Is your client entitled to workers’ compensation immunity? A discussion of Fleming v. Shaheen Brothers, Inc., 71 Mass. App. Ct. 223 (2008), rev. den. 451 Mass. 1105 (2008)

Issue Vol. 11 No. 1 January 2009 By Emily G. Coughlin

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.


1. See Patterson v. Liberty Mut. Ins. Co., 48 Mass. App. Ct. 586, 591 (2000) In Patterson, the plaintiff doctor was hired, supervised and controlled by a hospital, but was paid by, provided with workers’ compensation insurance by, and identified as an employee on the W-2 forms of a separate private foundation. The doctor sought compensation benefits for a work related injury from both the hospital and the foundation. An administrative law judge for the Department of Industrial Accidents ruled that both the hospital and foundation were the doctor’s employers, and that both the hospital and the foundation were liable for workers’ compensation. The foundation’s workers’ compensation insurer appealed, arguing among other things that the foundation was not the doctor’s employer as defined by the Workers’ Compensation Act. Patterson, 48 Mass. App. Ct. at 587-588. Although the case was decided on other grounds, this court discussed in detail the issue of Patterson’s employment, expressing its strong view that the foundation was not the employer despite the fact that it actually paid the doctor, provided the doctor with workers’ compensation and listed the doctor as its own employee in its W-2 Forms. This court expressed its belief that the administrative law judge’s conclusion that the foundation was the doctor’s employer should be “set aside” as not “justified by the evidence or the subsidiary findings.”Paterson, 48 Mass. App. Ct. at 591. Likewise, in this case there is no doubt that Shaheen was the plaintiff’s employer and not New Boston. Id.

Emily G. Coughlin is a founding partner of the firm of Coughlin Betke LLP (formerly Ryan, Coughlin & Betke LLP). She is vice president of the Massachusetts Defense Lawyers Association and an active member of the International Association of Defense Counsel, the Defense Research Institute and the Massachusetts and American Bar Associations.