Oil Rig Worker Strikes $950,000 Award After Defeating ‘Borrowed Employee’ Defense

Frank Ferreri

Austin, TX (WorkersCompensation.com) – A Texas oil company’s inability to show that it controlled a worker’s day-to-day responsibilities, had the right to terminate the worker, or was responsible for paying the worker left the company unable to show that the worker was a “borrowed employee.”

As a result, the company was unable to convince the Texas Supreme Court that the Longshore and Harbor Workers’ Compensation Act’s exclusive remedy provisions prevented the worker from suing and ultimately upheld a $950,000 award in the worker’s favor.

The worker experienced the injury while working on an offshore oil rig. The worker was assigned to the rig by a contractor that provided maintenance and service for the company.

The injury occurred when the worker was performing a safety check on a malfunctioning regulator and a pressurized pipe broke loose, hitting the worker’s arm and knocking him to the ground. The impact caused the worker broken bones that required surgery.

‘Borrowed’ or Not?

The worker sued the company for negligence, but because he wasn’t employed by the company, the question become whether he was covered by the LHWCA.

At trial, the jury decided that the worker wasn’t a borrowed employee and awarded him damages, but the trial court determined that the jury shouldn’t have considered the question and granted judgment notwithstanding the verdict in the company’s favor.

The worker appealed. The appeals court reversed the trial court’s decision, holding that the worker was entitled to damages. As a result, the company appealed to the Texas Supreme Court.

The LHWCA provides workers’ compensation benefits for certain injuries experienced by covered workers — including borrowed employees — on navigable U.S. waters. When the law applies, it provides the exclusive remedy for an injured employee who seeks compensation from the employer.

In W&T Offshore Inc. v. Fredieu, No. 18-1134 (TX 06/05/20), the Texas Supreme Court held that the appeals court and the jury correctly determined that the worker wasn’t a “borrowed employee” for LHWCA purposes. The court noted that a precedent case established nine factors for determining whether someone is a “borrowed employee,” including who had control over the employee, whose work was being performed, and who had to pay the employee and that these factors weighed in the worker’s favor.

Control Over the Employee

Addressing the nine factors, the court found that evidence in the case didn’t establish that the worker was a borrowed employee. For example, the court noted that the contractor, not the company, had the ability to assign the worker, reassign him, or relocate him to different customers, and it was the contractor, not the company, that paid him. Additionally, the worker’s uniform and equipment were supplied by the contractor, not the company.

Although the company was required to purchase workers’ compensation insurance for the contractor’s employees, the court didn’t find that this established that the company controlled the worker.

“This is insufficient to demonstrate that [the company] had the level of ‘power to control and direct another person in the performance of his work’ necessary to convert [the worker] into its borrowed employee,” the court reasoned.

Thus, the Texas Supreme Court upheld the appeals court’s decision and found that the LHWCA’s “exclusive remedy” standards posed no obstacle to the worker’s tort claims.

The court based its damages award on lost earning capacity due to his injuries and agreed with the jury that $950,000 reflected the worker’s loss of capacity to earn due to his impairment.

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