Lead Opinion
OPINION
Edward Montiel owns a business (“EMCO”) that provides contract labor and services to farmers and agricultural growers. EMCO assigned Jesus Avila to work for Northrup King Company (“Northrup”) as a temporary employee. Avila was injured while working under Northrup’s direction and control. After receiving workers’ compensation benefits from EMCO, Avila sued Northrup for negligence. The trial court granted summary judgment for Northrup on the theory that Avila’s status as a loaned employee renders Northrup immune from suit.
There are two issues before us. First, do the undisputed facts in the record support the trial court’s summary judgment that because Northrup was Avila’s special employer, it was immune from civil suit? The answer to this question depends upon whether Avila, by accepting the assignment from EMCO, and by submitting to Northrup’s control, direction, and supervision, impliedly consented to Northrup as his temporary employer. Second, assuming that Northrup was Avila’s special employer, is Northrup entitled to immunity from civil suit notwithstanding the fact that EMCO provided the workers’ compensation coverage for EMCO employees?
In resolving the above issues, we conclude first that under the standard pronounced in Orme School v. Reeves,
I. FACTS AND PROCEDURAL HISTORY
Montiel, doing business as EMCO, is a United States Department of Labor licensed labor contractor who contracts to provide agricultural labor and services to growers and farmers in the Yuma, Arizona area. At the time of Avila’s injury, EMCO had a work force of approximately 150 to 160 people who worked for one or more of five growers during the growing season. EMCO charged growers the amount of the wages it paid to each assigned worker plus a 32% mark-up to cover payroll taxes, workers’ compensation premiums, and general overhead. If a grower for whom EMCO provided services was dissatisfied with a particular laborer’s work, the grower did not have the right to discharge the laborer from EMCO’s work force, but could discharge him from the particular job. When this happened, EMCO would not send that laborer back to that job, and would exercise its discretion about whether to assign the worker to any other jobs.
One of the agricultural companies to whom EMCO supplied labor was Northrup. EMCO owner, Montiel, testified at his deposition that Northrup typically asked EMCO for small groups of laborers without a foreman, usually for not more than three or four days at a time. Montiel also testified that such employees were under the direct supervision of Northrup:
They [Northrup] don’t justify paying $65 a day for a foreman for a small group of people when they have their own foreman on staff____
So my supervisor delivers the people or sends the people, sets them up with the water and sanitation facilities, and they go to work under the leadership or the fore-manship of the Northrup King supervisor.
... Because you see, when we give Northrup King those 4 individuals, I say 4, we are assigning them to Northrup King. Hector [Villareal] tells them come back tomorrow. Tomorrow don’t come here, go to this end of the field, do this or that.
Everyday he directs them because that’s our arrangement. He acts as the foreman. The work quality and the performance of the job, they have to answer to him. My supervisor might call Hector and say, “Hector, is everything going okay? Any problem with Jesus or Juan or Jose?” And he may say, “No, they are working good. No problems.”
It’s our duty to check back with him. Not necessary that we talk to people____
Under the agreement between EMCO and Northrup, Northrup controls the details of the work done by the EMCO workers. When the EMCO employees arrive at the field, Northrup’s field supervisor, Hector Vil-lareal, relays the Northrup management’s instructions to them. Villareal tells the workers what Northrup wants to do that day and how it is to be done. If tools and training are necessary to complete the assignment, Northrup provides both. When EMCO’s employees are working in Northrup’s field, Villareal is present at all times supervising and giving directions about where to work and what to do.
Avila became a direct employee of EMCO in approximately March of 1987. Avila performed pre-harvesting and harvesting field work consisting of hoeing, weeding, cutting, picking, packing, and driving a tractor. During the year preceding the accident, EMCO had assigned Avila to work for Northrup on a number of separate occasions. On each prior occasion, Avila was overseen by Northrup’s supervisor, Villareal.
