The Oregon Appeals Court recently held that “the exclusive remedy provision of the workers’ compensation law does not apply to ‘members’ of an LLC.”
In Cortez v. Nacco Materials Handling Group, Inc., the employee of an LLC was injured by a forklift while it was backing up. The injured worker filed a claim with the LLC’s insurer and obtained workers’ compensation benefits. Additionally, the employee filed an action against the sole member of the LLC for negligence and under the Oregon Employer Liability Law.
The LLC member argued that he had complied with Oregon’s workers’ compensation statutes and obtained workers’ compensation insurance. As such, he was protected by the exclusive remedy provision of Oregon’s workers’ compensation law.
The Court, however, disagreed with the LLC member’s argument. In support of its decision, the Court looked at the legislative intent of the exclusive remedy provisions of ORS 656.018. These provisions explicitly provide a shield to employers and other specific entities and persons but do not “explicitly [list] a member or owner of a limited liability company.” If the legislature intended to include LLC members as one of the types of entities protected, it would have been specifically stated in the provisions.
The Court also held that an LLC is a legal entity distinct from its members. Therefore, when the exclusive remedy provision applies to an LLC as an employer, it does not necessarily apply to the LLC’s members.
Read the Court’s full opinion here.
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