Ark. Code Ann. § 11-9-402 (2026)

Case Notes

Constitutionality.

Provision making prime contractor liable for compensation to employees of subcontractor who has failed to secure compensation coverage as required by law is valid. Corban v. Skelly Oil Co., 256 F.2d 775 (5th Cir. 1958).

Purpose.

The primary purpose is to protect the employees of subcontractors who are not financially responsible, and to prevent employers from relieving themselves from liability by doing through independent contractors what they would otherwise do through direct employees. Liggett Constr. Co. v. Griffin, 4 Ark. App. 247, 629 S.W.2d 316 (1982).

This section is not for the benefit of the subcontractor, but rather for the unprotected subcontractor's employees. The same person can not be both the subcontractor and the injured employee, because to so hold ignores both the purpose of this section and its various provisions. Employers Ins. of Wausau v. Polar Express, Inc., 780 F. Supp. 610 (W.D. Ark. 1991).

Applicability.

Although an injured worker alleged that a healthcare company was a prime contractor for purposes of subsection (a) of this section, such a finding by the court would have afforded him no relief since he had elected to sue in tort under § 11-9-105(b), and subsection (a), which made a prime contractor liable for compensation to employees of subcontractors who failed to secure compensation, was a workers' compensation statute that governed claims filed with the Arkansas Workers' Compensation Commission. Sykes v. Williams, 373 Ark. 236, 283 S.W.3d 209 (2008).

Contractor's Liability.

Commission erred in disregarding the corporate entity of the subcontractor in determining whether a prime contractor should be liable for compensation to an injured employee of the subcontractor. Thomas v. Southside Contractors, 260 Ark. 694, 543 S.W.2d 917 (1976).

Evidence sufficient to find general contractor was liable for benefits to employee of subcontractor. Liggett Constr. Co. v. Griffin, 4 Ark. App. 247, 629 S.W.2d 316 (1982).

Subcontractor's employee held to have been injured in the performance of work for the general contractor. D & M Constr. Co. v. Archer, 14 Ark. App. 198, 686 S.W.2d 799 (1985).

When the subcontractor carries no compensation insurance, the prime contractor is made a statutory employer and has the same immunity as a regular employer. Lewis v. Industrial Heating & Plumbing, 290 Ark. 291, 718 S.W.2d 941 (1986).

The liability arising on the part of a prime contractor would not extend to subcontractors under this section, but would be limited to the subcontractor's employees. Estate of Sodorff v. United S. Assurance Co., 980 F. Supp. 1004 (W.D. Ark. 1997).

Where claimant was an employee of his brother, an uninsured subcontractor of the roofing company, the roofing company was the prime contractor liable for workers' compensation benefits to claimant; the fact that claimant's brother may have been an independent contractor for the roofing company did not preclude him from also being a subcontractor of the roofing company for purposes of this section. Garcia v. A&M Roofing, 89 Ark. App. 251, 202 S.W.3d 532 (2005).

Where injured worker was employed by an uninsured subcontractor, appellant contractor, as the “prime contractor”, was ordered to pay workers' compensation benefits to the worker; substantial evidence supported the Arkansas Workers' Compensation Commission's finding that the necessary links existed between the work the injured worker was performing and the contract with the Arkansas State Highway Commission in that all subcontractors were performing services that arose from this contract and the contractor was the only one with an obligation to a third party. Jones Bros. v. Journagan Constr. Co., 92 Ark. App. 406, 214 S.W.3d 870 (2005), modified, Jones Bros., Inc. v. Whitlock, 366 Ark. 254, 234 S.W.3d 864 (2006).

Stipulations and testimony, particularly the fact that general contractor had subcontracted the roofing on a house to a roofing subcontractor, along with the court's interpretation of the terms “prime contractor” and “general contractor,” constituted substantial evidence that the general contractor was the prime contractor and, thus, was statutorily liable for the subcontractor's employee's injuries. Musson Custom Bldg., Inc. v. Valladares, 93 Ark. App. 490, 222 S.W.3d 214 (2006).