On March 22, 1988, Villareal called Tran-quilino Vecerra, Avila’s supervisor at EMCO, and told him that Northrup needed two people to hoe weeds. Villareal did not ask for particular people or specify how long they would be working. On March 23, 1988, at 6:00 a.m., Avila and another person arrived at Northrup’s field in their own cars. Villa-real provided them with hoes. Villareal testified at his deposition as follows:
Q. What instructions did you give them that morning, do you recall?
A I told them we were going to hoe some weeds on squash and melons and I showed them how to get the weeds from underneath plants and look under plants and most of the weeds be thrown down in the furrow.
Q. And once those general instructions were given to them did they need any further instructions after that?
A No, just to keep going on all the things that I showed them where to hoe. I stayed there with them for a little while and then I had to do some other things and I came back after awhile [sic].
Q. Did you periodically just come and go to check on them?
A Yes.
That same day, EMCO’s supervisor, Vecerra, dropped by on one occasion to talk with Villareal and the workers.
The following day, while hoeing an experimental squash crop, Avila was stung by a bee. Because Avila is highly allergic to bee stings, he asked Villareal to take him back to Northrup’s shop so he could go home for the rest of the day. While Villareal was driving Avila back to the shop on a tractor, Avila fell from the tractor and was injured.
After obtaining workers’ compensation benefits from EMCO’s compensation carrier, Avila brought this negligence action against Northrup and Villareal. The trial court granted summary judgment in favor of both. It concluded that on the evidence presented, reasonable minds could not disagree that Avila was a lent employee of Northrup entitled to the immunity provided by A.R.S. section 23-1022(A). The trial court stated:
Avila’s acceptance of EMCO’s assignment to be supplied as an employee to NK and his acceptance of the direction, control and supervision by Hector Villareal, foreman and supervisor of N-K was sufficient to imply the consent required for the establishment of an employment relationship between Avila and N-K for the hoeing task being performed. When he arrived at the work site and N-K directed and controlled his work and he accepted such direction and control, the legal relationship was established as a matter of law.
Avila filed a timely appeal. We have jurisdiction pursuant to A.R.S. section 12-210KB) (Supp.1993).
II. DISCUSSION
A. Was Avila a “Lent Employee?”
Any inquiry concerning the “lent employee” doctrine in the workers’ compensation setting begins with Word v. Motorola, Inc.,
The factors to be considered in determining when a lent employee has become the employee of the special employer are set out in Larson. We quote them with approval:
When a general employer lends an employee to a special employer, the special employer becomes liable for workmen’s compensation only if
(a) the employee has made a contract of hire, express or implied, with the special employer;
(b) the work being done is essentially that of the special employer; and
(c) the special employer has the right to control the details of the work.
When all three of the above conditions are satisfied in relation to both employers, both employers are liable for workmen’s compensation.
When these factors are met, the “special employer” becomes an “employer” and, like other employers liable for workmen’s compensation, may be entitled to the benefit of the statutory immunity given complying employers.
Id. at 520,
Avila argues that issues of fact exist whether any of the three criteria of the “lent employee” doctrine adopted by our supreme court in Word were met in this case. See generally Orme School,
1. Northrup Had the Right to Control Details of the Work
We first address the third factor in Word: whether Northrup had the right to control the details of Avila’s work the day he was injured. In determining whether an employer has the right to supervise and control the method of reaching a specific result, we must consider:
[T]he duration of the employment; the method of payment; who furnishes necessary equipment; the right to hire and fire; who bears responsibility for workmen’s compensation insurance; the extent to which the employer may exercise control over the details of the work, and whether the work was performed in the usual and regular course of the employer’s business. In undertaking an analysis none of the indicia is, in itself, conclusive.
Home Ins. Co. v. Industrial Comm’n,
In addition, Avila did the weeding work in the regular course of Northrup’s business of raising an experimental squash crop. Although Northrup had no right to discharge Avila from his employment with EMCO, Northrup undisputedly had the right to terminate him from the particular job he was doing for Northrup that day. See Antonini v. Hanna Indus.,
2. Avila Was Doing Northrup’s Work
Avila also contends that an issue of fact exists concerning the second factor in Word: whether the work Avila was doing when he was injured was that of the special employer, Northrup. Avila argues that because the work furthered EMCO’s commercial activities as an independent contractor, it was essentially that of EMCO, not of Northrup. We disagree. Although EMCO may have functioned as an independent contractor for its other growers, it did not act in that capacity when it provided small crews of workers for Northrup.
