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1 EMPLOYMENT LAW Surviving the Special Employment Doctrine by Ian Fusselman Most of us understand that, with few exceptions, you can t directly sue a client s employer for a work-related injury because Workers Compensation serves an exclusive remedy. We also tend to believe that you can pursue a third party that contributed to the injury even though your client may have been injured on the job. Unfortunately, the definition of employer is relatively broad and can encompass parties that many might otherwise believe are viable third-party defendants. This article will discuss the scope of the special employment doctrine and will provide some suggestions on how to get your case in front of a jury. Workers Compensation as an Exclusive Remedy As a general rule, an employee injured in the course of his employment is limited to remedies available under the Workers Compensation Act ( the Act ). Jensen v. Amgen, Inc. (2003) 105 Cal.App.4th The Act, which has been codified in Labor Code 3200, et seq., is applicable to employment relationships. Arriaga v. County of Alemeda (1995) 9 Cal.4th 1055, Under the Act, employment is defined broadly so that any person in service to another is a covered employee. Id.

2 [W]hen the conditions of compensation exist, an employee's sole remedy for the acts of his employer or fellow employees is a claim for workers' compensation benefits. Superior courts are without subject matter jurisdiction to entertain causes of action based on such injuries. Bagatti v. Department of Rehabilitation (2002) 97 Cal.App.4th 344, 364. The exclusivity rules also extend to loss of consortium claims. Labor Code 3600 provides that the employer s liability for compensation is in lieu of any other liability whatsoever to any person. Under these [Workers Compensation] provisions, the Courts of Appeal have held that claims for loss of consortium are excluded where the spouse's injury giving rise to the loss is compensable under the compensation act. Although the cause of action for loss of consortium is not merely derivative or collateral to the spouse's cause of action, it is based on the physical injury or disability of the spouse, and is precluded by the broad language of the Labor Code sections. Cole v. Fair Oaks Fire Protection Dist. (1987) 43 Cal.3d 148, (citations omitted). California Courts have, under very specific factual theories, recognized strict liability causes of action by employees against their employers. More specifically, parties have been allowed to maintain strict product liability causes of action when their employers were operating in the dual capacity of both employer and manufacturer. Under the dual capacity doctrine, manufacturers are held liable for defects in their product regardless of an existing employment relationship with a plaintiff. See, Moreno v. Leslie s Pool Mart (1980) 110 Cal.App.3d 179, holding that plaintiff could maintain a strict product liability claim against his employer. Other cases that have held that employers could be found liable involved intentional torts such as assault or fraud. See, generally, Riley v. Southwest Marine, Inc. (1988) 203 Cal.App.3d 1242, 1257, footnote 9, discussing cases in which recovery against employers was allowed in the context of physical assault, intentional infliction of emotional distress and other intentional torts. The Special Employment Doctrine

3 An employee may have more than one employer for the purposes of workers compensation. In situations of dual employers, both employers enjoy the same immunity from suits relating to work related injuries. Santa Cruz Poultry, Inc. v. Superior Court (1987) 194 Cal.App.3d 575, 580. A special employment relationship arises when an employer lends an employee to another employer and relinquishes to the borrowing employer all right to control over the employee s activities. Riley v. Southwest Marine, Inc. (1988) 203 Cal.App.3d 1242, In such a relationship, the borrowed employee is held to have two employers -- his original or general employer, and the second, or special employer. Kowalski v. Shell Oil Co. (1979) 23 Cal.3d 168, 174. In this dual employer situation, the employee is generally limited to a statutory workers remedy for injuries he received in the course of his employment with the special employer; he may not bring a separate tort action against either employer. Riley, supra, at See, also, Santa Cruz Poultry, supra, at 580. While the question of whether an employment relationship exists is generally a question of fact, if neither the evidence nor the inferences are in conflict, then the question of whether an employment relationship exists becomes a question of law. Riley, supra, at 1248; Santa Cruz Poultry, supra, at 580. Moreover, where the facts of employment are not disputed, the existence of a covered relationship is a question of law. Johnson v. Berkofsky-Barret Productions, Inc. (1989) 211 Cal.App.3d 1067, Factors relevant to determining whether an employee is the borrowed employee of another include: (1) whether the borrowing employer's control over the employee and the work the employee is performing extends beyond mere suggestion of details or cooperation; (2) whether the employee is performing the special employer's work; (3) whether there was an

