2009 Longshore Reforms

Strong Leadership, Unwavering Commitment. The Key to Important Longshore Reforms 2009

 

In 1927 the Longshore and Harbor Workers’ Compensation Act (LHWCA) was created as a gap-filling measure between scare workers compensation and traditional maritime law. If a worker was injured on the dock, while loading and unloading cargo, there was now protective legislation in place that would cover his/her injuries. Clearly the recreational boating industry was not what it is today and there was no specification of the type of work being performed nor the type of vessel.

Fifty years later there were amendments made to the LHWCA that addressed the protection of land-based workers, responding to longshoremen (and their unions respectively) who were excluded from federal coverage when they left a ship. These amendments expanded the universe of those who were required to have LHWCA coverage, including the recreational marine industry, who primarily worked in marinas, boatyards, recreational docks and even manufacturing facilities.

Realizing the adverse effects on the recreational boating industry, Congress eliminated a segment of recreational operations in 1984. The definition of a maritime employee was refined and specifically excluded marinas and recreational boats under 65 feet. Remember in 1984, 65 foot boats were large and the intent of these amendments was to capture the recreational industry and exclude it entirely.

Reason for Legislative Change
In early 2000, nearly 20 years later, these exclusions were becoming less definitive. The boats were larger and marinas/yards were accommodating vessels under and over 65 feet in length. In Florida the rates for Longshore premiums were nearly five times the rate of state compensation. Many small businesses were unable to either achieve or  afford the coverage and their employees were going without. Those businesses able to afford the coverage were increasing their labor rates resulting in an un level playing field both domestically and internationally. Boatyards were becoming the enforcers of the law and investing in permanent infrastructures such as security gates and fences that had to be staffed full time. Marinas, even though specifically excluded in the LHWCA, were becoming involved as many times there were minor repair jobs being performed which negated their exclusion.

Bottom line: Something had to be done to protect and preserve the recreational marine industry, save jobs from going international and provide an opportunity for all workers to have proper coverage.

The Marine Industries Association of South Florida decided to form a task force whose objective was to determine the best strategy for amending the LHWCA once again to exclude the recreational marine industry entirely. In 2005, Blank Rome Government Relations was hired to provide MIASF with full time representation in Washington, DC. In the 107th, 108th, and 109th Congresses bipartisan legislation was introduced in both Houses to amend the LHWCA and completely remove the entire recreational marine industry. However politics played a major role and many provisions needed to be compromised to achieve the primary objective.

During the 110th Congress (2007-2008), Members of Congress supporting the industry spearheaded and championed a strong targeted approach. The industry was dearly in need of relief and still is. Legislative change would be a zero cost to the government. Bipartisan support was achieved and legislative action was taken, however, the economic crisis and financial bailout bill captured the Legislature’s focus and time ran out.

On February 17,2009 President Barack Obama signed the American Recovery and Reinvestment Act (H.R. 1) [the Stimulus bill]. The U.S. House of Representatives and Senate voted to implement the industry’s amendment to the Longshore and Harbor Workers Compensation Act. Because of the nature of this “Stimulus Bill” the effects are  immediate! Every single recreational repair facility, boar yard, marina, business owner and subcontractor is no longer subject to the duplicate, unnecessary and expensive coverage.

What this means:
The recreational marine industry jobs will be preserved and new jobs created. Boatyards will have a larger workforce including subcontractors to complete large refits or small repairs on-time, oil-target and on-budget. Small businesses will be able to afford and provide coverage for all of their workers and still provide reasonable labor rates on a level playing field.

Again this change is effective immediately! So what are the next steps?

First, marine business operators should contact their insurance agent immediately to determine how this legislative change affects their current policy. Depending upon your renewal date you could see a possible refund in premium.

Second, remember to be patient. While this is an amazing legislative accomplishment for everyone in the recreational marine industry, the insurance industry has had less than 30 days to interpret and incorporate those changes into their polices.

