McDaniel v. Troy Design Services Co

In McDaniel v. Troy Design Services Co., 186 Ariz. 552, 925 P.2d 693 (App. 1996), the Court addressed whether a general employer, Troy Design, could be held liable for an accident that occurred while the Troy Design employee was in service to General Motors Corporation ("GM"). 186 Ariz. at 553-54, 925 P.2d at 694-95. The Court noted that although Troy Design could hire and fire its employees, require its employees to comply with GM work rules, and sign time records, GM had "the exclusive right to control the lent employee's work activities at the GM proving ground" because GM supervised all of the employees' daily work activities, including "where, when, and how to work." Id. at 555, 925 P.2d at 696. The Court concluded therefore that Troy Design could not be held vicariously liable. Id. at 556-57, 925 P.2d at 697-98. In McDaniel, the plaintiff argued that the general employer had concurrent control with the special employer of the employee's performance. 186 Ariz. at 555, 925 P.2d at 696. The plaintiff pointed to the contract between the general and special employer, which provided that the special employer "was responsible: (1) to hire and fire employees; (2) to require employee compliance with the special employer's work rules; (3) to sign time records, and; (4) to comply with equal employment opportunity laws." Id. The Court recognized the contract as giving the general employer "some degree of control over its employees" but noted that such was insufficient for establishing vicarious liability because the evidence was undisputed that the special employer "had the exclusive right to control the employee's work activities." Id. This evidence was not derived from the contract but rather from testimony that "all the supervision . . . was done by the special employer's employees" and testimony that the special employer was "in charge of all of the employees' working conditions at the proving grounds, including where, when, and how to work." Id. In McDaniel, the Court noted that both employers could be held vicariously liable if both had a "joint right to control the performance" of the employee's work at the special employer's site. 186 Ariz. at 556, 925 P.2d at 697. The Court reiterated that "control or right to control determines liability" and that there will be no finding of liability if "command has been surrendered." Id. In McDaniel v. Troy Design Services Co., the court's majority held that the general employer's "control over the administrative aspects of the lent employee's employment is insufficient to subject the general employer to vicarious liability for the lent employee's negligence in the performance of his work" when the special employer "exclusively controlled the particular service the lent employee performed at the job site." 186 Ariz. at 556, 925 P.2d at 697. In that case, the lent employee was employed by a labor broker and had been assigned to work at a special employer's job site pursuant to the labor broker's contract with the special employer. Id. at 554, 925 P.2d at 695. The labor broker was responsible for hiring and firing employees, paying their wages and workers' compensation insurance, requiring their compliance with the special employer's work rules, signing time records, and complying with equal employment opportunity laws. Id. at 555-56, 925 P.2d at 696-97. The labor broker also could reassign employees to other employers. Id. at 555, 925 P.2d at 696. In addition, its regional manager visited the special employer's job site twice a week to resolve employee problems. Id. The court concluded that the lent employee doctrine applied and that summary judgment should have been entered in favor of the general employer, the labor broker.