Legal Memorandum: Loaned Servant Doctrine

Issue: What is the loaned servant doctrine?

Area of Law: Workers Compensation Insurance
Keywords: Loaned servant doctrine; Employee's Injury; Liability
Jurisdiction: Minnesota
Cited Cases: 541 N.W.2d 594; 64 N.W.2d 7; 108 N.W.2d 1; 599 N.W.2d 175; 242 Minn. 46; 514 N.W.2d 891
Cited Statutes: Minn. Stat. § 176.021 (2006)
Date: 03/01/2007

The Minnesota’s Workers’ Compensation Act makes clear that “[i]f an employer . . . fails to insure or self-insure liability for compensation to injured employees . . . , an injured employee . . . may elect to . . . maintain an action in the courts for damages on account of such injury.”  Minn. Stat. § 176.021 (2006).  If a defendant is not an employer entitled to immunity under the Act, a tort lawsuit will not be barred.  See Kaluza v. Home Ins. Co., 403 N.W.2d 230, 236 (Minn. 1987) (tort claims are not barred by the exclusivity provision if the injury did not occur in the course and scope of employment).

It is settled law that the workers’ compensation “exclusivity provision ‘is part of the quid pro quo of the workers’ compensation scheme in which the employer assumes liability for work-related injuries without fault in exchange for being relieved of liability for certain kinds of actions.'”  Meintsma v. Loram Maint. of Way, Inc., 684 N.W.2d 434, 438 (Minn. 2004).  The exclusivity provision, by its plain terms, applies only to an employer.  The burden of proving that the defendant was an insured employer under the Act is on the defendant.  Andrews v. Bartholomew, 242 Minn. 46, 64 N.W.2d 7 (1954).

“Under the loaned servant doctrine, a worker can be considered an employee of both a general employer [the employer that ‘loans’ the employee] and a special employer [the ‘borrowing’ employer].”  Hallas v. Naegele Outdoor Advertising, Inc., 541 N.W.2d 594 (Minn. […]

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