Keene v. CNA Holdings: A Turning Point for South Carolina’s Statutory Employee Doctrine in Workers’ Compensation Claim

Background: Dennis Seay’s Case and Keene v. CNA Holdings

In August 2021, the South Carolina Supreme Court issued a major decision in Keene v. CNA Holdings, LLC, 870 S.E.2d 156 (2021), which has made it easier for some injured workers to seek full compensation for workplace injuries . The case involved Dennis Seay, a maintenance worker who was employed by Daniel Construction but worked full-time at a polyester fiber plant in Spartanburg owned by Celanese (formerly Hoechst). In the 1970s, Seay’s job was to maintain and repair machinery at the plant, which exposed him continuously to asbestos insulation on the equipment . Years later, he developed mesothelioma (a cancer caused by asbestos) and eventually died from the disease . Seay (and after his passing, his family) sued Celanese’s successor company (CNA Holdings) for negligently providing an unsafe work environment, alleging that Celanese knew about the asbestos danger but failed to warn or protect workers.

Celanese’s defense was that it shouldn’t face a lawsuit at all because Seay was its “statutory employee.” In South Carolina, if a worker is deemed a statutory employee of a company, workers’ compensation is the exclusive remedy – meaning the worker cannot sue that company in court for injuries . Celanese argued that maintaining the plant’s equipment was an integral part of running its business (manufacturing polyester fiber), so even though Seay was hired by an outside contractor (Daniel Construction), he should legally be considered Celanese’s own employee. If that argument succeeded, Seay’s family would be limited to a workers’ comp claim (and barred from recovering the $14 million jury verdict they had won in the trial court) .

The stakes were high. A jury had indeed awarded $14 million in actual damages and $2 million in punitive damages to Seay’s estate at trial, finding Celanese negligent in causing his illness . The trial judge and the South Carolina Court of Appeals had both rejected Celanese’s statutory employer defense, allowing the verdict to stand. Celanese (CNA Holdings) then appealed to the South Carolina Supreme Court. In Keene v. CNA Holdings, the Supreme Court affirmed the lower courts – ruling that Dennis Seay was not a statutory employee of Celanese, and therefore his family’s lawsuit was valid . In the process, the Court changed the legal landscape on what counts as a “statutory employee,” narrowing the doctrine in a way that benefits many injured workers going forward.

What Is the “Statutory Employee” Doctrine in Workers’ Comp?

Under South Carolina’s workers’ compensation law, the statutory employee doctrine addresses situations where a business hires subcontractors or third-party companies to perform work that the business needs. The classic question is: if a worker employed by a contractor gets hurt while doing work for a third-party company, should that worker be treated as an employee of the third-party (“owner”) company for purposes of workers’ comp? If the answer is yes – they are a “statutory employee” – then the worker’s only remedy is to file a workers’ compensation claim (and sueing the owner company is not allowed because the company is immune from tort lawsuits, just as it is immune from employee lawsuits under workers’ comp law) . If the answer is no – not a statutory employee – then the worker can sue the third party company in a civil negligence action (in addition to or instead of a comp claim against their direct employer).

Why does this doctrine exist? Originally, it was created to protect workers. The concern back in the 1930s was that some companies might try to evade responsibility under the new workers’ comp system by outsourcing dangerous or costly parts of their business to uninsured subcontractors. An irresponsible subcontractor might not provide any remedy to an injured worker, leaving the worker high and dry . To prevent this, South Carolina’s legislature included a provision (now codified in S.C. Code § 42-1-400) stating that if a company (“owner”) contracts out part of its “trade, business, or occupation” to someone else, that company is still responsible for paying workers’ comp benefits to the subcontractor’s employees as if it were the employer . In effect, the law forces the hiring company to be a statutory employer – ensuring the injured worker has coverage (either through the subcontractor’s policy or ultimately the hiring company’s policy) . The flip side is that the hiring company then gets immunity from lawsuits – you can’t have it both ways by getting comp benefits and also suing in tort.

Over time, South Carolina courts developed a test to determine when a contractor’s employee would count as a statutory employee of the hiring business. They looked at three main factors, often phrased as whether the work being done was: (1) an important or integral part of the owner’s business; (2) necessary, essential, or incidental to the business (i.e. part of its day-to-day operations); or (3) work that the owner has previously performed for itself (or is in the same line of business) . If any of those were true, courts tended to call the worker a statutory employee. This was a very broad standard – almost any work that needed to get done for the business could be swept in under those criteria.

