Nothing can quite turn a straightforward-looking case into a mess like a confusing mix of general and special employers all on a single work site.

John P. Kamin

Fortunately, taking a strong investigative approach at the outset of a claim can lead to a simpler settlement or trial later on in the case, and save everyone some headaches.

First of all, one must identify all of the potential employers at the work site and lump them into two basic categories: general or special.

Your general employers are going to be the ones that hired the applicant, paid the applicant and had the right to fire the applicant. While this sounds simple, it can get complex quickly. For instance, what if the hiring party was a staffing agency that used a professional employer organization for both human resources and workers’ compensation purposes? Well, in that case, you’d have two co-employers on the general side — the staffing agency and the PEO.

Now let’s look at the special employers. What do staffing agencies do? They send their temps to work at other companies’ work sites. Those “other companies” are going to be your special employers. They fall into the “special employer” category.

Why, you might ask, are we dividing these two into general and special employers at the outset? Because according to Insurance Code 11663, general employers that have workers’ compensation insurance are liable for the claim unless the special employer had the applicant on its payroll.

Most applicants’ attorneys will immediately drop the special employers from the case once they’ve found coverage on the general side.

What about when it's not so simple?

Sometimes our clients find themselves on the “special employer” side and notice that something doesn’t smell right on the general side. Well, then it’s time to look for coverage on the general side. Often, there are a number of defenses or other identifiable factors you can take into account that can help defend against the claim.

Here is a checklist of things to take into account when you find yourself in that situation:

• See what you can find out about the staffing agency just by talking to your insured. Often, that can be a vital source of information.
• Whenever possible, try to get any LC 3602(d) employee leasing agreements as early as possible in the case. If you have to, subpoena them.
• Do Workers' Compensation Insurance Rating Bureau searches early and often. If it’s simple and recent, use this link. If it’s a complex matter or you need a search with multiple locations and dates, just order it up the old-fashioned way. The WCIRB is still pretty fast at responding these days.
• Subpoena applicant’s medical providers and see what information they have about who the employer is. Sometimes, there’s useful information in those; other times, they can often serve as a repeater of erroneous information.
• Subpoena other employers’ files to see what employment/personnel documents and contractual agreements they may have.
• If someone is ignoring your subpoena, consider taking the deposition of the most knowledgeable person. Deposition of an employer’s principal can be a valuable source of information.
• Take the applicant’s deposition and ask him in advance to bring his pay stubs and any other employment documents. Listen to him. Ask follow-up questions. Sometimes, an applicant’s testimony can shed light on a confusing situation. As noted above, ask who paid him, who hired him, who fired him and who had the right to control his work.
• Pay attention to the date(s) of injury. During the applicant’s deposition, ask what she thinks her date of injury is. Sometimes, parties try to push dates of injury that are questionable at best, in an attempt to pin liability on a specific party. Knowing all of the facts about the dates of injury at play can give you a strategic advantage against that tactic.
• Google potential employers that may be hiding. Do exhaustive searches in identifying principals, work sites, etc. Check the Secretary of State’s business search for location information and principals, and then cross-reference that with other databases.
• If an administrator has a batch of five or more claims with the same set of general facts, consider handling them in bunches. Doing a conference call once a month can be a more efficient way of streamlining discovery in cases with common facts.
• If one of the parties to the case may have a criminal background, consider using a private investigator with a strong criminal database to look into it.
• When filling out any pleadings, always take care to note that employment and coverage are in dispute. You can write down what you know, but just clearly note that it is in dispute.
• Lean toward joining any potentially liable co-defendants (employers and carriers) sooner than later. It makes the procedural aspect of the case simpler, should the case go to trial, as a judge should not proceed to trial unless all the necessary parties are there.
• If the case is a mess, consider joining forces with your co-defendants and offering a discounted settlement early. Alternatively, if your co-defendants are hostile, consider settling around them. Consider the following question: Would you rather settle for a slightly uncomfortable amount in 2022 with a few co-defendants, or still have a disputed case pending in 2027 with $100,000 in lien claims? The answer to that question may be “settle in 2022,” but on the other hand, if there is a batch of claims, sometimes the “settle early” approach becomes cost-prohibitive.

In conclusion, running down this checklist will help shed light on the many gray areas of cases and lead to more viable defenses. Will it solve all of your problems in every single case? No, probably not. Could it solve all of your problems in some cases? Absolutely.

And that’s why it’s worthwhile to take a proactive approach to investigating these types of claims.

John P. Kamin is a workers’ compensation defense attorney and partner at Bradford & Barthel’s Woodland Hills location. He is WorkCompCentral's former legal editor. This entry from Bradford & Barthel's blog appears with permission.