In analyzing the American Recovery and Reinvestment Act of 2009 (“ARRA”) that President Obama signed into law on February 17, 2009, much of the focus has been placed on provisions that create additional burdens on employers. However, the recreational boating industry will have at least one cause to celebrate the ARRA’s passage.

One provision of the ARRA expands the exclusion of recreational boating employees from coverage under the Longshore and Harbor Workers’ Compensation Act (“Longshore Act”). The Longshore Act provides workers’ compensation insurance coverage for certain types of employees, and the compensation rates for those employees are significantly higher than the average rates under comparable state workers’ compensation systems.

Under the pre-stimulus Longshore Act, one group of individuals excluded from coverage under the Act were “individuals employed to build, repair, or dismantle any recreational vessel under sixty-five feet in length.” On the other hand, businesses that manufactured and repaired boats 65 feet or longer were subject to the Act.

Pursuant to the ARRA, the exclusion has been revised to comprise “individuals employed to build any recreational vessel under sixty-five feet in length, or individuals employed to repair any recreational vessel, or to dismantle any part of a recreational vessel in connection with the repair of such vessel.” Thus, all individuals who repair recreational vessels or who dismantle recreational vessels in connection with the repair of such vessels are excluded from coverage under the federal Act, even if the recreational vessels in question exceed sixty-five feet in length.

This is welcome news to the recreational boating industry, as the industry will likely see a decrease in workers’ compensation insurance premiums for employees involved in the repair of recreational boats. However, employers are still subject to the Longshore Act with regard to employees who perform any work, however insignificant, that is not subject to the exclusion, including the manufacture of recreational boats over sixty-five feet in length and any work on commercial boats. Employers are also advised to not cancel their Longshore policies until they have obtained state workers’ compensation insurance for the affected employees.

To learn how your business can benefit from the recent changes to the Longshore and Harbor Workers’ Compensation Act, please be sure to contact your employment counsel at Smith, Gambrell & Russell, LLP.