For decades, the South Carolina Supreme Court often applied the doctrine expansively. If a task was even remotely connected to the business’s operation or profitability, the worker doing it was likely deemed a statutory employee (and thus limited to comp). For example, in the 1939 Marchbanks case that started it all, a power company hired an outside contractor to paint its power poles. An injury lawsuit by the painter was thrown out because keeping poles painted was deemed “part of the trade, business or occupation” of an electric utility – the court reasoned the company couldn’t carry on its business of delivering electricity if its poles weren’t maintained, so painting them was necessary to its business . Similarly, in a 1940 case (Boseman), a textile mill’s contractor was repainting a water tank on the property; when the worker was killed in an accident, the court held he was a statutory employee because the water tank (for fire suppression) was “necessary and essential” to the mill’s operations – thus, painting the tank was considered part of the mill’s business . By the same logic, maintenance and repair work came to be routinely viewed as part of the business. In one case, the Court flatly stated that a power company’s business included “the repair and maintenance” of its poles and wires – thus a lineman employed by a contractor was barred from suing . This broad approach meant that many injured workers could only get workers’ comp, even when hurt by a third party’s negligence, because legally that third party was considered their “employer.”

The Legal Issue in Keene: Was Seay a Statutory Employee of Celanese?

With that backdrop, the core legal issue in Keene v. CNA Holdings was straightforward: Was Dennis Seay essentially an employee of Celanese (the plant owner) under the statutory employee doctrine, or was he just an employee of Daniel Construction (the contractor)? Celanese argued that without the maintenance work Seay was doing, the plant could not operate – machinery would break down, production would halt, etc. In other words, maintenance was an integral part of running a polyester fiber manufacturing business, just as integral as painting power poles was to the electric company in Marchbanks. Therefore (said Celanese), Seay’s work was part of Celanese’s “trade or business,” making Celanese his statutory employer under the law . If the court accepted this, Seay’s family would be confined to a workers’ comp claim (which, notably, would likely be much smaller than the jury verdict they obtained for his wrongful death). Celanese pointed to the long line of cases finding maintenance workers to be statutory employees of manufacturers, arguing that this situation was no different .

On the other side, Seay’s attorneys contended that Celanese had deliberately excluded maintenance work from the scope of its business. Celanese was in the business of making polyester fiber, not in the business of equipment maintenance or industrial cleaning, for example. The proof? Celanese hired Daniel Construction to handle all maintenance from the very beginning – none of Celanese’s own employees were responsible for that task . This wasn’t a case of a company occasionally outsourcing a small project; Celanese never employed a maintenance department in-house. Seay’s team argued that this conscious business decision means the maintenance work was ancillary – Celanese chose to outsource it as a separate function. Therefore, they asserted, Seay should not be considered Celanese’s employee, and Celanese should remain fully liable (like any third-party would) for its negligence in keeping the workplace safe .

This dispute essentially asked the Supreme Court to clarify how to determine what counts as part of a company’s “trade or business.” Is it defined by what is important to the company’s operations (Celanese’s view), or by what the company has chosen to do itself as part of its business model (Seay’s view)? The answer would decide if Seay’s family could keep their jury award or if it would be wiped out by the workers’ comp exclusive remedy rule.

The Supreme Court’s Decision: Narrowing the Doctrine and Focusing on Business Purpose

The South Carolina Supreme Court sided with Seay’s family, ruling that Mr. Seay was not a statutory employee of Celanese – which meant Celanese (CNA Holdings) could be held liable in the tort lawsuit. In doing so, the Court not only resolved this case but also substantially revised the test for statutory employees going forward. The justices acknowledged that for 82 years the courts had “struggled” with applying the statutory employee provisions, leading to confusing and sometimes contradictory results . They recognized that the old three-part test (important, necessary, previously-done-by-owner criteria) had become “confusing, often conflicting, and always difficult” for lower courts to apply – and that this approach “did not reflect the realities of our modern economy” . In modern business, companies commonly subcontract work that they could do in-house, simply because it makes better business sense to outsource. The Court noted that prior interpretations seemed more focused on giving immunity to businesses than on the original purpose of the law . It was time to get back to why the doctrine exists: to prevent companies from evading responsibility by using uninsured contractors . If that evasion risk isn’t present, there’s less reason to call the worker a statutory employee.

