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Halfon v. Guarantee Records Storage Centers, Inc.

A-2261-02T2 (N.J. Super. App. Div. 2004) (Unpublished)

WORKERS COMPENSATION; SPECIAL EMPLOYERS—Where one employer generally controls the work of employees of another company and has the right to hire and fire them, those employees, for workers compensation purposes, are employees of both companies and the liability of both companies for injuries to those employees is limited to workers compensation benefits.

Employees were injured in an electrical fire at their employer’s premises. On a Sunday, their employer called them to go to the premises and check on an electrical problem. Although the employees assertedly did not feel qualified to make electrical repairs, they believed that the employer would not employ them in the future unless they tried to restore power. They were then injured from the combination of an electrical explosion and several inches of water on the floor of the premises. The employees then sued their employer for negligently maintaining the premises. Specifically, they claimed that the employer had failed to provide them with safe working conditions. These employees were actually on the employee roster of a second company that had provided the employer with several employees. The employees argued that they were self-employed, independent contractors who performed construction, repair and maintenance for the employer.

The lower court determined that the employees were in fact special employees of the employer, and not independent contractors. Thus, the lower court held that the employees’ negligence claims were barred by the Workers’ Compensation Act. Specifically, it noted that the employees were assigned to the employer for at least a year prior to the explosion. They reported to the employer every day. Their manager gave them daily orders and he controlled their daily work, so much so that he could call them in on Sunday to fix an electrical problem. Furthermore, evidence showed that the employer paid the employees directly, and not the company that had provided them to the employer. Finally, the lower court observed that the power to fire, which was held by the employer, indicated an employer-employee relationship, as opposed to an independent contractor relationship. Further, as admitted by the employees, due to their fear of being fired, they attempted to fix the electrical problem.

As a result, the lower court found that although the employees worked for the company that had provided them to the employer, they performed services for the employer who was integrally involved in every aspect of the work done by the employee, and who completely controlled the work that was done. And, whether the employees were paid by the employer in cash or whether they were paid by the company who provided them to the employer, through checks that were sent by the employer, they were paid for their work for the employer. Furthermore, the employer had the power to hire, fire, and at least send them back to the other company.

The Appellate Division affirmed the decision based on the lower court’s observations. It agreed that the employees were special employees and not independent contractors.

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