Borrowed Employee: Who’s in Charge?

August 2023

Catherine L. Carlson

Imagine a situation wherein Company A requests an employee from Company B to work at its plant and then the employee gets injured. In a “normal” situation, the exclusive remedy provisions of the Workers' Compensation Act would prevent any personal injury lawsuits by the employee against either Company. This is known as the “loaned employee” or “borrowed employee” doctrine. The Cabrera v. Wiremasters case provided some clarity on the scope of the protections afforded and any available exceptions.

In Cabrera v. Wiremasters, Inc., 2023 IL App (1st) 2207844-U, the First District Appellate Court in Illinois found that the plaintiff was a borrowed employee and thus, the borrowing employer was subject to the Workers' Compensation Act’s exclusive remedy provisions. In this case, Total Staffing Solutions (loaning employer) hired plaintiff as a press operator who did work on a press brake machine at Wiremasters (borrowing employer). Plaintiff was injured and attempted to file a personal injury lawsuit against Wiremasters. Wiremasters moved to dismiss the complaint arguing that it was plaintiff’s borrowing employer and thus, plaintiff’s civil action was barred by the Workers' Compensation Act and that plaintiff had not alleged any facts supporting a finding of any exception to the exclusive remedy provision.

The evidence showed that Wiremasters employed plaintiff pursuant to a contract between Wiremasters and Total Staffing. Total Staffing did not tell plaintiff beforehand what work she would be doing at Wiremasters, did not train plaintiff how to do her work, and did not tell plaintiff which machine to work on, what work she would be doing, or what tools she would be using. She reported directly to Wiremasters and was supervised by a Wiremasters’ employee. She clocked in and out of work with Wiremasters. The trial court found that the plaintiff was a borrowed employee of Wiremasters at the time of the incident and that the complaint was barred by the exclusive remedy provision of the Workers' Compensation Act. The Appellate Court affirmed that decision.

A borrowed employee under Illinois law arises from a situation where an employee employed by one company is loaned to another company for specific work and thus, becomes the employee of company to whom she is loaned. In the above example, Total Staffing hired the plaintiff and then loaned her to Wiremasters. The key decision in determining whether an employee is “borrowed” is who maintains control of the employee. A checklist below can help determine if a borrowed employment relationship exists:

1. Who controls the manner and direction of the employee’s work? In order to determine control, the Illinois courts have laid out the following factors: 1) the employee worked the same hours as the borrowing employer; 2) the employee received instruction from the borrowing employer’s foreman and was assisted by the borrowing employer’s employees; 3) the loaning employer's supervisors were not present; 4) the borrowing employer was permitted to tell the employee when to start and stop working; and 5) the loaning employer relinquished control of its equipment to the borrowing employer. Prodanic V. Grossinger City Autocorp, Inc., 2021 Il. App (1st) 110993, P 16. In this case, Wiremasters handled the training and supervision of the plaintiff and the plaintiff only received instruction from Wiremasters.
 
2. How was the employee hired and how was the employee paid? While the plaintiff was originally hired by Total Staffing and paid by Total Staffing, the court determined that who paid plaintiff was not as important a factor as to who controlled plaintiff’s employment.
 
3. What was the nature of the work? In this case, the plaintiff could not do the work unless Wiremasters told her what to do and how to do it.
 
4. What was the manner of direction and supervision of the work? This factor is part of the control factor. The courts have determined who controls the plaintiff to be more persuasive than other factors. In this case, Wiremasters supervised and controlled the plaintiff’s work and was the only supervisor for plaintiff’s work.
 
5. Who had the right to fire the employee? While in this case, Total Staffing retained the ability to fire the plaintiff, Wiremasters could ask that she not come back to work. So, while Wiremasters could not fire the plaintiff, it could ensure that she did not return.

Another important portion of this decision involved plaintiff’s attempt to assert the willful and wanton exception to the exclusive remedy provisions. However, the Appellate Court reiterated “mere negligence” is not sufficient to establish this exception. Rather, the borrowing employer’s acts must have been committed intentionally, with knowledge that they were likely to result in serious injury, or in wanton disregard of the probable consequences. In practice, this requires a showing that the employer “acted deliberately and with specific intent to injure the employee.” However, the alleged conduct in this case arose only to the level of ordinary negligence and thus the exception did not apply.

The overarching theme of this case and most cases involving borrowed employees is control. If the borrowing employer exerts control over the plaintiff, the more likely it will be seen as borrowing the employee. That being said, in determining whether a borrowed employee relationship exists, the totality of the control the borrowed employer retains over the employee is the most significant of the factors. If these factors are met, the company that borrowed the employee can assert the exclusive remedy provisions.