The evidence is uncontradicted that in its dealings with Northrup, EMCO supplied Northrup with an unsupervised work group that both EMCO and Northrup expected would be directed by Northrup’s supervisor. Avila was a member of one of those crews. He worked under the supervision of Northrup’s field supervisor, Villareal, and carried out his directions in removing weeds from Northrup’s experimental crop. On this record, no reasonable person could find that this work was anything other than Northrup’s work.
3. Avila’s Consent to Employment
We now consider the first factor stated in Word: whether the record establishes as a matter of law that Avila has made an express or implied contract of hire with the special employer. We begin the inquiry by making several general observations about the lent employee doctrine.
First, the requisite consent to a contract of hire between Avila and Northrup can be implied from the circumstances. See Nation,
Second, a distinction exists between an employer who borrows an employee from a general employer not in the business of furnishing temporary employees to others and an employer who obtains workers from the so called “labor contractor.” The latter term is used to describe a business that hires employees and in effect sells their services to other secondary employers who are in need of temporary assistance. Miller v. Federated Mut. Ins. Co.,
Here, undisputed evidence establishes that EMCO is in the business of providing temporary labor to farmers and growers in the Yuma area. EMCO is licensed by the United States Department of Labor to “recruit, solicit, furnish, hire, and employ” migrant farm workers. EMCO hires the workers and ordinarily buses them to the work site. Before they get on the bus, the workers are informed where they will be working and how much they will earn. Because the workers do not appear at EMCO’s office, the workers’ compensation notices and other applicable laws and regulations relating to employment are posted in the bus.
Under EMCO’s agreement with Northrup, EMCO “delivers the people ... and they go to work under the leadership or foremanship of the Northrup King supervisor.” No foreman is provided by EMCO because “they don’t justify paying $65 a day for a foreman for a small group of people when they have their own foreman on staff.” EMCO charges Northrup the amount of wages paid the employee plus 32% to cover payroll taxes and general overhead. Under these facts, no reasonable juror could conclude that EMCO is not a labor contractor. Consequently, Nation Lindsey, and other similar cases are controlling here.
Avila argues, however, referring to footnote 5 in Word,
First, we do not read Nation or Lindsey as narrowly as Avila does. Although the court in Lindsey,
Second, Avila is mistaken in the view that the lent employee doctrine applies only
Furthermore, in the non-labor contractor cases, where an employer merely loans an employee and does not provide special equipment, the majority rule is that the loaned employee becomes the employee of the special employer. IB Larson, supra, § 48.23, at 8-515. Consequently, even in the absence of a labor contractor relationship between EMCO, Avila, and Northrup, substantial precedent exists for holding that Avila is a lent employee of Northrup.
Finally, for the lent employee doctrine to apply, the employee need only be aware of and consent to the facts that give rise to the lent employee relationship. He need not be aware of and consent to the legal consequences of such facts. Six Flags Over Georgia, Inc. v. Hill,
In this case, Hill admits notice of and assent to the facts creating the special relationship. It is not necessary that the borrowed servant be on notice of and give his assent to the legal consequences of the special relationship where he has notice of the necessary facts and assents to perform the work at the direction and under the control of the special master.
