SI Review: June 2013

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Benefit of Counsel

Failure to Rehire Terminating a temp after an injury could raise workers’ comp costs

By Chuck Palmer and Douglas Selky

In most states, the staffing firms are exclusively responsible for payment of workers’ compensation benefits when a contingent worker is injured on the job. And following an injury, the client company sometimes is hesitant to bring the employee back. A recent decision out of Tennessee illustrates how that scenario could raise the staffing firm’s costs.

In Timmy Dale Britt v. Dyer’s Employment Agency Inc., the Tennessee Supreme Court addressed whether a contingent worker is entitled to a statutory multiplier in an instance when the staffing agency and/or worksite employer fails to return the temporary employee to work after the employee sustains a compensable injury. Here’s what that means.

Statutory multiplier. Tennessee law mandates that in certain instances, an employee is entitled to a statutory multiplier permitting an award of benefits up to six times the medical impairment rating, also known as a permanent partial disability assessment. A minimum award of 1.5 times the medical impairment rating is available if the employer returns the employee to work at a wage equal to or greater than the worker’s average weekly wage at the time of the injury. Otherwise, the injured worker is entitled to up to six times the medical impairment rating.

The public policy provision behind the Tennessee statute is to keep injured workers employed by reducing the extent of exposure for employers that return those employees to work at the same or greater wage. Encouraging such retention of injured employees in turn advances the general purpose of the Tennessee workers’ compensation statute in relieving society of having to provide benefits to injured employees and to place the burden on the industry employing those workers.

The Dyer case. Timmy Britt was hired by Dyer’s Employment Agency and was placed at a manufacturer of automobile hoses. He developed carpal tunnel syndrome, undergoing surgery. He was assessed with 4 percent permanent partial disability. The worksite employer ended his assignment. He was told by Dyer’s Employment Agency that his assignment had ended, and consistent with its business practice, his employment was terminated. The agency did not attempt to find him another assignment.

The trial court awarded workers’ compensation benefits to Britt, but only awarded one and one half times the medical impairment rating, based upon the temporary nature of Britt’s employment. The trial court also held that Dyer’s could not “be faulted” for the termination of the work assignment, and stated that due to the inherent temporary nature of Britt’s employment, coupled with the fact that Britt was advised of the temporary assignment, he was only entitled to the lesser statutory multiplier.

On appeal, the Tennessee Supreme Court held that because the employer did not return the employee to work after his injury, failed to offer him a return to work option and did not terminate his employment for misconduct, he was entitled to the higher benefit assessment — entitling him to benefits up to six times his medical impairment rating. The court applied the same analysis in awarding benefits to the plaintiff as any other laborer, regardless of his employment status as a contingent worker. The court, in its analysis, cited the fact that the temporary nature of the employment and the fact that Britt was aware of the duration of employment were not relevant to whether or not the multiplier is applicable. The court stated that the statute did not draw a line between permanent and temporary employees, and there was no statutory language permitting or requiring consideration of the employer’s business practice. Implications. Staffing firms often will incur greater workers’ compensation costs when their customers refuse to return injured workers to an assignment post-injury. Buyers are paying a premium to shift the cost of workers’ compensation to the temporary staffing agency. The business question for the staffing agency is whether that premium is enough to be profitable.

While it is difficult to predict future claim costs with any certainty, the injury experience of the customer, along with the customer’s willingness to provide light duty and return to work options for temporary employees, should factor into decisions to contract with the customer and/or pricing for the assignment. This will vary based upon the state law and the increase in benefits for a failure to rehire under that state law. Temporary staffing agencies are encouraged to review their state-specific workers’ compensation statutes in detail when analyzing potential workers’ compensation exposure.

Chuck Palmer and Douglas Selky are attorneys at Michael Best and Friedrich LLC. The can be reached at cbpalmer@michaelbest.com or deselky@michaelbest.com.

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