So what exactly did the Supreme Court change? The Court essentially threw out the rigid “three-factor” formula and said courts should go straight to the core question the statute asks: is the work part of the owner’s trade, business, or occupation? And crucially, they clarified how to answer that question in today’s context. The analysis is now akin to a “business judgment” test – looking at the hiring company’s own perspective and decisions.

The Court stated that determining whether work is part of a company’s business “is especially a question of business judgment, not law.” In a key passage, Justice John Few wrote that if a business manager reasonably believes her own workforce isn’t equipped to handle a certain job, or finds that it serves the company’s financial or business interests to outsource the work, and if that decision isn’t made just to avoid the costs of insuring workers, then the manager has legitimately defined that the work is not part of the company’s business . In plain terms, when a company outsources a task for legitimate reasons (other than trying to dodge workers’ comp), courts will respect that choice. In such cases, the statutory employee doctrine does not apply, and the company cannot claim immunity from a lawsuit for injuries to the contractor’s employee .

On the other hand, if a company really is in the business of doing that kind of work (for example, it normally uses its own employees for the job in question), then the worker likely would be a statutory employee. The difference is who defines the business: the company’s genuine business model and decisions, rather than an abstract court-imposed notion of “integral” work. This shift gives companies the benefit of the doubt when they legitimately outsource something outside their core business, but it denies them the immunity if they are simply outsourcing part of what is their core business.

Applying this new approach to the facts of Seay’s case, the Supreme Court found Celanese had clearly made a legitimate business decision to outsource maintenance . Celanese’s core business was manufacturing fiber, and it “had no intention of avoiding” work injuries by hiring Daniel – in fact, Celanese required in the contract that Daniel provide workers’ comp insurance for the maintenance crew, and even reimbursed Daniel for those insurance premiums . This showed Celanese wasn’t trying to shirk responsibility; it was simply not in the maintenance business. As Justice Few noted, none of Celanese’s own employees did maintenance work – the company’s employees were hired to run the production machines, “not maintain them.” The maintenance work was important, of course, but important is not the same as intrinsic. Because Celanese “chose to limit its business” to fiber production (and not to include maintenance), the Court concluded that maintenance was not part of Celanese’s trade or business in the sense of the statute . Therefore, Mr. Seay was not a statutory employee, and Celanese could “enjoy no immunity from suit.”

In sum, the Supreme Court affirmed that the $14 million verdict for the Seay family would stand . Beyond that, the decision sent a clear message: going forward, courts should focus on the reality of the company’s business (what work the company chooses to do in-house versus contract out) and the company’s intent in subcontracting, rather than automatically shielding companies from lawsuits just because the injured worker’s job was useful or “integral” in a broad sense.

From Broad to Narrow: A Shift in How “Statutory Employee” Is Defined

It’s important to understand that Keene was not a total bolt from the blue – it was the culmination of a trend in South Carolina case law moving toward a narrower view of the statutory employee doctrine. For much of the 20th century, as discussed, the courts took a very broad stance, as seen in cases like Marchbanks (1939) and Boseman (1940), where even periodic maintenance tasks performed by contractors were deemed part of the owner’s business (hence making the workers statutory employees) . The underlying notion was that if the work needed to be done for the business to function (even indirectly), the worker should get workers’ comp from the hiring company and the company should get immunity.

However, by the late 20th century, the Supreme Court began reining in the doctrine. A pivotal case was Glass v. Dow Chemical Co. in 1997. In Glass, Dow Chemical had to replace large exterior panels on a building at the Medical University of South Carolina – a major, specialized repair job. Dow hired outside firms to do it. An injury occurred, and the question was whether those workers were Dow’s statutory employees. The Supreme Court ruled they were not, explicitly recognizing that not all work that is “necessary” for an owner to carry on its business is part of that business for workers’ comp purposes . The Court noted that “where repairs are major, specialized, or of the sort which the employer is not equipped to handle with its own work force, they are not part of the business.” In Glass, because the work required highly specialized skills that Dow’s regular employees didn’t have (Dow’s workforce “were not trained in construction”), those repair workers were not considered Dow employees – meaning the injured worker could pursue a liability lawsuit instead of being limited to comp . Glass was significant because it departed from the earlier logic that had automatically treated any repair or maintenance as part of the business. It introduced the idea that the scope of the business can be limited by the company’s own capabilities and choices.

