Parson v. Procter & Gamble Mfg. Co.

• Decision Date: 20 April 1994
• Docket Number: No. 92-797,92-797
• Citation: 514 N.W.2d 891
• Parties: Debra PARSON and Harold Parson, Appellants, v. PROCTER & GAMBLE MANUFACTURING CO., Appellee. Pamela C. USHER and Marshall Dean Usher, Appellants, v. PROCTER & GAMBLE MANUFACTURING CO., Appellee.
• Court: Iowa Supreme Court

Page 891

514 N.W.2d 891

Debra PARSON and Harold Parson, Appellants, v. PROCTER & GAMBLE MANUFACTURING CO., Appellee.

Pamela C. USHER and Marshall Dean Usher, Appellants, v. PROCTER & GAMBLE MANUFACTURING CO., Appellee.

No. 92-797.

Supreme Court of Iowa.

April 20, 1994.

Rehearing Denied May 25, 1994.

Gregory T. Racette and Anne L. Clark of Hopkins & Huebner, P.C., Des Moines, for appellants.

Charles T. Traw of Leff, Haupert & Traw, Iowa City, for appellee.

Considered en banc.

McGIVERIN, Chief Justice.

The basic question here is whether, as a matter of law, the employees of a labor broker may be deemed the employees of the broker's industrial customer. Under this record, we believe not.

Accordingly, we vacate the decision of the court of appeals and reverse the judgment of the district court.

I. Background facts and proceedings. Kelly Temporary Services (Kelly) is a firm engaged in providing temporary workers to commercial and industrial customers. Defendant Procter & Gamble (P & G) is a Kelly customer; Kelly furnished workers, including plaintiffs, Debra Parson and Pamela Usher, to serve as temporary workers at P & G's plant in Iowa City, Iowa.

Under the written agreement between P & G and Kelly, P & G pays Kelly an agreed hourly rate for the furnished workers. From these payments Kelly pays the workers' wages, payroll expenses, and taxes, plus a workers' compensation insurance premium. Kelly conducts police checks, drug tests, and reference checks on each employee.

At the P & G plant, Kelly's on-site coordinator checks Kelly workers in and out of the plant, assigns them to the production lines, maintains attendance records, and receives complaints. P & G trains the Kelly workers and supervises the hands-on operation of each production line. P & G provides all equipment and establishes safety rules and quality guidelines. P & G cannot terminate the employment of a Kelly worker but can request reassignment.

When compared with P & G's regular employees, the Kelly workers have a much less desirable job. They are paid less. Kelly workers are required to use separate break rooms, entrances, driveways, parking places, and gates. They wear badges that differ from those of full-time P & G employees and are not allowed in the cafeteria or locker room.

While working on the job there, plaintiffs Parson and Usher were injured and received workers' compensation benefits from Kelly's insurer.

Plaintiffs and their spouses (for loss of consortium) later brought this tort suit against P & G based on the same injuries.

Defendant P & G filed a motion for summary judgment, contending that plaintiffs Debra Parson and Pamela Usher were its employees and that Iowa Code section 85.20 (1991) barred plaintiffs' tort suit against it.

The plaintiffs appealed after the district court, relying largely on Jones v. Sheller-Globe Corp., 487 N.W.2d 88, 93 (Iowa App.1992), granted summary judgment for defendant P & G as to plaintiffs' claims. The matter is before us on further review of a court of appeals decision affirming the district court ruling.

The nature of the relationship between plaintiffs and P & G controls the appeal. If, as a matter of law, P & G is plaintiffs' employer, tort recovery is barred by the exclusive workers' compensation remedy provision of Iowa Code section 85.20. But if a genuine issue of fact exists as to whether plaintiffs remained employed only by Kelly, and were not employed by P & G, summary judgment for P & G should not have been granted. See Iowa R.Civ.P. 237(c).

Therefore, our review of the district court's summary judgment ruling is at law. Iowa R.App.P. 4. Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law." Iowa R.Civ.P. 237(c); Farm Bureau Mut. Ins. Co. v. Milne, 424 N.W.2d 422, 423 (Iowa 1988). The moving party (P & G) has the burden to show the nonexistence of a material fact. Milne, 424 N.W.2d at 423. Evidence must be viewed in the light most favorable to the resisting party. Thorp Credit, Inc. v. Gott, 387 N.W.2d 342, 343 (Iowa 1986).

The summary judgment record here consisted of the pleadings, depositions, exhibits, and affidavits.

II. Contract of hire as a question of disputed fact. Plaintiffs first contend that the district court erred in holding that there was no genuine issue of material fact as to the existence of an employment relationship between them and P & G. We agree with plaintiffs.

