Georgia court weighs whether staffing agency or insurer should pay workers' compensation claims

The question boils down to whether temporary workers are technically employees of the companies that employ them.

Two cases heard in the Georgia Court of Appeals in early December 2023 involved injured workers hired through temporary employment agencies. In both cases, the temporary employment agency's employee insurance company became insolvent. Photo credit: Andrii Yalanskyi/Adobe Stock

The Georgia Insurer's Insolvency Pool (GIIP), a safety net for employees with workers' compensation claims in cases where the carrier became insolvent, filed two appeals with the Georgia Court of Appeals in early December 2023.

At the heart of these disputes were disagreements over who each plaintiff's employer was at the time of the accidents. Both were employed by an insolvent insurer through temporary employment agencies and both worked for companies at different insurers.

The question boils down to whether these temporary workers were technically employees of the companies to which they were contracted out under the borrowed servant doctrine for workers' compensation claims, as GIIP argues, or whether they were employees of the temporary employment agencies that hired them had . If the latter is true, the GIIP is responsible for paying workers' compensation and vice versa.

According to the GIIP, it is an issue that will have “serious and far-reaching consequences” for workers in Georgia as it determines whether similarly situated workers can receive employee benefits, and “the decision dismantles the longstanding established principle that …”The State Board will climb the liability ladder to find coverage that will prevent an injured employee from going without benefits.”

Whitney Arp of Gorby Peters argued for the GIIP, saying the borrowed servant doctrine is a three-step test to determine which insurer is responsible for claims:

  • Regardless of whether the “special supervisor” or the company to which the temporary worker was entrusted had complete direction and control over the “borrowed servant” or temporary worker.
  • Whether the “master general” or the temporary employment agency had no such control.
  • Whether the “special master” had the exclusive right to dismiss the servant.

Lexi West of Eraclides Gelman, arguing for Carpet Cycle as appellant, gave three reasons why the GIIP should be responsible for settling the claims:

  • The higher court did not err in applying the “any evidence” standard to the factual findings of the Appellate Division of the State Board of Workers' Compensation.
  • Even if the appeals court concludes that the higher court erred in law when it applied the “any evidence” standard, there is still no legal theory under which the pool can prove that its client is subject to workers' compensation liability under the act, and in return there is nothing the pool can ask for in compensation and reimbursement.
  • Even though the appeals court finds that her client is liable for workers' compensation, GIIP applied the law in a manner that violated her client's due process rights.

Judge Elizabeth Gobeil asked which cases supported the parties' positions, with particular interest in recent cases involving the borrowed servant doctrine and the Court of Appeals' authority in the matter. She particularly questioned the interpretation of the third pillar.

Seth Martin of Speed ​​​​Seta Martin Trivett Stubley & Fickling, representing the defendant company Zep, argued: “The Supreme Court judge's order actually specifically mentioned the third point and said that this extension had not been complied with. “

However, according to Arp, there is an exception for staffing companies: “The special master's ability to dismiss must only relate to temporary assignment.” Arp said the courts considered it irrelevant whether the employee was always under the control of a special supervisor, and they should have focuses on the specific occasion on which the injury occurred and not on the general employment relationship. To this end, “this was pointed out in the witness statement without being contradicted [the appellee company] had complete control over the work performed at the time of the injury.”

The appellants also noted that “opposing counsel will talk about literally every other moment except the moment of injury,” while the appellants pointed out that the case has now been heard by six different courts in which they have so far prevailed.

Martin said that if the appeals court actually rules in favor of GIIP, it should not confirm the case but send it back to the lower court.

The cases are Georgia Insurers Insolvency Pool v. Carpet Cycle, No. A24A0103, Carpet Cycle v. Georgia Insurers Insolvency Pool, No. A24A0211, and Georgia Insurers Insolvency Pool v. Zep, No. A24A0287, in the Georgia Court of Appeals.