Can Small Employers Opt Out of Coverage Under the Longshore and Harbor Workers’ Compensation Act?

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Can Small Employers Opt Out of Coverage Under the Longshore and Harbor Workers’ Compensation Act?

There are some states where small employers as defined in the state insurance law, or even large employers under certain conditions, can “opt out” of the states’ workers’ compensation system.

Is this ever an option under the Longshore Act? Don’t even think about it.

Under section 932 of the Longshore Act, an employer has two choices with regard to the insurance requirement. The employer can purchase first dollar coverage from an insurance carrier authorized by the U.S. Department of Labor to write Longshore Act coverage, or it can obtain the authorization of the U.S. Department of Labor to self-insure its Longshore Act obligations. An employer can obtain self-insurance authorization individually, or it can satisfy the self-insurance option through membership in a DOL authorized group self-insurance fund such as The American Longshore Mutual Association). These are the maritime employer’s only choices.

An “employer” is defined in section 902(4) of the Longshore Act:

The term “employer” means an employer any of whose employees are employed in maritime employment, in whole or in part, upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing, or building a vessel}.

In other words, if a worker is a maritime worker then his employer is by definition a maritime employer. And the maritime employer is subject to the section 932 insurance requirement.

An “employer” in section 902 of the Longshore Act is not defined by size or type of business organization, and there are only two insurance options offered in section 932.

So, no exceptions. Get the coverage.


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.


Related Topics

Coverage, Exclusions, Exemption, Longshore & Harbor Workers' Compensation Act (LHWCA), Small Business