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Leased Employment Has Its Consequences

Employment status

An employee leased to another company [ER], ie. a placement agency [PA], does not have the rights and benefits available to a regular employee. A recent case illustrates how the leased employee is prohibited from seeking an award for damages because of an accident at work.

A leasing agency contracted with a store to furnish an employee. The contract of employment reflected that: 

1) employee would receive his paychecks from ER; 

2) employee needed to discuss any problems or misunderstandings at work with an ER supervisor only; 

3) employee needs always to remember he is NOT a staff employee of the ER where he is assigned and is not eligible for any special privileges; and 

4) employees had to immediately notify a direct supervisor, and ER, in the event of an on-the-job injury. 

The employee was injured on the ER job site and filed a civil action against the ER. The trial court and the appellate court ruled that the employee was a “special employee” of the employer and the employee was prohibited under the Workers’ Compensation Act from suing his employer in a civil action. The only remedy available to the injured workers was workers’ compensation benefits. 

An appeal the court held: 

“In a well-reasoned written opinion, Judge Martha D. Lynes determined that defendant was a special employer of the plaintiff under the five-factor test first established in Blessing v. T. Shriver & Co., 94 N.J. Super. 426, 430 (App. Div. 1967). The judge found: 1) plaintiff had an implied contract to work for the defendant because he voluntarily accepted work assignments from the defendant; 2) plaintiff was performing work duties for a defendant under defendant’s ‘training, directives, and supervision’; 3) Patel, defendant’s agent, directed plaintiff’s daily tasks at the warehouse; 4) even though On Target paid plaintiff, New Jersey case law recognizes ‘employees of employment agencies are paid at least indirectly by the business ... borrowing that worker for a temporary position,’ and as such, defendant indirectly paid plaintiff; and 5) defendant had the ability to advise On Target it did not want plaintiff at the warehouse and could request another temporary employee. As a result of her findings, Judge Lynes concluded the defendant was a special employer under the Blessing test, and she granted summary judgment in the defendant’s favor on April 10, 2018. 

An issue on appeal was raised that the employee was only borrowed. The appellate court declined to accept that position: 

“A special employment relationship exists where “(a) [t]he employee has made a contract of hire, express or implied, with the special employer; (b) [t]he work being done is essentially that of the special employer, and (c) [t]he special employer has the right to control the details of the work.” Volb v. G.E. Capital Corp., 139 N.J. 110, 116 (1995).” …” We are unpersuaded by the plaintiff’s assertion that the defendant has not presented evidence to support the fifth factor under the required analysis. A borrowed employer does not have to show it has the right to terminate the employee from her position with her general employer. As we stated in Kelly [Kelly v. Geriatric & Med. Servs. Inc., 287 N.J. Super. 567, 571-72 (App. Div. 1996)], an employer’s right to screen or unilaterally remove a particular employee from its facilities is “the functional equivalent of the power to discharge” that employee. Ibid.” 

Uribe v Quartz Master, DOCKET NO. A-4071-17T1, 2019 WL 1970218 (Decided May 2, 2019) UNPUBLISHED OPINION. CHECK COURT RULES BEFORE CITING. NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION. This opinion shall not “constitute precedent or be binding upon any court.” Although it is posted on the internet, this opinion is binding only on the parties in the case, and its use in other cases is limited. R. 1:36-3. Superior Court of New Jersey, Appellate Division. 

See also:

Trump’s Gig Economy

Payment under section 20 invokes the exclusivity bar even if the employer is uninsured

Forklift Operator Not A “Special Employee”


Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thomson-Reuters). For over 4 decades the Law Offices of Jon L Gelman 1.973.696.7900 has been representing injured workers and their families who have suffered occupational accidents and illnesses.

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