general contractor can raise the statutory employer defense at any time, and the defense is not waivable. Until the General Assembly amends Section 302(b) of the Act, this will continue to be the rule of the Commonwealth.

John Paul works in our Scranton, PA office. He can be reached at (570) 496-4617 or JPAbda@mdwcg.com.

Firm Highlights

Thought Leadership

New Jersey Workers’ Compensation Legislation Updates

Since June 1, 2026, there have been no new New Jersey workers’ compensation related cases from the Appellate or Supreme Courts. As such, below will highlight any new legislative updates since February. A1023 | S3984 - Medical Use of Cannabis Under Certain Circumstances This requires workers’ compensation, PIP, and health insurance coverage for the medical use of cannabis under certain circumstances. It was introduced on January 13, 2026 and referred to the Assembly Financial Institutions and Insurance Committee. It was also introduced on March 19, 2026 and referred to the Senate Commerce Committee. A1045  - Certain Injuries to Volunteer and Professional Public Safety and Law Enforcement Personnel This revises workers’ compensation coverage for certain injuries to volunteer and professional public safety and law enforcement personnel. It was introduced on January 13, 2026 and referred to the Assembly Labor Committee. A1384 | S2757 - Reduce Statute of Limitations in Medical Fee Disputes This reduces statute of limitations from six years to two years in medical fee disputes in workers’ compensation matters. It was introduced on January 13, 2026 and referred to the Senate Labor Committee. It was also introduced on the same day and referred to the Assembly Labor Committee. A1870 | S1379 - Workers' Compensation Benefits For Certain Workers Due to September 11, 2001 Terrorist Attacks This provides workers’ compensation benefits for certain public safety workers who developed illness or injury as result of responding to September 11, 2001 terrorist attacks. It was introduced on January 13, 2026 and referred to the Assembly Labor Committee. It was also introduced on the same day and referred to the Senate Labor Committee. On February 5, 2026, it was reported from the Senate Committee, 2nd Reading, and referred to the Senate Budget and Appropriations Committee. A2779 | S1521 - Excludes Certain Illegal Aliens This excludes certain illegal aliens from workers’ compensation and temporary disability benefits. It was introduced on January 13, 2026 and referred to the Senate Labor Committee. It was also introduced on the same day and referred to the Assembly Labor Committee. A2792 | S1555 -  Prevent Intoxicated Employees from Workers’ Compensation This prevents intoxicated employees from receiving workers’ compensation. It was introduced on January 13, 2026 and referred to the Senate Labor Committee. It was also introduced on the same day and referred to the Assembly Labor Committee. A3167 | S2372 - Workers’ Compensation Insurance Requirements for Certain Corporations and Partnerships This concerns workers’ compensation insurance requirements for certain corporations and partnerships. It was introduced on January 13, 2026 and referred to the Senate Labor Committee. It was also introduced on the same day and referred to the Assembly Labor Committee. A3548 | S3571 – Maximum Benefits for Certain Volunteers This provides certain volunteer and other workers with maximum compensation benefit for workers' compensation claim regardless of outside employment. It was introduced on January 13, 2026 and referred to the Senate Labor Committee. On March 2, 2026, it was reported from the Senate Committee, 2nd Reading, and referred to the Senate Budget and Appropriations Committee. It was also introduced on the same day and referred to the Assembly Labor Committee. On May 7, 2026, it was reported and referred to Assembly State and Local Government Committee. A3724 - Personal Liability to Employer Officers for Failure to Pay for Coverage This provides personal liability for owner, executive officer, or executive director of employer for failure to pay for workers' compensation coverage. It was introduced on January 13, 2026 and referred to the Assembly Labor Committee. On May 7, 2026, it was reported and referred to Assembly Judiciary Committee. A4617  - Certain Workers' Compensation Supplemental Benefits and Funding Method This concerns certain workers' compensation supplemental benefits and funding method. For a permanently and totally disabled worker or surviving dependents after December 31, 1979, with some exceptions, this bill provides for an annual cost of living adjustment in the weekly workers’ compensation benefit rate. It was introduced on March 10, 2026 and referred to the Assembly Labor Committee. S241 - Inclusion in Database of Appointed Officials This requires that workers’ compensation judges and administrative law judges be included in database of appointed officials. It was introduced on January 13, 2026 to the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee. S2290 -  Mandatory Retirement Age This increases statutory mandatory retirement age for Supreme Court Justices, Superior Court Judges, Tax Court Judges, Administrative Law Judges, and Workers’ Compensation Judges from 70 to 72. It was introduced on January 13, 2026 and referred to the Senate Judiciary Committee. S3144 - Testimony in Workers’ Compensation This concerns submission of testimony in workers’ compensation claims. It was introduced on January 13, 2026 and referred to the Senate Labor Committee. S3342  - Increase Mandatory Retirement Age This increases statutory mandatory retirement age for Supreme Court Justices, Superior Court Judges, Tax Court Judges, Administrative Law Judges, and Workers’ Compensation Judges from 70 to 75. It was introduced on February 5, 2026 and referred to the Senate Judiciary Committee.

