Employer Proved its Entitlement to Exclusive Remedy Defense Despite Independent Contractor Agreement

A Texas Court of Appeals has reversed the judgment of a trial court and rendered judgment that an employer was entitled to the exclusive remedy defense even though the injured plaintiff was supplied to the employer by a staffing company, and even though the employer and staffing company had a contract stating that the staffing company was an independent contractor.

The decision in Texas Instruments v. Udell (No.  05-14-01042-CV), decided August 25, 2016, reversed a $468,972 judgment and rendered judgment that the plaintiff take nothing in his suit against TI.

TI and Volt executed a contract for Volt to furnish personnel with specific work qualifications and skills as requested by TI from time-to-time. The contract provided that Volt was an independent contractor.

Udell was hired by Volt and assigned to work at TI. Udell worked as a manufacturing specialist in a TI facility that was involved in the manufacture of semiconductors. Keith Davis, the TI supervisor for Udell, other Volt contractors, and some TI employees, set the work schedule and hours, determined overtime and approved time off. Also Davis and Anthu Tran, the TI team lead for Udell’s group, made the work assignments for the people working on their team, including Udell. Tran also assigned Udell to training.

At the TI facility, Udell worked in a “clean room.” On March 23, 2010, Udell’s tasks were assigned by Tran. As part of his assigned tasks, Udell carried “pods” to a work area and loaded them onto a machine. As he walked to the next tool, to perform assigned tasks, he tripped and was injured. Udell received treatment and reported his injury. Davis investigated and discovered that Udell tripped where the corner of a floor tile was slightly raised. Udell had five surgeries after his accident at TI and received workers’ compensation benefits through Volt’s insurance carrier.

Udell filed suit against TI for negligence based on the injury Udell sustained while assigned to work at TI by Volt. TI answered generally denying the claim and asserted, in part, that Udell’s claims were barred by section 408.001 of the Texas Workers’ Compensation Act, the exclusive remedy provision.

TI moved for a directed verdict on the exclusive remedy defense at the close of the evidentiary portion of the trial. The trial court denied TI’s motion. The jury returned a verdict in favor of Udell. The trial court signed a judgment awarding Udell $468,972.

The court first concluded that the contract between TI and Volt was not conclusive on the question of Volt’s or Udell’s independent contractor status.

Even though the contract claims Volt is an independent contractor, the terms of the contract referred to above reflect that TI retained control over, at least, certain activities. Accordingly, the contract between TI and Volt appears to be a “hybrid agreement.” . . . As a result, we conclude the contract does not control or end our inquiry into whether Udell was TI’s employee for purposes of workers’ compensation.

The court then reviewed the evidence and concluded that TI had the right to control details of Udell’s work while he was working on the TI campus. Next, the court determined that the evidence conclusively established that TI was covered by a policy of workers’ compensation insurance.

Finally, the court determined that Udell was a statutory or deemed employee of TI pursuant to TEXAS LAB. CODE § 408.124.

The parties do not contend that TI became a voluntary statutory employer under section 406.123(a) by agreeing, in writing, to provide workers’ compensation insurance to the subcontractor. See TEX. LAB. CODE ANN. § 406.122(a); TIC Energy, 2016 WL 3136877, at 4; Entergy, 282 S.W.3d at 439. In fact, the contract between TI and Volt specifies that Volt will provide workers’ compensation insurance. Accordingly, we address whether TI was a “statutory employer” under the “deemed employer” statute in section 406.124.

Section 406.124 applies to a general contractor who has compensation insurance and subcontracts all or part of the work to be performed with the intent to avoid liability. See TEX. LAB. CODE ANN. § 406.124; Entergy, 282 S.W.3d at 439. Paragraph 11 of the contract between TI and Volt states, in part, that:

Volt assumes all risks and hazards encountered in his/her performance of this Agreement, and further, Volt shall be solely responsible for all injuries, including death, to all persons and all loss or damage to property which are attributed in any way to Volt’s performance under this Agreement or that of any agent, employee, or sub-contractor engaged by Volt.

Also, as previously noted, paragraph 13(A)(1) of the contract between TI and Volt, requires Volt to provide workers’ compensation insurance. Accordingly, TI satisfies the requirements of section 406.124. 5 Therefore, by operation of section 406.124, for purposes of works’ compensation coverage, TI is considered a statutory or deemed employer, Udell is “treated as” TI’s employee, and TI is entitled to the exclusive remedy defense.

The court concluded that the trial court erred when it denied TI’s motions for directed verdict and judgment notwithstanding the verdict because the Texas Workers’ Compensation Act is the exclusive remedy available for Udell’s injuries.