The U.S. Government requires employees hired by contractors and subcontractors to work on international government contracts to be protected by Defense Base Act (DBA) insurance coverage, regardless of their assignment and/or location.
DBA insurance coverage provides workers’ compensation benefits (medical, disability, death) in the event of a work-related injury or illness.
Interest in DBA insurance has increased recently due to the high number of Department of Defense and other government contracts that are being awarded to U.S. corporations for work in countries such as Afghanistan and Iraq on projects related to the military, public works and U.S. national security.
Contact Jason Allen by email or by phone for Defense Base Act coverage or to obtain a quote.
Employment Situations Requiring DBA Coverage
- Any employee working on a military base or reservation outside the U.S.
- Any employee engaged in U.S. government funded public works business outside the U.S.
- Any employee engaged in public works or military contract with a foreign government which has been deemed necessary to U.S. national Security.
- Those employees that provide services funded by the U.S. government outside the realm of regular military issue or channels.
- Any employee of any subcontractors of the prime or letting contractor involved in a contract like number 1 – 4 above.
One should note that DBA coverage makes no reference to the nationality of covered employees; thus, local nationals or third country nationals are automatically covered under the DBA. Defense Base Act insurance coverage is required unless a waiver has been obtained from the U.S. Department of Labor. Waivers can be granted, but they need to follow certain criteria.
Key points for gaining waivers include:
- Class of employee must have available alternate means of compensation such as Employers Liability, Workers’ Compensation, or Social Security.
- Waivers cannot be requested for class of employees including U.S. citizens or those employees hired inside the U.S.
- Agency letting the contract must recommend that such a waiver be granted.
- Contractor must file an application with the U.S. Department of Labor.
All government contracts contain a provision requiring that bidding contractors obtain necessary Defense Base Act insurance. Failure to obtain DBA insurance will result in fines and possible loss of contract.
What are the consequences of not carrying DBA Coverage?
Failure to obtain DBA insurance carries stiff penalties. All government contracts contain a provision that requires bidding contractors to obtain necessary insurance. Failure to do so will result in fines and possible loss of contract. The additional and most severe penalty is that employers without DBA coverage are subject to suits under common law, wherein common law defenses are waived. In other words, the claimants or their heirs need only file suit and do not have to prove negligence. Lastly, all claims may be brought in Federal Court and are against the insured directly. According to Ashcraft & Gerel, LLP, the leading national law firm handling Defense Base Act cases for injured workers, these cases can be very costly, and should be a source of great concern for contractors operating overseas.
Some Information Courtesy of AIG WorldRisk
For more information on the Defense Base Act, visit the U.S. Department of Labor’s website or contact Mr. Jack Martone at (202) 693-0925.