Third, DO NOT rush out and cancel all of your insurance before speaking with an informed agent. The Longshore
exemptions for the: recreational marine industry DO NOT APPLY if you do not have state workers compensation. Also, you may want to consider keeping an incidental Longshore policy that is a fraction of your overall premium for that commercial job. You might want to take or to protect yourself from an over-enthusiastic attorney who may attempt to claim your employee as a longshoreman anyway. The LHWCA protects against employer double jeopardy litigation.

Who is not included in this legislative change?

• Boat manufacturers and builders of boats greater than 65 feet.
• Repairers of commercial vessels of any length (i.e. USCG or other government agency vessels; Sea Tow or other “assist” boats; excursion or sightseeing boats; shrimp boats or similar operations; water taxi; county or city owned boats; private security patrol boats; cargo or passenger vessels)
• Marine contractors, dock builders, dredgers, etc.

What are the rules? Myth vs. Fact:

Myth 1: I am a sole proprietor in the recreational marine industry, now exempt from LHWCA, but also exempt under
Florida state workers compensation so I do not need any workers comp.

Fact: The LHWCA exclusions for recreational marine employees DO NOT APPLY if you do nor have state workers
compensation. There are several reasons:

1. The intention of the LHWCA was provide coverage for workers. It is never Congress’ intent to have a maritime worker fall through a technical “loop hole” and not be covered. No worker will be left behind.
2. In order to be a sole proprietor you cannot work under the guise of another. Once you enter a yard or marina, you are considered an employee/subcontractor of that facility, regardless of the billing. If it were not for the yard, marina or similar facility enabling rhe boat to be repaired, a sole proprietor could not provide a service. A person cannot be both an employer and an employee.
3. If you are injured without insurance, the yard, marina or similar facility becomes the responsible party. In addition to monetary and potential criminal penalties, these facilities incur the risk as well as every other contractor/employee in the yard. For without these types of facilities, MANY will go without jobs as the boats will have no place to go.

Myth 2: If you come into the yard, marina or similar facility as a temporary member of the crew, even though I am a subcontractor, I do not need workers compensation and will be covered under rhe boat’s liability policy.

Fact: You are not considered a member of the crew unless spen d at least 30% of your time in service of a particular vessel or identifiable fleet of vessels. Someone who signed on for a week or two to perform repair/maintenance
work will never escape the need to buy the proper coverage. True crew should be covered under the vessel’s Protection & Indemnity insurance.

Myth 3: If a boat is foreign flagged and charters, it is considered commercial.

Fact: The Federal Department of labor defined a recreational vessel as “One designed principally for pleasure”. There is not a reference of documentation. Roscioli Yachting Center played host to a workshop on February 19 to announce the exciting news of the reform and explain how it would impact the industry. Insurance expert Ian Greenway of LIG Marine Managers made a presentation and answered a myriad of questions as all sought to understand the changes.

Many questions still existed and the MIASF Boatyard and Marina Group hosted a Longshore Reform Clinic, “Your questions answered!” at Lauderdale Marine Center on March 24 at 6:00 p.m. On the following day, Wednesday March 25, Ian Greenway of LIG Marine Managers, Inc. made himself available for one on one 1/2 hour appointments
at the MIASF offices to answer individual questions.

MIASF members are already reporting significant savings which are arriving at a pivotal rime, allowing companies to retain current employees and to be positioned to add additional jobs as the economy and the industry recovers. The 919 megayachts scheduled to be delivered this year represents $2 billion in economic impact alone as it relates to services, crew employment, fuel, dockage and the host of other expenditures. Longshore reform willlevd the playing field for the U. S. recreational marine industry as it competes globally for its service work.

The marine industry shall be forever grateful to Congresswoman Debbie Wasserman Schultz and Congressman Ron Klein for recognizing the importance of Longshore Reform and guiding it through the necessary legislative process.

This information is intended to answer most of the frequently asked questions. For additional informacion visit www.uslh.org or call Kristina Hebert directly at 954-605-2138.

Original Article by: Kristina Hebert, Ward’s Marine Electric
MIASF | Tide-ings

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