SI Review: November 2013

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Benefit of Counsel: For Their Welfare

Why buyers and staffing firms are jointly responsible for workplace safety

By Eric H. Rumbaugh and Mark Lotito

In recent months, workplace safety has become even more important, with the Occupational Safety and Health Administration (OSHA) issuing updated guidance specifically on the issue.

OSHA’s guidance reminds staffing firms and client companies that they should carefully consider who will be responsible for safety training and allocate responsibility accordingly. In this context, it is also important for staffing firms and client companies as “co-employers” to carefully consider the exclusive remedy protection afforded by workers’ compensation laws.

OSHA Guidance

OSHA recommends that staffing firms and client companies — or “host employers” — set out their respective responsibilities for compliance with applicable OSHA standards in their contract. According to OSHA, the staffing firm is generally responsible for ensuring that its workers have received proper safety training. In practice, however, the staffing firm may provide basic training, but it’s the client company that usually provides the training specific to a contingent worker’s particular tasks.

OSHA’s position is that in order for a staffing firm to fulfill its obligation under such circumstances, it must have a reasonable basis for believing that the client’s training adequately addresses potential hazards the worker may be exposed to at the host worksite.

Both parties should also be aware of OSHA reporting requirements in the event of fatalities or catastrophes. Only one employer’s log should record employees’ injuries and illnesses — normally that of the client company.

Embrace Co-Employment

While buyers tend to shy away from the co-employer label, in the case of workplace injury, it is a benefit. That’s because in most states, if an employee is eligible for workers’ compensation benefits, those benefits are the employee’s “exclusive remedy” against the employer for any job-related personal injury. The employee is entitled to a specific level of compensation set by statute or regulation, and, in exchange, the employer is entitled to immunity against suits for tort damages. Staffing firms and their clients both want this exclusive remedy. A company that denies being an employer risks forfeiting these important benefits, and a few case examples illustrate the significance of maintaining this protection.

In a Florida case, Toucet v. Future Foam Cushion Co., a contingent worker was severely injured at a client company’s factory. The staffing firm provided the worker, Edgardo Toucet, with workers’ comp payments and benefits and paid for his medical and psychological treatments. Toucet sued the client company, alleging negligence for disabling safety mechanisms, and failing to comply with safety regulations in the operation of the machine among other complaints. However, the client company established all of the statutory elements required to invoke the protection of workers’ compensation law: Toucet was under the client company’s supervision, and injured while acting in furtherance of the employer’s business, and the staffing firm had already secured payment of compensation for him. Accordingly, workers’ compensation exclusivity barred Toucet’s negligence claim against the client company.

By contrast, Black v. Labor Ready shows how a client company can lose the protection of workers’ compensation exclusivity. In this Pennsylvania case, a contingent worker was severely injured at a client company’s factory, and the staffing firm began providing workers’ compensation benefits. The worker, Diane Black, filled a petition to review the compensation benefits, and also filed a claim petition that named the client company as her employer. At a workers’ compensation hearing, the client company maintained that it was not Black’s employer, and Black ultimately withdrew her petition. Later, Black sued the client company for negligence. The client company then claimed employer status and asserted workers’ compensation exclusivity defenses, but the court ultimately held the client company to its earlier, successfully maintained, position that it was not Black’s “employer.” By initially denying employer status, the client company lost its exclusivity protections and faced a far more costly negligence suit.

Staffing firms and their client companies should carefully consider who will provide appropriate safety training to contingent workers. If workplace injuries do nevertheless occur, co-employment status may provide the exclusive remedy protection, and staffing firms should remind their clients of this provision in the case of subsequent claim attempts.

Eric H. Rumbaugh and Mark Lotito are attorneys with Michael Best & Friedrich LLC. ehrumbaugh@michaelbest.com, malotito@michaelbest.com

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