A recent state court ruling upends previous assumptions about temporary employees and workers’ compensation. Companies that hire temps should take note.
One reason companies use temporary workers is to cut down on administrative costs such as benefits. In many cases, the temporary agency that provides the workers carries workers’ compensation insurance. If the temporary worker is injured, the claim goes through the temp agency’s policy.
The exclusive remedy provision of workers’ comp prohibits, in most cases, employees from suing their employers for workplace injuries. The employee accepts payments through workers’ comp, and in exchange the company doesn’t face a potentially more expensive lawsuit.
However, while the exclusive remedy provision applies to claims by employees against their employers, it doesn’t stop a worker from suing a third party. Example: A worker collects workers’ comp for an injury from his employer but also sues the manufacturer of a machine that led to the injury.
How this played out in the case of a temporary worker may come as a surprise to many employers.
Didn’t file for workers’ comp
On Aug. 21, 2014, Carlos Esterley Cerrato Rivera and two other workers died in a single-vehicle crash in Wisconsin. Rivera was a passenger in the vehicle owned by Alpine Insulation. The workers were traveling from one job to another. The driver’s negligence caused the crash.
Rivera was employed by Alex Drywall, which had provided him to perform work for Alpine. In other words, Alex Drywall acted as a temp agency, and Alpine was where it assigned Rivera.
At the time of his death, two of Rivera’s five children were minors. His estate, on behalf of the two youngest children, sued Alpine for wrongful death. The estate didn’t file a workers’ comp claim.
Alpine tried to get the lawsuit thrown out. The company argued that, because Rivera was an employee of a temp agency (Alex Drywall), the estate was prohibited from bringing a lawsuit against Alpine under Wisconsin’s workers’ comp law. A trial court agreed with Alpine and threw out the lawsuit. Rivera’s estate appealed.
This is what Wisconsin’s workers’ comp law says regarding temporary workers:
“No employee of a temporary help agency who makes a claim for compensation may make a claim or maintain an action in tort against any of the following: Any employer that compensates the temporary help agency for the employee’s services.”
The part in italics is important.
Had Rivera’s estate filed for workers’ comp with Alex Drywall, it would have been barred from seeking damages in a lawsuit against Alpine, according to a state appeals court that recently issued its decision in the case.
But the estate didn’t seek workers’ comp, so it’s not barred from suing Alpine. The court wrote:
“The necessary implication of this language is that a temporary employee who does not make a claim for compensation under the Act is not prohibited from bringing a tort claim against his or her temporary employer.”
For Wisconsin employers that use temporary agencies to find employees, that’s huge.
Alpine used several arguments that this wasn’t what the law intended. The court rejected all of them.
A couple of caveats: As always, workers’ comp law is state-specific.
And as noted by the Ogletree Deakins law firm, the appeals court’s decision could be appealed to the Wisconsin Supreme Court, or the state legislature could enact a statutory fix. “In the meantime, however,” Ogletree Deakins warns, “employers in Wisconsin should be aware that in the event any temporary employee working for them is injured as a result of that work, they may be exposed to a tort suit by the worker.”
Sometimes, state courts look to judicial decisions in other states when a case is a matter of “first impression” within their borders. If this language in the Wisconsin law exists in other states’ workers’ comp statutes, all it could take is a similar lawsuit to result in a similar decision.
We’ll keep our eyes on this one. There are about three million temporary workers in the U.S., representing about 2% of the workforce.
(Estate of Carlos Esterley Cerrato Rivera v. West Bend Mutual Insurance Co. and Alpine Insulation, Wisconsin Court of Appeals District 3, No. 2017AP142, 1/9/18)