Alabama Workers' Comp Blawg

Exclusivity and Special Employers

On October 14, 2011 the Alabama Court of Civil Appeals released its opinion in Lewis v. Alabama Power Company (APCo) addressing the factors considered when determining if a company is a "special employer" for purposes of the exclusivity provision in the Alabama Worker’s Compensation Act. The Court of Appeals reversed the Trial Court’s ruling which granted APCo’s summary judgment motion.

Lewis was employed by Fluor Maintenance Services (Fluor) to perform work at the APCo Barry Steam Plant. (Lewis reached a settlement of his worker’s compensation claim against Fluor and proceed with his negligence and wantonness claim against APCo, who was made a defendant in the place of Southern Company Services (SCS) by agreement). Fluor entered into a labor broker agreement with SCS to provide laborers to perform construction services at the plant. SCS is a separate entity from APCo but acts as an agent for APCo and signed the agreement with Fluor as APCo’s agent. Pursuant to the labor broker agreement, Fluor provided workers’ compensation insurance for its employees but this cost was added into the fee that SCS paid Fluor for providing the laborers. Lewis signed a "project rules document" that stated he would be subject to the direction, control and the supervision of SCS and Fluor. APCo was mentioned in the "project rules document" but not in regards to supervision and control. Lewis testified at his deposition that he was provided instruction by a Fluor employee and he saw APCo and SCS as "one and the same."

APCo asserted that SCS acted as its agent when entering in to the labor broker agreement, APCo paid for the cost of the worker’s compensation insurance secured by Fluor, APCo kept up with Lewis’ hours and reimbursed Fluor for the paycheck it issued, and under the broker agreement APCc had the right to control and supervise work performed by Fluor employees and the right to deny Fluor employees readmission into the plant.

Lewis asserted the SCS entered into the agreement with Fluor, not APCo, that the agreement indicated SCS had the right to supervise and control the work done by Fluor, the project rules document indicated SCS had the right to supervise and control, not APCo, work instruction came from a Fluor employee, not SCS or APCo, and he never consented to enter into an employment agreement, expressed or implied, with APCo

The Court of Appeals stated that to determine if an employer is a ‘special employer" for purposes of the exclusivity provision they must, for all practical purposes, be considered the primary or co-employer of the employee. This involves a three prong test: 1) "the employee has made a contract of hire, expressed or implied, with the special employer;" 2) "the work being done is essentially that of the special employer;" and 3) "the special employer has the right to control the details of the work." In order to be a special employer all three of these must be met. In this case the Court only reviewed the first prong in coming to its decision.

In order to determine if there was a contract for hire the Courts usually insist that there be a showing of deliberate and informed consent since this could result in a bar to a common-law suit. The Court of Appeals stated that the rules document signed by Lewis did not provide sufficient notice to Lewis that SCS was acting as an agent of APCo in order to establish deliberate and informed consent. In addition, Lewis’ deposition testimony only indicates that he thought SCS and APCo were one an the same at the time of his deposition, not at the time he signed the document. Therefore, at the very least a genuine issue of material facts exists in regards to an expressed contract for hire.

In order to determine if there was an implied contract for hire, the Court of Appeals looked to four factors: 1) "whether the employee submitted to the control and supervision of the special employer;" 2) "whether the general employer was acting as a labor broker or a temporary employment agency for the special employer;" 3) "which entity provided the workers’ compensation insurance;" and 4) "whether the employment with the employer was of such duration that the employee could be reasonably presumed to have evaluated and acquiesced in the risks of his employment."

As to the first factor, the Court of Appeals found that all the evidence indicated that SCS and/or Flour had the right to supervise and control Lewis’ work, not APCo. In regards to the second factor, the Court of Appeals found that the labor broker agreement stated that Fluor was providing laborers to SCS, not APCo. The Court of Appeals noted that the labor broker agreement indicated that SCS was acting as APCo’s agent but there was no indication Lewis was aware of this. In looking at the third factor, the Court of Appeals agreed that APCo indirectly paid for the workers’ compensation insurance. As for the fourth and final factor, the Court held that three months might be sufficient in some cases but with these facts it was not enough time for Lewis to know that the risk of employment involved employment by APCo.

In light of all these facts, the Court of Appeals held that there was at least a genuine issue of material fact as to whether or not an implied contract for hire existed and remand the case to the Trial Court for further proceedings.