Kentucky's Thoroughbred Industry And Workers' Compensation: "Out Of The Money"

On May 1, the world will turn its eyes to Louisville, Ky., and the 136th running of the Kentucky Derby. The majestic thoroughbreds and rich traditions of the horse industry embody Kentucky's standing as the center of the equine universe, but some might consider the proclamation a grand fiction if it knew the plight of jockeys and backside workers injured on the job in the Bluegrass State.

In 2005-06, the Lexington Herald-Leader published “Wrong Side of the Track,” an award-winning, in-depth series of reports investigating compensation for injured track workers. The series focused on jockeys but also on the people who work on the “backside” or “backstretch,” who are “some of the least-protected in the state and some of the poorest in the billion-dollar horse business.” The series brought statewide attention to the deficiencies and prompted attempts to address the inequalities in what the paper dubbed “a bawdy fiefdom of manure and money, ruled by trainers who decide who gets benefits ... and who doesn't.”

At the time, Kentucky's jockeys and track workers did not benefit from workers' compensation coverage. Now, nearly five years later, they still don't.

But other horse-industry states like Maryland, New York, New Jersey, California and Colorado do not follow Kentucky's lead, choosing to provide workers' compensation coverage to jockeys and/or their backstretch counterparts.

In 1985, for instance, the Maryland legislature created the Maryland Jockey Injury Compensation Fund Inc., regarded as the first workers' compensation program for jockeys in the United States. Per §11-903 of the Business Regulation Article, “The Jockey Fund shall get workers' compensation insurance on a blanket basis for all jockeys who are covered employees under §9-212 of the Labor and Employment Article.”

In 1991, the New York legislature established the state's Jockey Injury Compensation Fund, which would serve as the as the employer of all jockeys, apprentice jockeys and licensed exercise riders. Specifically, under New York's Jockey Fund,

A jockey, apprentice jockey, or exercise person performing services for an owner or trainer in connection with the training or racing of a thoroughbred horse at a facility of a racing association or corporation subject to article two or four of the racing, pari-mutuel wagering and breeding law and subject to the jurisdiction of the New York State Racing and Wagering Board, is regarded as the “employee” of The New York Jockey Injury Compensation Fund, Inc. Such individual is also considered the employee of all owners and trainers who are licensed or required to be licensed under article two or four of the racing, pari-mutuel wagering and breeding law at the time of any occurrence for which workers' compensation benefits are payable for such jockey, apprentice jockey or exercise person.

The New York fund is financed by fees paid by owners and trainers based on a variety of factors set forth in N.Y. PML LAW 221.

In 1995, New Jersey enacted the New Jersey Horse Racing Injury Compensation Board Act as set forth at N.J. Stat. Ann. § 34:15-129.

That state declared it “in the public interest to ensure that workers' compensation coverage is available to persons employed in the thoroughbred and standardbred horse racing industries in New Jersey by collectively securing workers' compensation insurance coverage for certain designated horse racing industry employees …” N.J. Stat. Ann. §34:15-130 The coverage is funded by assessment such as deductions from gross overnight purses paid to owners and “additional assessments as needed from standardbred owners, thoroughbred owners and thoroughbred trainers who are licensed or are required to be licensed by the commission. N.J. Stat. Ann. §34:15-134

California case law has long acknowledged jockeys as employees, and a variety of legislation has been passed to address costs and funding associated with the injuries. One example is the 2002 establishment of a horse racing workers' compensation program called the California Horsemen's Safety Alliance (CHSA), which, as noted on its Web site, was created “to deal with the Workers Compensation crisis that was facing the thoroughbred industry. Skyrocketing rates were causing trainers to leave the State and owners to leave the industry. California racing was in danger of becoming a shell of its former self or an extinct industry.”

Colorado extends coverage as well, but under 8-40-301(8), C.R.S., excludes from the definition of employee “any person who performs services for more than one employer at a race meet ... or at a horse track.” The law there appears to provide coverage to all track workers and jockeys provided their employment relationship is limited to a single employer.  In other words, the law would not cover employees who “job hop” from employer to employer during a race meet or at a particular track.

In 2005, efforts were made by the Virginia Horsemen's Benevolent and Protective Association (VHBPA) and Colonial Downs to convince Virginia's legislature to adopt a jockey workers' compensation system similar to Maryland's.  A formal proposal was drafted, but according to Frank Petramalo, Executive Director of the VHBPA, the proposal never made it past the discussion stage with state officials. Legislation was never proposed.

Some attention to the plight has also been given at the federal level, but with no legislative or regulatory action being taken. In May 2006, federal hearings of the U.S. House of Representatives Energy and Commerce Subcommittee on Oversight and Investigations focused on the failure of the catastrophic injury insurance fund maintained by the Jockey Guild, a national association of licensed professional jockeys. Mismanagement of funds by the guild's president resulted in failure of the fund and were brought to light when a guild member, jockey Gary Birzer, was paralyzed in a July 2004 accident and later discovered the Jockey Guild insurance funds were non-existent. No particular action was taken other than to bring the Jockey Guild to account and to force reorganization of its ranks.

But it seems ironic that the Bluegrass State has not followed the lead of Maryland, New York or the others states or, more particularly, why as a leading horse state, didn't it lead the way in the first place?

Kentucky law traditionally views jockeys and track workers as independent contractors; therefore, trainers and others who hire them are not required to maintain workers compensation insurance. The Kentucky Supreme Court case of Ratliff v. Redmon, 396 S.W.2d 320 (Ky.App. 1965), established the factors required for determining whether an individual should be regarded as an employee or an independent contractor. The 1980 Kentucky Court of Appeals case of Munday v. Churchill Downs, Inc., 600 S.W.2d 487 (Ky.App. 1980), established the precedent for application of the independent contractor classification to jockeys and track workers based on the Ratliff factors.

While some trainers may carry workers' compensation insurance, they are in the minority. Numbers accumulated by the Herald-Leader's series revealed that four Kentucky racing facilities reported 260 injuries from January 1999 to March 2004 — averaging to about one injury a week.

In 2006, in response to the Herald-Leader's investigation, Kentucky's then-Gov. Ernie Fletcher and the state's legislature attempted through House Bill 741 to address the dismal coverage offered to jockeys and backside workers by creating a state fund that would provide coverage for work injuries. The effort passed the House but died in the state's Senate.

As some small consolation, due in part to a walkout staged by jockeys, Kentucky thoroughbred racetracks eventually increased accident insurance coverage for jockeys — but not exercise riders — from $100,000 to $1 million. Other states followed suit, but Kentucky has failed to revisit the issue in any other way.

So, as the sun shines bright on Churchill Downs on the first Saturday in May, the Kentucky Derby will be the first out of the gate to launch the Triple Crown, but as for compensating injured jockeys and track workers it's, as they say down at the track, out of the money.

 This blog was posted by Marcus A. Roland. Visit http://www.rolandlegal.com/.