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Wickert: Temps Who Don't File Comp Claim Can Sue Special Employers

By Gary L. Wickert

Tuesday, February 20, 2018 | 640 | 0 | min read

It seems that in Wisconsin, the exclusive remedy rule, which prevents an employee from suing his employer in tort, isn’t all that it’s cracked up to be.

Gary L. Wickert

Gary L. Wickert

On Jan. 6, the Wisconsin Court of Appeals held that a temporary employee on loan to a special employer appears to have an option (Carlos Rivera v. Alpine Insulation and West Bend Mutual Ins. Co., 2018 WL 334447 (Wis. App. 2018)).

He or she can either file a workers’ compensation claim or file a third-party tort suit against the special employer. The amazing ruling flies in the face of the general understanding of employer immunity, but makes perfect sense given the clear wording of Wisconsin’s third-party liability statute, Wis. Stat. § 102.29.

On Aug. 21, 2014, Carlos Rivera and two other individuals died in a single-vehicle accident. Rivera was survived by five children, two of whom were minors at the time of his death. Rivera was a passenger in a vehicle owned by Alpine Insulation and insured by West Bend Mutual Insurance Co.

Rivera was employed by Alex Drywall, which had provided him to perform work for Alpine. Alpine paid Alex Drywall for Rivera’s services, and Alex Drywall paid Rivera for his work. The vehicle’s driver was a temporary employee of Alpine, which had retained him through JC Staffing, a temporary help agency. The driver was negligent in his operation of the vehicle, and his negligence was a cause of the accident.

Rivera’s two minor children (estate) opted not to file a workers’ compensation claim, but instead sued Alpine for Rivera’s pain and suffering and for his minor children’s loss of society, companionship and support.

Alpine moved for summary judgment, arguing that Alex Drywall, Rivera’s employer, was a temporary help agency. Alpine claimed that because Rivera was an employee of a temporary help agency, the estate was prohibited from bringing a tort action against Alpine — an employer that compensated Alex Drywall for Rivera’s services — under § 102.29(6)(b)1. The circuit court agreed and granted summary judgment for Alpine and West Bend Mutual Insurance. The estate appealed.

The Court of Appeals stated that had Alpine been Rivera’s “employer” under the act at the time of his death, the exclusive remedy rule would bar the estate’s tort claims against Alpine. However, § 102.04(2m) provides:

A temporary help agency is the employer of an employee whom the temporary help agency has placed with or leased to another employer that compensates the temporary help agency for the employee’s services. A temporary help agency is liable under s. 102.03 for all compensation and other payments payable under this chapter to or with respect to that employee, including any payments required under s. 102.16(3), 102.18(1)(b)3 or (bp), 102.22(1), 102.35(3), 102.57, or 102.60.

Therefore, Rivera’s employer was Alex Drywall, the temporary help agency. The exclusive remedy rule prevents the estate from suing Alex Drywall, but not from suing Alpine. Section 102.29(6)(b)(1) says:

(b) 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:

1. Any employer that compensates the temporary help agency for the employee’s services.

Therefore, by its plain language, § 102.29(6)(b)(1) does not bar the estate from bringing a tort claim against Alpine or its insurer, West Bend Mutual Insurance. Any temporary employee who makes no claim for compensation under the act is not prohibited from bringing a tort claim against his or her temporary employer.

The defendants argued on appeal that § 102.29 should be read “in context with” the exclusive remedy rule, because the latter is critical to the balance that the act strikes between employers and employees.

They suggested that the exclusive remedy rule prohibits an employee from bringing a tort action against an employer when the conditions for workers’ compensation liability are met (Bauernfeind v. Zell, 528 N.W.2d 1 (Wis. 1995); Wis. Stat. § 102.03(2)). They claim that the exclusive remedy rule applies whenever the employee has “the right” to file a worker’s compensation claim, regardless whether he does so or not.

The Court of Appeals was not buying it. It noted that the words of § 102.29(6)(b)(1) are clear, and it resisted reading words into the statute, specifically the words “have a right to make.” The court refused to ignore the words “who makes a claim for compensation” or read them out of the statute entirely.

