News

August 01, 2008

In the summer of 2003, Surestaff, a day labor service, and Open Kitchens, a food service company, which provided meals to various identities in the Chicago Public School and the Chicago Housing Authority, entered into an agreement where Open Kitchens would provide additional workers for the summer lunch program.  On July 28, 2003, a temporary worker suffered a fatal injury at the Open Kitchens’ facility in Chicago.  As the result of the incident, Surestaff paid workers’ compensation benefits in the amount of $241,000 to the decedent’s beneficiaries.  Surestaff subsequently sought reimbursement.

At the trial, Ricardo Fiore, the owner of Open Kitchens, testified that prior to the fatal accident, he met with the owner of Surestaff, Raymond Morelli, and one of Surestaff’s sales associates, Frank Amanti, to discuss the terms of the agreement.  Fiore testified that various details were discussed and they agreed that Surestaff would pay all of the workers’ compensation benefits if one of the temporary workers sustained an injury.

Raymond Morelli testified to the contrary.  Morelli testified that he never discussed reimbursements of any benefits.  Morelli admitted that he did not know whether Amanti ever discussed any terms of the ultimate agreement between the parties.  Although Open Kitchens had requested Surestaff to produce Amanti to testify at the trial, Amanti, for some unstated reason, did not testify.

Based on the testimony of Morelli, the jury returned a verdict in favor of Surestaff in the sum of $241,000, plus attorney’s fees in the sum of $69,000.

Section 1(a)(4) of the Workers’ Compensation Act provides:

Where an employer operating under and subject to the provisions of the Act loans an employee to another such employer and such loaned employee sustains a compensable accidental injury in the employment of such borrowing employer and where such borrowing employer does not provide or pay the benefits or payments due such injured employee, such loaning employer is liable to provide or pay all benefits or payments due such [injured] employee under this Act and as to such employee the liability of such loaning and borrowing employer is joint and several, provided that such loaning employer is in the absence of agreement to the contrary entitled to receive from such borrowing employer full reimbursement for all sums paid or incurred pursuant to this paragraph together with reasonable attorneys’ fees and expenses***

A major issue between the parties concerned the obligation to prove the “agreement to the contrary.”  The court then reviewed existing law and stated that “the loaning employer’s right to reimbursement, however, may be waived by an agreement between the respective employers.”  In the instant case, the court found that Open Kitchens must prove the existence of an agreement by Surestaff to waive its right to reimbursement.  The court added:

The case law does not specify which party carries the burden of proving the existence of an agreement whereby the loaning employer waives its right to reimbursement.  However, we find no prejudice in placing that burden on the party claiming the existence of such an agreement.

Editor’s Note:

Curiously enough, your editor reported on a somewhat similar issue involving the same day labor service, Surestaff, Inc. where a borrowing employer alleged that Surestaff had orally agreed to be responsible for the workers’ compensation.  In that case, the jury also found against Surestaff concluding that the parties had agreed Surestaff would provide workers’ compensation benefits for its loaned employees injured at the job site of the borrowing employer.  The court found that in that case there was an oral agreement whereby Surestaff agreed to pay the workers’ compensation for its loaned employees.

Because of its failure to be specific, Surestaff has now been held responsible for the compensation payments in the first case because there had been an oral agreement whereby Surestaff agreed to pay.  The borrowing employer’s testimony as to the existence of an oral agreement was sufficient.  In the most recent case, the court placed the burden upon Surestaff to prove there was “an agreement to the contrary” and Surestaff had failed to establish such proof.  Surestaff had been on both sides of the same issue of “the agreement to the contrary” and had lost both times.

Surestaff v. Open Kitchens No. 1-06-3225, decided July 25, 2008

Frank J. Wiedner, Editor Wiedner & McAuliffe, Ltd One North Franklin, #1900 Chicago, IL 60606 (312) 855-1105