Court of Appeals Affirms Employee of a Staffing Company was a Borrowed Servant

In Grant v. Wind Turbine and Energy Cables Corp. and Arrow Personnel, LLC, (Tex. Ct. App.—Fort Worth, No. 02-21-00036-CV), July 21, 2022, the Fort Worth Court of Appeals has affirmed summary judgment in favor of an employer who maintained an employee hired by a staffing company was their employee for the purposes of workers’ compensation, and that they therefore enjoyed statutory immunity from a common law negligence suit arising from an on-the-job injury under the Texas Labor Code.

Appellant Demetrius Grant was hired by a staffing company, Appellee Arrow Personnel, LLC, to work at Appellee Wind Turbine & Energy Cables Corp’s (WTEC’s) warehouse. After Grant sustained injuries from a forklift accident while working at WTEC, he sued WTEC, Arrow, and other defendants under several theories of negligence. Both WTEC and Arrow moved for summary judgment, and the trial court granted the two summary judgment motions. Grant appealed, arguing that he did not qualify as WTEC’s “employee” within the meaning of the Workers’ Compensation Act, and further that WTEC’s workers’ comp policy did not extend to temporary workers.

The Court of Appeals noted that the Act defines an “employee” as “each person in the service of another under a contract of hire, whether express or implied, or oral or written.” §401.012(a). Under Texas Supreme Court precedent, an individual qualifies as a company’s “employee” within the meaning of the Act if the company “has the right to control the progress, details, and methods of operations of the [employee’s] work.” And given the importance of control, they noted that it logically follows that, when control shifts, “a general or regular employee of one employer may become the borrowed employee of another with respect to some activities.”

Thus, to prevail on its motion for summary judgment, WTEC was required to conclusively establish that it had the right to control the relevant details of Grant’s work when the forklift incident occurred. It was undisputed that WTEC leased the warehouse where the injury occurred, and provided the on-site machinery—including the forklift—and that it offered the only task-specific training that Grant received. In Grant’s own words, WTEC “told [him] what to do as far as a job.” And by Grant’s own account, in the 17 days that he spent working at WTEC’s facility prior to his injury, no “member of Arrow ever came onto WTEC’s property and instructed him on how to do [his] job.” WTEC workers instructed Grant on what training to take, what task to perform, how to do the assigned task, what equipment to use, and even—as Grant alleges happened on the day of his injury—where to stand.

The Court of Appeals also noted that WTEC’s control was consistent with the role that it agreed to assume in its contract with Arrow. The WTEC–Arrow contract stated that WTEC would “supervise” workers assigned to its facility, provide them “with a safe work site,” and provide “appropriate information, training, and safety equipment,” among other things. Though not determinative, the Court held that contractual language is “a factor to be considered” in the right-to-control analysis.

Grant asserted on appeal that Arrow—not WTEC—interviewed, screened, hired, and paid him. The Court referenced case law from the Houston 14^th Court of Appeals for the proposition that “a staffing company’s provision of payroll checks and benefits does not establish a right of control over the work performed at a client company’s facility.”

Grant further argued he could have only one “employer” under the Act, a notion that the Court noted was specifically rejected by the Texas Supreme Court in Wingfoot Enters. v. Alvarado, 111 S.W.3d 134, 142–43 (Tex. 2003), which held that “the express definitions of ‘employer’ and ‘employee’ [in the Act] and the exclusive remedy provision may apply to more than one employer”.  In so holding, the Supreme Court addressed Grant’s precise situation: if an employee is “working for h[is] general employer (i.e., the temporary staffing provider), but will also be subjected to laboring in the workplace and under the direction of the general employer’s client company,” then “[a]n employee injured while working under the direct supervision of a client company . . . . should be able to pursue workers’ compensation benefits from either.”

Finally, Grant argued on appeal that he presented a fact question as to whether WTEC’s workers’ compensation policy extended to temporary workers. He argued that “WTEC’s own paperwork provides that ‘temp’ workers do not get employment benefits” and that “[t]he record otherwise is silent about temporary workers (including so-called ‘borrowed servants’) being covered under WTEC’s workers’ compensation policy.” In rejecting that argument, the Court of Appeals noted that the Texas Supreme Court has held that “an employer may not (intentionally or unintentionally) split its workforce . . . . [and] choose to exclude certain employees from coverage unless a statutory or common law exception to the rule against split workforces applies.”

The Court found that the same is true here. WTEC was prohibited from splitting its workforce absent a statutory or common law exception. Grant does not allege that any exception applies; he does not allege that WTEC “makes different elections for separate and distinct businesses”; he does not allege that he is “a sole proprietor, partner, or corporate executive officer” that WTEC was statutorily permitted to exclude from coverage; and he does not allege that WTEC leased his services under the Staff Leasing Services Act.

Thus, whether or not WTEC’s paperwork indicated that it provided temporary workers with employment benefits, WTEC could not choose to exclude temporary employees from workers’ compensation coverage, and Grant cannot avoid the exclusive remedy defense by arguing that his subscriber–employer has done what the law prohibits.

Ultimately, the Court held that “[b]ecause the evidence conclusively establishes that Grant was WTEC’s ‘employee’ within the meaning of the Act and that WTEC had workers’ compensation coverage, and because there is no evidence or allegation to support an exception to the rule against splitting workforces, the trial court properly granted summary judgment for WTEC.