STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)
GEOFFREY HAYCOCK, Applicant
LABOR WORLD, Employer
BROWNING FERRIS IND, Employer
CREDIT GENERAL INS CO, Insurer
BFI INS OF WISCONSIN, Insurer
WORKER'S COMPENSATION DECISION
Claim No. 95043025
An administrative law judge (ALJ) for the Worker's Compensation Division of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.
The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and order in that decision as its own, except that it makes the following modifications:
Delete the words "without prejudice" from the fourth paragraph of the ALJ's Interlocutory Order.
ORDER
The findings and order of the administrative law judge, as modified, are affirmed.
Dated and mailed July 30, 1997
hancoge.wmd : 101 : 5 ND § 2.16
Pamela I. Anderson, Chairman
David B. Falstad, Commissioner
MEMORANDUM OPINION
This case potentially poses two related issues.
The first issue is whether, at the time of injury, the applicant was still the employe of a temporary help agency that had placed him with a client company or instead had been hired away by the client company. If that issue is resolved against the temporary help agency, the second issue is the application of the "loaned employe" doctrine. The commission must then decide whether the loaned employe doctrine either makes the client company the liable employer or entitles the temporary help agency to reimbursement or indemnification for its workers compensation liability from the client company. (1)
a. Temporary help agency Labor World as "employer."
The applicant was hired by Labor World in March 1995. Labor World is, by its own admission, a "temporary help agency," defined in Wis. Stat. § 102.01 (2)(f) as an employer who places or leases its employes to another employer who controls the employes' work and compensates the first employer for the employes' services. The applicant's first assignment was at BFI.
The applicant was injured while working at BFI on Monday, July 24, 1995. A BFI foreman had instructed the applicant to help balance a "Bobcat" front-end loader type vehicle. The applicant either fell or was thrown from the Bobcat while it was moving. Causation, nature of disability and extent of disability are not disputed. The only factual issue is whether, at the time of the injury, the applicant was still an employe of the temporary help agency Labor World or had been hired as a regular employe by BFI.
Labor World argues the applicant had been hired by BFI under BFI's policy to hire temporary workers on a regular basis after the temporary worker has completed 90 days of service with BFI. As a prelude to being hired as a regular BFI employe, though, a worker had to pass a drug screening and pre-employment physical. In most cases, when BFI learns that the temporary worker has had a satisfactory physical, it crosses the worker's name off the temporary list and informs the worker he or she is a regular BFI employe effective with the start of a payroll period on a Monday.
In this case, the applicant had passed both the drug test and the physical by Friday, July 21, 1995. However, the record does not establish that BFI learned of the results of the physical prior to the work injury on Monday. Indeed, BFI denied having such knowledge and the testimony of the administrator at the clinic where the physical was performed indicates that BFI would not have been told about the results of the physical until Monday, July 24 at the earliest, and more likely the following Wednesday. Transcript, pages 97-98 and 121.
In any event the applicant was never told he had been hired by BFI on a regular basis. Indeed, he was on Labor World's payroll for the date of injury and was paid by Labor World. Labor World provided him with light duty work once he recovered from the work injury. On this record, the commission concludes the ALJ correctly concluded the applicant was never actually hired by BFI and that he was still an employe of Labor World on the date of injury. In other words, Labor World must be viewed as the "general employer" in this case.
b. Loaned employe doctrine/reimbursement issue.
That being said, the question is what, if any, is BFI's liability as a "special employer" or "borrowing employer" with respect to it relationship to Labor World's employes working at BFI. Labor World contends that BFI should be the liable employer under the loaned employe doctrine, or at least that it is entitled to reimbursement or indemnification from BFI under the doctrine.
The "loaned employe" doctrine applies in cases where one employer "loans" a worker to a second employer and the worker is then hurt while performing services for the second employer. The loaned employe doctrine is usually raised with respect to at least three distinct questions: (a) who is the "employer" liable for workers compensation payments in the first instance, (b) may the loaning or general employer (here Labor World) seek reimbursement of workers compensation payments from the borrowing or special employer (BFI), and (c) may the injured worker attempt to collect tort damages beyond his workers compensation remedy from the borrowing employer?
Only the first two questions are now before the commission. However, the relatively recent supreme court cases cited to the commission by the parties (Gansch and Baurenfeind (2)) deal with the last issue, the availability of a tort remedy to the applicant. Under Wis. Stat. §§ 102.29 (6) and (7), temporary help employes or loaned employes are barred from bringing tort claims against the "borrowing" or "special" employer in whose temporary service they are injured. The dispute in Gansch and Baurenfeind involved what test should be used to decide whether the injured worker was a "loaned employe" restricted to a workers compensation remedy: the Seaman test (focusing on the relationship between the worker and the alleged borrowing employer) or the Gansch test (focusing on the relationship between the alleged temporary help agency employer and the borrowing employer).
