Section 905(a) of the Longshore and Harbor Workers’ Compensation Act (“LHWCA”) provides that an employer’s liability for workers’ compensation benefits to an employee “shall be exclusive and in place of all other liability of such employer to the employee.” 33 U.S.C. § 905. This statute reflects the “industrial bargain” between employers and employees on which the LHWCA and all workers’ compensation laws are based. The bargain is simple: “The covered employee has surrendered the right to sue the employer for negligence, and thus has eschewed the possibility of a more significant damages award from the employer; the employer, similarly, has relinquished its common law defenses available in employee negligence actions. In consideration, the employee receives more certain compensation for injuries arising from the employment, regardless of fault; the employer, in turn, eludes litigation expenses and pays only scheduled LHWCA benefits.”
In a new published decision, the United States Court of Appeals, Eleventh Circuit, addressed the exclusivity provision, Section 905(a), as it applied to a borrowing employer. In Langfitt v. Federal Marine Terminals, Inc., Claimant was a full-time employee of Able Body Temporary Services, Inc. (“Able Body”), a labor broker which supplied day-laborers to its clients. On the day that Claimant was severely injured, Able Body had sent him to work for Federal Marine Terminals (“FMT”). Based upon the agreement between Able Body and FMT, as well as the nature of FMT’s work, it was evident that: (1) FMT was solely responsible for supervising and directing Claimant’s activities; (2) FMT had the right to terminate Claimant’s employment with FMT; (3) FMT had to furnish Claimant a place for performance of his work; (4) FMT had the obligation to compensate Claimant; and (5) FMT actually exercised control over Claimant’s work. Although Claimant received workers’ compensation benefits, he nevertheless brought a negligence action against FMT. In response, FMT alleged that it was Claimant’s employer at the time of injury and that it was immune from a civil suit by operation of the LHWCA’s exclusivity provision. The district court agreed and this appeal followed.
After a lengthy discussion of the common law origins of the borrowed-servant doctrine, the court noted that the common law tests for the doctrine must be tweaked for workers’ compensation claims. Based upon its prior case law, the court “distilled” the following standard for establishing whether a borrowed-employment relationship existed under the LHWCA:
“When a general employer transfers its employee to another person or company, the latter is the employee’s borrowing employer for purposes of the LHWCA, and thus is liable for the Act’s compensation and has the benefit of the Act’s tort immunity, if each of the following three criteria is satisfied:
“(1) Employee Consent to the New Employment Relationship. The employee must be shown to have given deliberate and informed consent to the new employment relationship with the borrowing principal. The test is objective, and the employee’s consent may be shown to have been given either expressly or impliedly.
“(2) Borrowing Principal’s Work Being Done. The work being performed by the employee at the time of the injury must be shown to have essentially been that of the borrowing principal–that is, that it was primarily the borrowing principal’s interests that were being furthered by the employee’s work.
“(3) Borrowing Principal Assumed Right to Control the Details of Employee’s Work. The borrowing principal must be shown to have received, from the employee’s general employer, the right to control the manners and details of the employee’s work. This might be evidenced by: (a) an express agreement between the general employer and the borrowing principal that directly evidences a transfer of control over the employee to the borrowing principal; (b) the borrowing principal’s actual exercise of control; (c) the borrowing principal’s furnishing of the equipment and space necessary for the employee to perform the work; (d) the borrowing principal’s right to terminate the employee’s relationship with the borrowing principal; and (e) the method and obligation of payment for the employee’s services.”
Applying this standard to the facts of the case, the Eleventh Circuit determined that FMT was Claimant’s borrowing employer, and that FMT was entitled to tort immunity under the LHWCA. Although the relationship between Claimant and FMT may have been short, Claimant nonetheless knowingly agreed to perform work for Able Body’s clients, including FMT. In fact, it is routine for courts to find that the employee of a labor broker like Able Body has consented to working in differing environments, under the control of the broker’s clients. In addition to consent, the Eleventh Circuit easily found that FMT controlled Claimant’s work for the reasons stated above. In conclusion, the Eleventh Circuit agreed “with the district court that FMT was [Claimant’s] borrowing employer for purposes of the LHWCA and that, consequently, [Claimant’s] negligence claim [was] barred by 33 U.S.C. § 905(a).”
(Note: I originally published this post on Navigable Waters: A Maritime, Longshore and Defense Base Act Blog.)