Then came Abbott v. The Limited, Inc. in 2000, which pushed the needle further. Abbott involved a truck driver who was delivering merchandise to a retail store (The Limited) and got hurt due to alleged negligence at the store’s loading area. Initially, using the old test, the lower courts in Abbott said the driver was a statutory employee of the store – after all, a retail business “could not operate … without stock,” so delivering goods was essential to its operation . This reasoning fell squarely under the “integral part” and “necessary” prongs of the traditional test. But the S.C. Supreme Court reversed that decision. The Court held that just because something is vital or “important” to a company, it doesn’t automatically make the person performing that function a statutory employee . In the Court’s words, “The fact that it was important to [the Retailer] to receive goods does not render the delivery of goods an important part of [the Retailer]’s business.” Selling clothes was the store’s business; trucking and delivering inventory was a related service, but not the business itself. With that distinction, the delivery driver in Abbott was allowed to sue the store for negligence.

The Supreme Court in Keene explicitly referenced Abbott as a watershed moment – noting that Abbott “represents a change” in South Carolina’s jurisprudence on what counts as part of an owner’s business . In fact, in a subsequent case (Olmstead v. Shakespeare, 2003), the Court affirmed that Abbott’s principle wasn’t confined to delivery-to-store scenarios. Olmstead involved goods being delivered from a manufacturer to a customer, and the Court again said the logic is the same: unless the company’s primary business is transportation, a trucking/delivery worker is not its statutory employee . The Court even went so far as to overrule any prior decisions that conflicted with the Abbott approach . By the time the Keene case reached the Supreme Court, there was already a “firmly established” “trend away from Marchbanks and Boseman – i.e., away from the broad view that had once prevailed .

In Keene, the Supreme Court essentially endorsed and expanded this modern, narrow view to all industries. It agreed with the Court of Appeals that the logic of Abbott and Olmstead – focusing on whether the work is the same kind of work the hiring company “has established as its business” – should apply across the board, “across all trades, businesses, and occupations.” . The analysis must be done case by case, looking at the unique facts, but the guiding principle is clear: Just because work is helpful or even necessary for a company, we don’t assume it’s done by that company as part of its trade. We look at the company’s actual business scope.

In reviewing the lineage, the Keene Court pointed out how each key case contributed to this refined approach: Bridges (1963) acknowledged differing practices between businesses and the importance of a business’s choice to do or outsource certain work ; Wilson (1973) respected a contractor’s decision to buy materials from outside rather than make them in-house, treating the outsider’s employee as not a statutory employee since the company removed that function from its own business ; Glass (1997) carved out specialized outsourced work as not part of the business ; Abbott (2000) nailed down that “important” ≠ “part of the business” ; and Olmstead (2003) confirmed and generalized Abbott’s rule . Keene then took the final step of abandoning the antiquated three-part test entirely in favor of this business-oriented standard. The end result is a doctrine that more faithfully serves its original purpose – protecting workers – without giving companies an overly broad liability shield that was never intended by the legislature.

Impact on Workers’ Compensation Claims and Third-Party Injury Lawsuits

The Keene decision has significant implications for current and future workplace injury claims in South Carolina, particularly for those working through contractors or subcontractors. It marks a clear shift in favor of injured workers on this issue. Here are some of the major impacts:

Narrower Immunity for Companies: Many companies that hire subcontractors have long used the statutory employee doctrine as a “shield” against tort liability . They would claim that any contractor’s employee on their premises was their statutory employee, forcing the claim into the workers’ comp system (where payouts are limited and no fault needs to be proven). After Keene, that shield is not as broad. Companies can no longer assume that anything a contractor is doing on their premises falls under workers’ comp exclusivity. The doctrine will only apply if the work is truly a part of the company’s own business operations as defined by the company’s normal practices. This increases the likelihood that companies can be held liable in tort for injuries to subcontractor workers .
More Opportunities for Injured Workers to Sue: If you are an injured worker employed by a subcontractor, you are now more likely to have the option to bring a negligence lawsuit against the company that hired your employer (the “owner” or general contractor), depending on the nature of your work. The Supreme Court recognized that in scenarios like Mr. Seay’s – where the worker’s job was important but fundamentally external to the host company’s core business – the “road to compensation” through a lawsuit should be open. The Keene opinion explicitly notes that this decision will make it easier for other workers in similar circumstances to get compensated for their injuries . Practically, this could mean higher damage recoveries for those workers, because in a tort lawsuit one can recover for pain and suffering, full lost wages, punitive damages, etc., which are not available in workers’ comp.
Workers’ Comp Coverage Still Guaranteed: It’s worth emphasizing that Keene doesn’t leave anyone without a remedy. If a worker is not a statutory employee of the hiring company, that means the hiring company must have hired a responsible, insured contractor (as Celanese did with Daniel). In fact, in many contracts (like Celanese’s), the hiring company pays for or reimburses the subcontractor’s workers’ comp insurance to ensure coverage . So injured workers will still receive workers’ comp benefits from their direct employer’s insurer. What Keene changes is whether the hiring company can also be sued. The Supreme Court made it clear that the public policy goal is simply to ensure workers are covered by some workers’ comp – once that is satisfied, granting the hiring company immunity is not necessary . In Seay’s case, he was covered by Daniel’s workers’ comp policy (Celanese even indirectly paid the premiums), so there was no risk of him being without workers’ comp protection. Thus, allowing a tort lawsuit on top of that didn’t undermine the purpose of the law – it reinforced accountability. Going forward, we can expect courts to use similar reasoning: Is the worker covered by comp through their employer or the general contractor? If yes, then denying the worker a chance to sue the negligent party isn’t serving the workers’ comp system’s purpose; it’s only protecting the company. The immunity is now seen as a collateral benefit, not the main intent .
Case-by-Case Fact Analysis: One practical impact is that these disputes may become more fact-intensive. Companies and workers (and their attorneys) will argue about the details of the business’s operations. We’ll see questions like: Does the company have its own department or employees who do this work? How specialized is the work? Why was it outsourced – was it a cost-saving measure, a lack-of-expertise issue, or just routine contracting? The courts will examine business contracts, company practices, and motivations to decide if the work was part of the company’s trade. This was evident in Keene – the contract terms between Celanese and Daniel (including the insurance requirement) and Celanese’s internal staffing decisions were key evidence. We can expect similar evidence to be crucial in future cases.
Impact on Construction Industry and Others: A common scenario for statutory employee questions is the construction industry – e.g., an employee of a subcontractor (like an electrical sub or a painting sub) gets hurt and tries to sue the general contractor or property owner. Traditionally, general contractors often are deemed statutory employers (construction is usually the general contractor’s trade, and they just hire subs to do segments of it). Keene doesn’t automatically change that, but it does indicate courts should look at the specific facts. For instance, if a general contractor hires a specialty firm for something highly specialized that the GC never does itself, could that be outside its trade? Possibly – Keene gives room for that argument. In manufacturing and other industries, tasks like maintenance, transportation, catering, IT services, etc. will be analyzed under the new lens. If those services are outsourced, an injured worker in those roles might now get a chance to sue the host company where previously they would have been barred.
Companies May Reevaluate Contracts: Knowing that outsourcing work no longer guarantees immunity from lawsuits, companies might take additional steps to protect themselves. This could mean more rigorous safety oversight of contractors (since they can be sued for contractor employees’ injuries if caused by the company’s negligence) or it could even affect decisions about which tasks to outsource versus perform in-house. However, the Court did provide reassurance to businesses: if you genuinely outsource for legitimate reasons, the law will honor that. The focus is on preventing abuses (sham contracting to avoid liability), not penalizing good-faith business practices. In fact, by aligning legal outcomes with sensible business decisions, the ruling could encourage companies to clearly delineate what their “business” encompasses in contracts and internal policies.

In short, Keene v. CNA Holdings realigns South Carolina’s law with a more modern and worker-friendly viewpoint. It ensures that workers aren’t unfairly barred from civil recovery when they are hurt due to a company’s negligence, so long as holding that company liable doesn’t undermine the workers’ comp system’s goal of providing a sure, quick remedy. And it reminds businesses that if they outsource peripheral functions, they can’t automatically expect to be immune from lawsuits – unless they truly treat those functions as part of their own operation. This decision closes a loophole that, in the Court’s view, had favored immunity over accountability for too long .

