A company using temporary employees may not be able to take advantage of workers’ compensation immunity from litigation claims if it fails to establish a clear contractual relationship with its temporary agency. A recent Ohio Court of Appeals decision illustrates that, absent a clear contractual relationship, a company using temporary labor risks exposing itself to negligence claims and other claims with low standards of proof, subjecting itself to significant liability.
Ohio law typically shields employers who provide workers’ compensation coverage to their employees from lawsuits for injuries to those employees in the course of their work. An exception to that immunity is that employers can be held liable for “intentional torts,” but those claims carry an extremely high burden of proof, making it very difficult for a plaintiff to prevail. Ohio courts have in most cases extended that immunity to cover not only temporary agencies, but also the clients to whom they “rent” their employees, even though the temp agency is the nominal employer of the employee, because the clients are either directly or indirectly contributing to workers’ compensation insurance coverage. But recent case law from Ohio’s Eighth District Court of Appeals emphasizes the need to take care in establishing a formal relationship between the temp agency and its client.
The court in Hornyak v. Reserve Alloys, LLC, 2016-Ohio-8489 (8th Dist. App. 2016) found that it was inappropriate to dismiss negligence claims against a company who was controlling the work of a temporary employee when he was injured, because it was unclear whether the company was a client of the temp agency. The company, Reserve Alloys, claimed immunity from suit, arguing that even though the plaintiff technically was an employee of a staffing agency, it was entitled to immunity as well because it had controlled and supervised the work of the plaintiff. Citing evidence that it was Reserve Alloys’ parent company, rather than Reserve Alloys itself, that had a contractual relationship with the temp agency, the Court of Appeals found that it was error to extend immunity to Reserve Alloys.
The decision highlights the perils of not establishing clear and well-defined contractual relationships when using temporary labor. Failure to do so can result in unintended and significant tort liability.