In this case, under either test, the parties all but agree that the injured worker is a loaned employe, that Labor World is a temporary help agency, and that BFI is a "special" or "borrowing employer." However, the commission is not confronted with the question of whether the applicant may seek a tort remedy from BFI, but whether BFI is the liable employer or must reimburse Labor World for Labor World's workers compensation payments. Thus, the Gansch and Baurenfeind cases are not precisely on point.
Turning to the question of whether the loaned employe doctrine makes BFI the liable employer, the commission notes the department's footnote to the definition of "temporary help agency" in Wis. Stat. § 102.01 (2)(f). (3) The footnote indicates that temporary help agencies remain the employer responsible for the payment of workers compensation benefits, assuming they retain some rights or obligations under the original employment contract, such as the right to terminate the worker or the obligation to pay wages. Labor World meets this minimal test. The commission thus has no basis to conclude that the loaned employe doctrine operates to make BFI the employer liable to the applicant instead of Labor World.
The question of whether a temporary help agency, despite its liability to an injured worker, may receive reimbursement or indemnification from the client in whose service the worker was injured, has been addressed in a recent court of appeals case, Kaebler Plumbing and commission decision, S.C. Johnson & Son, Inc. (4) In Kaebler Plumbing, the court determined that regardless of whether the Seaman or Gansch test applied the temporary help agency or loaning employer was entitled to reimbursement under Wis. Stat. § 102.06. In S.C. Johnson, the commission affirmed an ALJ's finding that S.C. Johnson was a "special employer" liable for reimbursement to the workers compensation insurer of a temporary help agency who had placed the injured worker with S.C. Johnson. In its decision in S.C. Johnson, the commission pointed out that Wis. Stat. § 102.06 "is the specific statute which provides that the contractor (general employer) who becomes liable for and pays the workers compensation may recover such compensation from the contractor (special employer) for whom the employe was working at the time of the injury."
If Kaebler Heating and S.C. Johnson were the last word on the issue, BFI would have to reimburse or indemnify Labor World for Labor World's workers compensation payments to the applicant. However, since the dates of injury at issue in Kaebler Heating and S.C. Johnson, Wis. Stat. § 102.06 was amended to eliminate the language specifically allowing a loaning employer to seek reimbursement from a borrowing employer for workers compensation payments made to a loaned employe. (5) True, a "contractor over" who is liable to an injured worker of an uninsured "contractor under" under Wis. Stat. § 102.06 could still seek reimbursement from the "contractor under." (6) However, regardless of whether Labor World may reasonably be viewed as a "contractor under," it is not uninsured.
Thus, the commission sees no statutory basis for requiring reimbursement, as there was when Kaebler Heating and S.C. Johnson were decided. Moreover, the department's footnote to the definition of "temporary help agency" also seems to suggest that the temporary help agency, and only the temporary help agency, is liable for the workers compensation payments.
However, in addition to the now-repealed statutory right for reimbursement from a borrowing employer, loaning employers also have or had a common law right to reimbursement. In Cayll v. Waukesha Gas & Electric, 172 Wis. 554 (1920), worker Massino was injured while on loan from employer Cayll to employer Waukesha Gas & Electric. The issue was which employer was liable to pay workers compensation to Massino. The court wrote:
"It was well settled at common law that where an employee, with his own consent, was loaned to a special employer, he became the servant of such employer. The English workman's compensation act changed this rule and provided:
`Where the services of a workman are temporarily lent or let on hire to another person by the person with whom the workman has entered into a contract of service,... the latter shall, for the purposes of this act be deemed to continue to be the employer of the workman whilst he is working for that other person.' Stat. 6 Edw. VII. ch. 58, sec. 13.
"This act was considered by the committee or our legislature which framed the worker's compensation act, and it was brought to the attention of the legislature. It is fair to assume that the legislature, by failing to adopt this section, intended that the common-law rule would continue so far as to be applicable to such a transfer of service as is here involved."
Cayll, at 172 Wis. 559.
The Cayll court went on to find Waukesha Gas & Electric the special (or borrowing) employer legally and morally liable for the workers compensation payments. The holding was later endorsed by the supreme court in Seaman Body Corporation v. Industrial Commission, 204 Wis. 157, 163 (1932). See also Boehck Equipment Co. v. Industrial Commission, 246 Wis. 178, 189 (1944). Criticism of the Seaman test for determining when an employe is a loaned employe appeared as early as Rhinelander Paper Co. v. Industrial Commission, 206 Wis. 2d 215 (1931), but the common law right under Cayll was not challenged. The earliest mention of a general employer's statutory right under Wis. Stat. § 102.06 to recover reimbursement from a special employer for compensation paid to a loaned employe disclosed in the commission's review of the case law is Braun v. Jewett, 1 Wis. 2d 531, 536 (1957).
The final inquiry, then, is whether in the absence of a statutory right to reimbursement, Labor World still has a common law right to reimbursement. The commission concludes not. The common law right of reimbursement, announced in Cayll and approved in Seaman, no longer applies to temporary help agencies in light of the statutory changes in Wis. Stat. §§ 102.01 (2)(f), 102.06 and 102.29 (6). Indeed, because no provisions similar to Wis. Stat. §§ 102.02 (2)(f), 102.06, and 102.29 (6) were in effect on the date of injury in Cayll, the subsequent enactment and modification of that statute may reasonably be viewed as changing the common law rule.
