Utah House rejects bill to restore 'statutory employer' immunity after heated debate

SALT LAKE CITY — The Utah House on the floor Tuesday rejected House Bill 299, a bipartisan but contested measure that would have restored immunity in some cases for statutory employers and limited certain third-party lawsuits by injured workers. The final vote was 29 in favor and 42 opposed.

Supporters, including the bill sponsor and representatives of business groups, said the measure was intended to return the law to its status before the June court decision in the “Pate” line of cases and to protect small contractors and owners from disruptive litigation. "House Bill 299 restores the protection of exclusive remedy to the statutory employer," said Larry Bunkle, president of the Utah Manufacturers Association, who testified for the bill. He argued that the no‑fault workers' compensation system benefits both employees and employers and that the Pate decision exposed up‑line companies to suits that previously had been resolved through workers' compensation.

Opponents said the bill would improperly strip injured workers of remedies against negligent third parties and would shift costs to victims and state funds. "This bill extends immunity from tort lawsuit to parties who are known as, quote, statutory employers," said Roger Sandak, speaking for the opponent side. He warned that reimbursements the state insurance fund now recovers through successful third‑party suits could be lost, raising long‑term costs for employers and taxpayers.

Much of the debate focused on the policy trade‑off at the heart of workers' compensation: immediate but limited benefits under the no‑fault system versus the possibility of larger, fault‑based recoveries through litigation. Representative Howard described the measure as "taking away" responsibility for negligent parties and said the bill would benefit owners and general contractors while giving injured workers less recourse. Supporters countered that the bill simply sought to return the legal balance that had prevailed before the recent court interpretation and to avoid small contractors being squeezed out of competitive bidding.

Lawmakers also debated the fiscal note. Opponents pointed to estimates suggesting possible multimillion‑dollar impacts on the state insurance fund if recoveries were curtailed; during floor debate members cited an illustrative figure as high as $7.8 million as a potential impact, though proponents argued the bill would return the law to pre‑Pate practice and therefore not change established rates. The sponsor noted the bill does not change workers' compensation benefits but aims to restore the "exclusive remedy" for statutory employers.

After a motion to end debate was adopted, the House proceeded to a final recorded vote. With 29 yeas and 42 nays, House Bill 299 failed and was filed. There was no further floor action on amendments to create a direct compensating funding mechanism or to alter the workers' compensation benefit structure.

The debate included extensive exchanges between proponents, opponents, and members asking technical and policy questions; proponents emphasized protection for small subcontractors and continuity of the private contracting system, while opponents stressed injured workers' rights and potential fiscal consequences to the state's compensation funds. The House returned to other business following the vote.