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No easy answer to worker status questions

Montana state courthouse

A recurring theme at state Supreme Courts in recent months has been perhaps the most fundamental issue of workers compensation — coverage.

Courts in Texas, Kentucky, Montana and Missouri addressed the applicability of workers compensation laws to employees with dual employers and in industries that have been exempted from the workers compensation system, with mixed results.

On April 30, the Texas Supreme Court ruled that a worker hired by a staffing agency and assigned to a client qualified as an employee of the client company under the state Workers’ Compensation Act.

In Waste Management of Texas v. Stevenson, a majority of the court said that the test to determine whether a worker is an employee of a borrowing employer centers around the issue of control over the worker.

“Rather than focus on the legal question of who had the contractual right to control the plaintiff’s work, we looked instead to the factual question of who exercised the right to control as a practical matter in the course of the parties’ daily work,” the court said.

Jeffrey Belfort, who co-represented the worker, Robert Stevenson, said his argument had centered on the appropriate standard for a grant of summary judgment as opposed to the standard for determining coverage. 

He explained that the standard for summary judgment is “whether fair-minded people differ in their conclusions in light of all the evidence,” and he said the record contained extensive evidence regarding the amount of control Waste Management did, and did not, exercise over its borrowed employees. 

Among the evidence was a contract that stated Mr. Stevenson was an independent contractor, which, the court said, gave a “have your cake and eat it too” flavor to Waste Management’s argument that Mr. Stevenson ought to be treated as an employee. However, the court said the contract was not controlling, and it concluded that the evidence was sufficient for it to find Mr. Stevenson was a Waste Management employee as a matter of law.

Justice Jeffrey Boyd wrote separately, arguing that the majority decision created “a new and different test for determining whether a worker hired by a staffing agency and assigned to the agency’s client company qualifies as an employee of the client company under the Workers’ Compensation Act.”

When an express contract provides that a worker is not an employee or deprives the employer of the right to control, Justice Boyd contended the contract ought to control unless the evidence establishes that “the true operating agreement was one which vested the right of control in the alleged (employer).”

On March 30, the Kentucky Supreme Court also addressed the protections available to a temporary worker – and it reluctantly ruled that a statutory safety violation benefit enhancement was unavailable to such a worker.

Kentucky law provides for a 30% enhancement of workers compensation benefits if an accident is caused in any degree by workplace safety violations committed by the employer.

While the legislature did not expressly exempt temporary employers from the law, the court said the statute required Nathaniel Maysey to prove his employer, a staffing service company, had committed the violations — not his employer’s client. 

Since there was no evidence that Mr. Maysey’s employer knew of the unsafe practices at Magna-Tech Manufacturing LLC, where it had sent him, the court said he could not receive an enhanced award under state law.

The court acknowledged that the result in Maysey v. Express Services Inc. is “harsh,” especially given the severity of Mr. Maysey’s injury and the “egregious” nature of the safety violations, but the court said the harshness was “potentially mitigated” by the fact there is a pending federal civil suit in which Mr. Maysey is pursuing claims against Magna-Tech’s parent corporation and the owner of the premises.

Attorney Thomas W. Davis, who represented Mr. Maysey, argued that the staffing company, Express Services Inc., “intentionally violated” its duty to provide a safe workplace to Mr. Maysey by placing the teenager at a worksite with “multiple obvious hazards” and by failing to make a good faith effort to provide Mr. Maysey a place of employment free from hazards likely to cause death or serious physical harm.

Mr. Davis advocated for a reexamination of the existing Kentucky law that allows a borrowing employer to “escape liability for any penalty no matter how egregious the safety violation,” which “creates a financial incentive for an employer to assign the most dangerous work positions to temporary employees.” 

Alternatively, he urged the court to adopt a rule that “where a temporary help service employer fails to exercise due diligence to furnish a place of employment free from recognized hazards likely to cause death or serious physical harm to its employees, the temporary help service employer should be found to have acquiesced in the wrongful actions of its client, the host employer,” thus subjecting the temporary help service employer to liability for enhanced benefits under state law.

H. Clay List, who represented Express Services, said the court’s ruling “appropriately places the burden of ensuring a safe work environment on the host employer rather than on the temp/staffing agency, as temp/staffing agencies have little to no control over the safety policies and procedures which their clients put in place.” 

Mr. List reflected that “client employers often use extremely complex and sophisticated technology and/or machinery of which the temp/staffing agency has no knowledge or expertise, and thus, rather than expect the temp/staffing agency to provide training, and to regularly inspect, maintain, and/or monitor each and every such machine at each and every client employer’s worksite, Kentucky law puts the onus on the host employer.”

On April 8, the Missouri Supreme Court ruled that an unbroken chain of contractor-subcontractor relationships between an injured truck driver and the employer of an alleged tortfeasor created a statutory employer relationship. 

Under Missouri law, an independent contractor is deemed to be the employer of the employees of his subcontractors and their subcontractors when employed on or about the premises where the principal contractor is doing work, the court said in State ex rel. Beutler Inc. v. Midkiff

This principle operated to bar Joshua McArthur’s negligence suit against the George J. Shaw Construction Co., the court said, since Mr. McArthur’s actual employer was the subcontractor of a subcontractor for Shaw. 

Abigail Han, who represented Mr. McArthur, said she expected the decision would have “not much of an impact” as it merely restated the existing law on borrowed employees. She said she had hoped the court would have used the case as an opportunity to clarify some points about the law.

On March 25, the Montana Supreme Court ruled that the federal Employers Liability Act does not preempt an injured railroad worker’s state law bad-faith claim.

In Dannels v. BNSF Railway Co., the court said the plain language of the FELA reveals that Congress’ purpose was to enact a compensatory scheme for railway employees who suffer occupational injuries caused by the negligence of their employer, but it did not intend “to regulate through the FELA the entire field of injuries and claims a railroad employee may have.”

Thus, the court said, “the FELA does not occupy the entirety of the field of recovery for injured railroad employees so as to preempt state bad-faith law claims premised on a self-insured railroad’s claims-handling conduct.”

Mark Parker, who represented the Washington Legal Foundation as amici, said he feared the court’s decision “will further complicate an already complicated area of the law.” 

Dennis Conner, who co-represented the worker, Robert Dannels, said the decision was good news for railway workers, because they now know they have “rights and protection from being abused and mistreated by the people adjusting and handling FELA claims.”

Sherri Okamoto is a legal reporter at WorkCompCentral, a sister publication of Business Insurance






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