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Chaney v. Yetter Manufacturing Co.

August 16, 2000


Appeal from Circuit Court of Sangamon County No. 98L42 Honorable Robert J. Eggers, Judge Presiding.

The opinion of the court was delivered by: Presiding Justice Cook

Plaintiffs, Vanessa Chaney, Ella Chaney, Elizabeth Chaney, and Terrance Chaney, through their parent, Vanessa Chaney, filed this tort action against Yetter Manufacturing Company (Yetter) seeking damages for injuries that Vanessa Chaney (Chaney) sustained in a work-related accident. On February 14, 1996, Chaney's right hand was severed at the wrist when her glove was caught in a rotating drill at the Yetter plant. Chaney was employed by Genie Temporary and Executive Services (Genie) and, on the date in question, was assigned by Genie to work at Yetter's plant. Chaney previously recovered workers' compensation benefits from Genie relating to the accident.

Genie supplied Yetter with temporary workers during peak demand periods. In exchange, Yetter paid Genie the employees' hourly wage plus a percentage fee. As is common with temporary agencies, Genie handled its employees' payroll, tax withholding and reporting, and insurance. Genie also provided workers' compensation coverage for its employees. In fact, the contract between Genie and Yetter specifically provided:

"(c) Supplier [(Genie)] is also responsible for [w]orkers' [c]ompensation and [g]eneral [l]iability insurance coverage for all temporary employees, and will furnish Client

[(Yetter)] a [c]ertificate of [i]nsurance as evidence of inforce coverage at all times during this agreement.

(e) The Supplier [(Genie)] hereby indemnifies and holds harmless Client [(Yetter)] from any judgment, finding, or assessment of liability under the Workers' Compensation Act or the laws of Illinois for injuries allegedly suffered by a temporary employee."

In response to plaintiffs' complaint, Yetter filed several affirmative defenses, one of which raised the exclusive remedy provisions of the Workers' Compensation Act (Act) (820 ILCS 305/5(a) (West 1996) (employee has no common law right to recover damages other than those provided by the Act)). Yetter contended that it was a "borrowing employer" and Chaney was a "loaned employee" at the time of the accident and, as such, Yetter was entitled to the protections of the Act's exclusive remedy provision. 820 ILCS 305/1(a)(4) (West 1996) (borrowing employers covered by Act). Yetter subsequently filed a motion for summary judgment on this same basis. The circuit court granted Yetter's motion in a docket entry order. Chaney's motion for reconsideration was denied, and the court specifically ruled that Genie (as the loaning employer) and Yetter (as the borrowing employer) were protected by the Act's exclusive remedy provisions. On appeal, Chaney argues that summary judgment was improper.

The Act is designed to provide financial protection to workers for accidental injuries arising out of and in the course of employment. Meerbrey v. Marshall Field & Co., 139 Ill. 2d 455, 462, 564 N.E.2d 1222, 1225 (1990). Accordingly, the Act imposes liability without fault upon the employer and, in return, prohibits common-law suits by employees against the employer. The exclusive remedy provision "'is part of the quid pro quo in which the sacrifices and gains of employees and employers are to some extent put in balance, for, while the employer assumes a new liability without fault, he is relieved of the prospect of large damage verdicts.'" Meerbrey, 139 Ill. 2d at 462, 564 N.E.2d at 1225, quoting 2A A. Larson, Law of Workmen's Compensation §65.11 (1988).

Section 5(a) of the Act provides that employees have no common-law or statutory right to recover damages from their employer other than the compensation provided under the Act. 820 ILCS 305/5(a) (West 1996). Section 1(a)(4) of the Act recognizes the concept of "loaning" and "borrowing" employers and outlines the implications of each status.

"Where an employer operating under and subject to the provisions of this Act loans an employee to another such employer and such loaned employee sustains a compensable accidental injury in the employment of such borrowing employer and where such borrowing employer does not provide or pay the benefits or payments due such injured employee, such loaning employer is liable to provide or pay all benefits or payments due such employee under this Act and as to such employee the liability of such loaning and borrowing employers is joint and several, provided that such loaning employer is in the absence of agreement to the contrary entitled to receive from such borrowing employer full reimbursement for all sums paid or incurred pursuant to this para- graph together with reasonable attorneys' fees and expenses ***." 820 ILCS 305/1(a)(4) (West 1996).

Thus, with respect to an injured employee, the liability of the loaning and borrowing employers is joint and several; as between employers, the borrowing employer is primarily liable and the loaning employer secondarily liable, the latter being required to pay only when the borrowing employer fails to do so, and is then entitled to reimbursement from the borrowing employer. Fort Dearborn Cartage Co. ex rel. Chubb & Son, Inc. v. Rooks Transfer Co., 136 Ill. App. 3d 371, 374, 483 N.E.2d 618, 619 (1985). The loaning employer's right to reimbursement, however, may be waived by an agreement between the respective employers. Fort Dearborn, 136 Ill. App. 3d at 374, 483 N.E.2d at 619-20.

Section 1(a)(4) of the Act also provides that an employee, like Genie, that is in the business of furnishing employees to other employers "for the performance of the work of such other employers and who pays such employees their salary or wages notwithstanding that they are doing the work of such other employers shall be deemed a loaning employer within the meaning and provisions of this [s]section." (Emphasis added.) 820 ILCS 305/1(a)(4) (West 1996).

Clearly, Genie qualifies as a "loaning employer" under the Act. The issue in this case is whether Chaney's status as a loaned employee was properly decided as a matter of law. Although the existence of a loaned-employee status is generally a question of fact, it becomes a question of law where the facts are undisputed and capable of only one inference. Willfong v. Dean Evans Co., 287 Ill. App. 3d 1099, 1101, 679 N.E.2d 1252, 1254 (1997) (affirming summary judgment after finding the plaintiff was loaned employee). After conducting a de novo review of the record, we affirm the circuit court's grant of summary judgment.

The Supreme Court of Illinois has held that two factors determine whether a loaned-employee relationship exists: (1) whether the borrowing employer had the right to direct and control the manner in which the plaintiff performed the work; and (2) whether a contract of hire, either express or implied, existed between the employee and the borrowing employer. Of these two factors, the right to control is ...

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