ISSUE: Defense Base Waivers

Jack_crop 72dpiI’ve discussed the Defense Base Act (DBA) (42 U.S.C. 1651) on several previous occasions so I’ll just briefly review it here and then discuss one particular aspect.

The DBA is a workers’ compensation law that extends the benefits of the Longshore Act to employees outside of the continental U.S. under certain circumstances.  It was enacted in 1941, supplemented in 1942 by the War Hazards Compensation Act (WHCA) (42 U.S.C. 1701), and amended in 1953 and 1958 to broaden coverage.

The DBA covers the following employment activities:

  1. All employees working overseas for private employers on U.S. military bases or on any lands used by the U.S. for military purposes outside the continental U.S. in any Territory or possession,
  2. All employees working on public works contracts with any U.S. Government agency outside the continental U.S.,
  3. All employees working on contracts approved or funded by the U.S. under the Foreign Assistance Act, generally providing for cash sale of military equipment, materials, or services to allies if the contract is performed outside the continental U.S.,
  4. All employees working for American employers providing welfare or similar services outside the U.S. for the benefit of the armed forces (such as the USO).

The DBA applies to all employees, not just to U.S. citizens, and to all employers, foreign or domestic.

The DBA applies to all contracts regardless of length, whether just a few days, a year, or longer.

There does not have to be a causal relationship between the employment of the injured worker and the injury in the conventional sense.  All that is required is that the “obligations and conditions” of employment create the “Zone of Special Danger” out of which the injury arose.  This is sometimes inaccurately referred to as “24 hour coverage”.

Defense Base Act Waivers

Section 1(e) of  the Defense Base Act states, “Upon the recommendation of the head of any department or other agency of the United States, the Secretary of Labor, in the exercise of his discretion, may waive the application of this section with respect to any contract, subcontract, or subordinate contract, work location under such contracts, or classification of employees.”

Waiver requests are routinely granted when submitted by the proper person in the proper form, but there are limits and conditions.

Waivers do not apply to any employee who is a U.S. citizen, or is hired in the U.S., or who is a bona fide resident of the U.S. regardless of nationality.  The one exception to this policy is the case of Guam, where the DBA has been waived in its entirety even though the residents are U.S. citizens.

There is a further, very important, consideration.  There is a condition attached to every waiver.  The condition is that employees covered by the waiver must receive workers’ compensation benefits pursuant to the provisions of the local laws.  If this condition is not met then the waiver is null and void and the DBA applies to all employees.

Federal agencies should insert in every contract the requirement that each contractor, before commencing performance under the contract, must provide and maintain for all waived employees such workers’ compensation insurance or injury and death benefit protection required by local law.  It is important that this protection not exclude war hazards, since a waiver under the DBA also waives coverage under the WHCA for direct claims by injured employees.

A problem arises when there is no effective local workers’ compensation law.  Where that is the case, you either apply the provisions of the DBA, or if you obtain a waiver of the DBA as to host country and third country nationals you make sure that the conditions for application of the waiver are satisfied.  For third country nationals, for example, you can provide home country or country of hire coverage.  For host country nationals, if there is no existing law, you have a problem.  What did the local law provide when and if it was in effect?  What kind of existing health and disability coverage is available which approximates workers’ compensation protection?  Does it include war risk protection?  You must come up with something close to local coverage or else you must provide DBA benefits.

The burden is on the contractor to make sure that his waiver meets all conditions.

John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers Compensation Programs, as the Chief, Branch of Insurance and Financial Management, and the Acting Director, Division of Longshore and Harbor Workers’ Compensation.  Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of the AEU Longshore Blog.

One thought on “ISSUE: Defense Base Waivers

  1. Pingback: AEU Longshore Blog ISSUE: Questions- Extensions – AEU Longshore Blog

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