Tex Supreme Court Case Important to Staffing Companies and Those that Utilize Them

In Garza v. Exel Logic, Inc. (Tex, 4/8/05) the Texas Supreme Court issued an interesting opinion regarding the application of the Texas Workers' Compensation Bar to situations involving an employee provided by a staffing company to a client company who suffers a workplace injury. I know that many staffing companies and most client employers believe that the client employer is covered by the staffing company's workers compensation coverage and therefore need not worry about workplace injuries of temporary employees. As this case makes clear, this is not necessarily the case.

In this case, Interim Services Pacific LLC, a temporary employment agency, employed Jose Garza as a laborer and assigned him to perform general labor at Exel Logistics, Inc., one of Interim's clients. Garza sued Interim and Exel after he was injured while crossing over a moving conveyor belt to turn off a machine at the request of an Exel supervisor. The trial court granted summary judgment for the agency and its client, concluding that the Workers' Compensation Act's exclusive remedy provision bars the worker's common law claims. The court of appeals affirmed. In this opinion, however, the Supremes affirmed the court of appeals' judgment as to the temporary employment agency but "because the client company did not establish that it is "covered by workers' compensation insurance coverage," which is necessary to come within the exclusive remedy provision", reversed the court of appeals' judgment as to the client company and remanded the case to the trial court for further proceedings.

The client employer argued that the contract between it and the staffing company "required [the client company] to pay [the staffing company] for the costs associated with maintaining workers' compensation insurance," and therefore, "the client provided worker's [sic] compensation insurance for Garza, albeit through [the staffing company." The Court held that the Workers' Compensation Act "does not permit a temporary employment agency like Interim to obtain coverage for a client simply by obtaining coverage for itself. There must be explicit coverage for the client."Time to run and check those contracts people.