Impact on Workers’ Compensation Claims and Third-Party Injury Lawsuits

The Keene decision has significant implications for current and future workplace injury claims in South Carolina, particularly for those working through contractors or subcontractors. It marks a clear shift in favor of injured workers on this issue. Here are some of the major impacts:

Narrower Immunity for Companies: Many companies that hire subcontractors have long used the statutory employee doctrine as a “shield” against tort liability . They would claim that any contractor’s employee on their premises was their statutory employee, forcing the claim into the workers’ comp system (where payouts are limited and no fault needs to be proven). After Keene, that shield is not as broad. Companies can no longer assume that anything a contractor is doing on their premises falls under workers’ comp exclusivity. The doctrine will only apply if the work is truly a part of the company’s own business operations as defined by the company’s normal practices. This increases the likelihood that companies can be held liable in tort for injuries to subcontractor workers .
More Opportunities for Injured Workers to Sue: If you are an injured worker employed by a subcontractor, you are now more likely to have the option to bring a negligence lawsuit against the company that hired your employer (the “owner” or general contractor), depending on the nature of your work. The Supreme Court recognized that in scenarios like Mr. Seay’s – where the worker’s job was important but fundamentally external to the host company’s core business – the “road to compensation” through a lawsuit should be open. The Keene opinion explicitly notes that this decision will make it easier for other workers in similar circumstances to get compensated for their injuries . Practically, this could mean higher damage recoveries for those workers, because in a tort lawsuit one can recover for pain and suffering, full lost wages, punitive damages, etc., which are not available in workers’ comp.
Workers’ Comp Coverage Still Guaranteed: It’s worth emphasizing that Keene doesn’t leave anyone without a remedy. If a worker is not a statutory employee of the hiring company, that means the hiring company must have hired a responsible, insured contractor (as Celanese did with Daniel). In fact, in many contracts (like Celanese’s), the hiring company pays for or reimburses the subcontractor’s workers’ comp insurance to ensure coverage . So injured workers will still receive workers’ comp benefits from their direct employer’s insurer. What Keene changes is whether the hiring company can also be sued. The Supreme Court made it clear that the public policy goal is simply to ensure workers are covered by some workers’ comp – once that is satisfied, granting the hiring company immunity is not necessary . In Seay’s case, he was covered by Daniel’s workers’ comp policy (Celanese even indirectly paid the premiums), so there was no risk of him being without workers’ comp protection. Thus, allowing a tort lawsuit on top of that didn’t undermine the purpose of the law – it reinforced accountability. Going forward, we can expect courts to use similar reasoning: Is the worker covered by comp through their employer or the general contractor? If yes, then denying the worker a chance to sue the negligent party isn’t serving the workers’ comp system’s purpose; it’s only protecting the company. The immunity is now seen as a collateral benefit, not the main intent.
Case-by-Case Fact Analysis: One practical impact is that these disputes may become more fact-intensive. Companies and workers (and their attorneys) will argue about the details of the business’s operations. We’ll see questions like: Does the company have its own department or employees who do this work? How specialized is the work? Why was it outsourced – was it a cost-saving measure, a lack-of-expertise issue, or just routine contracting? The courts will examine business contracts, company practices, and motivations to decide if the work was part of the company’s trade. This was evident in Keene – the contract terms between Celanese and Daniel (including the insurance requirement) and Celanese’s internal staffing decisions were key evidence. We can expect similar evidence to be crucial in future cases.
Impact on Construction Industry and Others: A common scenario for statutory employee questions is the construction industry – e.g., an employee of a subcontractor (like an electrical sub or a painting sub) gets hurt and tries to sue the general contractor or property owner. Traditionally, general contractors often are deemed statutory employers (construction is usually the general contractor’s trade, and they just hire subs to do segments of it). Keene doesn’t automatically change that, but it does indicate courts should look at the specific facts. For instance, if a general contractor hires a specialty firm for something highly specialized that the GC never does itself, could that be outside its trade? Possibly – Keene gives room for that argument. In manufacturing and other industries, tasks like maintenance, transportation, catering, IT services, etc. will be analyzed under the new lens. If those services are outsourced, an injured worker in those roles might now get a chance to sue the host company where previously they would have been barred.
Companies May Reevaluate Contracts: Knowing that outsourcing work no longer guarantees immunity from lawsuits, companies might take additional steps to protect themselves. This could mean more rigorous safety oversight of contractors (since they can be sued for contractor employees’ injuries if caused by the company’s negligence) or it could even affect decisions about which tasks to outsource versus perform in-house. However, the Court did provide reassurance to businesses: if you genuinely outsource for legitimate reasons, the law will honor that. The focus is on preventing abuses (sham contracting to avoid liability), not penalizing good-faith business practices. In fact, by aligning legal outcomes with sensible business decisions, the ruling could encourage companies to clearly delineate what their “business” encompasses in contracts and internal policies.

