State ex rel. Newman v. Indus. Comm. - Ohio Supreme Court Opinion - Ohio Supreme Court Decision

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THE STATE EX REL. NEWMAN ET AL., APPELLEES, V. INDUSTRIAL
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COMMISSION OF OHIO, APPELLANT.
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[Cite as State ex rel. Newman v. Indus. Comm. (1997), ___ Ohio St.3d ___.]
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Workers' compensation -- Customer companies of temporary service
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agencies are "employers" subject to claims for violations of
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specific safety requirements.
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Customer companies of temporary service agencies are "employers" subject to
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claims for violations of specific safety requirements.
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(No. 94-1675 -- Submitted September 24, 1996 -- Decided January 15, 1997.)
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APPEAL from the Court of Appeals for Franklin County, No. 93AP-486.
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Relator-appellees, Jeffrey Newman, Hillard E. Foster, Jr., and Kelly
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Henderson, were employed by temporary employment services. They were all
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assigned to work for a customer of their employment service where, in the
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course of their employment, they suffered work-related injuries. Appellees'
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workers' compensation claims for their injuries were all allowed.
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Appellees filed applications for violation of specific safety requirements
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("VSSR"), stating on their applications that they were injured while employed
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by their temporary services: (Newman) Manpower, Inc., (Foster) Victor

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Temporary, Inc., and (Henderson) Kelly Services, Inc. Appellees also named
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as their employers the companies where their injuries occurred: (Newman)
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Wigand Corporation, (Foster) Invacare, Inc., and (Henderson) Forest City
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Foam Products. Appellees' VSSR claims against the temporary employment
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services were all denied on the basis that the services had no control over the
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conditions alleged to be in violation of the commission's specific safety
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requirements. The Industrial Commission refused to take action or make
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findings with respect to the claims against the customer companies. Appellees'
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motions for rehearing were all denied.
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Appellees filed a joint writ of mandamus seeking to compel the
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appellant, Industrial Commission, to take jurisdiction over their applications as
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to the customer companies. The writ also sought an order requiring the
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appellant to investigate, hear and determine appellees' VSSR claims against the
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customer companies.
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The court of appeals adopted its referee's report and granted the writ of
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mandamus.
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This matter is now before this court upon an appeal as of right.

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1
__________
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Weiner & Suit Co., L.P.A., and Walter Kaufmann, for appellees.
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Betty
D.
Montgomery,
Attorney General, and Jetta Mencer, Assistant
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Attorney General, for appellant.
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Stewart Jaffy & Associates Co., L.P.A., Stewart R. Jaffy and Marc J.
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Jaffy, urging affirmance for amicus curiae, Ohio Academy of Trial Lawyers.
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__________
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FRANCIS E. SWEENEY, SR., J. This court must decide whether customer
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companies of temporary service agencies are "employers" subject to claims for
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violations of specific safety requirements. For the following reasons, we find
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that they are employers for purposes of VSSR claims. Accordingly, we affirm
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the court of appeals' judgment which issued a writ of mandamus ordering the
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Industrial Commission to consider appellees' VSSR claims.
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Article II, Section 35 of the Ohio Constitution provides for the granting
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of an additional award over and above the standard workers' compensation
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benefits where the claimant's injury or death is found to have been caused by
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the employer's violation of a specific safety requirement of the commission.

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The workers' compensation premium does not cover the additional award. The
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VSSR is an award paid by the employer directly. Thus, a VSSR award is not a
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modification of a previous award, but is a new, separate, and distinct award.
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State ex rel. Curry v. Indus. Comm. (1979), 58 Ohio St.2d 268, 269, 12 O.O.3d
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271, 272, 389 N.E.2d 1126, 1128.
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An employee seeking to recover on a VSSR claim must show more than
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the violation and proximate causation. The employee must also show that his
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or her employer is the party that violated the specific safety requirement. State
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ex rel. Lyburn Constr. Co. v. Indus. Comm. (1985), 18 Ohio St.3d 277, 279, 18
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OBR 329, 331, 480 N.E.2d 1109, 1111.
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Appellees
cite
Daniels v. MacGregor Co. (1965), 2 Ohio St.2d 89, 31
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O.O.2d 141, 206 N.E.2d 554, in support for their argument that the customer
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companies may be deemed to be their employers for purposes of VSSR claims.
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In Daniels, an employee of a temporary agency was injured while working for
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a customer of that agency. The employee received workers' compensation
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benefits through a claim filed with the temporary agency. The employee then
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attempted to bring a tort action against the customer for damages. However,

