By Bruce B. Deadman
The Wisconsin Court of Appeals recently identified a loophole in the “grand bargain” which impacts all Wisconsin employers who use a staffing agency to provide them with temporary employees, or who “borrow” employees from another employer. Fortunately, the Legislature acted with unusual speed to close that loophole.
In Estate of Rivera vs. West Bend Mutual Insurance Company and Alpine Insulation, (Appeal No. 2017AP142), the Wisconsin Court of Appeals held that temporary employees who are injured on the job may choose to either file a claim under workers’ compensation or commence a lawsuit against the temporary employer in court. The Court also held that the same principle applies to “loaned” employees (for example, when a contractor on a job site “borrows” another contractor’s employee).
Over a century ago, Wisconsin became the first state to adopt a worker’s compensation program to address how on-the-job injury cases should be resolved. This “grand bargain” established a system whereby, in most circumstances, employees gave up their right to sue their employer for damages. Although a suit could result in a large award, the process was expensive, uncertain, and time-consuming, and required the employee to prove that the employer was the primarily negligent party. Instead, an administrative system was established which provides for the relatively quick payment of medical expenses, lost wages, and other benefits regardless of fault, albeit in amounts which are usually less than what might be awarded in a lawsuit. This “grand bargain” is commonly referred to as the “exclusivity” provision.
Here are the undisputed facts of Rivera: Rivera was employed by Alex Drywall, which in turn provided him to Alpine to perform work. Alpine paid Alex Drywall for Rivera’s services and in turn, Alex Drywall paid Rivera. While traveling from one Alpine job site to another, Rivera and two others were killed in a one-vehicle accident. The vehicle was owned by Alpine and insured by West Bend. The vehicle’s driver was a temporary employee of Alpine through a different staffing agency. The driver was negligent in operating the vehicle and that negligence was a cause of the accident.
Rivera’s estate filed a negligence action, commonly known as a tort, against Alpine and West Bend. The trial court granted Alpine and West Bend’s motion to dismiss the claim without a trial, holding that the facts were undisputed and the exclusivity provision did not apply. The estate appealed.
In reversing the trial court, the Court of Appeals looked at the following language of the “exclusivity” provision:
(b) No employee of a temporary help agency who makes a claim for [worker’s] compensation may make a claim or maintain an action in tort against any of the following:
- Any employer that compensates the temporary help agency for the employee’s services. “Wis. Stat. sec. 102.29(6)(b)1. (emphasis by the Court)
The Court looked to the “plain language” of the statute, and held that it clearly and unambiguously says that a temporary employee who claims worker’s compensation benefits is barred from bringing a tort action against his or her temporary employer, but that one who doesn’t make such a claim can bring such an action.
The Court held that its ruling also extended to “loaned” employees, as the language of that statute contained the same qualifying language- “who make a claim for compensation” as the temporary employee statute.
On February 7th, West Bend and Alpine asked the Wisconsin Supreme Court to review the Court of Appeals’ decision. That request has not been acted on as of this writing. On February 8th Assembly Bill 884 was introduced in the Wisconsin Legislature. This bill literally flew through the legislative process and was signed into law as Wisconsin Act 139 on March 1st. The bill changes the statute to read “no employee of a temporary help agency who has the right to make a claim for compensation may make a claim or maintain an action in tort . . . “
Generally, this means “problem solved” with respect to future claims. However, because the statute is not retroactive, Wisconsin employers should be aware that they may be subject to a negligence suit by a temporary or loaned employee injured between January 9, 2018 and March 1, 2018. Wisconsin employers who have either temporary or loaned employees should also check with their insurance provider to ensure they have coverage for such claims.
Bruce B. Deadman is an attorney with the law firm of Davis & Kuelthau in Green Bay. His practice is focused on labor, employment, and compensation-related issues. He can be reached at email@example.com or 920.431.2228.
This article will appear in the April edition of The Business News.