Ghersi v. Salazar

• Decision Date: 28 October 1994
• Docket Number: No. 930243,930243
• Citation: 883 P.2d 1352
• Parties: Dante GHERSI, Plaintiff and Appellant, v. Joe SALAZAR, and Huish Detergent, Inc., formerly Huish Chemical Company, a Utah Corporation, Defendants and Appellees.
• Court: Utah Supreme Court

Page 1352

883 P.2d 1352

Dante GHERSI, Plaintiff and Appellant, v. Joe SALAZAR, and Huish Detergent, Inc., formerly Huish

Chemical Company, a Utah Corporation, Defendants

and Appellees.

No. 930243.

Supreme Court of Utah.

Oct. 28, 1994.

Edward T. Wells, Murray, for plaintiff.

Gary B. Ferguson, Kurt M. Frankenburg, Salt Lake City, for defendants.

STEWART, Associate Chief Justice:

Dante Ghersi appeals from a summary judgment holding that his personal injury action against Huish Detergent, Inc. ("Huish"), and its employee, Joe Salazar, was barred by Utah Code Ann. § 35-1-60, the exclusive remedy provision of the Utah Workers' Compensation Act (the "Act"). We affirm.

I

The facts are undisputed. Adia Personnel Services, Inc. ("Adia"), a temporary labor service, contracted with defendant Huish to provide Huish with temporary employees. Huish paid Adia an hourly fee for each temporary employee, and Adia compensated the temporary employee directly at a lesser hourly rate. Pursuant to the agreement between Adia and Huish, Adia carried workers' compensation insurance on all temporary employees provided to Huish. The difference between the rate Huish paid Adia and the rate Adia paid the temporary employee included an allowance for workers' compensation insurance premiums. Huish was entitled to dismiss from its employment any temporary employee with whom it was dissatisfied, but it had no authority to terminate the employee's relationship with Adia.

Dante Ghersi obtained employment with Adia in April 1989. In the ensuing months, Adia placed Ghersi with several different companies. Ghersi could accept or reject any assignment given him by Adia. In late April or early May 1989, Ghersi accepted an assignment from Adia to work at Huish. Huish assigned Ghersi to work in a warehouse loading boxes of detergent from a conveyor belt onto a pallet. Huish employees supervised and controlled Ghersi in his work, telling him when, where, and how to work.

While Ghersi was working in Huish's warehouse, a forklift driven by Huish employee Joe Salazar backed over Ghersi's right foot and lower leg. Ghersi was paid workers' compensation benefits from Adia's workers' compensation insurer for the injuries he suffered working for Huish. Ghersi then filed a personal injury action against Huish and Salazar for negligence in the operation of the fork lift. The district court granted defendants' motion for summary judgment on the ground that Huish was an employer of Ghersi and, therefore, under Utah Code Ann. § 35-1-60, both Huish and Salazar were immune from a common law personal injury action and Ghersi's sole remedy was under the Act.

II

As a preliminary matter, Ghersi contends that whether an employment relationship existed between Huish and himself is a question of fact that may not be disposed of on summary judgment. However, the facts concerning the terms and manner of employment are undisputed here. The nature of the relationship, therefore, is an issue of law that may be decided by the court. Whitehead v. Safway Steel Products, Inc., 304 Md. 67, 497 A.2d 803, 806 (1985); see Bennett v. Industrial Comm'n, 726 P.2d 427, 429 (Utah 1986); Rustler Lodge v. Industrial Comm'n, 562 P.2d 227, 228 (Utah 1977).

Ghersi's principal assertion is that the Act does not provide immunity to Huish and Salazar because Huish was a "statutory employer" under § 35-1-42 who did not provide workers' compensation benefits. Ghersi contends that Huish and Salazar are not protected by the Act because a "statutory employer" is liable for a common law personal injury action under § 35-1-62 and our ruling in Pate v. Marathon Steel Co., 777 P.2d 428 (Utah 1989), at least if the statutory employer did not pay workers' compensation premiums, as in this case. The issue is a matter of first impression in this state.

Under the Act, an employer's liability to employees for work-related injuries is limited to workers' compensation under the Act. ¹ Nonemployers, however, may be sued for common law damages for injuries to workers caused by the negligence of the nonemployer. ² Adia paid workers' compensation benefits to Ghersi as his general employer. Consequently, Ghersi's exclusive remedy against Adia is workers' compensation. Whether Huish was also an employer of Ghersi and paid workers' compensation insurance premiums determines whether Ghersi is precluded from asserting a negligence action against Huish.

An employee may have two employers for purposes of the Act. Kinne v. Industrial Comm'n, 609 P.2d 926, 928 (Utah 1980); Blacknall v. Westwood Corp., 307 Or. 113, 764 P.2d 544, 547 (1988). Even though Adia was Ghersi's employer and paid workers' compensation benefits, that does not mean that Huish cannot also be Ghersi's employer.