Thought Leadership

Commonwealth Court Holds That a Claimant Who Was Struck By a Car While Crossing the Street During an Unpaid Break Was In the Course and Scope of Employment

This case involved a claim petition filed by a claimant who sustained injuries after being struck by a vehicle while crossing the street in front of the employer’s premises. The employer denied the claim based on course and scope, as the accident occurred during one of two mandatory fifteen (15) minute breaks provided to the claimant. The claimant would punch out at the beginning of a break and punch back in when the break was over.  On the date of the incident, the claimant punched out and left the building to get lunch at a restaurant, which required her to cross the employer’s parking lot, and then a public street, where the injury occurred. The Workers Compensation Judge (WCJ) dismissed the petition, noting that that during the two mandatory fifteen-minute breaks per shift allowed by the employer, the claimant was free to leave the employer’s premises, and during breaks, permitted to engage in whatever activity she desired. The WCJ found that at the time of the accident, the claimant was on her own time, in the middle of the street, and going to get lunch.   The claimant filed an appeal with the Worker’s Compensation Appeal Board (Board), and the Board reversed.  According to the Board, the claimant’s location was still on the employer’s premises, as the claimant was taking her customary route while using a reasonable ingress/egress from the employer.  Further, the Board found that the “Personal Comfort Doctrine” applied, as the claimant was on a momentary departure to take care of her personal comfort, within the window of time she was allotted for her break.  The Board remanded the case, and a WCJ granted the claim petition.  The Board affirmed, and the employer appealed to the Commonwealth Court. Before the Court, the employer argued that the claimant was not in the course and scope of her employment, because the injury did not occur on its premises, and the claimant was outside the bounds of the Personal Comfort Doctrine. The Court, however, rejected these arguments, and dismissed the employer’s appeal.  The Court noted that the break given to the claimant was so cursory, when she set out to relieve her hunger for her own personal comfort,  she remained in the course of her employment when she sustained her injuries.  A Petition for Allowance of Appeal in the Supreme Court has been filed by the Employer, Giant Eagle.

Thought Leadership

Appellate Court Rejects Horizontal Immunity Defense to Company Not Acting as Statutory Subcontractor

The First District Court of Appeal held that a property management company was not entitled to horizontal immunity under section 440.10(1)(e), Florida Statutes, in a negligence action brought by an employee of another company working on the property. The claimant was injured while servicing a swimming pool at an apartment complex. His employer had contracted with the property owner to maintain the pool. Following the accident, the claimant received workers' compensation benefits through his employer’s carrier. The claimant subsequently filed a negligence action against the property management company, alleging that it failed to maintain the premises in a reasonably safe condition and failed to warn him of a dangerous condition that caused his injuries. The property management company had been retained by the property owner to maintain the complex in good operating condition and to perform routine maintenance and repair work. The property management company argued that it was immune from suit under section 440.10(1)(e) of Florida’s Workers’ Compensation Law. That provision grants immunity to a subcontractor providing services in conjunction with a contractor on the same project or contract work from civil actions brought by employees of another subcontractor, subject to limited exceptions. According to the property management company, it qualified as a subcontractor working on the same project as the claimant’s employer and was therefore entitled to horizontal immunity. The trial court agreed and entered summary judgment in its favor. On appeal, however, the claimant argued, and the appellate court agreed, that horizontal immunity applies only when a contractor has sublet work arising from a contractual obligation owed to a third party. The court noted that prior decisions consistently held that an entity acting solely on its own behalf as the owner of property, rather than pursuant to a contract with a third party, is not a “contractor” under section 440.10(1), even when it hires other companies to perform work on the property. In Teed, the property management company could not establish that the property owner had a primary contractual obligation to a third party to maintain either the apartment complex or the swimming pool, which it then delegated to the claimant’s employer or the property management company. As a result, the property owner did not qualify as a statutory contractor, and the property management company was not a subcontractor entitled to horizontal immunity under section 440.10(1)(e). The First District therefore reversed the lower court’s ruling and remanded the case for further proceedings on the claimant’s negligence claim.