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Is a crane operator a borrowed employee? That’s a jury question

Chicago Daily Law Bulletin September 12, 2013

By Colin H. Dunn

The Workers’ Compensation Act imposes liability without fault upon an employer and, in return, the act’s exclusive remedy provision prohibits common-law suits by employees against the employer. Chaney v. Yetter Manufacturing Co., 315 Ill.App.3d 823, 826 (2000).

The act also allows tort plaintiffs to sue third parties responsible for injuries, but the act can limit options as to who they can sue depending upon whether they qualify as an “employee” or “employer” under the act.

For instance, an employee in the general employment of one employer may be loaned to another for the performance of special work and take on the status of a “borrowed employee” while performing the special service. Kawaguchi v. Gainer, 361 Ill.App.3d 229, 240 (2005).

If an employee is a borrowed employee at the time of the allegedly tortious conduct, vicarious liability for the negligent conduct of that borrowed employee falls upon the borrowing employer, not the general employer. Behrens v. California Cartage Co., 373 Ill.App.3d 860, 863–64 (2007). In other words, if an employee is a borrowed employee at the time he or she acts negligently, the loaning employer is not liable for the conduct.

So if the plaintiff is an employee of Company A and is injured during a construction project, the exclusive remedy provision prohibits him from suing Company A. But if the accident was caused by an employee borrowed by Company A from Company B, the plaintiff is also barred from suing Company B. Recently, the 1st District considered just that scenario. See Hastings v. Jefco Equip. Co., Inc., 2013 IL App (1st) 121568.

In Hastings, the plaintiff was an ironworker employed by Area Erectors Inc. She was injured when a load of steel beams being hoisted by a crane fell from its rigging. Among other defendants, the plaintiff sued Jefco, the owner of the crane. The question on appeal was whether the crane operator was an employee of Jefco (if so, the exclusive remedy provision would not apply) or Area (then the exclusive remedy provision would apply) at the time of the incident.

The sole argument on appeal was whether a question of fact existed as to the crane operator’s status as a borrowed employee. The 1st District recognized that the key to answering that question was which company had the right to control the crane operator. That analysis was based on several factors — the manner in which the performance of the employee’s duties is directed, the mode of payment, the right to discharge, the terms of any written contract between the employers and the general employer’s ability to substitute among employees loaned to the borrowing employer. Kawaguchi, 361 Ill.App.3d at 240; see also Dowe v. Birmingham Steel Corp., 2011 IL App (1st) 091997, ¶ 30 (separating the “right to control” from factors such as the “right to discharge,” but noting that the right to control the manner in which the work is performed is considered to be the most important factor in determining status of borrowed employee).

Other factors relevant to the question of borrowed employment include the level of skill required to perform the work; who deducts or pays for insurance, Social Security and taxes on the employee’s behalf; and the length of service for the special employer. Dowe, 2011 IL App (1st) 091997, ¶ 30. “Whether a loaned employee status exists is generally a question of fact, but it constitutes a question of law if the facts are undisputed and capable of one inference.” Prodanic v. Grossinger City Autocorp, Inc., 2012 IL App (1st) 110993, ¶ 15.

Reviewing the evidence adduced during discovery, the court found that a genuine issue existed as to whether the crane operator was a borrowed employee of Area. For instance, there was a question as to whether Area had the right to discharge the crane operator. Area’s foreman testified that if Area wanted a different operator, it would find a different crane to lease. That testimony suggested not that the crane operator became an employee of Area, but that Area had to settle for whomever Jefco sent to operate the Jefco crane.

There was also evidence that Area did not control the manner in which the crane operator did his job. “‘A continuance of the general employment is also indicated in the operation of a machine where the general employer rents the machine and a servant to operate it, particularly if the instrumentality is of considerable value. Normally, the general employer expects the employee to protect his interests in the use of the instrumentality and these may be opposed to the interests of the temporary employer.’ ” Robinson v. McDougal–Hartmann Co., 133 Ill.App.2d 739, 742–43 (1971).

Though the crane operator followed the hand signals of Area’s workers when, at times, he could not see the load he was moving, courts have found that “[e]ven if an employee receives directions from a party other than his general employer such employee may nevertheless retain his status as an employee of the general employer.” Robinson, 133 Ill.App.2d at 742; see also Gundich v. Emerson–Comstock Co., 21 Ill.2d 117, 125 (1960) (“The giving of the signals under the circumstances of this case was not the giving of orders, but of information and the obedience to those signals showed co-operation rather than subordination and is not enough to show that there has been a change of masters”).

The court found that simply because the crane operator “was obedient to the hand signals of Area employees” (actually, there was evidence that he routinely disregarded those hand signals or operated the crane without waiting for those signals) did “not establish that Area had the right to control his actions as an employer would.”

In fact, the crane operator had discretion to refuse a lift based on his view of wind conditions and a general right not to perform an unsafe lift, whether based on wind conditions, improper rigging or if the crane was not functioning properly.

The court also rejected Jefco’s argument that the contract between Area and Jefco (which stated that “[Area] agrees that the equipment and all persons operating such equipment including [Jefco’s] employees are under [Area’s] exclusive jurisdiction, supervision and control”) gave Area a right to control the crane operator as a matter of law. Citing non-Illinois cases considering nearly identical provisions in crane rental agreements, the court agreed that “[b]ecause such provisions are used primarily to allocate between the parties’ financial responsibility for damages claimed by a third party, they cannot, by themselves, determine employment status.”

The court also noted that the “indemnification provision here does not speak to the employment status of Jefco’s crane operators; rather, the agreement makes explicit reference to Jefco’s ‘employees,’ in stating that Area is under no duty to indemnify Jefco for its sole negligence or that of its employees.”

Moreover, Jefco paid the crane operator’s wages, provided him with health benefits, contributed to his pension and was listed as his employer on his federal income tax form. There was nothing in the record to show that Jefco was merely a conduit through which the crane operator was paid by Area. Haight v. Aldridge Electric Co., 215 Ill.App.3d 353, 367 (1991) (“Although [the employee] received his wages from [the general employer], [the general employer] would then bill [the borrowing employee] for [the employee’s] time plus a bit of a premium.”). Thus, while not controlling, the fact that Jefco paid wages and provided benefits to the crane operator weighed against a finding that he was Area’s borrowed employee.

Finally, the length of the employment was short (only several hours over the course of two days) and the level of skill required to perform the crane operation was high, both supporting a finding that the crane operator was not a borrowed employee of Area.

In sum, because Jefco’s right to summary judgment was not “clear and free from doubt,” the circuit court’s grant of summary judgment was reversed.

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