Third-Party Liability for Contract Employees: New Jersey’s Borrowed Servant Doctrine

Many businesses are trying to cut costs these days, and one popular way to do so is to lease temporary employees. If your business leases employees through an agency, you likely have lower overhead; employee leasing agencies typically pay the leased employees’ benefits and payroll costs, such as FICA and income taxes. The agencies also cover the expense of recruiting and hiring. But what happens if a temporary employee gets hurt on the job?

When you lease an employee through an agency, the agency is the employee’s general employer, and you are the employee’s special employer. In New Jersey, both the general employer and the special employer are responsible under the Workers’ Compensation Act for an employee’s job-related injuries. However, New Jersey law also protects both the general employer and the special employer from personal injury lawsuits, because Workers’ Compensation is the exclusive remedy when an employee injures himself. A Monmouth County business lawyer can help you determine if your business has a special employment relationship with leased employees.

Proving a Special Employment Relationship

Your status as a special employer may seem cut and dried. You contracted with an agency, which sent you an employee, and that employee works for you. If a leased employee suffers an injury on your premises, however, that employee may try to find a loophole. If the employee can show that your business is not a special employer, the employee can bring a personal injury action against you.

The criteria to establish that you are a special employer include:

  • Whether the employee has a contract of hire with you, whether that contract is express or implied
  • Whether the employee’s work is essentially your business’ work
  • Whether your business has the right to control the details of the employee’s work
  • Whether you pay the employee’s wages
  • Whether you have the power to hire or terminate the employee

If you have leased employees working at your business and one of them gets hurt on the job, he or she can only collect workers’ compensation. If a leased employee tries to circumvent this exclusive remedy, contact an experienced Monmouth County business attorney to find out if you can fend off a costly personal injury lawsuit.