To determine whether an employer falls under the workers' compensation scheme, there must be

a mutual arrangement between the employer and employee under which both give up and gain certain things. Since the rights to be adjusted are reciprocal rights between employer and employee, it is not only logical but mandatory to resort to the agreement between them to discover their relationship. To thrust upon a worker an employee status to which he has never consented ... might well deprive him of valuable rights under the compensation act, notably the right to sue his own employer for common-law damages. This reasoning applies not only to the question whether there is any employment relationship at all, but also to the question whether one of two or more persons is an employer. In such cases, with all the elements of employment having been established as to some employer, the issue may be solely whether the particular defendant made a contract with the particular employee.

Rouse v. State, 369 N.W.2d 811, 814 (Iowa 1985) (quoting 1B Arthur Larson, The Law of Workmen's Compensation § 47.10, at 8-304 to 8-309 (1993) (citations omitted) [hereinafter Larson] ).

Thus, the threshold determination in deciding whether a worker falls into the workers' compensation scheme is whether the worker entered into a contract of hire, express or implied. 1B Larson § 47.00, at 8-301; id. § 48.00(a), at 8-434; see Iowa Code § 85.61(11) (" 'Worker' or 'employee' means a person who has entered into the employment of, or works under contract of service, express or implied, or apprenticeship, for an employer...."); Muscatine City Water Works v. Duge, 232 Iowa 1076, 1084, 7 N.W.2d 203, 208 (1942) ("[U]nder our law the employment or work must be under a contract of service, express or implied.").

The question of whether a contract of hire exists is ordinarily one of fact. Polk County v. Steinbach, 374 N.W.2d 250, 252 (Iowa 1985); accord Williams v. Delta Truck Body Co., 892 F.2d 327, 328 (3d Cir.1989); French v. Grove Mfg. Co., 656 F.2d 295, 299-300 (8th Cir.1981); Gigax v. Ralston Purina Co., 136 Cal.App.3d 591, 598-99, 186 Cal.Rptr. 395, 399 (1982) ("The question of whether a worker is an employee within the meaning of the Compensation Act .... becomes a question of law only when but one inference can reasonably be drawn from the facts."); Smith v. Greg's Crane Serv. Inc., 576 So.2d 814, 818 (Fla.App.1991); Saldana v. Wirtz Cartage Co., 74 Ill.2d 379, 24 Ill.Dec. 523, 528, 385 N.E.2d 664, 669 (1978); Mackall v. Zayre Corp., 293 Md. 221, 443 A.2d 98, 103 (1982); Weme v. Lastavica, 458 N.W.2d 404, 406 (Minn.1990); O'Brien v. Garden Way Mfg., Inc., 72 A.D.2d 860, 860, 421 N.Y.S.2d 729, 730 (1979); Novenson v. Spokane Culvert & Fabricating Co., 91 Wash.2d 550, 588 P.2d 1174, 1177 (1979) ("Consent to an employment agreement with [the defendant] should not be imputed to [the plaintiff] as a matter of law; material factual questions exist regarding the plaintiff's consent to enter a contract of hire."). This rule merely reflects the general rule of contract law that "[t]he determination of the intent of the parties to make a contract, as gathered from what they did and said, is normally a question of fact for the jury, particularly where the terms of the contract are unclear." 75A Am.Jur.2d Trial § 795, at 403 (1991) (footnotes omitted). Because the determination of the employment status of a workers' compensation claimant by the Industrial Commissioner is one of fact, see Steinbach, 374 N.W.2d at 252, we do not see why a similar determination by the district court becomes one of law.

Moreover, in cases involving the question of whether an employee of a general employer became the employee of a special employer, the presumption is that the general employer continues as the sole employer. O'Brien, 72 A.D.2d at 860, 421 N.Y.S.2d at 730; 1B Larson § 48.14, at 8-455.

Because in many cases an express contract will not exist, courts look for evidence of the employee's consent to an employment relationship with the alleged special employer. This is especially true when an employee stands to lose the right to sue the special employer in tort; as Larson notes, "when the question has been presented in this form, the courts have usually been vigilant in insisting upon a showing of a deliberate and informed consent by the employee before employment relation will be held a bar to common-law suit." 1B Larson § 48.12, at 8-440; see Smith, 576 So.2d at 819 (borrowed servant status could only result from a clear and definite arrangement between the employers and with plaintiff's knowledge and acquiescence thereto); Rouse, 369 N.W.2d at 814; Nussbaum v. Wright, 217 Neb. 712, 715-17, 350 N.W.2d 559, 562 (1984) ("Consent cannot be inferred merely from the fact that the employee obeyed the commands of his master in entering the services of another.... Before such new relationship can be made effective, the servant must understand that he is submitting himself to the control of the new master."); Skornia v. Highway Pavers, Inc., 39 Wis.2d 293, 159 N.W.2d 76, 79 (1968).

The record here indicates plaintiffs had no express contract of hire with P & G. In the next two subdivisions we discuss whether a fact question existed concerning any implied contract between plaintiffs and P & G.

A. P & G's intent not to be an...