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this court held that the customer, who had complied with the workers'
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compensation provisions, could not be sued for damages. In so holding, this
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court stated:
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"Where an employer employs an employee with the understanding that
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the employee is to be paid only by the employer and at a certain hourly rate to
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work for a customer of the employer and where it is understood that that
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customer is to have the right to control the manner or means of performing the
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work, such employee in doing that work is an employee of the customer within
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the meaning of the Workmen's Compensation Act." (Emphasis added.) Id. at
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syllabus; Campbell v. Cent. Terminal Warehouse (1978), 56 Ohio St.2d 173, 10
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O.O.3d 342, 383 N.E.2d 135; see, also, State ex rel. Zito v. Indus. Comm.
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(1980), 64 Ohio St.2d 53, 18 O.O.3d 257, 413 N.E.2d 787 (a general contractor
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who had the "authority to alter or correct" any deficiencies on the construction
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site could be liable for a VSSR claim brought by employee injured by
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scaffolding erected by subcontractor); State ex rel. Lyburn, supra.
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Therefore, the court in Daniels found that the entity which controls the
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manner or means of performing the work is also the "employer" of the

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employee regardless of whether that entity paid the premium into the State
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Insurance Fund from which the compensation is paid. While Daniels dealt
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with the Workers' Compensation Act's exclusivity provision, R.C. 4123.74, we
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agree with appellees that its rationale should be expanded to allow coverage
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under the Act for VSSR claims against the customer-employer. To hold
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otherwise would be grossly unfair, as it would allow employers who fail to
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comply with the safety requirements immunity from VSSR claims as well as
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immunity from common-law damages. The commission's policy would permit
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customers of temporary agencies to avoid the requirements of the VSSR laws
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by making a contract with a temporary agency which lets the agency "employ"
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the workers on the employer's worksite. The employer who hires through a
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temporary agency would have no incentive to provide a safe workplace.
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Moreover, to adopt the Industrial Commission's position would leave
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temporary employees with no remedy to address injuries sustained as a result of
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an alleged violation of a specific safety requirement. Depriving these
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temporary employees of the additional award provisions of Section 35, Article
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II would defeat the General Assembly's purpose in enacting VSSR laws. See

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1
State ex rel. Lyburn, supra, at 280-281, 18 OBR at 332, 480 N.E.2d at 1112
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(Holmes, J., dissenting).
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Based on the above, we conclude that a worker injured while working
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for a customer of a temporary service agency can pursue a VSSR claim against
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that customer company. Accordingly, we affirm the court of appeals' issuance
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of a writ of mandamus ordering the Industrial Commission to consider
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appellees' claims.
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Judgment affirmed.
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MOYER, C.J., DOUGLAS, RESNICK, PFEIFER, COOK and STRATTON, JJ.,
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concur.
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STRATTON, J., concurs separately.
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STRATTON, J., concurring. I concur with the majority opinion. The
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Industrial Commission contends that to hold the customer companies liable for
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a VSSR claim is to deprive them of due process because they do not participate
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in the underlying workers' compensation claim, nor do they have an
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opportunity to challenge the claim. In other words, the customer companies
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would be able to "have their cake and eat it too."

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Customer companies contract with a temporary employment service to
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obtain workers; at the same time, these companies contract away their
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obligations and responsibilities under the workers' compensation laws. The
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temporary agency becomes legally responsible for paying workers'
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compensation premiums for these workers and for processing claims. Thus,
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when the worker is injured on the job, the temporary agency handles the claim
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on behalf of the customer company per the contract.
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The customer company has assigned its rights and responsibilities with
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respect to workers' compensation to a third party, the temporary agency. The
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temporary agency acts as its agent in all aspects of workers' compensation
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coverage. When an accident or injury occurs, the customer company most
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likely participates to some extent in making a report or conducting an
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investigation. The temporary agency then represents the interests of the
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customer company in the processing of the workers' compensation claim.
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There is no reason to suspect that the temporary agency would not vigorously
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contest a claim it felt was not justified.

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1

Damages awarded as a result of a VSSR claim are punitive in nature.
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They are awarded as a result of wrongdoing to provide a strong incentive for
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the company to maintain a safe workplace. Ohio has long recognized a policy
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against contracting away one's responsibility to cover damages caused by
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intentional torts. Gearing v. Nationwide Ins. Co. (1996), 76 Ohio St.3d 34, 38,
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665 N.E.2d 1115, 1118; State Farm Mut. Ins. Co. v. Blevins (1990), 49 Ohio
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St.3d 165, 551 N.E.2d 955. The temporary agency cannot be held liable
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because it did not control the workplace; the customer companies did exercise
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control over the workplace and should not be able to avoid responsibility for a
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valid VSSR claim by contracting away all workers' compensation liability. I
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do not believe the legislature intended to permit a company which is liable for a
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specific safety requirement in the workplace to contract away its liability to a
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temporary agency and thereby escape all responsibility for a violation of a
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specific safety requirement, leaving the worker without recourse. Therefore, I
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strongly agree with the majority opinion.
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