Where contractor hired a third party, who in turn hired a subcontractor to perform work on a highway project where employee was injured, the contractor was liable to subcontractor's injured employee because of subcontractor's failure to pay insurance. Jones Bros., Inc. v. Whitlock, 366 Ark. 254, 234 S.W.3d 864 (2006).

Contractor-Subcontractor Relationship.

Contractor-subcontractor relationship not established. Andrews v. Gross & Janes Tie Co., 211 Ark. 999, 204 S.W.2d 783 (1947) (decision under prior law); Lofton v. Bryan, 237 Ark. 376, 373 S.W.2d 145 (1963); Eagle Star Ins. Co. v. Deal, 337 F. Supp. 1264 (W.D. Ark. 1972), rev'd, 474 F.2d 1216 (8th Cir. 1973).

Contractor-subcontractor relationship established. Brothers v. Dierks Lumber & Coal Co., 217 Ark. 632, 232 S.W.2d 646 (1950) (decision under prior law); Huffstettler v. Lion Oil Co., 110 F. Supp. 222 (W.D. Ark.), aff'd, 208 F.2d 549 (8th Cir. 1953); Brower Mfg. Co. v. Willis, 252 Ark. 755, 480 S.W.2d 950 (1972) (decision under prior law) D & M Constr. Co. v. Archer, 14 Ark. App. 198, 686 S.W.2d 799 (1985).

Before an independent contractor can be found a “subcontractor” within the meaning of this section, it must first be established that the one sought to be held liable as “prime contractor” was contractually obligated to a third person for the work being performed by the independent contractor. Bailey v. Simmons, 6 Ark. App. 193, 639 S.W.2d 526 (1982).

Where the evidence showed that owners of property upon which a house was being built were not contractually bound to any third person in connection with the work being done by the independent contractor and his injured employee, and that the owners exercised no control over either of them, the owners of the property could not be held liable as the prime contractors. Bailey v. Simmons, 6 Ark. App. 193, 639 S.W.2d 526 (1982).

The duties of a general contractor to a subcontractor's employees are analogous to those of an owner of the premises, and include the duty to exercise ordinary care, the duty to warn of unusually hazardous conditions that might affect the welfare of the subcontractor's employees, and if the general contractor begins to perform certain duties or activities and then negligently fails to perform or performs in a negligent manner, he may also be held liable. Franklin v. Osca, Inc., 308 Ark. 409, 825 S.W.2d 812 (1992).

A general contractor's liability can be likened to the “business invitee” concept: when a general contractor invites a subcontractor onto a job site, the general contractor has a duty to exercise ordinary care for the welfare of the subcontractor's employees. Franklin v. Osca, Inc., 308 Ark. 409, 825 S.W.2d 812 (1992).

Where the citizens of the northeast portion of county assessed a tax against themselves in order to secure dependable emergency ambulance service, and the county only served as a conduit to collect the tax and turn it over to the service on an as-needed basis, the subcontractor-prime contractor provision of subsection (a) was not applicable. Sloan v. Voluntary Ambulance Serv., 37 Ark. App. 138, 826 S.W.2d 296 (1992).

Contractor was liable for workers' compensation benefits to claimant, as an employee of an uninsured subcontractor, where the contractor subcontracted out a roofing job, and that subcontractor contracted out the job to another roofer, who employed the claimant. Garcia v. A&M Roofing, 89 Ark. App. 251, 202 S.W.3d 532 (2005).

Arkansas Workers' Compensation Commission erred in holding that an employer, a registered carrier, was a transportation broker's uninsured subcontractor and that the broker was an injured employee's statutory employer under § 11-9-402(a) where the broker was not obligated to transport any loads for a shipper; hence, it had no work to “farm out” to the employer. Transplace Stuttgart, Inc. v. Carter, 98 Ark. App. 418, 255 S.W.3d 878 (2007).

