Court Opinion

ID: 9660393
Source: CourtListenerOpinion
Date Created: 2023-08-23 22:12:22.543347+00
Date Added: 2024-06-11T18:14:19.027147
License: Public Domain

Kelly, J.
I respectfully dissent from the majority’s conclusion that defendant was plaintiffs’ employer for purposes of the exclusive remedy provision of the Worker’s Disability Compensation Act. The contract between defendant and Construction Labor Services states clearly and unequivocally that defendant was not plaintiffs’ employer. Therefore, defendant is liable in tort to plaintiffs if shown to be negligent. I would remand this matter to the trial court for further proceedings.
The majority sets forth two separate rationales to support its conclusion that defendant was plaintiffs’ *48employer. First, as a labor broker relationship existed between defendant and CLS, defendant became one of plaintiffs’ employers. Second, application of the economic realities test reveals that defendant was plaintiffs’ employer.
i
With respect to the first holding, I do not agree with the majority’s conclusion that coemployer status can be found solely because two parties enter into a labor broker relationship. To support its holding, the majority relies on this Court’s decision in Farrell v Dearborn Mfg Co,1 and the Court of Appeals decision in Renfroe v Higgins Rack Coating & Mfg Co, Inc.2 However, in neither case did the courts find that employment status could be determined solely from the fact that a labor broker relationship existed.
In Renfroe, Employers Temporary Service (ets) was in the business of supplying temporary labor to businesses, including to the defendant, Higgins. The plaintiff was a worker supplied by ets to Higgins. He was injured in a punch press accident. After receiving worker’s compensation benefits from ets, he sued Higgins as a third-party tortfeasor.
The Court of Appeals found that ets was a labor broker. However, the labor broker relationship was not the basis for the finding that Higgins was the plaintiff’s employer. Instead, the Court applied the economic realities test. It concluded that ets maintained control of its workers by reassigning and paying them daily at its offices. Ets handled all the *49paperwork incident to employment. Higgins maintained control of the workers by directing them to perform various tasks in its factoiy. It was responsible for paying the workers even though it did so indirectly, through ets. The Court concluded that both ets and Higgins were plaintiffs employers, each for different purposes.
Similarly, in Farrell, in three out of the four cases consolidated for appeal, a labor broker supplied personnel to various businesses on a temporary basis. This Court did not rely solely on the labor broker relationship to reach its decision. Instead, it applied the economic reality test to determine whether the defendant was the plaintiffs’ employer for purposes of the worker’s compensation laws.3 I do not dispute that application of the economic realities test to the typical labor broker situation generates a finding that the labor broker and its customer are both employers. However, I disagree with the majority’s conclusion that, in some circumstances, dual employment can be found solely because a labor broker situation exists. In the typical labor broker case, the economic realities test should be applied.
*50n
Even were the majority correct that sometimes the labor broker relationship alone is dispositive, the factual scenario presented in this case is an excellent example of when it is not. The contract that defendant and CLS signed makes theirs an atypical labor broker relationship. The language renders it so clear and unambiguous that defendant is not plaintiffs’ employer, that it alone must control. There is no reason to go on to the economic realities test.
An underlying rationale of the worker’s compensation statutes is often cited by this Court. It is that the employer, by agreeing to assume responsibility for all injuries in the course of employment, protects itself from potentially excessive damage awards. Statutory compensation, limited in amount, is substituted for common law negligence liability. Farrell, supra at 274-275.
In Farrell, we discussed the labor broker situation. In a typical situation, the labor broker is in the business of supplying temporary labor to companies. A company needing labor assistance calls the labor broker and explains the skills that the temporary workers require and the number of workers needed. The labor broker then sends the necessary number of qualified workers to the company. In return, the company pays the labor broker an agreed-upon rate per hour. The labor broker then pays the workers and covers its costs. See Farrell, Renfroe, supra. Once the workers arrive at the business, its agent instructs them what to do and how to do it. If the workers do not perform up to expectations, the business can dismiss or discipline them. Farrell, supra.
*51In Farrell, we applied the economic realities test to the typical labor broker situation. We held that both the labor broker providing the personnel and the company using the temporary workers’ services are employers for purposes of the WDCA. Id. at 275-278.
Here, however, we do not have a typical labor broker situation. The contract that defendant and cls signed has a significant distinguishing feature. It explicitly sets forth the duties of Miller-Davis and cls. Throughout it, defendant is described as not being the temporary workers’ employer. The contract declares that for all purposes cls is the sole employer. It states in pertinent part:
2. Md hereby leases construction trades personnel from cls pursuant to the job description requests furnished to cls by MD from time to time. Such leased personnel shall be employees of cls for all purposes. Such leased personnel shall not be employees of md for any reason.
3. (a) For all leased construction trades personnel furnished to MD by cls, cls shall be responsible for all employment matters including, but not limited to, withholding of taxes; payment of all withheld taxes and any employment related taxes; providing workers’ compensation, disability, life and group health insurance; providing pension plan coverage, if applicable; and providing all other nonobligatory fringe benefits programs. With respect to these obligations on the part of cls, cls, at the request of md, shall submit evidence to md that such obligations have been met. Cls shall also have the sole responsibility for the payment of all wages to leased personnel furnished to MD.