4 agreement, understanding, or meeting of the minds between the original and special employer; (4) whether the employee acquiesced in the new work situation; (5) whether the original employer terminated his relationship with the employee; (6) whether the special employer furnished the tools and place for performance; (7) whether the new employment was over a considerable length of time; (8) whether the borrowing employer had the right to fire the employee and (9) whether the borrowing employer had the obligation to pay the employee. Riley, supra, at Although the foregoing list of factors help to determine the existence of a special employment relationship, [t]he primary consideration in determining whether a special employment relationship exists is whether the special employer has the right to control and direct the activities of the alleged employee or the manner and method in which the work is performed, whether exercised or not. Riley, supra, at 1250 (internal quotations omitted). The test is whether the special employer has the right to control the details of the work for which the employee was loaned. Sehrt v. Howard (1960) 187 Cal.App.2d 739, 743. As noted by the Court in Thomas v. Edgington Oil Co. (1977) 73 Cal.App.3d 61, when the special employer was exercising direct supervision over the exact task during the accomplishment of which an employee is injured, the status of special employer must be found to exist as to a claim for that injury. Id. at 64 (emphasis added). [A] contract cannot affect the true relationship of the parties to it. Nor can it place an employee in a different position from that which he actually held. Kowalski, supra, at 176. It is "the reality of the employment relationship, not the parties' paper agreement, [that] controls the parties' rights." Santa Cruz Poultry, supra, at 581. Consequently, even if your client has a contract specifically identifying an employer and disclaiming any rights or responsibilities on the

5 part of the third party as an employer, courts can ignore the contract and look to the reality of the relationship. Getting Past Summary Judgment In many cases, the circumstances of the employment relationship are such that you simply cannot avoid application of the special employment doctrine, so it is important to analyze the application of the doctrine before taking on a case involving a workplace injury. Carefully review the nine factors in Riley, supra, in any potential workplace injury case and make a wellreasoned decision as to whether you have a viable case. If you decide to take the case, be proactive in introducing facts into the case through discovery that are going to get you past summary judgment. Exploit any details of the job which show that the client was required to observe the general employer s rules and procedures while on loan to other employers. If there are conflicts between the general employer s and the special employer s procedures, focus on the conflicts which show the general employer s procedures are controlling. Focus attention on any written agreement establishing limitations on the special employer s ability to control the client s work and any situations in which your client exercised the discretion to supplant the special employer s directions with the employee s own judgment or procedures of the general employer. If the client is a specialist performing work beyond the typical scope of the special employer s business, focus on the facts that distinguish your client from other employees on the job. Establish that the special employer had neither the expertise nor the sophistication to manage or control your client. If the employment was over a long period of time, determine whether the original assignment contemplated the entire period or whether the assignment was

6 extended or renewed periodically. Determine whether your client used any special equipment or tools provided by the general employer or the client. Finally, make sure that your client is fully versed in the details of the special employment doctrine and work with the client on strategies to provide truthful testimony that will raise triable issues of fact during the client s deposition. CONCLUSION Once you survive summary judgment, remember that Workers Compensation exclusivity is still a complete defense, so anticipate a motion to bifurcate the trial and continue developing facts favorable to your client even after prevailing on summary judgment. If the case is not bifurcated, make sure to weave facts and themes into your case that will help the jury get past the special employment doctrine and will allow the jury to focus on a just verdict for your client.

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