Disruption Caused by Growth in Number of Temporary/Contingent Workers
A few days ago, my close colleague, Robin Kobayashi, and I put the final touches on a new book, Workers’ Compensation Emerging Issues Analysis, 2014 Edition (LexisNexis—expected ship date, Oct. 24). Robin and I serve as joint Editors-in-Chief. As a quick, self-serving plug, let me say that it’s a neat compendium of issues, trends & cases. We review what happened legislatively in each state during 2014, provide summaries of interesting and noteworthy cases from around the nation, and include a host of articles on current workers’ compensation topics [For additional information, click here].
While the book covers the waterfront, we chose this year to place particular emphasis on temporary (a/k/a “contingent”) workers and those working in alternative employment arrangements (e.g., those employed by employee staffing companies, temporary help agencies, contract labor firms, and the like). According to one recently published national study, the growth of these contingent and alternative working arrangements has itself become a disruptive force that not only negatively impacts workplace safety, but also challenges our existing structures of data collection, risk assessment, and assignment of legal responsibility [see Foley, M., et al., “Contingent Workers: Workers’ Compensation Data Analysis Strategies and Limitations,” American Journal of Industrial Medicine, 2014; 57(7):764–775]. Foley and his colleagues point out that while the workers’ compensation system of delivering medical care and disability benefits rests on the traditional employer-employee relationship, important dynamics of that relationship have radically changed during the past several decades due to increased reliance of “just in time” workers. They suggest that our industry and its regulators have been too slow to adapt to the sea change caused by the expansion of staffing agencies and the like. They join a chorus of others who argue that the number of injuries among contingent workers is substantially understated each year. When it comes to contingent workers, it isn’t just that the malleability of the employer-employee relationship skews our injury statistics; it produces some puzzling court decisions.
Recent Ohio Decision
In Mills v. Enviro-Tank Clean, Inc., 2014-Ohio-3866, 2014 Ohio App. LEXIS 3798 (Sept. 8, 2014), a state appellate court reversed a trial court’s summary judgment in favor of a defendant—on exclusive remedy grounds—in a negligence action filed against it by a worker supplied to it by a staffing agency. The appellate court held that since the staffing agreement in place between the defendant and the staffing agency specified that the defendant was required to get written permission from the staffing company before requiring any employee to climb a ladder more than six feet high, the worker was no longer the defendant’s employee when he climbed, and fell, from a ladder at defendant’s premises that was some 10 to 12 feet in height. The court reasoned that the worker had pointed to evidence that created a genuine issue of material fact and so the court remanded the case back to the trial court. Taking the court’s reasoning to its logical conclusion, it seems that the worker, in chameleon-like fashion, switched employers as he moved up and down the defendant’s ladder.
At some point in 2008, a temporary staffing agency (“agency”) assigned the worker to work for the defendant, a centralized waste treatment facility. While the agency was responsible for paying and insuring the worker, the defendant trained him, set his hours, provided him with a uniform and equipment, and assigned his job duties. The defendant eventually trained the worker to work as a water plant operator; a job that required him to fill a frac tank with wastewater and treat it with sulfuric acid. On December 20, 2010, the worker sustained injuries when he fell from a ladder he had climbed in order to check the water level inside the frac tank. The worker received workers’ compensation benefits as a result of his injuries and he eventually filed suit against the defendant, alleging his injuries were the result of its negligence.
The defendant moved for summary judgment, contending it was immune from suit because the worker was, in actuality, its employee and he had been compensated for his workplace injury through workers’ compensation, his exclusive remedy. The trial court agreed and granted summary judgment in favor of the defendant. On appeal, the employee contended in relevant part that at the time of his injury he was not acting as the defendant’s employee.
Appellate Court: Right to Control the Employee
The appellate court summarized the issue quite well, stating:
… Thus, in determining whether a temporary worker is actually an employee of his or her temporary agency’s customer, the key inquiry is who had the right to control the employee.
