THE DEFENSE BASE ACT

(December 2020)

BACKGROUND

Legislation passed in 1941 enacted the Defense Base Act (DBA). It provides compensation for disability or death to persons who are injured while employed at military, naval, and air bases outside the United States. While it is primarily meant to cover civilian government contractor and subcontractor employees working on military bases outside the United States (U.S.), it was amended to include employees of contractors working on government public works contracts who construct dams, schools, roads, harbors, etc. A further amendment added employees of enterprises that are directly or indirectly involved with the national security of the U.S. and its allies. Today, almost any contract with a U.S. government agency for work outside the U.S. of a military or other nature probably requires Defense Base Act coverage.

The U.S. Department of Labor, Office of Workers Compensation Programs, Division of Longshore and Harbor Workers Compensation, administers the act. It ensures that workers compensation benefits are provided to covered workers correctly and on time. DBA adopts the provisions of USL&HWCA with only a few exceptions. The insurance requirements for the DBA are essentially identical to those of USL&HWCA.

COVERAGE UNDER THE DEFENSE BASE ACT

DBA covers the following employment situations:

• Work for private employers on U.S. military bases or on any lands outside the U.S. used for military purposes. This includes those in U.S. territories and possessions.
• Work on public works contracts outside the U.S. with any U.S. government agency. This includes construction and service contracts in connection with national defense or war activities.
• Work on contracts the U.S. approves and funds under the Foreign Assistance Act. This generally provides for cash sales of military equipment, materials, and services to its allies in cases where the contract is performed outside the U.S.
• Work for American employers that provide welfare or similar services outside the U.S. for the benefit of the Armed Forces. An example is the United Services Organization (USO).
• Employees of any sub-contractors of the prime or general contractor involved in a contract in connection with any of the above

DEFENSE BASE ACT WAIVERS

Because DBA coverage does not refer to the nationality of covered employees, local nationals or third-country nationals are automatically covered. The U.S. Secretary of Labor can grant waivers with respect to any contract, work location, or class of employees, subject to complying with specific criteria and protocols. There are a few points to keep in mind with respect to the waiver process:

• Waivers cannot be requested for U.S. citizens or employees hired in the U.S.
• The agency that administers and handles the contract must recommend approving the waiver request.
• Waivers may be refused for certain countries regardless of other circumstances. This is especially true with those that represent an active war zone.
• An application must accompany contractor requests for waivers.

Once a waiver is granted, it is valid only if alternative workers compensation benefits are provided to the waived employee according to local laws.

COVERAGE ISSUES

Several points must be considered with respect to coverage:

• Courts frequently rely on precedent when they determine liability issues. Two specific doctrines are especially important in finding coverage under the Act:
• The Zone of Special Danger Doctrine requires that a worker's injury or death arise out of or in the course of his or her employment. However, the Doctrine makes an exception when unique conditions or circumstances of employment place an employee in a zone of danger. When an accident that results in injury or death in such a zone, it may be covered even though the injury or death may not be strictly related to job duties.
• The Reasonable Recreation Doctrine allows for a worker's injury or death to arise out of or in the course of the employer's furnished, funded, or promoted recreational facilities. This may also include some non-sponsored activities.

Note: Even when taken together, these two doctrines may not guarantee an employee "around the clock coverage."

• Failing to obtain DBA coverage may result in serious penalties. Government contracts usually include provisions that require bidding contractors to purchase and maintain certain required coverage. Not doing so may result in both fines and possible loss of the contract. Employers that do not provide the required DBA coverage may also be subject to common lawsuits and the normal common law defenses may be waived. Stated a different way, claimants or their heirs may have to simply file a suit and not necessarily prove negligence. Claims may also be brought directly against the employer in Federal Court.

BENEFITS UNDER THE DEFENSE BASE ACT

DBA provides disability, medical, and death benefits to covered workers injured or killed in the course of their employment whenever it happens. Compensation for total disability is for two-thirds of the employee's average weekly earnings, up to periodically adjusted maximum amounts per week. Compensation also applies to partial loss of earnings. The death benefit is one-half of the employee's average weekly earnings to the surviving spouse or to one child and two-thirds of those earnings for two or more such survivors, subject to the current weekly maximum. Permanent total disability and death benefits may be payable for life and are also subject to annual cost of living adjustments. There is no minimum compensation rate.

Note: The Act includes detailed instructions and procedures to report injuries and file claims.

HOW TO COVER WORKERS UNDER THE ACT

WC 00 01 01 A–Defense Base Act Coverage Endorsement must be attached to WC 00 00 00 C–Workers Compensation and Employers Liability Insurance Policy for coverage to apply. It provides workers compensation insurance and employers liability insurance for work subject to the Defense Base Act extension of The United States Longshore and Harbor Workers' Compensation Act. The location and type of work must be described on the endorsement schedule or the Information Page. It replaces policy General Section C. Workers Compensation Law with a different General Section C. Workers Compensation Law. It also provides that Part Two–Employers Liability Insurance, C. Exclusion 8 does not apply to work subject to the Defense Base Act.

Note: Even though the Defense Base Act is an extension of The United States Longshore and Harbor Workers' Compensation Act, using WC 00 01 06 A–Longshore and Harbor Workers' Compensation Act Coverage Endorsement does not provide Defense Base Act coverage. In fact, it actually excludes it.