CACI 3706 Special Employment—Lending Employer Denies Responsibility for Worker’s Acts

New September 2003; Revised June 2013, December 2015, December 2016

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This instruction is for use in “special employment” cases. Special employment arises when a worker has been loaned from one employer to another, and there is an issue as to which employer the worker should be attributed with regard to the claim in the case. The borrowing employer is called the “special” employer. The lending employer is sometimes called the “general” employer, though use of that term may be confusing to a jury.

The instruction as drafted is for use by the lending employer to claim that the worker should be considered as the special employee of the borrowing employer. This would be the case if the issue is which employer is responsible for the worker’s tortious conduct under respondeat superior. The instruction may be modified if the claim is for injury to the worker, and the borrowing employer wants to claim the worker as its own in order to take advantage of the exclusive remedy bar of workers’ compensation. This instruction is not for use by the worker to claim employment rights under the Labor Code, though many of its provisions will likely be applicable.

In addition to the borrowing employer’s control over the employee, there are a number of relevant secondary factors to use in deciding whether a special employment relationship existed. They are similar, but not identical, to the factors from the Restatement Second of Agency, section 220 to be used in an independent contractor analysis. (See State ex rel. Dept. of California Highway Patrol v. Superior Court (2015) 60 Cal.4th 1002, 1013–1014 [184 Cal.Rptr.3d 354, 343 P.3d 415]; CACI No. 3704, Existence of “Employee” Status Disputed; see also Marsh v. Tilley Steel Co. (1980) 26 Cal.3d 486, 492 [162 Cal.Rptr. 320, 606 P.2d 355]; Kowalski v. Shell Oil Co. (1979) 23 Cal.3d 168, 176–177 [151 Cal.Rptr. 671, 588 P.2d 811].) In the employee-contractor context, it has been held to be error not to give the secondary factors. (See Bowman v. Wyatt (2010) 186 Cal.App.4th 286, 303–304 [111 Cal.Rptr.3d 787].)

•“[W]here the servants of two employers are jointly engaged in a project of mutual interest, each employee ordinarily remains the servant of his own master and does not thereby become the special employee of the other.” (Marsh, supra, 26 Cal.3d at p. 493.)

•“When an employer—the ‘general’ employer—lends an employee to another employer and relinquishes to a borrowing employer all right of control over the employee’s activities, a ‘special employment’ relationship arises between the borrowing employer and the employee. During this period of transferred control, the special employer becomes solely liable under the doctrine of respondeat superior for the employee’s job-related torts.” (Marsh, supra, 26 Cal.3d at p. 492.)

•“The law of agency has long recognized that a person generally the servant of one master can become the borrowed servant of another. If the borrowed servant commits a tort while carrying out the bidding of the borrower, vicarious liability attaches to the borrower and not to the general master.” (Societa per Azioni de Navigazione Italia v. City of Los Angeles (1982) 31 Cal.3d 446, 455–456 [183 Cal.Rptr. 51, 645 P.2d 102], internal citations omitted.)

•“Liability in borrowed servant cases involves the exact public policy considerations found in sole employer cases. Liability should be on the persons or firms which can best insure against the risk, which can best guard against the risk, which can most accurately predict the cost of the risk and allocate the cost directly to the consumers, thus reflecting in its prices the enterprise’s true cost of doing business.” (Strait v. Hale Construction Co. (1972) 26 Cal.App.3d 941, 949 [103 Cal.Rptr. 487].)

•“In determining whether a special employment relationship exists, the primary consideration is whether the special employer has ‘ “[t]he right to control and direct the activities of the alleged employee or the manner and method in which the work is performed, whether exercised or not … .” ’ However, ‘[whether] the right to control existed or was exercised is generally a question of fact to be resolved from the reasonable inferences to be drawn from the circumstances shown.’ ” (Kowalski, supra, 23 Cal.3d at p. 175, internal citations omitted.)

