Tort Reform Act Limits Liability for Employee Leasing

Author:Mr Edward Diaz
Profession:Holland & Knight LLP
 
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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...

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