The work at XYZ Manufacturing is seasonal. Rather than hire long term employees, most of the workforce is comprised of temporary workers. So, what happens when one of them becomes injured? Who’s responsible for providing workers’ compensation benefits?
The issue is not a novel one. Many of today’s employees find that companies will only hire them on a temporary basis. Some come in through outside agencies. Others work directly for the employer, during an acknowledged trial period. The written or implied contract of hire will be extremely relevant in determining culpability for medical bills and wage loss.
The arrangement has become standard in many industries. Construction, warehousing, food production, hospitality, healthcare, and information technology all rely heavily on temporary workers. The financial incentive is obvious. The host company avoids payroll taxes, benefits costs, and the administrative burden of full employment. The trade-off is that injury claims can become a finger-pointing exercise between the staffing agency and the host. New Jersey law does not allow that finger-pointing to defeat the worker’s right to coverage. Both entities can be on the hook.
Temporary Workers and Workers’ Compensation Benefits
According to the State of New Jersey, injured workers are entitled to certain benefits for work-related accidents. The duration of their employment is of no consequence. People can be hired as dayworkers. If they are hurt within the first hour of work, they can expect to receive authorized medical care. In addition, depending of the length of time the authorized physician instructs them to be out of work, they may be entitled to receive temporary disability benefits. They may also receive an additional award if their injury involves permanency.
How New Jersey Determines Who the Employer Is
The legal question of who counts as the employer for workers’ compensation purposes is not answered by the title on the worker’s paycheck. New Jersey courts apply a multi-factor analysis that looks at the substance of the relationship rather than the form. The key factors include the right to control the worker’s daily activities, the source of the tools and equipment, who supervises the work, who has the power to discipline or terminate the worker, who pays the worker, and whose payroll the worker appears on. A worker who is paid by the staffing agency but supervised entirely by the host company often qualifies as an employee of both for compensation purposes.
The “special employee” doctrine has been a fixture of New Jersey workers’ compensation law for decades. Under this doctrine, a worker can simultaneously be the general employee of the staffing agency and the special employee of the host company. The benefits flow from whichever entity has insurance coverage that applies. When both have coverage, the carriers fight among themselves about which one pays first. The worker gets paid regardless.
The arrangement matters in one important way. The exclusive remedy rule in New Jersey workers’ compensation prevents an employee from suing his employer for negligence after a work injury. The trade-off for guaranteed benefits is the loss of the right to sue. When the host company is treated as a special employer of the temporary worker, the exclusive remedy rule applies to it as well. This sometimes surprises workers who assumed they could sue the host company in addition to receiving workers’ compensation from the staffing agency. They generally cannot, unless the analysis comes out differently in the specific case.
A person who has been hired to work as a temporary worker will need to know the following if they are injured at work:
- Were they referred to work at a company by a temporary employment agency?
- Does the temporary agency have an agreement with the company to provide workers’ compensation benefits to all of their referrals?
- Does the company where you are working actually bear responsibility for taking care of your workers’ compensation benefits? (Either by agreement with the staffing agency or because they hired you directly?)
- Have you signed paperwork with the staffing agency that references work-related injuries?
- Have you reported your accident to the temporary agency and the company where you are working?
When Is the Host Company a Third Party Rather Than a Special Employer?
The exclusive remedy rule cuts off most negligence claims against the host. The question of whether the host counts as an employer or as a third party is fact-specific. Courts in New Jersey have found host companies to be third parties when the staffing agency retained substantial control over the worker’s day-to-day activities, when the host company did not have the right to discipline the worker, and when the engagement was for a discrete project rather than continuous work. In those cases, the worker can collect workers’ compensation from the staffing agency and also pursue a personal injury lawsuit against the host for negligence.
The third-party claim is potentially worth far more than workers’ compensation alone. The compensation system pays seventy percent of average wages and a schedule of awards for permanent injury. It does not pay for pain and suffering. A third-party personal injury claim can recover pain and suffering, full lost wages, and other damages that workers’ compensation does not cover. When a temporary worker is hurt because of unsafe conditions, defective equipment, or the negligence of a permanent employee of the host, the third-party claim deserves serious analysis.
A New Jersey Works Compensation Attorney handling a temporary worker case looks at the engagement on both tracks. The workers’ compensation claim against the agency, the carrier, or the host, depending on coverage. The third-party claim against the host if the analysis allows it. Equipment manufacturers, subcontractors, and property owners other than the host can also be third parties in the right case.
Reporting and Deadlines That Apply to Temporary Workers
The same deadlines that apply to permanent employees apply to temporary workers. Notice of the injury must be given to the employer within ninety days of the accident or, for occupational diseases, within ninety days of discovering the connection between the disease and the work. The notice can be oral, but written notice is far more reliable.
For a temporary worker, the question of who to notify takes on extra weight. Notice should be given to both the staffing agency and the host company. Sending an email or a written letter to both is the right approach. Verbal reports get forgotten and contradicted. A documented written notice protects the claim regardless of which entity later turns out to be legally responsible.
The formal claim petition must be filed within two years of the accident for traumatic injuries or within two years of the date the worker knew or should have known the disease was work-related for occupational illnesses. Missing the petition deadline ends the case regardless of the strength of the underlying facts.
