Court Finds Client Company a Co-Employer Because of an Alternate Employer Endorsement
The Tenth Court of Appeals has concluded that a temporary staffing company’s employee was also the employee of its client company at the time he was injured, and that the staffing company’s workers’ compensation policy provided coverage for both employers through an alternate employer endorsement. Accordingly, in Tractor Supply Co. v. McGowan, No. 10-14-00132-CV (Ct App—Waco, April 28, 2016.), the court held that the exclusive remedy provision of the Texas Workers’ Compensation Act barred a personal injury suit brought by the injured worker against the client company.
Job Link Personnel Services, Inc., is a temporary staffing company. Tractor Supply Company of Texas, L.P., a non-subscriber under the Texas Workers’ Compensation Act, operates a distribution center and is a client of Job Link. Job Link assigned Kenneth McGowan to work in the distribution center. Tractor Supply employees trained, supervised, and instructed McGowan in his job duties at Tractor Supply. On May 21, 2012, McGowan was working as a “picker” at the distribution center when an employee of Tractor Supply, was loading a pallet onto a high, gravity-flow rack, and he pushed another pallet loaded with a thousand pounds of dog food off of the rack. The pallet landed on McGowan causing severe injuries.
McGowan sued Tractor Supply for the alleged negligence of its employee. The parties filed cross motions for summary judgment on the defendant’s exclusive remedy defense. The trial court rejected the defendant’s exclusive remedy defense. Tractor Supply appealed.
The court of appeals first observed that in Texas an employee may have more than one employer within the meaning of the Workers’ Compensation Act, and each employer who subscribes to workers’ compensation insurance may raise the exclusive-remedy provision as a bar to claims about the injury. The defense potentially applies to a suit brought by an employee of a temporary employment agency who is “injured while working under the direct supervision of a client company” because such an employee is conducting the business of both the general employer [the temporary employment agency] and that employer’s client. The court reviewed the evidence on “right of control” and determined that, for workers’ compensation purposes, McGowan was an employee of Tractor Supply at the time of the accident.
The court turned next to the question of whether Tractor Supply was a subscriber to workers’ compensation insurance at the time of the accident. Tractor Supply argued that it was covered by the workers’ compensation policy obtained by Job Link for its temporary employees. The agreement between Tractor Supply and Job Link provided that Tractor Supply would pay a “markup” of 29.50 percent to include payroll taxes, general liability, workers’ compensation insurance, drug screens, employment eligibility, and criminal background checks. The agreement indicated a workers’ compensation code of “8107” for Tractor Supply.
Job Link maintained a workers’ compensation policy that included an Alternate Employer Endorsement. The Alternate Employer Endorsement provided:
This endorsement applies only with respect to injury to your employees while in the course of special or temporary employment by the alternate employer in the state named in the Schedule. Part One (Workers Compensation insurance) and Part Two (Employers Liability Insurance) will apply as though the alternate employer is insured.
The Alternate Employer Endorsement listed the alternate employer as “Blanket” and the address as “Various Locations in Texas Only”.
The Texas Supreme Court has held that there must be explicit coverage for the client company in order for a client company to take advantage of the exclusive remedy under a co-employment theory. The Alternate Employer Endorsement in this case specifically provided coverage for bodily injury in the course of special or temporary employment by the alternate employer. Although Tractor Supply was not named in the policy as an alternate employer, the policy referred to the alternate employer as “blanket” and Job Link provided the comp carrier with a list of client companies and their respective job descriptions.
The court of appeals held that Tractor Supply established that it is covered by workers’ compensation insurance coverage for the injury sustained by McGowan. The court further held that Tractor Supply was entitled to the exclusive remedy defense set out in Tex. Lab. Code Ann. § 408.001 (a) (West 2015). Accordingly, the court rendered judgment that § 408.001 (a) bars McGowan’s recovery from Tractor Supply.
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