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Gelman: Leased Employment Has Consequences

By Jon L. Gelman

Tuesday, May 14, 2019 | 408 | 0 | min read

An employee leased to another company (ER) — a placement agency (PA) — does not have the rights and benefits available to a regular employee. A recent case illustrates how the leased employee is prohibited from seeking an award for damages because of an accident at work. 

Jon L. Gelman

Jon L. Gelman

A leasing agency contracted with a store to furnish an employee. The contract of employment stated that: 

  • Employee would receive his paychecks from ER;.
  • Employee was to discuss any problems or misunderstandings at work with an ER supervisor only.
  • Employee needed to always remember he is not a staff employee of the ER where he is assigned and is not eligible for any special privileges. 
  • Employee had to immediately notify a direct supervisor, and ER, in the event of an on-the-job injury. 

The employee was injured on the ER job site and filed a civil action against the ER. The trial court and the appellate court ruled that the employee was a “special employee” of the employer, and the employee was prohibited under the Workers’ Compensation Act from suing his employer in a civil action.

The only remedy available was workers’ compensation benefits. 

On appeal, the court held: 

“In a well-reasoned written opinion, Judge Martha D. Lynes determined that defendant was a special employer of plaintiff under the five-factor test first established in Blessing v. T. Shriver & Co. The judge found: 1) plaintiff had an implied contract to work for defendant because he voluntarily accepted work assignments from defendant; 2) plaintiff was performing work duties for defendant under defendant’s ‘training, directives, and supervision’; 3) Patel, defendant’s agent, directed plaintiff’s daily tasks at the warehouse; 4) even though On Target paid plaintiff, New Jersey case law recognizes ‘employees of employment agencies are paid at least indirectly by the business ... borrowing that worker for a temporary position,’ and as such, defendant indirectly paid plaintiff; and 5) defendant had the ability to advise On Target it did not want plaintiff at the warehouse and could request another temporary employee. As a result of her findings, Judge Lynes concluded defendant was a special employer under the Blessing test, and she granted summary judgment in defendant’s favor on April 10, 2018. "

An issue on appeal was raised that the employee was only borrowed. The appellate court declined to accept that position: 

“A special employment relationship exists where “(a) [t]he employee has made a contract of hire, express or implied, with the special employer; (b) [t]he work being done is essentially that of the special employer; and (c) [t]he special employer has the right to control the details of the work.

"We are unpersuaded by plaintiff’s assertion that defendant has not presented evidence to support the fifth factor under the required analysis. A borrowing employer does not have to show it has the right to terminate the employee from her position with her general employer. As we stated in (Kelly v. Geriatric & Med. Servs. Inc.), an employer’s right to screen or unilaterally remove a particular employee from its facilities is 'the functional equivalent of the power to discharge' that employee.” 

Claimants' attorney Jon L. Gelman is the author of "New Jersey Workers’ Compensation Law" and co-author of the national treatise "Modern Workers’ Compensation Law." He is based in Wayne, New Jersey. This blog post is republished with permission.


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