Federal appeals court rules on LHWCA borrowed employee rule

The U.S. Eleventh Circuit Court of Appeals recently ruled on the exclusivity provision of the Longshore and Harbor Workers' Compensation Act ("LHWCA"). Under Section 905 (a), the obligation of an employer to provide compensation benefits to a worker "shall be exclusive and in place of all other liability of such employer to the employee."

Under 33 U.S.C. § 905, a worker gives up the right to sue the company for negligence and go after a potentially much greater damage award in exchange for the company giving up the right to a common law defense that is typical in worker negligence claims. The worker gets more certain compensation for injuries caused by the employer, no matter who is at fault. The company avoids litigation costs and only pays the assigned LHWCA benefits.

Here in Langfitt v. Federal Marine Terminals, Inc., a longshore worker employed by labor broker Able Body Temporary Services Inc. ("Able"), was sent over to work for Federal Marine Terminals ("FMT"). While working for FMT, he was severely injured.  Even though Able is covered by LHWCA, the plaintiff filed suit against FMT. FMT asserted an affirmative defense that it was a LHWCA employer and protected from a negligence claim. The U.S. District Court for the Middle District of Florida agreed that FMT was in fact an employer and granted FMT's motion for summary judgment.

The case was appealed to the Eleventh Circuit which considered this key question:

If a labor broker sends its employee to another company, what criteria must be satisfied in order for the borrowing company to fall within the guidelines of the LHWCA?

The three criteria considered by the Court were:

1) The employee consents to the new employment relationship. The worker must have given deliberate and informed consent to the relationship with the borrowing company (FMT).

2) The borrowing principal's work is being done. The work being done at the time of the injury must have been for the borrowing company (FMT)

3) The borrowing principal assumed the right to control the details of the employee's work. The borrowing company (FMT) must have been given the right, from the worker's employer, to control the "manners and details of the employee's work."

The appeals court upheld the district court ruling that FMT was the employer under LHWCA and the plaintiff's negligence claim was barred.

Read Langfitt v. Federal Marine Terminals, Inc., in our article library here.

Source: Navwaters.com