Workers’ compensation is a scheme set up by each state government to control how workers with occupational injuries or industrial diseases are compensated. In most situations, an employee who sustains a work-related injury or illness will receive monetary and other benefits according to the workers’ comp laws of his or her state and without regard to fault. As a trade-off, the employer carries workers’ compensation insurance to cover these claims and is immune from related employee lawsuits because workers’ compensation, with a few narrow exceptions, is the worker’s exclusive remedy.
It is not unusual for employers to share employees. For example, a retail business could contract for building construction services and have construction company employees on store premises carrying out the terms of the service agreement. If a construction employee contracted food poisoning in the retailer’s employee lunchroom, how would he or she be compensated? What types of responsibilities would each employer have for that injury?
The borrowed-servant doctrine is the longstanding legal principle that an employee who consents to be lent by his or her general employer to a special employer is also considered to be the servant of the special employer so that the worker is essentially employed by both employers at the same time. In most states, this means that if a borrowed employee is injured while working for a special employer, the employee’s exclusive remedy is still workers’ compensation rather than a lawsuit against the borrowing employer. Usually both employers are jointly and each fully liable for the workers’ compensation claim.
The states use a variety of tests to determine whether an employee is a loaned employee or borrowed servant for workers’ compensation purposes. Sometimes a state’s statutes enunciate a specific test to be applied. Other times the statutes might enunciate a test that is further defined and refined by the courts. Another possibility is that the workers’ comp statutes in a state are silent on this issue and the law is completely developed by the courts.
The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.