Indiana Law Update Blog - Price Waicukauski & Riley Legal Blog

Leased Employee Is a Joint Employee of Both the Lesssor and Lessee, Regardless of Their Agreement

March 1, 2011

Today, the Indiana Court of Appeals issued a decision in Taylor v. Ford Motor Co., Case No. 49A02-1007-CT-82, which clarified its holding in a recent case, Kenwal Steel Corp. v. Seyring, 903 N.E.2d 510 (Ind. Ct. App. 2009). The central question is whether the Worker's Compensation Act (WCA) provided that two corporations who were not an injured worker's direct employers were immune from suit based on an on-the-job injury. The Court of Appeals held that these other corporations were deemed "joint employers" of the injured worker and, therefore, the trial court did not have subject matter jurisdiction over the lawsuit.

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Taylor was employed by Visteon and leased to ACH, a subsidiary of Ford. The lease agreement between Visteon and ACH provided that Visteon would retain responsibility for Taylor's worker's compensation benefits and that Taylor would not be ACH's employee. Taylor was was seriously injured at the ACH plant when Adams, a Ford employee, struck him with a forklift. Taylor received worker's compensation benefits.

Taylor then filed suit against Adams, ACH, and Ford, alleging that their negligence caused his injuries. The defendants moved to dismiss for a lack of subject matter jurisdiction and the trial court granted that motion.

The WCA provides the exclusive remedy for recovery of personal injuries arising out of and in the course of employment in Indiana. Taylor argued that his claims against Adams, ACH, and Ford are claims against third-parties that are not precluded by the WCA and should be allowed to proceed. He focused his argument on the language of the lease agreement. However, the Court of Appeals found that the relevant statute (I.C.§ 22-3-6-1(a)) was clear and unambiguous and that it, not the contract between Visteon and ACH, controlled.

[E]ven though James may have been considered an employee of Visteon only for purposes of the Employee Lease Agreement, by operation of the mandatory provision of Subsection 1(a), both Visteon and ACH are considered James's joint employers for purposes of the exclusivity portion of the Act.

Taylor argued that the Seyring court did not rely solely on Subsection 1(a), but also looked to the contract between the lessor and lessee of the temporary employee in determining who to consider as employers. The Court disagreed.

The fact that joint employers may distribute the cost of the unemployment compensation by contract does not mean that they can contractually exclude themselves from the mandatory language of Subsection 1(a), which defines both lessors and lessees of leased employees as joint employers for purposes of the Act. The Seyring court did not hold otherwise. Instead, the court assumed arguendo that even if an employer could waive the exclusivity provisions of the Act, the lease agreement in that case did not contain such a waiver. The same is true here. Although the Employee Lease Agreement does provide that any leased employee such as James was to be considered an employee of Visteon only and not ACH, there is nothing the in the Agreement mentioning the exclusivity provision of the Act or indicating that ACH was intentionally waiving this provision.

Thus, Visteon and ACH were joint employers of Taylor for the purposes of the WCA. Likewise, Ford was a joint employer of Taylor, because ACH was its subsidiary. Therefore, the WCA's exclusivity provisions were applicable against all of the defendants.

Lessons:

The lessor and lessee of a leased employee are both joint employers of the employee for the purposes of the Worker's Compensation Act.
A parent and subsidiary corporation are joint employers of an employee of the subsidiary for the purposes of the Worker's Compensation Act.

Brad A. Catlin
Price Waicukauski & Riley, LLC
Learn more about Brad and contact us
Download a copy of this article here

TAG IN Court of Appeals, Joint Employer, Leased Employee, Parent Corporation, Subsidiary Corporation, Worker's Compensation

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Leased Employee Is a Joint Employee of Both the Lesssor and Lessee, Regardless of Their Agreement

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