Many Arkansas companies have replaced long-term employees with external workers contracted through staffing or temporary agencies to avoid employment-related expenses. Businesses do not have to pay social security and Medicare taxes, unemployment insurance, or workers’ compensation benefits to external workers. An added benefit is that companies are usually not liable if an external worker commits a negligent act causing injury to a third party.
These cost savings often result in a dangerous workplace and serious injuries to external workers. When businesses use external workers, they fail to train them, provide them with necessary safety equipment, and place them in dangerous areas to perform the work. External workers are usually paid minimum wage and are inexperienced in using dangerous equipment encountered in factories and on construction sites. Serious injuries involving amputations, paralysis, and even fatalities result from this unsafe business practice.
The public and Arkansas taxpayers also lose because the injured external workers and their families are forced to turn to government programs to obtain the medical care and assistance to survive. External workers attempt to make negligence claims against the company that put them in peril, and that is when the company changes its position, alleging the external worker is also their employee.
The Benefits of Using an External Workforce
The dual employment doctrine in Arkansas is unfair and promotes poor public policy. As already stated, big businesses are continually looking for ways to increase profits. By employing external workers, companies avoid the liability of:
- Properly withholding income taxes
- Paying social security and Medicare taxes
- Paying workers’ compensation premiums or claims
- Violations with the IRS, DOL, OSHA, EEOC, and NLRB
- Violations of the critical employment acts such as FLSA, ADA, FMLA, and ERISA
- Workplace negligence committed by the external worker
To ensure the above companies are not liable as an employer, they try to stay clear of practices that could appear to be involved in a dual or co-employment situation. Companies often allege their supervisors and how they did not exercise control over the external worker. Companies often claim the following:
- The external worker exercised control over their work and how the work is done,
- The external worker exercised control over their hours, time off, and company expenses; and
- The external worker provided their equipment and tools for the job.
Profits increase using the external workforce by transferring all employment liabilities to the staffing agency. To effectively avoid these employment costs, a company must maintain that they are not dual or co-employers. Companies maintain this position in all situations except when the injured external worker makes a negligence claim against the company.
Companies Want to Have Their Cake and Eat it Too
As we just discussed, companies get to enjoy all the above advantages of using an external workforce to avoid all employment liabilities. However, when they are being held accountable for negligence, they change their position and claim the injured external worker is also their employee under the dual employment doctrine. We will talk about the dual employment doctrine in a bit but let us answer some specific questions about the sudden change of heart.
Q: What is a tort, and why do companies find it dangerous?
A: Tort litigation is crucial as it holds the company accountable for negligence and forces companies to provide safe work environments and protect workers from unsafe practices. If an external worker proves the company breached its duty to provide a safe workplace, the injured worker can be awarded medical bills, lost wages, permanency, pain, and suffering.
Q: Why would a company want to become a dual employer in a negligence claim after working so hard to ensure they were not classified as a dual employer to avoid all employment liabilities?
A: Total immunity from any lawsuit – employment and negligence. If the court finds that the external worker is a dual employee, then the courts will dismiss the negligence claim brought by the external worker. Conversely, if the external worker received a claim involving an employee’s right, such as wrongful employment termination, the company would dismiss the case because they were not a dual employer. The dual employment doctrine creates a double standard for big companies, leading to unsafe work conditions. In the end, big businesses profit at the expense of the Arkansas taxpayer because the external worker ends up requesting government assistance.
Q: How do companies use the dual employment doctrine to avoid torts?
A: Companies use the dual employment doctrine by stating they are now a “special employer” to the external worker. The term “special employer” refers to a company, a person, or an organization that receives a worker on loan from another employer. Under this doctrine, the external employee is considered an employee of the temporary or staffing agency and the special employer to whom the employee is assigned. Under this doctrine, the special employer gets tort immunity and cannot be sued for negligence.
We discussed in detail why a company would avoid this classification for all the protections it provides. Negligence claims brought by the external worker are the only time you will witness a company completely changing its stance and allege they are also the employer. Under the negligence scenario, the company will argue that they did have control over this external employee and their work to persuade the court to dismiss the negligence action.
Dual Employment Doctrine Creates Dangerous Work Environments
According to the U.S. Bureau of Labor Statistics, Arkansas has one of the highest worker injuries and death rates in the United States. Companies can use the dual employment doctrine to obtain tort immunity for any injuries suffered by those workers. Therefore, they have little incentive to ensure worker safety while on loan from a staffing or temporary employment agency.
As a result, companies will provide little training to external workers and place them in dangerous work zones without proper warnings or safety equipment. The obvious result is more injuries and deaths involving this category of workers. Arkansas companies should not get tort immunity for unsafe work practices by claiming dual employment to avoid being held accountable for their dangerous practices. It is bad public policy to allow wrongdoers to get away with negligent acts and push the burden onto the Arkansas taxpayer. All workers should have a right to a safe and healthy workplace.
Requirements for Proving a Dual Employment Relationship
In order to obtain the dual employment classification and to avoid liability for negligence, the company must prove the following:
1. The external worker made a contract for hire, expressed, or implied with the company,
2. The work being performed is that of the company; and
3. The company has the ability or right to control the details of the work.
All three of the requirements must be met to obtain the dual employment status and get the case dismissed. The courts rarely find an express contract between the external worker and the company. Instead, the courts look at the course of conduct between the external worker and the company to find an implied contract.
Like in many other legal situations, there is no clear standard as to what amount of control by the contracting employer is sufficient to find a dual employment relationship, and each must be evaluated on a case-by-case basis.
Hiring an Experienced Workers’ Compensation Attorney
Because of the legal complexities of these types of workers’ compensation cases, it is crucial if you are injured while performing work as an external worker that you contact an experienced workers’ compensation lawyer as soon as possible.
The Law Office of Jason M. Hatfield, P.A. has experience with workers’ compensation and dual employment issues. We are here to help you better understand your workers’ comp and tort negligence rights and will fight for the benefits you deserve.