Comp Clues


Defining the Employer-Employee Relationship

By Sharon Funcheon Murphy and Lewis Wagner, LLP
| Date: 03/01/2008

Two recent cases help to explain the way civil courts are looking at the existence (or non­existence) of employment relationships when work place accidents occur. Unfortunately, the holdings of these cases put in doubt the predictability of the law in this area.

1.     Temporary Employees – Who is their Employer?

Since the amendments to the Act in 2001, there has been statutory language in the Workers’ Compensation Act which defines the relationship between an employee working for a temporary agency while assigned to the workplace of a company. That language is present in the definition of Employer found in Indiana Code §22-3-6-1 (a) as follows:

(a) “Employer” includes. . . Both the lessor and a lessee of employees shall each be considered joint employers of the employees provided by the lessor to the lessee for purposed of IC 22-3-2-6’ and IC 22-3-3-31.

Despite this statutory language, the court in Wishard v. Kerr 846 N.E.2d 1083 (Ind.Ct.App. 2006) seemed to analyze the case solely on the criteria by which an individual is determined to be an employee of one or the other company.

Ms. Kerr was a registered nurse assigned to work at Wishard through a temporary staffing agreement with CareStaff, Inc. She slipped and fell on a slick floor in the hospital as she departed at the end of her shift. She collected workers’ compensation benefits as against the staffing agency and then sued Wishard civilly. A motion to dismiss the suit based on the worker’s compensation bar was denied, and the denial was upheld by the court on appeal. Evidently there was nothing in the contract between the two companies that stated Ms. Kerr would be a “dual employee” and there was not sufficient other information presented to support such a finding. However, it would seem under the language of the WCA noted above, such a “weighing of the evidence” was unnecessary, and the bar to civil liability should have been upheld.

11C 22-3-2-6 limits an employee’s remedy for any personal injury or death by accident to the provisions of the Workers’ Compensation Act.

21C 22-3-3-31 states that when an employee works for two employers at the same time, the employers are liable for benefits in proportion to their liability for wages;

however, the employers are allowed to make any alternative arrangement between themselves a long as it is reasonable.

2.     Independent Contractors – Who is their Employer?

While it may seem counter intuitive to talk about the “employer” of an “independent contractor,” that sort of question often plagues litigants before the Board. Since the Workers’ Compensation system was designed to attempt to establish a remedy covering a minimum amount of benefits in all cases of work related injuries (i.e. lost wages, medical expenses, and PPI), the Hearing Members are reluctant to deny compensation to any worker without clear statutory authority to do so.

In like manner, civil courts are likely to look closely at the relationship of the individuals involved in a workplace accident to determine if in fact an employment relationship exists limiting the injured worker to benefits under the Workers’ Compensation Act. One such example is the case of Nickels v. Bryant, 839 N.E.2d 1211 (Ind.Ct.App. 2006). In that case, the infonnal arrangement between two truck drivers to work as a team was found to establish an employer-employee relationship between them.

Bryant worked as an independent contractor for New Prime, Inc. (NPI) and Nickels was an employee of NPI. Bryant agreed to take Nickels as a 2’”’ seat driver to train her on his runs. Though Nickels was an employee of NPI, the Court found that she was also an employee of Bryant for the purpose of the exclusivity doctrine of the Workers’ Compensation Act. Therefore, when Bryant ran over Nickels’ foot causing her injury, Nickels’ civil suit for damages against Bryant was dismissed and she was directed that her only remedy was workers’ compensation benefits. The court used the following seven factors to determine if an employment relationship existed between the two drivers:

  1. The right to discharge
  2. The mode of payment
  3. Who supplies the tools or equipment
  4. Whether the parties believe there is an employer-employee relationship
  5. The control over the means used and the results reached
  6. The length of employment, and
  7. The establishment of work boundaries.

Clearly this sort of “weighing of the evidence” is appropriate in a situation such as this when there is no statutory basis to establish whether an employment relationship exists. The problem faced by litigants, however, is the difficulty in predicting the outcome of such a “weighing of the evidence” review by the courts. Furthermore, it would seem important in almost every instance for potential “employers” to seek the counsel of those well versed in workers’ compensation law as well as employment law in order to educate the court as to the ramifications of any potential decision that is rendered while there is still time to have an impact on that decision.