In Garza v. Exel Logistics, Inc., 161 S.W.3d 473 (Tex. 2005), Interim Services Pacific LLC, a temporary employment agency, employed Garza as a laborer and assigned him to perform general labor at Exel Logistics, Inc., one of Interim's clients. Id. at 474.
Garza sued Interim and Exel after sustaining an injury on the job, and Exel moved for summary judgment based on the exclusive remedy provision of the TWCA. Id.
In response, Garza argued that there was insufficient proof that Exel was covered by workers' compensation insurance. Id.
The court of appeals affirmed the trial court's summary judgment in favor of Exel. Id.
Garza also argued that Exel was not his employer, but the Texas Supreme Court rejected that argument. 161 S.W.3d at 475-77.
The Garza court noted that Exel had not come forward with a workers' compensation policy that it had obtained for itself. Id. at 477-78.
Instead, Excel contended that, under its contract with Interim, because the "markup" it paid to Interim was to be used to purchase workers' compensation insurance and that Interim had, in fact, purchased insurance, Exel was covered. Id. at 478.
The Garza court held that the TWCA does not permit a temporary agency to obtain coverage for a client simply by obtaining coverage for itself; instead, there must be explicit coverage for the client. Id.
In Garza, there was no evidence that an insurance company had contracted to secure Exel's liability and obligations, as distinguished from Interim's. Id.
Moreover, nothing in the contract between Interim and Exel indicated that Interim was required to obtain a workers' compensation policy that named both parties as insureds, or that Interim was required to obtain a separate policy for Exel. Id. at 480.
In any event, even if Interim had been contractually obligated to obtain workers' compensation insurance that named Exel as an insured, or it gratuitously chose to do so, no such policy had been identified or made part of the record. Id. at 481.
The Texas Supreme Court held that under the TWCA, a temporary employment agency cannot obtain worker's compensation insurance for a client company simply by obtaining coverage for itself.
The court held that "two employers cannot agree that one workers' compensation policy will name only one employer but cover both."
The Garza court held that because there was no evidence of explicit insurance coverage for Exel (the client company) in the record, Exel had failed to establish that it was "covered by workers' compensation insurance coverage" for a "work-related injury sustained by the employee," which is a prerequisite to the application of the exclusive remedy provision of the TWCA.
The Court stated that we are to determine whether the worker is an employee of the client company as well as the temporary-employee provider, by applying "traditional indicia, such as the exercise of actual control over the details of the work that gave rise to the injury."
In Garza, undisputed evidence established that when Mr. Garza was injured, he was working on the client's premises, in the furtherance of the client's day-to-day business, and under the specific direction of the client in terms of the details of his work. Id.
The court concluded that, for workers' compensation purposes, Mr. Garza was an employee of the client when he was injured. Id.