Id. at 575; see also Beach v. Owens-Coming Fiberglas Corp.,
From the evidence presented to the trial court in this ease, reasonable persons could only conclude that Avila was a loaned employee of Northrup. Avila accepted EMCO’s assignment to work at Northrup’s field, just as he had done on numerous occasions during the preceding year. While working there, Avila submitted to Northrup’s control, direction and supervision through its field supervisor, Villareal. The fact that Avila thought that he was at all times a direct employee of EMCO and subject to his EMCO supervisor’s authority did not raise a contrary inference. See Nation,
Avila contends that reasonable minds could differ concerning whether he was a lent employee, a statutory employee,
The dissent argues, citing IB Larson, supra, § 48.11-12, that a “deliberate and informed consent” by the employee is required before a special employment relationship can arise. Building on this proposition, the dissent asserts that a conclusive inference of a new hire cannot be inferred merely by Avila’s showing up at Northrup’s field and following the direction of a Northrup employee. The dissent contends that because EMCO normally operates as a contract harvester, rather than as a labor broker, and that because on the day of the accident Avila did not expressly agree to a different relationship, a disputed issue of fact exists. This analysis is flawed for several reasons.
First, as we discuss above, Arizona law is contrary to the dissent’s quoted statement from Larson that deliberate and informed consent by the employee is necessary to create a special employment relationship. See Lindsey,
The dissent also cites Larson, supra, § 48.14, for the proposition that there is a presumption that an existing employment relationship continues. That presumption, however, only arises where the employee attempts to hold a particular employer liable for workers’ compensation benefits. It does not apply where, as in this case, an employee who has workers’ compensation coverage seeks to hold a particular employer liable as a third party. See Larson, supra, § 48.14, at note 37.1 (citing Ruble v. Arctic Gen., Inc.,
Thus, there are neither presumptions for or against finding tort liability on behalf of a third party, nor presumptions for or against finding an employment relation with respect to a particular employer.
Ruble,
B. Northrup King’s Entitlement to Immunity Under A.R.S. Section 23-1022(A)
Finally, Avila argues that Northrup was not entitled to immunity pursuant to AR.S. section 23-1022(A) because it failed to show it had provided workers’ compensation insurance that would have covered Avila. We reject this argument because it is undisputed that Northrup provided workers’ compensation coverage for its own employees. As we held in Nation,
The exclusivity of workers’ compensation coverage as a remedy is based on the existence of an employment relationship. That relationship exists between Avila and two employers—Northrup and EMCO. The fact that Avila chose not to make his workers’ compensation claim against Northrup is irrelevant—he could have—and Northrup would have been obligated to pay benefits. Avila has received the quid pro quo that justifies loss of the right to reap the benefits of a common law negligence action against Northrup. Thus, both his general and special employer are entitled to immunity under A.R.S. section 23-1022(A).
CONCLUSION
For the reasons stated above, the trial court properly granted summary judgment in favor of EMCO and Villareal.
Notes
. See Simmons v. Atlas Vac Mach. Co.,
. Footnote 5 states: "In cases specifically involving labor contractors, the usual rule is that ‘employers obtaining workers from the kind of labor service typified by Manpower, Inc. have usually, but not invariably, been held to assume the status of special employer.’ ” Word,
. An employer is a worker’s “statutory employer" under A.R.S. section 23-902(B) (1983) if the worker is a direct employee of a contractor whom another employer procured to do work for him, the other employer retains supervision or control over the work, and the work is a part or process of the trade or business of the other employer. Word,
Dissenting Opinion
dissenting.
The majority finds no material issue of disputed fact in holding that Northrup was Avila’s “special employer,” thus affording to Northrup the statutory immunity from common law negligence liability to its “employees.”
Let me first deal with the policy considerations that the majority contends support the result it reaches. The first is that, because of the agreement between EMCO and Northrup, Northrup indirectly paid the cost of Avila’s workers’ compensation coverage and, “[t]hus, Avila’s suit against Northrup is essentially a suit against the entity that indirectly paid his worker’s compensation premiums.” Op. at 506,
The second policy consideration, i.e., exclusivity of workers’ compensation as a remedy, is absolutely correct—if Northrup was Avila’s employer; if not, A.R.S. § 23-1023(A) gives Avila the public policy stated reason for pursuing his action—that is, his injuries were caused by the negligence of a third party. There is nothing in the workers’ compensation scheme that affords protection to a stranger for negligent infliction of injuries. Thus, the inquiry must focus on this determination.
