In circumstances where an employer subject to the workers' compensation mandate fails to obtain the requisite insurance coverage, such noncompliance can have serious legal consequences. By statute in many states, such noncompliance deprives the employer of the standard employer tort defenses barring a defendant employer from asserting (1) an assumption of risk, (2) the fellow servant rule, and (3) contributory negligence in a tort suit brought by an injured worker.
From a policy perspective, this statutory defensive penalty was intentionally enacted so as to materially disadvantage noncompliant employers at trial (by removing an employer’s preferred tort defenses), thereby encouraging employers to participate in the system. Bath Mills v. Odom, 168 F.2d 38, 39-40 (4th Cir. 1948); Blinkinsop v. Weber, 85 Cal. App. 2d 276, 279, 193 P.2d 96, 97 (1948).
That being said, injured workers suing noncompliant employers must still prove at trial that their injury was proximately caused by the negligence of their employer. Wendzinski v. Madison Coal Corp., 282 Ill. 32, 36, 118 N.E. 435, 437 (1917); Bath Mills, 168 F.2d at 39 ("[T]he purpose of this statute was to deny to the employer who elected not [to] operate under it the standard defenses of assumption of risk, the fellow servant rule and contributory negligence in a suit for damages by an employee and leave, for practical purposes, only the question whether defendant was negligent and whether that negligence was the proximate cause of the injury."); see also Clover Splint Coal Co. v. Lorenz, 270 Ky. 676, 110 S.W.2d 457, 459 (1937) ("The application of this law, however, does not relieve the injured person of the burden of alleging and proving negligence, and of establishing causal connection between the act of negligence and the injury.").Thus, to succeed at trial against a noncompliant employer defendant, the worker plaintiff must show that (1) the noncompliant employer was in fact negligent, and (2) that such negligence proximately caused the plaintiff's injuries. In practice, the statutory bar preventing noncompliant employers from asserting the standard workers' compensation exclusivity tort defenses is only problematic if the employer was, in fact, negligent, and such lack of care directly caused the worker's injuries.