Ghersi argues that Huish was his statutory employer under § 35-1-42 of the Act and that Adia was similar to a subcontractor. As a general proposition, that provision allows workers to recover workers' compensation benefits from persons who are not actual employers but are statutory employers. Section 35-1-42 provides in part:

If any person who is an employer procures any work to be done wholly or in part for him by a contractor over whose work he retains supervision or control, and this work is a part or process in the trade or business of the employer, the contractor, all persons employed by him, all subcontractors under him, and all persons employed by any of these subcontractors, are considered employees of the original employer.

Utah Code Ann. § 35-1-42(5) (1988) (current version at § 35-1-42(6)(a) (Supp.1994)). Thus, an "employer" who engages a contractor "over whose work he retains supervision or control, and such work is a part or process in the trade or business of the employer " is deemed in law to be the "employer" of the contractor, the contractor's employees, the contractor's subcontractors, and their employees. Pinter Constr. Co. v. Frisby, 678 P.2d 305, 307 (Utah 1984) (emphasis added). Ghersi's argument, however, is that he can maintain an action for damages against Huish, even though Huish is a statutory employer, because workers' compensation premiums were paid by Adia, not by Huish, ³ and therefore, under Pate v. Marathon Steel Co., 777 P.2d 428, 431 (Utah 1989), he can sue Huish for damages. Pate held that it is only the "immediate, or common law employer, who actually pays compensation, and its officers, agents, and employees [who] are shielded by the exclusive remedy immunity conferred by section 35-1-60" and that under § 35-1-62 ⁴ an injured worker can maintain an action for damages against a statutory employer who had not paid workers' compensation premiums. Id. at 431; see also Bosch v. Busch Developments, Inc., 777 P.2d 431, 432 (Utah 1989).

Ghersi's characterization of Huish's legal status does not correctly reflect the true nature of the parties' relationship. A temporary labor service is not like a subcontractor. See Word v. Motorola, Inc., 135 Ariz. 517, 662 P.2d 1024, 1026 (1983); Nation v. Weiner, 145 Ariz. 414, 701 P.2d 1222, 1225 (Ct.App.1985); see also Utah Code Ann. § 35-1-42(6)(a) (Supp.1994). Such a service does not perform any work for customers; it merely supplies or "loans" workers who are under contract to the service to work as an employee for a client. The work the employee performs is the work of the client. Word, 662 P.2d at 1026; Weiner, 701 P.2d at 1225. The relationships between a labor service, a "loaned" or temporary employee, and a temporary employer are different from statutory employer-employee relationships and different legal principles govern that relationship. 2A Arthur Larson, Workmen's Compensation Law § 72.31(c), at 14-245 to -246 (1993).

Almost without exception, courts have relied on the loaned employee doctrine to hold that the special employer of a temporary employee is an employer for workers' compensation purposes. See, e.g., Capps v. N.L. Baroid-NL Industries, Inc., 784 F.2d 615, 617-18 (5th Cir.1986); Huff v. Marine Tank Testing Corp., 631 F.2d 1140, 1144 (4th Cir.1980); Word, 662 P.2d at 1027; Danek v. Meldrum Mfg. & Eng'g Co., Inc., 312 Minn. 404, 252 N.W.2d 255, 260 (1977); Wright v. Habco, Inc., 419 S.W.2d 34, 36 (Mo.1967); Shipman v. Macco Corp., 74 N.M. 174, 392 P.2d 9, 12 (1964); Goodman v. Sioux Steel Co., 475 N.W.2d 563, 565 (S.D.1991); Meka v. Falk Corp., 102 Wis.2d 148, 306 N.W.2d 65, 70-71 (1981). ⁵ The doctrine provides that if a labor service loans an employee to a special employer for the performance of work, then the employee, with respect to that work, is the employee of the special employer for whom the work or service is performed. Danek, 252 N.W.2d at 258; see also Restatement (Second) of Agency § 227 (1958). No public policy is subverted by this doctrine. Jones v. Sheller-Globe Corp., 487 N.W.2d 88, 92 (Iowa Ct.App.1992).

The loaned employee doctrine has evolved to determine the rights and responsibilities of the parties under workers' compensation laws. Special terminology has been developed to describe the parties to this relationship. A temporary labor service is a "general employer"; a temporary employee is a "loaned" employee; and the business to which the employee is assigned is a "special employer." Here, Adia is a general employer, Ghersi the loaned employee, and Huish the special employer.

Professor Larson explains workers' compensation liability under the loaned employee doctrine as follows:

When a general employer lends an employee to a special employer, the special employer becomes liable for workmen's compensation only if:

(a) the employee has made a contract of hire, express or implied, with the special employer;

(b) the work being done is essentially that of the special employer; and (c) the special employer has the right to control the details of the work.

When all three of the above conditions are satisfied in relation to both employers, both employers are liable for workmen's compensation.

1B Arthur Larson,...