Key Takeaways for Injured Workers and Attorneys

For Injured Workers (Contractor Employees)

You might have the right to sue the hiring company. If you are hurt while working for a subcontractor at someone else’s workplace, don’t assume you’re limited to a workers’ comp claim. Think about whether your job was part of that company’s normal business operations. Under Keene, if the work you were doing is something the company does not ordinarily do for itself, you are likely not their statutory employee. That means you can pursue a negligence lawsuit against that company (a “third-party action”) in addition to claiming workers’ comp from your direct employer. For example, a maintenance mechanic working at a manufacturing plant (like Seay), or a delivery driver dropping off products to a retail store (like in Abbott), may now sue the owner/company for negligence because those jobs were outsourced and are not considered part of the host company’s core business . This can be hugely beneficial – a successful lawsuit can provide compensation for pain and suffering and other damages that workers’ comp doesn’t cover.
Workers’ comp benefits are still available – and now they work in your favor. Whether or not you’re a statutory employee, you will usually be covered by workers’ comp insurance (either through your employer or the hiring company’s policy). Keene doesn’t take away your workers’ comp; rather, it might add an extra avenue for recovery. If you’re deemed not a statutory employee, you collect workers’ comp from your employer and you can also sue the third party for additional damages. The Supreme Court specifically noted that having workers’ comp coverage in place satisfies the law’s concern for the injured worker, so that shouldn’t bar you from also suing the negligent party . Bottom line: being covered by comp no longer automatically shields the larger company from liability. You get the security of comp and the opportunity of a lawsuit if warranted.
If the work is truly part of the company’s business, you’ll be limited to comp. It’s important to understand that Keene narrows the doctrine but doesn’t abolish it. If you are doing work that is directly in line with the company’s primary business, you may still be considered a statutory employee, which means you cannot sue that company. For instance, if you’re an electrician subcontractor building a power plant for an electric utility, or a framer working for a general contractor constructing a building, those tasks might well be deemed part of the hiring entity’s trade. In those cases, the hiring company must ensure you have workers’ comp coverage, and that will be your exclusive remedy. Keene didn’t change outcomes where a contractor’s work *really is the same work the hiring company is in business to do. Each case can differ, so this is where consulting a lawyer about the specifics is key – but know that the mere fact your job was important to the company is no longer enough to make you their statutory employee .
Signs you may not be a statutory employee: If the company outsourced your work because it lacked the manpower, expertise, or inclination to do it itself, that’s a strong sign you’re not considered their employee. Look at how the company operates: do they have an internal department or staff doing what you do, or is it entirely handled by contractors? In Seay’s case, all maintenance was handled by contractors, none by Celanese employees . Likewise, if you’re, say, a cleaning contractor’s employee and the host company doesn’t employ any janitors of its own, you’d argue cleaning isn’t part of their business. These facts matter. Also, if the company explicitly required your employer to carry workers’ comp insurance for you (as Celanese did), it shows they were fulfilling their legal duty to cover you via the subcontractor – which supports that they intended to treat that work as outside their own business (thus no immunity for them). Keep these factors in mind when discussing your case with an attorney.

