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Galvao v. G. R. Robert Construction Company, Inc.

A-5561-01T3 (N.J. Super. App. Div. 2003) (Unpublished)

WORKERS COMPENSATION; SPECIAL EMPLOYERS—In a “double breasting” arrangement, if a worker is under the total control of the contractor, and there is no other basis for liability, then the related companies are not liable for the worker’s injuries on the job, even under the theory of respondeat superior.

One man owned three related companies. One company was a contractor. The other two companies engaged solely in providing workers to the contractor from the steel and labor unions. The contractor reimbursed those two companies for their payroll expenses. Neither of the two companies provided workers to any other entity, and neither of the two companies “had the authority or discretion to refuse to supply workers to the construction company.” The construction company had exclusive control over its job site, “supervision of workers, and direction of the work being performed.” In addition, the construction company “managed and directed the employees on the payroll of “both of the other companies.” The workers were hired and directed by the construction company and the two other companies’ “employees were assigned to their jobs by [the construction company], and their performance was overseen by [the construction company].”

An employee of one of the two companies was injured and collected workers’ compensation benefits from the construction company. He then sought to recover from one of the two other companies, which was his actual employer, as well as from the other company on the grounds that employees of the other company had created a dangerous situation at a particular job site. The lower court “found forty-one specific facts upon which [it] based [its] decision that the doctrine of respondeat superior could not be applied to [the company whose employees had created the alleged dangerous condition].” The Appellate Division affirmed. It recognized that the corporate affiliation described was known as “double breasting,” which “refers to the creation of two distinct operating entities, one governed by a collective bargaining agreement and one totally unencumbered by such an agreement. The single most universal characteristic of any double-breasted operation is the common ownership of both the unionized and nonunionized companies by a central business entity.” Here, it was clear that the injured employee was a “special employee” of the contractor. In a similar, earlier case involving other parties, the New Jersey Supreme Court held against an employer in a similar situation, but “took no position as to which view of respondeat superior liability, the control view or the furthering of a general employer’s business interest view, should [have been] applied in that case.” Consequently, neither the lower court nor the Appellate Division felt bound to hold the company employed the workers who had created the hazardous condition liable under the theory under respondeat superior. The employees were under the total control of the construction company and only the construction company could be held liable for the alleged neligence.

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