An Ohio court of appeals last week confirmed that a primary benefit of using staffing companies – the staffing company’s payment of workers’ compensation premiums covering the loaned employees – shields both the staffing company and its customer from workplace negligence claims.
Ohio’s Eighth District Court of Appeals, in Thomas v. PSC Metals, 2018-Ohio-1630 (8th Dist. Ct. App., Apr. 26, 2018), found that an employee who was on loan to PSC Metals from a staffing company could not sue PSC for negligence because the employee was covered by the workers’ compensation insurance policy obtained by the staffing company. (The employee had originally sued the staffing company as well, but dismissed those claims.) The employee argued that because he was an employee of the staffing company, and the staffing company (not PSC) had paid the premiums for the workers’ compensation insurance policy, only the staffing company was shielded from negligence claims under Ohio’s workers’ compensation immunity statute. The court of appeals disagreed, affirming summary judgment in favor of PSC.
The court first found that, even though the employee was on the staffing company’s payroll, he was also an employee of PSC because an “employee may have more than one employer for purposes of workers’ compensation immunity.” Even though the staffing contract specified that PSC was not the employer, PSC’s right of control over the manner and means of the employee’s work made it an employer for purposes of immunity.
Second, the court found that PSC had complied with its obligations to provide workers’ compensation coverage to the employee by virtue of the policy purchased by the staffing company. The court rejected the employee’s argument that only the staffing company had immunity because it – not PSC – had paid the policy premiums. It found that, for purposes of immunity, it does not matter whether the staffing company or customer pays the premiums, as long as someone does so. Further, it noted that PSC did pay the premiums, indirectly, through the fees it paid to the staffing company.
This case highlights the advantages provided by the increased use of staffing companies, and the importance of ensuring that the contract between the staffing company and its customer adequately manages the risks and potential liability of the parties. For more information on how to manage these issues, please contact one of Frantz Ward LLP’s Staffing Industry attorneys.