Tort Reform Act Limits Liability for Employee Leasing
 
March 1, 2000
 
Edward "Eddie" Diaz- Miami

An increasing number of companies are "leasing" employees from professional employment organizations. Employee leasing occurs when a leasing company assigns its "employees" to a client and allocates the direction of and control over the leased employee's performance between the leasing company and the client, or in some instances, completely to the client. Employee leasing results in the establishment of a joint-employer relationship between the leasing company and the client. This joint-employer relationship gives rise to issues of liability should a party to the relationship, or a shared employee, engage in wrongful conduct. For example, who is responsible for the wrongful act of a leased employee?

Recently, the Florida Legislature addressed this issue. In the Tort Reform Act of 1999, the Florida Legislature limited the liability for parties to a joint-employment arrangement. The statute provides that an employer in a joint-employment relationship is not liable for the wrongful actions of another employer in that relationship or of a leased employee under that relationship if the following conditions are satisfied:

• the party seeking to avoid liability did not authorize or direct the wrongful act
•  the party seeking to avoid liability did not have actual knowledge of the wrongful act and fail to take appropriate action
• the party seeking to avoid liability did not exercise control over the day-to-day job duties of the leased employee or of the employee's job site
• the written contract forming the joint-employment relationship expressly absolves the party seeking to avoid liability of control over the day-to-day job duties of the leased employee and of actual control over that employee's job site
• the written contract forming the joint-employer relationship requires that any complaints, allegations or incidents of wrongful conduct be reported to the party seeking to avoid liability, and that party did not fail to take appropriate action as a result of receiving such a report related to a leased employee who has engaged in wrongful conduct

In addition, the new statute specifically provides that the fact that an employee at issue is a "leased" employee does not raise a presumption that the party seeking to avoid liability had actual control over the day-to-day job duties of that employee or over the employee's job site. Rather, courts must analyze the actual allocation of responsibilities between the joint employers.

With the establishment of the new employee leasing statute, it is imperative upon parties who enter into joint-employment relationships to specifically delineate the duties and responsibilities each joint employer will have with regard to the leased employee. Such foresight will avoid confusion over who is liable should a leased employee engage in wrongful conduct. However, it remains to be seen how courts will interpret this new statute and how the new statute will impact the relationship between joint employers and their leased employees.

For more information please call Edward Diaz at 1-888-688-8500.