[Court's opinion, p. 7]
The court observed that in the worker’s deposition, he had admitted that defendant’s employees had trained him, that they provided him with a uniform and with all necessary equipment to perform his duties, that his supervisor set his work schedule, handled his requests for time off, and had the authority to discipline him. The worker also agreed that he reported daily to his supervisor, that he worked under the direction and control of defendant’s management, rather than anyone at the agency, and that before the day of the accident, he had climbed the frac tank ladder every day for two and one-half years without incident.
The defendant’s operations manager testified that he had signed a Safety Partnership Agreement with the agency approximately 11 months prior to the worker’s injury and that pursuant to the agreement, workers supplied by the agency were not permitted to climb structures, including ladders, higher than six feet above the floor, without the written permission of the agency. The manager did not dispute that the ladder in question was some 10 to 12 feet high. He maintained, however, that he had obtained the relevant permission from the agency, but could not recall if such permission had been granted in writing.
The worker argued that at the time he was injured, he was “contractually outside the employer-employee relationship.” The court indicated that the safety agreement constituted a “pertinent agreement” that tended to show that the agency specifically retained the right to control the means and manner of the worker’s work as detailed in the agreement. According to the court, the worker had established an issue of fact as to the legality of defendant’s control; summary judgment was, therefore, not appropriate.
In essence, the Ohio court crafted a “twilight zone” of legal liability related to this contingent worker. It never questioned the defendant’s level of control over the worker, except during the brief period each day when the worker passed through the magic six-foot threshold in his climbing activities. With all due respect, I think the court’s decision is wrong on a number of counts.
Control Is Not To Be Judged on Moment-to-Moment Basis
First, the court erroneously assumes the issue of control should be determined on a moment-to-moment basis. Instead, it should be the totality of the worker’s employment that determines if an “employer” has the right to exert control. Consider for a moment the personal comfort doctrine within workers’ compensation law [see Larson's Workers' Compensation Law, § 21.01 et seq.]. The basic workers’ compensation formula provides for benefits related to injuries and illnesses that arise out of and occur within the course of the employment. One is generally considered to be within the course of the employment when one is furthering the employer’s business. Courts are not rigid in the analysis, however, less an employee be determined to move in and out of the employment relationship when he or she took short bathroom or water breaks. Workers’ compensation law is sufficiently flexible to allow recovery for routine personal activities that are technically not part of the employment. In the recent Ohio case, however, the court’s thought process mimics the Verizon cellular telephone commercials. Instead of “can you hear me now?”, the court seems to suggest a repetitive inquiry, “am I under the borrowing employer’s control now? … How about now? Now?”
Was the Worker’s Activity a Substantial Deviation So as to Remove Him From the Employment?
Second, if the worker stepped outside of his employment with the defendant when he stepped above the six-foot threshold, can it legitimately be argued that at that time he was truly an employee of the staffing agency? Doesn’t the same logic that says he was not employed by the defendant at the time of the fall also show he was also not an employee of the staffing agency at the time? None of its representatives were exercising control over the worker. Indeed, the staffing agency’s policies prohibited his activity. Can it not be said that the worker’s activity removed him entirely from his employment and, therefore, disqualified him from recovering workers’ compensation benefits? (I don’t think so, but isn’t that the logical conclusion of the court’s decision?)
Why Can’t Control Be Shared?
Third, implicit in the court’s decision is the notion that control cannot be shared between the agency and the defendant. Numbers of decisions point exactly in the opposite direction, however [see, e.g., Hanisko v. Billy Casper Golf Management, Inc., 2014 N.J. Super. LEXIS 128, decided the same day as the Ohio Mills case]. Over the years, we’ve seen many “dual employment” holdings, particularly with leased employees, where the worker is considered to be under the control of more than one firm [see Larson's Workers' Compensation Law, § 68.01 et seq.]. Both are ultimately responsible for assuring the injured worker receives workers’ compensation benefits. Both should enjoy the exclusive remedy defense.
Caution, Ohio Employers!
Finally, a cautionary note for firms in Ohio that employ contingent workers: check your service agreements. Under this decision, if those agreements contain specific safety-related provisions, you may be opening your business to tort liability in spite of the fact that your “deal” with the staffing agency is priced so as to include full workers’ compensation coverage for work-related injuries.