The court said that by reversing the trial court and allowing the estate to bring a third-party tort action against Alpine, it was not in conflict with the exclusive remedy rule, which shields employers, not temporary employers. The court noted that the exclusive remedy rule “does not affect the employee’s and employer’s right to assert claims against third-party tortfeasors.”

The decision by the Court of Appeals sets up a very interesting race to get the employee’s ear — a showdown between the workers’ compensation carrier of a temporary help agency and the liability carrier of a special employer for whom the employee was working at the time of a death or injury.

Because of the wording of § 102.29(6)(b)(1), the workers’ compensation carrier will want the employee to know he or she has the right to forgo a compensation claim and can sue the special employer (especially in cases of clear liability), and the liability carrier of the special employer will want the employee to file a worker’s compensation claim as quickly as possible, thereby barring the employee from filing a more lucrative third-party tort lawsuit.

The decision means that in cases involving temporary help agencies, workers’ compensation carriers will want to advise the employee that if he files a claim for benefits, he will not be able to file a third-party lawsuit. Their hope, in many instances, will be that the employee opts for the latter.

Borrowed servant situations

It should be noted that this ruling dealt specifically with a temporary help agency and, on its face, it does not appear to govern garden-variety borrowed servant scenarios, where an employee of one employer is temporary subject to the right of a second employer to control the details of his or her work, or in employee leasing situations, where the employee is subject to a long-term contract involving the provision of staffing.

This ruling applies only to a “temporary help agency,” described as “an employer who places its employee with or leases its employees to another employer who controls the employee’s work activities and compensates the first employer for the employee’s services, regardless of the duration of the services” (Wis. Stat. § 102.01(2)(f)).

It is likely, however, that the ruling will extend to a borrowed servant situation. In a borrowed servant situation, no employee who is loaned by his or her employer to another employer and who makes a claim for compensation benefits may make a claim or maintain a third-party action in tort against the employer who accepted the loaned employee’s services.

Section 102.29(7) provides:

(7) No employee who is loaned by his or her employer to another employer and who makes a claim for compensation under this chapter may make a claim or maintain an action in tort against the employer who accepted the loaned employee’s services.

Section 102.29(6)(b)(1) simply doesn’t apply under a simple borrowed servant situation, but the above subsection does.

Employee leasing situations

Section 102.29(6)(b)(1) also doesn’t apply under long-term employee leasing arrangements, yet another subsection does. The Rivera decision will also likely extend to longer-term employee leasing situations involving employee leasing companies. These are companies that contract to provide the non-temporary, ongoing employee workforce of a client under a written agreement, whether referred to as a “professional employer organization,” “PEO,” “staff leasing company” or otherwise.

This is because § 102.29(6m) states that a “leased employee” may not make a third-party tort claim against the employee leasing company’s “client”, also known as the special employer, but the bar doesn’t apply if the employee doesn’t “make a claim for compensation.”

As a result of the Court of Appeals’ new decision in Rivera v. Alpine Insulation, it will become vitally important for workers’ compensation claims handlers receiving a new first report of injury or disease to quickly and thoroughly evaluate the nature of the injury and whether a temporary help agency or a routine borrowed servant special employer is involved.

The next step the claims handler takes could dictate whether there is a workers’ compensation claim or a third-party action to follow. The Rivera decision puts claims handlers in the uncomfortable position of having to decide whether they have an obligation to advise employees looking to file a workers’ compensation claim that, if they do, they may be giving up the right to sue for more lucrative damages.

It didn’t take long for the Wisconsin Legislature to respond to the Rivera decision. On Jan. 30, Rep. Cindi Duchow, R-Delafield, introduced Assembly Bill 884. The bill, which has been referred to the Committee on Insurance, would eliminate the right of a temporary employee, borrowed servant or leased employee to file a third-party action against the special employee to whom he was loaned, borrowed or leased, if he had a right to make a claim for compensation. It also fixes the loophole contained in the other miscellaneous employment situations mentioned above.

Even if it passes, the bill would first apply to claims for workers’ compensation made, or civil tort claims filed, on the effective date of the subsection.

Gary Wickert is a partner with the Matthiesen, Wickert & Lehrer law firm in Hartford, Wisconsin. This blog post is reprinted with permission.

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