(b) Cls shall be the employer, and as such, responsible for any and all obligations, including contract administration, with respect to any collective bargaining agreements covering leased construction trades personnel to which cls is bound.
*527. (a) Cls shall be sole responsibility [sic] for recruiting, hiring, training, evaluation, replacement, supervision, discipline, and discharge of individuals furnished to md by cls.
(b) Cls shall designate on-site supervisors (foremen) from among its employees to fill positions pursuant to job description requests furnished to cls by md. These on-site supervisors (foremen) shall direct operational and administrative matters relating to services provided by cls leased constructions trades personnel and shall be under the direct supervision of CLS. If CLS does not designate an on-site supervisor (foreman), cls employees leased to md shall be responsible and shall report to the cls official designated by cls.
(c) Procedures to be followed by cls employees regarding the time and performance of their duties as leased construction trades personnel to MD shall be determined by the on-site supervisor employed by cls, or in the absence of an on-site supervisor, the cls official designated by cls. Md shall not participate in or be responsible for employment related matters which are normally incident to cls’ employer/employee relationship with leased personnel. Md will make all directives deemed necessary for the efficient jobsite utilization of leased cls construction trades personnel through the assigned cls on-site supervisor (foreman), or the designated cls official. Md shall have no authority or power to modify the terms and conditions of any employment agreement between cls and its leased personnel, nor shall md have the right to recruit, hire, train, evaluate, replace, supervise, discipline or discharge individuals leased to md by cls. Md’s rights with respect to the leased personnel shall be limited to making routine directives to such leased personnel and notifying cls that specific leased personnel are unsatisfactory to md.
(d) Cls agrees to remove any person leased to md as leased construction trades personnel which md deems, at its sole discretion, as unsatisfactory, and to furnish a suitable replacement for such leased personnel within a reasonable period of time. The provisions of this subparagraph shall not be construed as granting to md any right to discharge or suspend leased personnel furnished to md by cls.
*53As the contract demonstrates, defendant did everything it could to establish that it was not plaintiffs’ employer. Cls had the exclusive right to hire, fire, and discipline the workers. It had the responsibility of controlling the workers at the job site. Defendant absolved itself of all the responsibilities of an employer. The contract expressly states that the temporary workers are employees of CLS and shall not be defendant’s employees “for any reason.”
The majority refuses to accept defendant’s characterization of itself in paragraph two of the agreement, stating that it is not dispositive of the status of the parties. It cites three cases for the proposition that the contract is not controlling: Fitzgerald v Mobil Oil Corp, 827 F Supp 1301 (ED Mich, 1993), Tolbert v U S Track Co, 179 Mich App 471; 446 NW2d 484 (1989), and White v Central Transport, Inc, 150 Mich App 128; 388 NW2d 274 (1986).
In Tolbert and White, the Court held that a contract’s characterization of the employment arrangement is not controlling. There, both contracts stated that the employees were independent contractors. Tolbert, supra at 476; White, supra at 129. In Fitzgerald, the contract specifically disclaimed the existence of an employer-employee relationship.
It is true that, normally, the parties’ characterization of the employment relationship alone should not control. However, where, as here, the contract so thoroughly disclaims an employer-employee relationship, a different situation is presented.
Defendant contracted in the manner it did to avoid an employer’s responsibilities, including the purchasing of worker’s compensation insurance. If plaintiffs had sought worker’s compensation benefits through *54defendant, it is evident that defendant would have used its contract with cls to demonstrate that it was not plaintiffs’ employer.
We agree with plaintiffs that defendant cannot be allowed to have its cake and eat it, too. The judicial system should not enable defendant to emerge as a nonemployer when plaintiffs seek worker’s compensation benefits, but as their employer when they sue for third-party negligence.
The majority concludes that the policies and purposes of the wdca axe best advanced by treating the contract as just one of many factors, not dispositive in and of itself. See ante, p 46, n 12. However, the purpose of the wdca is to “afford maximum benefit to injured parties.” Nichol v Billot, 406 Mich 284, 299; 279 NW2d 761 (1979). The employee in this case has already recovered worker’s compensation benefits from cls. Therefore, allowing defendant to successfully assert that it too is plaintiffs’ employer in contravention of its clear and unambiguous contract does nothing to further the act’s purpose.
Moreover, we recognized in Farrell the underlying rationale of the exclusive remedy provision of the WDCA.4 It is to shield the employer from tort liability when the employer agrees to assume automatic liability for all employee injuries. Farrell, supra at 274. Here, according to the unambiguous terms of the contract, defendant never agreed to assume worker’s compensation responsibility. Therefore, defendant *55should not be allowed to assert the exclusive remedy provision as an affirmative defense.5
CONCLUSION
I have difficulty imagining a clearer example than this of a case where neither the labor broker relationship nor the economic realities test should control employment status. Where the terms of a contract are clear and unambiguous, they should be enforced as written. Defendant entered into an agreement that, by its clear and unambiguous terms, denied that defendant was plaintiffs’ employer, specifically spelling out that cls was the sole employer. Under the circumstances, defendant should be bound by the terms of its contract. As it is not plaintiffs’ employer, defendant is liable in tort for any negligence to plaintiffs. I would remand these cases to the trial court for further proceedings.
Cavanagh and Boyle, JJ., concurred with Kelly, J.