•“[S]pecial employment is most often resolved on the basis of ‘reasonable inferences to be drawn from the circumstances shown.’ Where the evidence, though not in conflict, permits conflicting inferences, … ‘ “the existence or nonexistence of the special employment relationship barring the injured employee’s action at law is generally a question reserved for the trier of fact.” ’ ” (Marsh, supra, 26 Cal.3d at p. 493.)

•“[I]f neither the evidence nor inferences are in conflict, then the question of whether an employment relationship exists becomes a question of law which may be resolved by summary judgment.” (Riley v. Southwest Marine, Inc. (1988) 203 Cal.App.3d 1242, 1248–1249 [250 Cal.Rptr. 718], internal citations omitted.)

•“The special employment relationship and its consequent imposition of liability upon the special employer flows from the borrower’s power to supervise the details of the employee’s work. Mere instruction by the borrower on the result to be achieved will not suffice.” (Marsh, supra, 26 Cal.3d at p. 492.)

•“California courts have held that evidence of the following circumstances tends to negate the existence of a special employment: The employee is (1) not paid by and cannot be discharged by the borrower, (2) a skilled worker with substantial control over operational details, (3) not engaged in the borrower’s usual business, (4) employed for only a brief period of time, and (5) using tools and equipment furnished by the lending employer.” (Marsh, supra, 26 Cal.3d at p. 492.)

•“The common law also recognizes factors secondary to the right of control. We have looked to other considerations discussed in the Restatement of Agency to assess whether an employer-employee relationship exists. The comments to section 227 of the Restatement Second of Agency, which covers servants lent by one master to another, note that ‘[m]any of the factors stated in Section 220 which determine that a person is a servant are also useful in determining whether the lent servant has become the servant of the borrowing employer.’ The secondary Restatement factors that we have adopted are: ‘ “(a) [W]hether the one performing services is engaged in a distinct occupation or business; (b) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision; (c) the skill required in the particular occupation; (d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work; (e) the length of time for which the services are to be performed; (f) the method of payment, whether by the time or by the job; (g) whether or not the work is a part of the regular business of the principal; and (h) whether or not the parties believe they are creating the relationship of employer-employee.” [Citations.]’ ” (State ex rel. Dept. of California Highway Patrol, supra, 60 Cal.4th at pp. 1013–1014, internal citations omitted.)

•“Evidence that the alleged special employer has the power to discharge a worker ‘is strong evidence of the existence of a special employment relationship … . The payment of wages is not, however, determinative.’ Other factors to be taken into consideration are ‘the nature of the services, whether skilled or unskilled, whether the work is part of the employer’s regular business, the duration of the employment period, … and who supplies the work tools.’ Evidence that (1) the employee provides unskilled labor, (2) the work he performs is part of the employer’s regular business, (3) the employment period is lengthy, and (4) the employer provides the tools and equipment used, tends to indicate the existence of special employment. Conversely, evidence to the contrary negates existence of a special employment relationship. [¶¶] In addition, consideration must be given to whether the worker consented to the employment relationship, either expressly or impliedly, and to whether the parties believed they were creating the employer-employee relationship.” (Kowalski, supra, 23 Cal.3d at pp. 176–178, footnotes and internal citations omitted.)

•“Moreover, that an alleged special employer can have an employee removed from the job site does not necessarily indicate the existence of a special employment relationship. Anyone who has the employees of an independent contractor working on his premises could, if dissatisfied with an employee, have the employee removed. Yet, the ability to do so would not make the employees of the independent contractor the special employees of the party receiving the services.” (Kowalski, supra, 23 Cal.3d at p. 177 fn. 9.)

•[T]he jury need not find that [the worker] remained exclusively defendant’s employee in order to impose liability on defendant. Facts demonstrating the existence of a special employment relationship do not necessarily preclude a finding that a particular employee also remained under the partial control of the original employer. Where general and special employers share control of an employee’s work, a ‘dual employment’ arises, and the general employer remains concurrently and simultaneously, jointly and severally liable for the employee’s torts.” (Marsh, supra, 26 Cal.3d at pp. 494–495.)