In Fleming v. Shaheen Brothers, Inc., 71 Mass. App. Ct.
223 (2008), the appeals court held that the defendant, Shaheen Brothers, Inc.,
was entitled to immunity from suit by the plaintiff under Massachusetts General
Laws, chapter 152, even though the plaintiff received his paycheck from a
separate entity, and that separate entity paid the plaintiff’s workers’
compensation benefits following the accident. The court held that Shaheen was
entitled to immunity because it was the plaintiff’s employer as a matter of law
at the time of the accident, was insured for workers’ compensation, and was
liable for the payment of workers’ compensation. The court stated that the fact
that Shaheen was not the party that actually paid Fleming’s workers’
compensation “has no bearing on the issue of immunity” as long as Shaheen was
the insured employer liable for the payment of that benefit. Id.
at 229.
In February of 1998, plaintiff Mark Fleming (Fleming)
walked into Shaheen’s place of business to apply for a warehouse job. “Fleming
completed an application for employment and interviewed with Shaheen’s
operations manager. Shaheen subsequently hired Fleming as a temporary employee
to work in its warehouse and Shaheen set his hourly wage. Fleming was trained
by Shaheen’s staff. He worked on the warehouse’s premises and was under the
direction and control of Shaheen employees. After Fleming’s first ninety days
of employment, Shaheen had the exclusive right to decide whether to continue
Fleming’s temporary employment or make him a permanent employee. Shaheen could
fire him at any time.”
Fleming’s paychecks, however, did not come from Shaheen.
Shaheen regularly used a company named New Boston Select (NBS) to pay its
temporary employees, like Fleming, and to handle related administrative
functions. “Shaheen paid NBS an amount equivalent to Fleming’s salary, plus a
service fee. In return, NBS paid Fleming’s wages, withheld Federal and State
taxes, and provided unemployment insurance. NBS also paid workers’ compensation
insurance premiums for Fleming, although Fleming was also covered under
Shaheen’s workers’ compensation policy. NBS obtained all the information
necessary to conduct its payroll through applications, which NBS provided to
Shaheen. Similarly, Fleming recorded his hours on a time sheet, which Shaheen
provided to NBS. Fleming had no contact with NBS, was never introduced to
anyone from NBS, had never been to any NBS location, and only discovered its
name when he received his first paycheck. Two weeks after Fleming was hired, he
was injured in a work-related accident while operating a forklift. Shaheen
notified NBS about the accident and NBS filed the “first report of injury” with
the Division of Industrial Accidents. Fleming then began receiving workers’
compensation benefits from NBS’s insurer.”
The appeals court held that for an employer to be immune
from suit, it need only satisfy the two-part test the appeals court first
articulated in its decision in Lang v. Edward Co. v. Edward J. Lamothe Co.,
20 Mass. App. Ct. 231, 232 (1985). To be entitled to immunity, “a direct
employment relationship must exist, and ‘the employer must be an insured person
liable for the payment of compensation.’” Fleming, 71 Mass. App. Ct. at
227 (quoting Lang, 20 Mass. App. Ct. at 232).
With respect to the first part of the test, “in order to
determine whether an employer-employee relationship exists, the finder of fact
must identify ‘who has direction and control of the employee and to whom does
he owe obedience in respect of’ the performance of his work’” Fleming,
71 Mass. App. Ct. at 227 (quoting Patterson v. Liberty Mut. Ins. Co., 48 Mass.
App. Ct. 586, 591 (2000) (quoting Chisholm’s Case, 238 Mass. 412, 419, 131
N.E. 161 (1921))). The court stated that although the method of
payment for the work performed may be important, it is not controlling in
determining the terms of an employment relationship. Fleming, 71 Mass.
App. Ct. at 227. Rather, the “primary test is whether one has a right to
control the individual’s work performance.” Id. (quoting National Assn. of
Govt. Employees v. Labor Relations Commn., 59 Mass. App. Ct. 471, 474, 796
N.E.2d 856 (2003)). In Fleming, the court pointed out that it was undisputed
that there was a direct employment relationship between Shaheen and
Fleming. “It was not disputed that Shaheen independently interviewed and hired
Fleming,
exclusively controlled Fleming’s training, hours and job duties, supervised
Fleming’s
work and indirectly paid his wages and workers’ compensation
benefits.” Although NBS formally paid Fleming’s wages and workers’ compensation
benefits, it had no actual control over hiring, firing, or other work
conditions. Under this set of facts, the court was able to find as a matter of
law that Shaheen, not NBS, was Fleming’s employer.
