Appeals Court Rules Employer Immune From Tort Liability For Workplace Injury

“Employee misclassification” has long been a problem that costs workers and the government billions of dollars every year. Employers are notorious for trying to label employees “independent contractors” in order to avoid paying payroll taxes and worker benefits. “Employee Misclassification” is especially common when workers have been injured, harmed, or otherwise mistreated at work. In circumstances where employees organize to form unions, are victims of illegal discrimination, file claims for unpaid wages or overtime, or are terminated without just cause, it is a common litigation dodge of employers to argue that they are not, in fact, employers. The recent Massachusetts Appeals Court case of Fleming v. Shaheen Brothers, 07-P-255 (Feb. 21, 2008) provides a unique instance when an employer has a financial incentive to prove that it is the boss to an employee injured on the clock.

In general, Massachusetts workers compensation law provides immunity to employers from personal injury claims by employees injured on the job. As the tradeoff for requiring employers to contribute to workers compensation insurance to make lost compensation and health benefits available, the law prohibits injured workers from bringing personal injury claims, which could potentially provide much large awards. (In certain circumstances, employees may file personal injury claims against third parties that caused the injuries, including manufacturers, and sometimes against fellow employees).

In Shaheen Brothers, an employee was injured while operating a forklift. The employee and his wife sued the employer and the forklift manufacturer. Shaheen Brothers hired, supervised and directed the employees. But, as is not uncommon in the construction industry, Shaheen Brothers outsourced its administrative and payroll functions to a different company, NBS. It was NBS, not Shaheen Brothers, that paid employees, withheld taxes and contributed to unemployment and workers compensation funds. The injured employee argued that NBS, not Shaheen Brothers, was his employer and Shaheen Brothers therefore was not immune from liability for personal injury claims. The Appeals Court disagreed. “NBS cannot be considered a general employer if it did not exercise any control over Fleming’s work duties; performing payroll functions does not amount to a working relationship.”

In concluding that an employer-employee relationship existed between the injured employee and Shaheen Brothers, the Appeals Court relied on the golden rule of “if it walks like a duck, it’s a duck” rather than technical niceties. In other words, if the company hires you, assigns you work, supervisors your work, and has the power to discipline you or change your wages, then it is your employer for purposes of workers compensation, regardless of who is listed on your paystub.

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