Are You a “Special” Employer?
When an appellate opinion includes words like joint employment, special employer, general employer, lent employee, or borrowed servant, it usually means that the parties have a fundamental difference of opinion about the exact nature of their work relationship. And, the nature of the parties’ work relationship also determines whether an injury claim belongs at the Industrial Commission or whether it belongs somewhere else. So, the parties often have a fundamental difference of opinion about the proper forum, too.
While the underlying fact patterns are myriad, the legal issues in these cases frequently center around two specific facts: (1) temporary employment and (2) an allegation of negligence. In Estate of Belk v. Boise Cascade, et al, ___ N.C. App. __ (05 February 2019), the Court of Appeals issued an especially clear opinion, on a murky subject.
In Estate of Belk, a staffing company entered into a contract with Boise Cascade to provide temporary personnel for Boise Cascade’s manufacturing plant. There was a written contract between the staffing company and Boise Cascade, and that contract outlined the contractual arrangement between those two entities.
The staffing company recruited, and then placed William Belk at Boise Cascade as a mechanic. Belk was repairing a Boise Cascade machine, when it collapsed and crushed him. Belk’s dependents pursued a workers’ compensation claim against the staffing company, and they received an award of workers’ compensation death benefits. Separately, Belk’s estate instituted a civil action against Boise Cascade, seeking civil damages for Belk’s death based upon Boise Cascade’s alleged negligence.
Estate of Belk ended up at the Court of Appeals on Boise Cascade’s motion to dismiss and its motion for summary judgement, both of which had been denied. In its motions, Boise Cascade contended that Belk only had one injury resulting in death, and that Belk’s exclusive remedy was the workers’ compensation award that the staffing company was already paying to Belk’s dependents. The Court of Appeals agreed.
There is no indication in the Court of Appeals’ opinion that the staffing company played any role in the civil litigation, and there is no mention in the Court of Appeals’ opinion that there was any written contract between Boise Cascade and Belk. This is interesting because this genre of cases often includes some discussion about implied contracts between the parties. Nonetheless, there was no dispute that Belk was on the Boise Cascade premises, doing what he was supposed to do, when he died.
For purposes of workers’ compensation, not every lent employee is an employee of the general employer and also of the special employer. In Estate of Belk, the Court of Appeals’ legal decision, and the parties’ rights, turned on whether Boise Cascade was Belk’s “special employer.”
As to the law, “[t]he crucial test in determining whether a servant furnished by one person to another becomes the employe [sic] of the person to whom he is loaned is whether he passes under the latter’s right of control with regard not only to the work to be done but also to the manner of performing it  irrespective of whether [the latter] actually exercises that control or not.” Weaver v. Bennett, 259 N.C. 16, 28 (1963). This analysis seems very similar to the Hayes v. Elon College test that is cited in cases where the legal issue is whether a plaintiff is an employee versus an independent contractor.
Of course, the law must be applied to the facts. As to the facts, the Court of Appeals made clear that it is not required to give any deference to the Industrial Commission’s fact finding when it comes to jurisdictional issues. Nevertheless, based upon the pleadings only, the Court of Appeals determined that there was no genuine dispute about whether Belk was a “special employee” of Boise Cascade. The Court of Appeals focused primarily upon the contract between the staffing company and Boise Cascade, which specifically referenced Boise Cascade as a “special employer” and documented its right to control temporary personnel. The Court of Appeals buttressed its factual conclusion with other uncontradicted evidence to show that its decision was based upon the facts associated with the actual relationship between Boise Cascade and Belk, and not merely the facts that were documented in the contract between Boise Cascade and the staffing company.
One interesting argument that Belk’s estate made to the Court of Appeals was that in the workers’ compensation proceeding, the parties had stipulated that Belk was an employee of the staffing company, and that there was no issue as the non-joinder of a necessary party. The Court of Appeals treated this argument dismissively, pointing out that Boise Cascade was not a party to the workers’ compensation proceeding or the stipulation, and that the issue of whether Belk was an employee of the staffing company did not address the question of whether Belk was also an employee of Boise Cascade.
Estate of Belk is a good case to use as a reference, because it addresses the relevant issues and it efficiently summarizes the applicable law. The defendants prevailed, so at the end of the day, they presented the winning legal argument. However, their path to the Court of Appeals was probably an expensive one. And, that path most likely included significant risks, as there are many cases that are similar to Estate of Belk, where the defendants did not prevail.
There can be tremendous upside to a joint litigation agreement between the various parties. So, one take-away for defendants is to consider the potential advantages of coordinating with the other target-defendants as early as is possible, with the hope that a favorable result can be achieved for multiple parties, long before a claim wends its way to the Court of Appeals.
Coming up with a joint defense agreement can be a difficult task. The reality is that coordination and cooperation are not possible in every case, but the upsides are so great that the possibility should be considered. The multiple players in these claims usually have risks and strategies that are not directly aligned, but upon close evaluation, the ultimate interests of the various targets may not be so prohibitively dissimilar that they prevent an effective working arrangement.
The odds of a favorable result for all targets increases dramatically if the targets can cooperate and coordinate to manage any investigation; to consider any stipulations that any target makes; to secure favorable stipulations from the plaintiffs; to develop deposition testimony in a favorable way (in whichever side of the litigation appears to be moving the quickest); and to make use of the “the exclusive remedy doctrine.”
Please call an attorney at Cranfill Sumner & Hartzog LLP if you would like to discuss creative solutions for difficult claims.