Employment Relationship.

The legislature has created the relationship of employer and employee between the employee of a subcontractor who has not secured compensation and the prime contractor; however, this statutory relationship does not exist when the employee has received compensation from the subcontractor and he may proceed against the prime contractor on a common law action of tort as against a third party. Baldwin Co. v. Maner, 224 Ark. 348, 273 S.W.2d 28 (1954), superseded by statute as stated in, Stapleton v. M.D. Limbaugh Constr. Co., 333 Ark. 381, 969 S.W.2d 648 (1998).

Under Workers' Compensation Law of Arkansas, the prime contractor is not the employer of an employee of a subcontractor and becomes the statutory employer liable for compensation only when the subcontractor has failed to provide workers' compensation insurance. Carter v. Fraser Constr. Co., 219 F. Supp. 650 (W.D. Ark. 1963).

Whether a claimant was an employee of a subcontractor was a question of fact to be determined by the Workers' Compensation Commission, and that finding on appeal would be given the same effect as the verdict of a jury. Benefield Real Estate v. Mitchell, 269 Ark. 607, 599 S.W.2d 445 (Ct. App. 1980).

Evidence supported commission's finding that claimant was an employee of subcontractor and was entitled to benefits. Benefield Real Estate v. Mitchell, 269 Ark. 607, 599 S.W.2d 445 (Ct. App. 1980).

The determination of whether, at the time of injury, a person was an employee or an independent contractor is a factual one and the Workers' Compensation Commission is required to follow a liberal approach, resolving doubts in favor of employment status for the worker and a reviewing court will view the evidence in the light most favorable to the Commission's decision. D & M Constr. Co. v. Archer, 14 Ark. App. 198, 686 S.W.2d 799 (1985).

Arkansas Workers' Compensation Commission found that Arkansas Forestry Commission (AFC) was not obligated to a third-party for the business's proper completion of a state contract and, thus, the AFC was not a prime contractor; the Commission found that the business was a contractor to the AFC, but the AFC was a contractor to no one. Riddell Flying Serv. v. Callahan, 90 Ark. App. 388, 206 S.W.3d 284 (2005).

Fact that the truck driver had obtained a certificate of non-coverage under this section did not preclude the Arkansas Workers Compensation Commission from concluding that the driver was an employee of the company for purposes of determining entitlement to workers' compensation benefits; the Commission based its conclusion of an employment relationship upon the incidents of control exerted by the company, including ownership and maintenance of the truck and the ability to order the employee to a pick-up location at any time. Cloverleaf Express v. Fouts, 91 Ark. App. 4, 207 S.W.3d 576 (2005).

Substantial evidence supported the Arkansas Workers' Compensation Commission's decision that a claimant's relationship with a contractor was that of an independent contractor because that was the relationship both parties agreed to before the work began and, as such, the contractor was not liable for the claimant's injuries, pursuant to subdivision (c)(1)(A) of this section; the claimant acknowledged his intent in the beginning of the work relationship with the contractor was that no taxes would be withheld from his pay and the claimant would not be covered by workers' compensation insurance. Woodmancy v. Framco, Inc., 2011 Ark. App. 785, 387 S.W.3d 286 (2011).

Estoppel.

Corporation which agrees to furnish workers' compensation coverage to subcontractor and his employees is estopped to deny that subcontractor is entitled to benefits. Stillman v. Jim Walter Corp., 236 Ark. 808, 368 S.W.2d 270 (1963).

In an action by carrier of workers' compensation insurance of a prime contractor against a subcontractor to recover amounts paid to an injured employee of the subcontractor, the carrier may be barred by estoppel where insurance premium has been paid or it was carrier's fault that it had not been paid. Phoenix of Hartford v. Coney, 249 Ark. 447, 459 S.W.2d 558 (1970).

Carrier was estopped from seeking to recover from subcontractor for benefits paid to the subcontractor's injured employee, even though it was not established that the carrier received and retained premiums withheld from subcontractor's payment. Phoenix of Hartford v. Coney, 249 Ark. 447, 459 S.W.2d 558 (1970).

