A recent opinion of the Supreme Court of Texas raises important considerations for the management of workers’ compensation risk in connection with jointly employed workers.
The basic bargain of workers’ compensation schemes is that an injured worker loses his right to sue his employer in exchange for the virtual certainty of recovering benefits rationally related to his injuries, without going through the expense, risk, and delay of litigation. The employer loses the opportunity to defeat injury claims in court and becomes obligated to pay the scheduled benefits but gains the certainty that the benefits will be limited by law and also gains immunity from further suits or claims for those injuries. This immunity is called the “exclusive remedy” defense, meaning that the benefits paid by the workers’ compensation program will be the only remedy available for the injuries.
The exclusive remedy defense typically applies to claims that would otherwise be based on regular negligence. Claims for injury caused by an employer’s gross negligence or intentional misconduct are usually not negated by it, and suits for additional damages may be won on those theories even after workers’ compensation benefits are fully paid. In most states, workers’ compensation programs are mandatory, and most states have some version of the exclusive remedy defense.
When a worker is jointly employed by two employers, most state codes and case law operate so that, as long as one of the employers (usually the payroll employer) covers the worker with compliant workers’ compensation benefits or insurance, the exclusive remedy defense is available to both employers. Nevertheless, challenges to the exclusive remedy defense are still made, often ancillary to claims for gross negligence or intentional misconduct.
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