The court also found that Shaheen satisfied the second
prong of the test set forth in Lang, Id. at 229. The
court held that to satisfy the second prong of the immunity test, the insured
person must only be “liable for the payment of compensation” Fleming, 71
Mass. App. Ct. at 229 (quoting Lang, 20 Mass. App. Ct. at 232). The court held
that the employer need not actually pay the workers’ compensation benefits or
even pay the insurance premiums to take advantage of the workers’ compensation
exclusivity bar Fleming, 71 Mass. App. Ct. at 229. The court
concluded that Shaheen need only be an insured employer. In this case, “Shaheen
carried its own workers’ compensation insurance, which it paid for as the named
insured.” In addition, Shaheen “also paid NBS the cost of additional workers’
compensation coverage for those Shaheen employees paid through NBS.” Since
Shaheen satisfied both prongs of the Lang test, the appeals court
held that Shaheen was immune from Fleming’s negligence suit.
Fleming argued, however, that Shaheen was not liable for
the payment of workers’ compensation because NBS was Fleming’s “general”
employer not Shaheen. Shaheen, according to the plaintiff, was merely a
“special” employer not liable for workers’ compensation under the Workers’
Compensation Act. Mass. Gen. Laws
c. 152, §18, provides that where there exists a general/special employer
relationship, “the [general] employer upon whom liability for making workers’
compensation payments has been placed shall have the burdens and immunities of
the Act; the other [special] employer will have neither” Fleming,
71 Mass. App. Ct. at 228 (quoting, Nason, Koziol & Wall, Workers’
Compensation § 7.17, at 168 (3d ed. 2003).
The appeals court held, however, that the facts in Fleming
failed to establish that NBS was Fleming’s general employer. In fact, the court
went on to state that there were “no facts indicating that NBS was Fleming’s
general employer” Id. at 228. “NBS cannot be considered a general
employer if it did not exercise any control over Fleming’s work duties.”
Moreover, the court held that performing payroll functions does not amount to a
working relationship. Id. (citing Cameron v. State Theatre Co., 256 Mass.
at 468 (control and actions of the parties determine employment relationship)).
Consequently, the appeals court concluded that since Shaheen controlled and
directed Fleming’s work, and was liable for payment of Fleming’s workers’
compensation benefits, Shaheen was immune from suit pursuant to M.G.L. c. 152,
despite the fact that Shaheen did not pay Fleming directly and Fleming’s
workers’ compensation benefits were provided by NBS.
The idea of being employed by one entity but being
payrolled by another entity was not new to the appeals court.1 However, in Fleming the
appeals court had the opportunity for the first time to apply the language from
Patterson
and Lang
to a situation where an insured employer provided for insurance from more than
one source. Both Shaheen and NBS were insured, however NBS rather than Shaheen
paid the plaintiff’s workers’ compensation benefits. The court in Fleming
acknowledged that nowhere in the Workers’ Compensation Act or in any case law
decided pursuant to it, is “the employer” actually required to pay workers’
compensation benefits to be immune from suit under Section 15. See
Lang, 20 Mass. App. Ct. at 232. In fact, if that were the case, then the court
in Lang
need not have put forth the two-part test or done any analysis to reach its
conclusion as to the party entitled to immunity. It could have simply ruled
that the party who paid the benefits would be immune. Instead, the appeals
court in Lang
and again in Fleming held that an employer need only be “liable
for” payment of the compensation benefits to be immune, not that the employer
need actually to have paid those benefits.
If Shaheen had leased its employee from a leasing
company, or some other type of general-special employment relationship had
existed between Shaheen and NBS (as in the case of a borrowed servant), it is
clear that the appeals court in Fleming would have reached a
different result. The key to the defendant’s success in Fleming
was the lack of control on the part of NBS over the employee. Had there been
evidence of any such control, the issue of whether Shaheen was Fleming’s
employer would have been left for a jury to decide.
Endnotes