Where the insured “employer's” liability is based upon estoppel, or other equitable considerations, the estoppel will not automatically apply to an insurance carrier whose liability is to be determined by this chapter. Phoenix of Hartford v. Coney, 249 Ark. 447, 459 S.W.2d 558 (1970).

Where there was no proof that claimant knew that the subcontractor's compensation insurance policy had been canceled at the time he discussed a subcontract for work with prime contractor, claimant was not estopped to assert liability on the part of prime contractor. Thomas v. Southside Contractors, 260 Ark. 694, 543 S.W.2d 917 (1976).

Foreign Law.

Employee who had received Workers' Compensation benefits from another state was not precluded against third party responsible for accident in Arkansas even though other state's workers' compensation statutes provided that the provisions were exclusive. Carroll v. Lanza, 349 U.S. 408, 75 S. Ct. 804 (1955).

Insurance Coverage.

Agreement executed after workers' compensation policy to the effect that policy would cover all employees, including employees of any contractor or subcontractor engaged by insured, who had not provided for compensation coverage of their operations, related back to the effective date of the policy and covered employees of contractor as effectively as if specifically mentioned therein. Thomas Bros. Lumber Co. v. Hill, 204 Ark. 976, 166 S.W.2d 3 (1942) (decision under prior law).

In the absence of certification of noncoverage, a subcontractor who is a sole proprietor or partner but does not insure himself is not necessarily statutorily deemed an employee and the prime contractor is not necessarily liable for his workers' compensation coverage; instead, it is necessary to determine whether such individual is a subcontractor, independent contractor, or, depending upon the right of control, an agent of the prime contractor that should be treated as an employee under the workers' compensation statutes. Aloha Pools & Spas, Inc. v. Employer's Ins., 342 Ark. 398, 39 S.W.3d 440 (2000).

Recovery from Subcontractor.

The statutory right of the carrier to recover from the subcontractor is not dependent upon the right of the prime contractor, but rather depends only upon the payment of the claim by the carrier, whose claim for recovery does not affect its liability to the injured employee. Phoenix of Hartford v. Coney, 249 Ark. 447, 459 S.W.2d 558 (1970).

Subsection (a) of this section refers to the prime contractor's liability to employees of the uninsured subcontractor, and subdivision (b)(1) refers to recovery from the subcontractor; thus, it was error to order recovery from a third party in the chain of hiring for a road project, instead of an uninsured subcontractor. Jones Bros., Inc. v. Whitlock, 366 Ark. 254, 234 S.W.3d 864 (2006).

Recovery under this section is not limited solely to amounts due that are lienable. Jones Bros., Inc. v. Whitlock, 366 Ark. 254, 234 S.W.3d 864 (2006).

Sole Proprietor Exemption.

Although two sole proprietors exempted themselves from the benefits of coverage under subdivision (a)(B)(i) of this section, they did not exempt their employees; under the clear language of subdivision (a)(B)(ii), a presumption of exemption did not extend to employees of the subcontractors. Garcia v. A&M Roofing, 89 Ark. App. 251, 202 S.W.3d 532 (2005).

Cited: Massey v. Poteau Trucking Co., 221 Ark. 589, 254 S.W.2d 959 (1953); Hollingsworth v. Evans, 255 Ark. 387, 500 S.W.2d 382 (1973); Julian Martin, Inc. v. Indiana Refrigeration Lines, 262 Ark. 671, 560 S.W.2d 228 (1978); Employers Ins. of Wausau v. Polar Express, Inc., 780 F. Supp. 610 (W.D. Ark. 1991); Cheatham v. 100% Certain Underwriters at Lloyds, 783 F. Supp. 1174 (E.D. Ark. 1991); Stapleton v. M.D. Limbaugh Constr. Co., 333 Ark. 381, 969 S.W.2d 648 (1998).