Aug 22, 2016

We are pleased to report that the WCAB recently designated one of our cases as a “Noteworthy Panel Decision.” The case is Jesus Felix Serrano, Applicant v. Exact Staff, Tower Insurance Company, Administered by York RSG, and HR Comp, LLC through Farmington Casualty Company (Travelers Insurance), 2016 Cal. Wrk Comp P.D. Lexis 221.

Ingber & Weinberg LLP, by Corey A. Ingber, Esq., and assisted by Jeffery A. Levenson, Esq., representing Exact Staff and Tower Insurance, successfully argued concurrent employment and insurance coverage on the basis of joint and several liability.

In this case, the applicant, a warehouse worker, alleged an industrial injury when he crashed a forklift while working for a special employer. The general employer, Exact Staff, entered into a written employee leasing agreement with HR Comp, who agreed to pay payroll taxes and provide workers’ compensation insurance, while Exact Staff agreed to provide net payroll directly to the applicant.

HR Comp purchased a workers’ compensation policy through Farmington Casualty Company (Travelers), but an issue arose as to disclosure by HR to Travelers of the number of HR employees, as well as their job classification. Travelers issued its policy with erroneous information and allegedly did not conduct a premium audit. They thereafter denied coverage for the applicant’s injury, contending that their workers’ compensation policy only covered the one clerical employee and not any warehouse workers, and they had not collected sufficient premium.

Our position that Travelers provided coverage by contract was upheld and affirmed at Mandatory Arbitration and by the WCAB. The misclassifications or premium adjustments were deemed Travelers’ responsibility and did not absolve it from being legally responsible for covering applicant’s injuries. Their remedy was to pursue the uncollected premium or seek policy recession in another forum (Superior Court). The arbitrator found that the contractual agreement between Exact Staff and HR Comp did not fit the traditional general-special employment relationship, it constituted a hybrid with concurrent payroll duties that conferred the same legal responsibilities. Travelers had no basis to deny coverage as a matter of public policy.

Utilizing Labor Code §3602(d)(1), the Arbitrator found that since each entity contractually shared payroll duties for the purpose of workers’ compensation coverage, Exact Staffing and HR Comp were concurrent employers and both provided coverage to the applicant as of the date of injury. As is typically the rule of thumb, follow the payroll! Here payroll was equally shared pursuant to the contract.

On Reconsideration by Travelers, the WCAB upheld and incorporated the Arbitrator’s Report.

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