The majority correctly sets forth the law in relation to lent employees or “special employers.” I zero in on the first of the findings that is necessary in order for special employers to become liable for workers’ compensation:
(a) the employee has made a contract of hire, express or implied, with the special employer____
Word v. Motorola, Inc.,
The law, again as correctly cited by the majority, is that where an employer obtains workers from a labor contractor, that employer assumes the status of a special employer and, with that status, immunity from civil suit. See op. at 502,
However, these are assumptions that should not be entered into lightly. As Larson points out, the first question to be asked in the “lent employee” situation is: “Did he make a contract of hire with the special employer? If this question cannot be answered ‘yes,’ the investigation is closed, and there is no need to go on into tests of relative
This must necessarily be so, since the employee loses certain rights along with those he gains when he strikes up a new employment relation. Most important of all, he loses the right to sue the special employer at common law for negligence; and when the question has been presented in this form, the courts have usually been vigilant in insisting upon a showing of a deliberate and informed consent by the employee before employment relation will be held a bar to common-law suit.
IB Arthur Larson, Workmen’s Compensation Law, § 48.11-12 (1993).
It is at this juncture that I part company with the majority—not on its understanding of the law, but on its understanding of the facts. The majority concludes that the “undisputed evidence establishes that EMCO is in the business of providing temporary labor to farmers and growers in the Yuma area.” Op. at 503,
What the facts show here is that EMCO is more than simply a labor contractor that supplies labor to farmers. Rather, it is in the business of contract harvesting: it moves onto the farmer’s land, with crews, supervisors, equipment including toilets, water, ice, buses, tractors, and hoes, and performs all preharvesting and farming work. In this normal operation, its employees are never considered to be “lent employees” because they are at all times under the direct control and supervision of EMCO. This was generally how Avila’s employment with EMCO was conducted.
What makes this case difficult from the special employers’ standpoint is Northrup’s contract with EMCO. Northrup is a grower in Yuma that maintains an experimental seed plot. Because of the limited size of this operation it does not need the full services of EMCO, including its supervisory personnel, at all times. Rather, the oral contract between EMCO and Northrup provided that, if less than fifteen laborers were needed by Northrup to perform a specific task, EMCO would not supply supervisory personnel; instead, Northrup’s field hand would be available for temporary supervision. However, if the task required by Northrup entailed more than fifteen laborers, EMCO would provide its own supervision.
On the day Avila was injured, he was part of a crew of less than fifteen laborers and therefore was under the direction of a Northrup employee. However, his modus operandi for that day was the one he usually followed since his employment by EMCO. He reported to his supervisor at EMCO who directed him to report, with one other laborer, to Northrup. There he was given direction by a Northrup employee as to the tasks to be performed.
There is no question that Avila was not aware of the contractual agreement between his general employer, EMCO and Northrup, nor did he specifically enter into a contract of hire with Northrup, always thinking of himself an EMCO employee.
It is true as pointed out by the majority that the “consent to hire” requirement maybe satisfied by the circumstances under which the employee undertakes the direction and control of the special employer, and that “lent employees” are not limited to “labor contractor” cases. However, given the circumstances of Avila's employment with EMCO, EMCO’s general harvesting business and the special nature of the contractual relationship with Northrup, a conclusive inference of a new hire cannot be inferred merely by Avila’s showing up at Northrup's field and following the direction of Northrup’s employee. This was exactly what he was told to do by his general employer, EMCO.
It is important to keep in mind Larson’s observation that an analysis of the “lent employee” problem begins by acknowledging that an existing employment relationship exists, and that it is presumed that this existing employment relationship continues.
To overcome this presumption, it is not unreasonable to insist upon a clear demonstration that a new temporary employer has been substituted for the old, which demonstration should include a showing that a contract was made between the special employer and the employee.
Larson, supra, at § 48.14.
In my opinion, not only has a clear demonstration not been made that Avila entered into a new contract of hire with Northrup, but a serious factual dispute exists as to this issue. I would reverse to allow a trier of fact to resolve this dilemma.