The commission appreciates that the supreme court has held that statutes in derogation of the common law must be strictly construed, and that where a common law doctrine is relevant to an issue presented, and the statute would change the common law, the legislative intent to change the common law must be clearly expressed. LaPoidevin v. Wilson, 111 Wis. 2d 116, 139 (1983). An argument could be made here that the legislature has not clearly expressed an intent to change the Cayll common law rule. On the other hand, since the worker's compensation act itself is a change in the common law, and since the actual application of the rule announced in Cayll is a grafting of the common law on a statutory remedy, the commission believes legislative action with respect to Wis. Stat. §§ 102.01 (2)(f), 102.06 and 102.29 (6) is sufficient to evince a change in the common law on this point.
In sum, the commission agrees with the ALJ's conclusion that Labor World remained the applicant's employer at the time of injury. The commission also concludes Labor World and its insurer are solely liable for the worker compensation payments in this case, as temporary help agencies have no right to reimbursement from a client or "borrowing employer" under the workers compensation statutes, case law or common law.
cc: ATTORNEY ROBERT C MENARD
DERZON MENARD & NOONAN SC
ATTORNEY PAUL R RIEGEL
BORGELT POWELL PETERSON & FRAUEN SC
ATTORNEY JAMES P REARDON
KASDORF LEWIS & SWIETLIK SC
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Footnotes:
(1)( Back ) BFI's brief suggests that the reimbursement or indemnification issue is a different question than the "loaned employe doctrine," or at least that the issue of reimbursement or indemnification is not now before the commission. Under the facts of this case, though, the commission must disagree. If Labor World has a right to indemnification, it is under the loaned employe doctrine. Moreover, the commission believes reimbursement or indemnification is within the issues as framed by the ALJ, which included the respective liabilities of insurers.
(2)( Back ) Gansch v. Nekoosa Papers, Inc., 158 Wis. 2d 743, 745 (1989); Baurenfeind v. Zell, 190 Wis. 2d 701, 706 (1995). See also Meka v. Falk Corp., 102 Wis. 2d 148, 149-50 (1981).
(3)( Back ) Footnote 3 to DWD's Worker's Compensation Act of Wisconsin, with amendments to January 1, 1996, states:
"Leasing agencies that lease employes to other employers would be responsible for worker's compensation benefits in the same way that temporary help agencies are. An employe continues to be the employe of the original employer, though that employe may have been loaned or leased to another employer, if the original employer continues to retain at least some rights or obligations of the original employment contract such as payment of wages or the power to terminate the employe. This corrects the situation that can occur when employes leased to another employer are injured during the leasing period and the employers litigate who is responsible for the benefits while the employe waits for his or her compensation. This clarification also eliminates the double collection of premiums by insurance carriers on the wages of the employe from both the leasing agency and the employer to whom the employe is leased. In the event an employer should be without insurance, the employe would retain the present right to claim compensation against the employer who contracts for his or her services."
The department's interpretive footnotes are given great weight in construing the workers compensation statutes. Pigeon v. DILHR, 109 Wis. 2d 519, 524 (1982).
(4)( Back ) Kaebler Plumbing & Heating v. LIRC, 160 Wis. 2d 342 (Ct. App. 1991) and Milwaukee Insurance Company v. S.C. Johnson & Son, WC Case no. 82024056 (LIRC, September 2, 1994), affirmed sub nom, S.C. Johnson & Son v. LIRC, No. 94-CV-2127 (Wis. Cir. Ct. Racine County August 16, 1995).
The italicized language was deleted from Wis. Stat. § 102.06 by 1989 Wis. Act 64, effective January 1, 1990:
102.06 Joint liability of employer and contractor. An employer shall be liable for compensation to an employe of a contractor or subcontractor under the employer who is not subject to this chapter, or who has not complied with the conditions of s. 102.28 (2) in any case where such employer would have been liable for compensation if such employe had been working directly for the employer, including also work in the erection, alteration, repair or demolition of improvements or of fixtures upon premises of such employer which are used or to be used in the operations of such employer. The contractor or subcontractor, if subject to this chapter, shall also be liable for such compensation, but the employe shall not recover compensation for the same injury from more than one party. In the same manner, under the same conditions, and with like right of recovery, as in the case of an employe of a contractor or subcontractor, described above, an employer shall also be liable for compensation to an employe who has been loaned by the employer to another employer. The employer who becomes liable for and pays such compensation may recover the same from such contractor, subcontractor or other employer for whom the employe was working at the time of the injury if such contractor, subcontractor or other employer was an employer as defined s. 102.04.
(6)( Back ) At least until July 1, 1996, when all of Wis. Stat. § 102.06 ceased to apply upon the certified capitalization of the uninsured employer's fund.