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5th Circuit Reviews "Employee" Definition
A federal appellate court decided that the definition of “employee”, as written in the Federal Motor Carrier Safety Regulations, was used correctly to determine if a person injured in an accident was a motor carrier “employee” as it applies to the employee exclusion found in an insurance policy.
The case arose from an accident that involved a motor’s carrier’s vehicle, in which the driver died and the passenger was injured. The motor carrier wanted its insurance company to defend and indemnify it for the passenger’s injuries. The insurance company claimed that the injured passenger was the motor carrier’s employee, which means the passenger was not covered because the insurance policy specifically excluded employees from coverage. In response, the motor carried argued that the passenger was not an employee under state law and was, instead, an independent contractor, which would require coverage from the insurance company.
The federal district court found that the exclusion applied because the injured passenger was the motor carrier’s “statutory employee.” Federal transportation law makes no distinction between employees and independent contractors. This means motor carriers cannot avoid liability in claims involving independent contractors. In this case, the motor carrier bought the insurance policy to satisfy federal regulations, which required the carrier to maintain at least a minimum level of public-liability coverage. The insurance policy was drafted to meet federal insurance requirements. As a result, the court correctly used the definition of “employee” found in the federal regulations when evaluating whether the injured passenger was the carrier’s “employee.” This means the insurance policy’s provision that excluded coverage for employees did apply to this case.
Reference: Consumers County Mutual Insurance Co. v PW & Sons Trucking Inc. (5th Cir) ¶ 84.262
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