 416 Mich 267; 330 NW2d 397 (1982).

 17 Mich App 259, 262; 169 NW2d 326 (1969).

 Likewise, other jurisdictions have discussed the relationship between labor brokers and worker’s compensation laws. Different tests such as the control test and the economic realities test have been used to determine employment status. My research reveals no case that has found immunity under the respective worker’s compensation laws solely because of the existence of a labor broker situation. See, e.g., McMaster v Amoco Foam Products Co, 735 F Supp 941 (D SD, 1990); Honey v United Parcel Service, 879 F Supp 615 (SD Miss, 1995); Wingate Taylor-Maid Transportation, Inc v Baker, 310 Ark 731; 840 SW2d 179 (1992); Pettaway v Mobile Paint Mfg Co, Inc, 467 So 2d 228 (Ala, 1985); Whitehead v Safway Steel Products, Inc, 304 Md 67; 497 A2d 803 (1985); Danek v Meldrum Mfg & Engineering Co, Inc, 312 Minn 404; 252 NW2d 255 (1977).

 MCL 418.131; MSA 17.231(131).

 As noted by the majority, other jurisdictions, in similar circumstances, have found the contract signed by the parties controlling. See Dugas v Pelican Construction Co, 481 F2d 773 (CA 5, 1973); Kirby v Union Carbide Corp, 373 F2d 590 (CA 4, 1967).