A labor broker is a company that hires workers (or laborers) and assigns them to various other companies and jobs. The labor broker charges the company for the workers’ time then pays the workers a wage less than that. Because the plaintiff was employed by a labor broker in this case, the question of “who is the employer?” was of utmost importance. The Workers Disability Compensation Act (WDCA) indicates that it is the exclusive remedy against “the employer.” An injured worker receives workers compensation benefits for a work-related injury without having to prove fault on the part of the employer, but the tradeoff is that the injured worker cannot sue the employer for injuries beyond the worker’s compensation benefits. Is the employer the defendant or the labor broker or are they both treated as employers? If the employer is the labor broker, plaintiff wins and can seek additional remedies against defendant. If the employer is the defendant, or both the labor broker and defendant, plaintiff loses and can only recover pursuant to the WDCA.
In a recent Michigan Court of Appeals decision, Bolen v Marada Industries, Inc. Docket No. 348765, the Court of Appeals ruled that when determining whether a party is “the employer” for purposes of the WDCA, Michigan Supreme Court decisions are clear that the economic realities test governs and not the plain language of the statute. In the present matter, plaintiff was employed by a company that acted as a labor broker for defendant and a question of “who is the employer?” for purposes of the WDCA needed to be addressed. The Michigan Court of Appeals begrudgingly ruled that the plain language of the WDCA, MCL 481.131 does not apply, and instead prior Michigan Supreme Court decisions apply instead.
While the Court of Appeals seems to agree with the plaintiff that the plain language indicates that defendant is not “the employer”, past Michigan Supreme Court decisions have indicated that for purposes of the WDCA, there can be two employers as long as the economic realities test is satisfied for the second. The economic realities test contains four elements: (1) control of a worker’s duties, (2) payment of wages, (3) right to hire and fire and right to discipline, and (4) performance of the duties as an integral part of the employer’s business towards the accomplishment of a common goal.
The Court found that all four elements were in favor of the defendant as a result of the labor broker dynamic, that they were “the employer”, and the WDCA would be the exclusive remedy for plaintiff, preventing any other causes of action against defendant.
The key takeaway from this case is that in situations where a labor broker relationship applies to a WDCA claim, the economic realities test governs whether defendant is “the employer” and the WDCA is the exclusive remedy. Use caution though as the Court of Appeals used this case to indicate their displeasure in the ruling and urged the Michigan Supreme Court to reconsider their prior decisions.
The full text of the opinion can be found at: https://law.justia.com/cases/michigan/court-of-appeals-unpublished/2021/348765.html
A separate, concurring opinion urging the Supreme Court to reconsider its decisions can be found at: https://law.justia.com/cases/michigan/court-of-appeals-unpublished/2021/348765-0.html
