February 06, 2017 BY Robert Quinn
Shielding Your Company From Claims By Temporary Employees
For some, the Christmas season is considered the most wonderful time of the year. But for many businesses, especially in the retail and hospitality industry, the season is their busiest time. According to the National Retail Federation, most retail businesses see a 30 percent increase in sales in November and December as compared to the rest of the year. For this reason, it is not uncommon for many businesses to hire seasonal employees. The increase demand requires additional workers, albeit on a temporary basis. Many companies rely on temp agencies to fill these gaps in workers. Many of these employees are hired as 1099 independent contractors, while some are merely contracted out from the temp agency. But the relationship between your business and the temporary hiring agency may raise several concerns. What happens when one of these temporary employees gets injured on the job? Who is responsible for compensating the employee? And how can you help to shield your business from any liability?
The injured employee may be entitled to compensation but that doesn’t mean that your business should be footing the bill. The Georgia Workers' Compensation Act was designed to be the exclusive remedy for injuries sustained by an employee during the course of employment even if the injury is caused by the negligence of a co-worker. This provision includes immunity for “the businesses using the services of a temporary help contracting firm… when the benefits required by this chapter are provided by the temporary help contracting firm.” Courts have consistently held in favor of businesses for negligence filed by these temporary employees by finding that the exclusivity provision of the Georgia Workers’ Compensation Act barred such claims.
For example, in Sabellona v. Albert Painting, Inc., a temporary employee was killed at a brick manufacturing plant, and his son filed a workers’ compensation claim against the employer, a temporary help contracting firm. The temporary employee’s other children also filed a wrongful death claim alleging that the owner of the brick manufacturing plan was negligent. The trial court found in favor of the property owner because it was “using the services of a temporary help contracting firm” and had elected WCA coverage through its contract with the temporary help contracting firm. While the children argued that the company was not protected by workers’ compensation because it had less than three employees, the court held that by entering into the agreement with the temporary help contracting firm to provide workers’ compensation coverage, the temporary employee was bound by the WCA.
Similarly, in Lewis v. Georgia-Pacific Corp., a temporary employee suffered burns form exposure to chemicals at the property owner’s resin plant. Georgia-Pacific had contracted with Wendell Patton, a temp agency, to provide employees for the project. The trial court found the temporary employee’s claim against Georgia-Pacific to be barred under the exclusivity provision of the Georgia Workers’ Compensation Act because he was an employee of a temporary help contracting firm.” The Court of Appeals of Georgia affirmed the trial court’s decision granting the employer’s motion for summary judgment and agreed that the employee was a borrowed servant and thus limited to workers’ compensation benefits.
In a recent federal case, Tuten v. Target Corp., Diamond Personnel, a temporary help contracting firm, contracted out its employee to Target to provide security services. While working for Target, the employee worked under the direct supervision of Target and not Diamond. Diamond continued to provide for the employee’s workers’ compensation coverage. The employee was later injured while working for Target and filed a lawsuit. In addition to suing Target, the employee received workers’ compensation benefits from Diamond. The trial court dismissed the employee’s claims against Target finding that because Diamond qualified as a temporary help contracting firm and the employee received workers’ compensation benefits from Diamond, he was barred from bringing any claims against Target.
However, in some instances, courts have found that the business was not a statutory employer and thus not immune from any tort action brought by the temporary employee. For example, in Yoho v. Ringier of America, Inc.¸ the owner of a printing plant contracted with a temporary hiring agency to perform repair work on its solvent recovery system. The temp agency retained control of the workers and directed their work. One of the temporary workers was injured after an explosion occurred at the plant. The worker filed workers’ compensation claim against his employer and claims for negligence against the owner of the printing plant. The owner argued that the negligence claims should be dismissed because the temporary employee’s sole remedy was recovery of workers' compensation benefits. The Georgia Supreme Court disagreed. The Georgia Supreme Court found that that owner was not a statutory employer because it only contracted for the services of the temp agency and not the employee in question and thus was not entitled to tort immunity. The court rationalized that because the owner did not control the manner and means in which the employee performed his work and the temporary hiring agency retained control over the employee, including the right to terminate his employment, the owner was not an employer of the temporary employee rather a customer of the temporary hiring agency.
The distinction appears to be for what services your business is contracting. If your business is merely contracting with the temporary agency for the performance of a specific service and the temporary agency retains control of the employee, then your business is more likely to be found to not be a statutory employer under the Georgia Workers’ Compensation Act and not immune for tort claims by the temporary employee. However, if you are contracting for the use of the temporary employee and you have complete control and direction over the temporary employee, including the exclusive right to discharge the employee, then you are more likely to be found to be a statutory employer under the exclusivity provision of the Georgia Workers’ Compensation Act and thus enjoy the benefit of tort immunity from any claims by the temporary employer.
The cases demonstrate that the mere fact the worker is employed by a temporary hiring agency is not enough to provide your business immunity from tort claims. The relationship between your business and the temporary employee must be more clear and definitive. The failure to ensure the terms of the relationship between your business and the temporary employee can be very costly.
The question becomes what steps should I take to protect my business from any claims by the temporary employees. The first thing you should do is make sure that your agreement with the temporary hiring agency is in writing. The contract with the temporary hiring agency should explicitly detail the terms of the relationship between your business and the temporary employee. The contract should further include some acknowledgement by the temporary employee that they remain the employee of the temporary hiring agency and are not your employee. The acknowledgement should further provide that if the employee is injured at work, they agree to pursue claims against the temporary hiring agency and not your business. The contract should also state that the temporary agency will provide workers compensations coverage for its employees. Be sure that the temporary help contracting firm provides you a certificate of coverage or other verification that the employees have workers’ compensation coverage. You should also provide rules and policies for the temporary employee that shows that you have direct supervision over the manner and method of the work they performed. Finally, the contract with the temporary hiring agency should include an indemnification provision where the agency agrees to indemnify your business for any and all claims that may be brought by the employee.
If you have specific questions regarding the use of temporary employees or how it affects your hiring policies and procedures, or if you need assistance updating your employment policies, please contact our office.
The Journal is a publication for the clients of Drew Eckl & Farnham, LLP. It is written in a general format and is not intended to be legal advice to any specific circumstance. Legal Opinions may vary when based upon subtle factual differences. All rights reserved.
H. Michael Bagley