Safety Violation Cannot Be Imputed to Kentucky Temporary Staffing Company

Lamenting that under the plain wording of Ky. Rev. Stat. § 342.165(1), a temporary staffing company can only be liable for the special 30 percent enhancement of workers’ compensation benefits if the staffing company had knowledge of, approved of, directed, or acquiesced in the host company’s improper actions, the Supreme Court of Kentucky affirmed the denial of the enhancement to a worker who suffered an amputation of his left arm above the elbow in a centrifuge machine incident involving numerous lapses of safety and judgment by the host company [Maysey v. Express Servs., 2021 Ky. LEXIS 123 (Mar. 25, 2021)]. Noting that a similar decision by the state’s Court of Appeals had been allowed by the state legislature to stand for more than ten years ago, without an amendment to the statute, the Court reluctantly affirmed the lower court’s ruling. As I explain at the end of this blog post, one is left to wonder why Kentucky fails to see the host company as a dual employer and, therefore, susceptible to the 30 percent enhancement caused by its own violations.

Background

Claimant obtained employment with Express Services (“Express”), a temporary staffing company, and was placed with Magna-Tech Manufacturing (“the host company”). After working five days operating machinery at the host company, Claimant was involved in a work-related accident that resulted in the amputation of his left arm above the elbow.

Claimant settled with Express prior to the final adjudication of his workers’ compensation claim. There remained the question, however, as to whether he was entitled to a 30 percent enhancement for a workplace safety violation pursuant to Ky. Rev. Stat. § 342.165(1). The ALJ denied the enhancement and the Board and the Court of Appeals affirmed, prompting this appeal to the state supreme court.

Evidence of Safety Violation

The Kentucky Supreme Court detailed some of the evidence as to the host company’s safety violation. In short, the centrifuge involved in Claimant’s injury was always open during operation, thereby allowing workers, such as Claimant, to reach into the machine’s point of operation while the machine was still operating. Evidence also indicated that an emergency stop switch on the railing in front of the centrifuge was inoperable at the time of the accident.

According to the centrifuge’s manufacturer, the machine was not designed to operate unless the top was closed. Moreover, the machine’s actual design was such that the top could not be opened unless the centrifuge’s two cycles had come to a complete stop. This design feature had been included so as to prevent the sort of injury sustained by Claimant. According to the manufacturer, the safety mechanism was effectuated by computer software called logic control, which “told” the machine when to move and when to stop. The manufacturer informed an inspector that in order for the machine to operate with the top open—as it had done at the time Claimant was injured—the computer program would have to have been intentionally bypassed. Yet another factor, indicated the Court, was the fact that Claimant had received only minimal training regarding the operation of the centrifuge machine.

Sole Issue: Did the Enhancement Statute Apply to the Staffing Agency?

The Court noted that the sole issue was whether the staffing agency could be held liable for the 30 percent enhancement of benefits because of the safety violations of the host company. Reviewing KRS 342.165(1) in some detail, and echoing the regrets and concerns expressed by the ALJ, the Board, and the lower appellate court, the Supreme Court held Express could not be so liable.

The Court found that a temporary staffing company, such as Express, could only be liable for the safety violation enhancement if the employee had shown that the agency had knowledge of, approved of, directed, or acquiesced in the host company’s actions. The Court added that the facts in the instant case were virtually identical to those in Jones v. Aerotek Staffing, 303 S.W.3d 488 (Ky. App. 2010), upon which the ALJ had relied.

Prior Inspection

The Court also acknowledged that on March 25, 2016, approximately nine weeks prior to Claimant’s employment with Express, the parent corporation of the host company had performed an inspection of Line 46, where the centrifuge was installed. This inspection identified the need for point of operation guarding for the centrifuge. The audit team requested that the parent corporation approve the guarding but this request was neither approved nor implemented prior to Claimant’s injury. The Court said that while this information certainly suggested that the host company committed blatant safety violations, those violations could not be imputed to Express who merely supplied temporary employees and had no control over the host company’s facility and machinery or knowledge of the violations.

Kentucky Legislature Had Not Revised Law

The Court lamented that more than ten years had passed since the Court of Appeals’ decision in Jones, and that the state legislature had, therefore, plenty of time to amend the enhancement statute. It had not done so. The Court could not rewrite the statute.

My Own Comment/Lament

I need to do some additional research before speaking fully on the matter, but I’m left wondering why neither the Court of Appeals nor the Supreme Court saw this arrangement as one of dual employment. As outlined in Larson’s Workers’ Compensation Law, § 67.01, et seq., and § 68.01, et seq., many states treat Claimant’s situation as one of dual employment. That is particularly the case where, as here, the host company exerts complete (or virtually complete) control not only over the worker’s duties, but the environment in which the work is carried on.

To be sure, the temporary staffing agency should not be liable for penalties or benefits enhancements if it has no knowledge of the safety concerns at the host company’s facility. Bear in mind, of course, that it should not be able to turn a blind eye to obvious problems. The list of court decisions in other jurisdictions that would have found Claimant to be the employee of both Express and the host company is long and informative.