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November 24, 2015 - Construction Group News: Workers Cannot Recover Lost Wages from Contractor Responsible for Explosion that Shut Down Project

The Connecticut Supreme Court has held that construction workers whose jobs are affected by the shutdown of a construction project due to an accident cannot bring suit for lost wages against the companies whose negligence caused the accident. Lawrence v. O&G Industries, Inc., 319 Conn. 641 (Nov. 24, 2015).  The full decision is available here. In February 2010 an explosion occurred during the construction and startup of the Kleen Energy power plant in Middletown, Connecticut. About 50 employees of subcontractors on the project who were not physically injured by the accident brought a lawsuit against the general contractor and several other companies involved in the project. The workers claimed that the companies’ negligence caused the explosion and that, as a result, they lost their jobs and suffered economic damages.

In a unanimous decision, the Court held, in essence, that the general contractor and other companies did not owe a duty to the workers to pay the wages they would have been paid if the project was not shut down because of the explosion. "We conclude that the defendants, whose alleged negligence caused the explosion at the power plant, did not owe a duty of care to the plaintiffs, who were employees that sustained only economic losses as a result of the explosion." The Court based its decision on public policy concluding that "[r]ecognizing a duty of care in this factual context appears likely to result in a significant increase in litigation, without a corresponding increase in the safe operation of industrial sites such as the power plant." The Court also noted that statutory unemployment benefits are available to the displaced workers to help mitigate the lost wages resulting from such an accident.

Tragically, accidents on construction projects can result in injuries to workers and damage to property. However, contractors typically maintain commercial general liability and excess policies to cover the costs of such injuries and damages. To address the lost wages of their employees, contractors have workers’ compensation policies for injured employees and also pay into unemployment funds. This Supreme Court decision now makes clear that the contractor responsible for an accident will not, in addition to compensating the victims for their injuries and paying for the property damage, be liable for the lost wages of workers of other companies that are displaced by the accident. The Court’s decision provides a public policy defense against lawsuits that fail to allege physical injury, property damage, or breach of contract.

If you have any questions regarding the above information, please contact an attorney in our Construction Law Group.

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