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A Cautionary Tale for Businesses Utilizing Temporary Help Agencies for Staffing Needs: In Re Estate of Rivera v. West Bend Mutual Ins. Co. et. al. (2017-AP-142).

By Atty. Ken J. Kucinski

The Wisconsin Court of Appeals for the 3rd District issued a decision on January 9, 2018, which construed the Worker’s Compensation Act (“WCA”) to allow an employee of a temporary staffing agency to bring a tort claim against the temporary staffing agency’s client. The Court of Appeals rejected the defense raised by the staffing agency’s client—mainly that the exclusive remedy provision of the WCA barred the employee from bringing the tort claim against it—and concluded that the plain language of the WCA allowed the employee to bring the claim.

The employee who brought the tort suit (Rivera) was initially hired by a staffing agency (Alex Drywall). Alex Drywall then assigned Rivera to perform temporary work for a client of theirs (Alpine Insulation). While on the way to a job site for Alpine Insulation, the vehicle Rivera was riding in was involved in an accident and Rivera and two others were killed. It was undisputed that the driver of the vehicle was negligent and that his negligence caused the accident.

Rivera’s estate chose not to file a claim for worker’s compensation against his employer at the time of the accident—Alex Drywall. Instead, Rivera’s estate filed suit against Alpine Insulation and its insurance carrier (West Bend) for wrongful death. Alpine Insulation and its insurer successfully moved for summary judgment at the Circuit Court stage, asserting that because Rivera was an employee of Alex Drywall and his death occurred while in the course of his employment with Alex Drywall, that Rivera’s estate was precluded from brining a tort action against Alex Drywall’s client (Alpine Insulation) pursuant to the exclusive remedy provision of the WCA.

Rivera’s estate appealed, arguing that while the exclusive remedy provision did indeed bar an action in tort against Alex Drywall, the same could not be said for Alex Drywall’s client, Alpine Insulation. The estate argued that Wis. Stat. § 102.29(6)(b)1 was on point, which provides:

(b) No employee of a temporary help agency who makes a claim for compensation may make a claim or maintain an action in tort against any of the following:

  1. Any employer that compensates the temporary help agency for the employee’s services.

The estate argued that Alpine Insulation was an “employer that compensates the temporary help agency for the employee’s services,” and because Rivera chose not to “mak[e] a claim for compensation” against Alex Drywall, that the necessary implication based on the plain language of the statute was that Rivera was not barred from brining a tort claim against Alpine Insulation.

The Court of Appeals agreed with this argument and held that “a temporary employee who does not make a claim for compensation under the [WCA] is not prohibited from bringing a tort claim against his or her temporary employer.” The Court of Appeals recognized that this holding would essentially “give a temporary employee the ‘right to choose’ whether to file a worker’s compensation claim against the temporary help agency or a tort claim against the temporary employer.” The Court of Appeals reasoned that the legislature seems to have granted “temporary employers” a “sort of middle ground” status between being an “employer” under the WCA and a “true third party [tortfeasor].” The Court of Appeals explained that this made sense considering that temporary employers are “not required to shoulder the same burdens as an ‘employer’ under the [WCA]” and that the overall purpose of the WCA “was to protect worker’s and their employers, not to extend immunity to tortfeasors outside the worker-employer relationship.”

Overall, this case stands for the proposition that clients of temporary help agencies are not granted the protection of the WCA’s exclusive remedy provision. If a temporary employee chooses to forego making a claim for worker’s compensation benefits against the temporary help agency, that same temporary employee may bring a tort-based claim against the client of the temporary help agency.

Of course, any person or business potentially affected by this holding should consult with an attorney to evaluate whether their particular fact situation does indeed fall within the parameters of this case. Because the Court of Appeals’ holding may well be the subject of further appeal to the Wisconsin Supreme Court, it is quite possible that certification may be granted and that the holding may be altered. Therefore, reliance on the holding should be exercised with caution.

Moreover, in response to the Court of Appeals’ decision, lawmakers in Wisconsin are already drafting a bill which could potentially overrule the decision and clarify that the exclusive remedy provision does indeed apply to clients of temporary help agencies.

If anyone is interested in exploring the case further, the case is currently accessible via: https://www.wicourts.gov/ca/opinion/DisplayDocument.pdf?content=pdf&seqNo=206844.