If the company where you are working claims that you are an independent contractor, you should take a look at one of our previous articles. Although you may have signed a 1099 form, you may still be considered an employee. It is always best to review your situation with an experienced workers’ compensation attorney.
The ABC Test for Independent Contractor Status
New Jersey applies a three-part test, known as the ABC test, to determine whether a worker is properly classified as an independent contractor. The worker is presumed to be an employee unless the company can prove all three parts. The work must be done free from control or direction by the company. The work must be outside the usual course of business of the company or performed outside all the places of business of the company. The worker must be customarily engaged in an independently established trade, occupation, profession, or business.
Most workers labeled as independent contractors fail at least one part of this test. A delivery driver labeled as a contractor who drives only for one company at hours dictated by that company does not satisfy the test. A construction worker who works only on the company’s projects and is paid by the hour does not satisfy the test. A misclassified contractor is entitled to workers’ compensation benefits the same as any other employee. The 1099 form has no legal effect on the classification.
You should also know that the federal government has rules and regulations regarding the safety of temporary workers. Both the staffing agency and host company are obligated to ensure that you are provided with safety equipment and that your work environment is considered safe.
OSHA’s Approach to Temporary Worker Safety
OSHA’s Temporary Worker Initiative makes clear that both the staffing agency and the host employer share responsibility for worker safety. The staffing agency must conduct an inquiry to determine what hazards the worker will face and must provide general safety training. The host company must provide site-specific training, supervision, and proper equipment.
Citations and penalties can be issued against either or both entities depending on which one had control over the unsafe condition. A staffing agency that placed a worker in a job that obviously required protective equipment the agency did not provide can be cited. A host company that failed to provide site-specific training or that ignored hazards on its property can be cited. The Initiative has produced enforcement actions against major staffing agencies and large host companies.
For the injured worker, OSHA findings can support both the workers’ compensation claim and any third-party claim. A documented violation of an OSHA standard at the site of the injury is strong evidence of negligence in a civil case.
What Benefits Are Actually Available
The same four categories of benefits available to a permanent employee are available to a temporary worker. Medical benefits cover all reasonable and necessary medical treatment related to the injury, with no deductible or copay. Temporary disability benefits pay seventy percent of average weekly wages, subject to a statutory maximum, while the worker is unable to work. Permanent disability benefits compensate the worker for any permanent impairment that remains after treatment ends. Death benefits cover dependents in fatal cases.
The wage calculation for a temporary worker can be tricky. The compensation carrier may try to use only the wages from the brief temporary engagement to calculate the benefit rate, which produces a lower number. The proper calculation often includes the worker’s typical earnings, even from other jobs, when the worker is normally employed in similar work. An attorney can challenge an artificially low wage calculation and produce a more accurate figure.
Common Mistakes Temporary Workers Make
Reporting the injury to only one entity is the most common mistake. The staffing agency tells the worker to report to the host. The host tells the worker to report to the agency. The worker ends up unsure of who to talk to and may delay reporting altogether. Report to both. In writing if possible. Do it the same day if you can.
Accepting an early settlement is another. The temporary nature of the engagement creates pressure to wrap up the claim quickly so the worker can move on to the next job. The carrier knows this pressure and may offer a settlement that does not account for the full extent of the injury or for any permanent impairment.
Letting the company doctor manage the entire course of treatment is a third. The treating physician in a workers’ compensation case is selected by the employer or the carrier, not by the worker. The worker can disagree with the treating physician’s findings, request additional testing, and request an independent medical evaluation through the Division of Workers’ Compensation. Skilled counsel knows when an independent evaluation is warranted.
Returning to work too soon is a fourth. The pressure to return to work, especially when wages stop, can cause workers to ignore medical advice. A premature return can aggravate the injury and complicate the claim. Follow the doctor’s restrictions. Document any conflict between what the doctor said and what the employer is asking you to do.
Questions Temporary Workers Often Ask
What if I worked only one day before I got hurt?
The length of employment does not matter. A worker injured on the first day of work is entitled to the same benefits as a worker with twenty years of service. The first hour of the first day counts.
What if I am undocumented?
New Jersey workers’ compensation benefits are available regardless of immigration status. The statute covers any worker injured in the course of employment in this state. Immigration status does not bar the claim.
Can I sue the company if I was working through a staffing agency?
You may be able to sue the host as a third party in some cases. The analysis depends on the specific arrangement between the worker, the staffing agency, and the host. An attorney can review the engagement and identify whether a third-party claim is viable.
What if neither the staffing agency nor the host claims to be my employer?
This is more common than it should be. When both entities deny coverage, the claim petition can be filed against both, and the Division of Workers’ Compensation determines which one is responsible. The Uninsured Employers’ Fund administered by the state can also provide benefits in cases where no coverage can be identified.
How long does the workers’ compensation case take?
Medical treatment and temporary disability benefits begin within weeks of a reported injury when the claim is not contested. A contested case can take months or longer. A permanency award is typically resolved after maximum medical improvement is reached, which depends on the injury but often falls between six months and two years after the accident.
Contact Us
At the Law Offices of Anthony Carbone, we have almost three decades of experience helping injured workers. If you have been hurt at work, we would be happy to meet with you. Contact us.