For Attorneys and Legal Professionals

Investigate the hiring company’s business model and outsourcing decisions. In any case involving a contractor’s injured employee, a thorough understanding of the defendant company’s business is crucial post-Keene. Don’t accept at face value a defendant’s claim that “it was part of our business.” Dig into company records, contracts, and testimony to determine if the task in question was something the company regularly does with its own employees or something it purposefully outsources. The Keene decision directs courts to essentially apply a business judgment rule: Did the company have a genuine business reason to outsource this work (lack of expertise, efficiency, economic decision)? If yes, the courts will likely find the worker was not a statutory employee . For example, show that the company’s management decided “we are not in the X business, so we hire Y company to do that for us.” Any evidence of that decision-making will bolster the argument against statutory employment. Conversely, if a company historically performs that type of work in-house and just happened to contract it out this time, it will be harder to argue Keene applies – in that scenario, use Bridges (1963) as a caution, where a one-off contracting out didn’t change the business’s inherent scope .
Identify the motive: outsourcing for legitimate reasons vs. liability avoidance. One question Keene raises: was the outsourcing done “to meet the ever-increasing competitive challenges” and efficiency needs of modern business (legitimate), or was it done to avoid the expense of insuring workers (not legitimate) ? During discovery, seek information on why the company outsourced the work. Internal communications or policies might reveal if, for instance, safety or cost of insurance was a deciding factor. The Supreme Court signaled that if a company is trying to dodge workers’ comp costs, courts should not reward that. On the flip side, if the company can point to valid business justifications (and has indeed made sure the contractor’s employees are covered by insurance), the worker’s side can argue this supports the position that the work was outside the company’s business (hence no immunity). Be prepared to draw that line in your arguments – courts post-Keene will be looking for that reasoning.
Use the language of Keene, Glass, and Abbott to your client’s advantage. These cases are now your key citations when opposing a motion to dismiss or summary judgment based on the statutory employee defense. For example, Keene reaffirmed that “just because work is important to a business does not mean the work is part of the business.” That one line from Abbott, now endorsed in Keene, can be powerful in rebutting a defendant’s broad claims of integrality. Likewise, cite Glass to show that specialized or one-off work falls outside the business’s scope . And of course, quote Keene itself on the new test: a company has the right to define its business boundaries through reasonable decisions, and courts will honor those boundaries . If you represent the injured worker, emphasize how the facts fit into the Keene framework: “This is a classic case of a company outsourcing what it doesn’t consider part of its core business, exactly the scenario the Supreme Court in Keene said would not trigger statutory immunity.” If you represent the defendant company, you’ll want to do the opposite – show that the function was indeed part of its core operations or that Keene is distinguishable – but the burden has shifted perceptibly toward companies to justify broad claims of immunity.
Remember that workers’ comp coverage and tort immunity are separate questions now. After Keene, the old conflation of “if comp applies, no tort” is no longer automatic. The Supreme Court made it clear that the public policy of covering workers is not an all-or-nothing tradeoff with tort rights . As an attorney, you should address both prongs: ensure your client had workers’ comp available (coverage is a good thing and satisfies the court that the worker wasn’t left unprotected), but then pivot to why that shouldn’t bar the tort claim. Point out if the hiring company required or secured comp coverage for the contractor’s employees – that shows compliance with the law’s intent. Then argue immunity for the company is unnecessary on top of that. This approach directly aligns with Keene’s reasoning . On the defense side, a company might argue Keene doesn’t apply because the particular facts show the work was core to their business – but simply saying “the worker was covered by comp” will not itself be a winning argument going forward, since the Court has effectively decoupled coverage from immunity in these scenarios.
Practical impact – advise clients accordingly: If you counsel businesses, especially those in manufacturing, construction, or any industry reliant on contractors, advise them that being proactive about safety and contractual clarity is key. They should know that outsourcing work no longer guarantees a free pass on liability. Emphasize steps like: ensuring contractors are well-vetted and safe, maintaining clear contracts that outline the contractor’s responsibilities, and perhaps even consider additional insured arrangements or liability insurance for such situations. If you counsel injured workers or other attorneys (referring attorneys in workers’ comp or personal injury), spread the word that Keene opens new possibilities. A workers’ comp claim may not be the end of the story – there could be a viable third-party lawsuit now, even if past wisdom might have said otherwise. This is especially true in cases of toxic exposures, catastrophic injuries, or wrongful death on worksites, where comp benefits are woefully inadequate to make the family whole (as was true in Mr. Seay’s case). Keene gives a pathway to significantly greater recovery in the right circumstances

By explaining Keene v. CNA Holdings and the evolution of South Carolina’s statutory employee doctrine, we see a clear message: the law will no longer broadly immunize companies at the expense of injured workers when those companies have intentionally outsourced work outside their core business. The decision is both worker-friendly and reflective of modern business practices, ensuring that the original purpose of the Workers’ Compensation Act – to protect employees, not to shield employers – is honored . For injured workers and their attorneys, Keene is a game-changer that could open the door to fuller justice, while for businesses and defense attorneys, it’s a call to carefully evaluate when and how the statutory employee defense truly applies.

Categories: Workers Compensation