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Borrowed Employee’s Injury Claim Was Barred by the Workers Compensation Act Even Though A Staffing Agency’s Insurer Paid His Compensation Benefits

The Illinois Appellate Court recently held that a client of a staffing agency was protected by the exclusive-remedy provision of the Workers’ Compensation Act for injuries to a loaned employee even if the client did not reimburse the agency for workers’ compensation premiums or benefits. In Holten v. Syncreon North America, Inc., 2019 IL App (2d) 180537, the Court noted that Section 305/1(a)(4) of the Workers’ Compensation Act (“the Act”) extends the exclusive-remedy protection to borrowing and loaning employers. The provision includes staffing agencies as loaning employers while contemplating that they, rather than the borrowing employer, may be the one to pay the workers’ compensation premiums or benefits. Section 1(a)(4) of the Act further provides that the liability of the borrowing and loaning employers is joint and several, and “in the absence of agreement to the contrary,” the loaning employer is entitled to reimbursement from the borrowing employer for sums paid under the Act. The Court noted that the right to reimbursement may be waived by agreement, and where the staffing contract there required the agency to provide worker’s compensation coverage for the employees it furnished, this was “an agreement to the contrary” which did not eliminate the client’s right to the Act’s exclusive-remedy protection.

Click here for a more detailed summary of the Court’s decision.

Should you have any questions regarding these issues, or require assistance with an insurance coverage issue, please contact Mollie E. Werwas at [email protected] or 312-506-4474 or Jeanne M. Zeiger at [email protected] or 312-506-4458.