What Does “Joint and Several” Liability Mean?
Nov 12, 2009
- Jack Martone, The American Equity Underwriters, Inc.
What Does “Joint and Several” Liability Mean? And What Does “Several Not Joint” Liability Mean? And Why Is This Very Important?
As Yogi Berra never said, “Sometimes I chew more than I bite off”. This obviously means that the remaining unanswered Top Ten Longshore Act Questions, with two exceptions, will be difficult to deal with in a brief format. I’ll have to figure out a way to simplify the answers.
For example, “joint and several” liability is a legal concept with more applications than I can competently cover. But what I can do here is tell you what it means to the maritime employer under the provisions of the Longshore Act. First, let’s look at the law.
Section 938(a) (33 U.S.C. 938(a)) of the Longshore and Harbor Workers’ Compensation Act states:
“Failure to secure payment of compensation. Any employer required to secure the payment of compensation under this Act who fails to secure such compensation shall be guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine of not more than $10,000, or by imprisonment for not more than one year, or by both such fine and imprisonment; and in any case where such employer is a corporation, the president, secretary, and treasurer thereof shall be also severally liable to such fine or imprisonment as herein provided for the failure of such corporation to secure the payment of compensation; and such president, secretary, and treasurer shall be severally personally liable, jointly with such corporation, for any compensation or other benefit which may accrue under the said Act in respect to any injury which may occur to any employee of such corporation while it shall so fail to secure the payment of compensation as required by section 32 of this Act (33 USC 932).
The named corporate officers have personal liability jointly and severally with the corporation. The injured worker can sue the corporation alone or he can sue each one of the officers separately for the full 100%, or he can sue all or some in any combination.
For example, if the uninsured employer’s corporate entity is bankrupt and defunct and the corporate President and Treasurer are nowhere to be found, then the Secretary alone can be sued for 100% of the liability. Officers of an uninsured corporation have a very real likelihood of having to reach into their own pockets to defend a civil action by the injured employee. Here’s how it happens.
The uninsured corporation is bankrupt and defunct. The injured worker seeks payment from the U.S. Department of Labor administered Special Fund under the insolvency provisions of section 918(b). Before the administrator of the Special Fund will consider accepting the case for payment, he will require the injured worker to add the corporate officers as defendants. All three or any he can find. They are all jointly and severally liable.
This is why “joint and several” liability can be very bad news for the corporate officers of an uninsured employer.
Just by way of contrast, although the phrase does not appear anywhere in the Longshore Act, references to “several not joint” liability describe an equitable, mutual form of shared liability. Each participant bears only a share of liability proportionate to its participation. No single participant bears more than its proportionate share.
If you’re a corporate officer make sure that your company has the correct insurance coverage, and you don’t have to worry about joint and several liability.
ABOUT THE AUTHOR
John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers’ Compensation Programs, as the Chief, Branch of Insurance, Financial Management, and Assessments and Acting Director, Division of Longshore and Harbor Workers’ Compensation. Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of AEU's Longshore Insider.