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The Takeaway

If your client is a construction company that subcontracts for the use of other companies’ employees, consider the Workers’ Compensation Act’s exclusive remedy protections when defending lawsuits filed by such employees. These protections, if applicable, may limit a construction company’s liability exposure considerably if that borrowed employee is injured.

Background

Often, construction companies utilize the services of other companies’ employees on worksites. These arrangements are often done through subcontracts, and the borrowing company is often considered a subcontractor, even though the services are simply for the use of an employee.

Because subcontracts are often used in construction settings, companies may not consider this type of an arrangement as a “borrowing employer” relationship under the Worker’s Compensation Act (WCA). 820 ILCS 305/1, et sec. However, depending on the relationship between the borrowed employee and the borrowing employer construction company, the borrowing employer construction company could be protected from lawsuits filed by a borrowed employee injured on the job.

Factors that Determine if the Workers Compensation Act Applies

To determine whether a borrowed employment relationship exists under the WCA, courts consider various factors. The two most important— and often controlling—factors include whether:

1. the borrowing employer had the right to control and direct the manner in which the employee performed the work
2. a contract of hire existed between the borrowing employer and the employee

Prodanic v. Grossinger City Autocorp, Inc., 2012 Il App (1^st) 110993, ¶ 15 (citing A.J. Johnson Paving Co. v. Industrial Comm’n, 82 Ill. 2d 341 (1980)

If these two factors are met, a borrowing employer construction company can be entitled to the WCA’s exclusive remedy provision for personal injury lawsuits filed by the employee injured on the job.

Under the WCA, the employee has no common law or statutory right to recover damages from their employer for injuries sustained while engaged in the line of duty as an employee other than those specific workers’ compensation payments required under the WCA, 820 ILCS 305/5(a).

Leman v. Volmut, et al, 2023 IL App (1^st) 221792* - A Real World Example

Keith Leman was hired to perform carpentry work for Intren under a Master Subcontract Agreement (MSA) with another construction company [Pinto] for the exclusive purposes of working for Intren. The MSA labeled Pinto employees as independent contractors who were to be in control of the means and methods of their work. Leman was injured at the worksite of Intren and brought a common law negligence claim against various defendants, including Intren. On the day of the accident, Leman was not performing carpentry services but was instead assisting Intren crews as a laborer.

Illinois’ First District Appellate Court found that, among other factors, the evidence established that Leman:

• worked the same hours as Intren’s construction workers
• received instruction, direction, and daily assignments from Intren foremen
• assisted Intren beyond carpentry services

The Court found these factors supported the finding that the relationship met the criteria of a borrowed employment relationship. Therefore, the Court affirmed summary judgment, finding that as a construction company, Intren was a borrowing employer construction company and thus entitled to the exclusive remedy provision of the Workers Compensation Act.

*This matter was litigated by HeplerBroom attorneys Aleen Tiffany, Sarah Jansen, and Jamie Rein.