In February 2019, the Fifth Circuit issued a per curiam opinion affirming a district court’s granting of summary judgment to an offshore platform owner for injuries sustained by the employee of one of its contractors. The case is Mosley v. Wood Grp. PSN, Inc., C.A. No. 18-30523, 2019 US App. LEXIS 3803 (5th Cir. Feb. 7, 2019). 

While the decision did not create new law within the Fifth Circuit, it nonetheless provides a helpful discussion and overview on an issue of significant relevance to all offshore owners/operators: When is a contractor’s employee considered a “borrowed employee” of the owner/operator? 

If a contractor’s employee is considered the “borrowed employee” of the owner or operator of the platform, he has no tort claim against the owner or operator and must instead proceed against the owner/operator under the Longshore Harbor Workers’ Compensation Act (LHWCA). In other words, the claim against the platform owner or platform operator is one of worker’s compensation, not tort.

In this case, the plaintiff had been hired by Quality Production Services (QPS). QPS had a Master Service Contract with the platform owner. The plaintiff submitted an employment resume and application to QPS for consideration as a contract operator. QPS forwarded the resume and application to the platform owner, who, in turn, selected the plaintiff to work as a contract operator on the platform. The plaintiff remained a payroll employee of QPS however. 

In addition to its Master Service Contract with QPS, the platform owner also had a Master Service Contract with another contractor—the platform operator (operator)—whereby the operator provided contract personnel to also work on the platform. An employee of the operator was the “person in charge” of the platform on the day of plaintiff’s accident.

Lastly, the platform owner hired another party to disconnect and assist with the moving of a transformer on the platform. Plaintiff, along with some payroll employees of the operator, assisted with moving the transformer. During the move, a spigot began leaking. The plaintiff slipped on a mixture of hydraulic fluid and water on the deck as a result of this spigot leak. The plaintiff then sued the platform owner and operator for negligence and gross negligence. The district court granted summary judgment on the basis that the plaintiff was a “borrowed employee” of the platform owner.

The Fifth Circuit affirmed this ruling, beginning its analysis by explaining that the case arose under the Outer Continental Shelf Lands Act (OCSLA). Under OCSLA, when an employees is injured “as the result of operations conducted on the outer Continental Shelf for the purpose of exploring for, developing, removing, or transporting by pipeline the natural resources,” his exclusive remedy lies in the LHWCA. Under the LHWCA, “liability of an employer . . . shall be exclusive and in place of all other liability of such employer to the employee,” meaning that a covered employee’s exclusive and soleremedy against his employer in a negligence case is governed by the LHWCA.

Here, both the platform owner and operator argued that the plaintiff was a “borrowed employee,” meaning his exclusive remedy was under the LHWCA. Additionally, the operator argued that its other payroll employees who were involved in moving the transformer were also “borrowed employees” of the platform owner because, under the LHWCA, an employee cannot assert a cause of action against his co-employees. Put differently, the operator could not be held vicariously liable for the negligence of its payroll employees if they were the “borrowed employees” of the platform owner.

The Fifth Circuit looks at nine (9) factors to determine whether an individual qualifies as a “borrowed employee” rather than an independent contractor:

1. Who has control over the employee and the work he is performing, beyond mere suggestion of details or cooperation?;

2. Whose work is being performed?;

3. Was there an agreement, understanding, or meeting of the minds between the original and the borrowing employer?;

4. Did the employee acquiesce in the new work situation?;

5. Did the original employer terminate his relationship with the employee?;

6. Who furnished tools and place for performance?;

7. Was the new employment over a considerable length of time?;

8. Who had the right to discharge the employee?; and

9. Who had the obligation to pay the employee?

As the Fifth Circuit noted, “[n]o single factor, or combination of them, is determinative.” While some courts have previously placed the most emphasis on the “control” factor, the Fifth Circuit cautioned that certain factors may be more important in light of the facts of any particular case.  

Addressing the factors within the specific facts of this case, the Fifth Circuit explained that although the plaintiff was a payroll employee of QPS, the platform owner had selected him to work on the platform. The platform owner determined the specific platform upon which the plaintiff would work. The platform owner controlled the work being done on the platform, as well as the specific work being done by the various payroll employees of QPS and the operator. While QPS and the operator directly paid these payroll employees, the platform owner was obligated under the master service agreements to reimburse QPS and the operator. Ultimately, the Fifth Circuit found that seven of the nine factors weighed in favor of finding that the plaintiff was a “borrowed employee” of the platform owner. 

By extension, these factors also weighed in favor of finding that the payroll employees of the operator were also the “borrowed employees” of the platform owner. As a result, the Fifth Circuit affirmed the district court’s finding that the plaintiff and the operator’s payroll employees were the “borrowed employees” of the platform owner. Accordingly, the plaintiff’s claims against both the platform owner and the operator were exclusively limited to the LHWCA. 

The reasoning for classifying an employee as a “borrowed employee” as opposed to an independent contractor may differ, given the circumstances and business objectives of each owner/operator. In this case, the platform owner and the operator sought to limit their tort liability by having the plaintiff identified as a “borrowed employee.” In turn, though, the platform owner became responsible for the worker’s compensation component of the plaintiff’s claim.

Ultimately, whether an individual qualifies as a “borrowed employee” is going to be a case-specific inquiry. That said, there are advantages and disadvantages to a “borrowed employee,” none of which, however, are universally applicable to all owners/operators. What works for one owner/operator may not work for another. The above, though, should provide some guidance to owners/operators as to the factors that courts will consider when this issue arises.