In a recent decision, the
Texas court of appeals in
Dallas held that the client company of a
Texas licensed PEO is protected by exclusive remedy.
Vega v. Silva, 223 S.W.3d 746 (Tex.App.—Dallas 2007).
Link hereThis decision is completely consistent with the language of the Texas PEO licensing statute and so is no surprise. This decision is the first
Texas court decision squarely addressing the issue.
The case is based on an auto accident in which two worksite employees of a PEO were injured on their way to work in a vehicle owned by the client company.
The driver was a worksite employee.
The injured passenger brought suit against the client company and claimed that the client was not covered by exclusive remedy protection flowing from the PEO’s workers compensation insurance policy.
The Court of Appeals easily found that the Client Company was protected. “[B]oth the staff leasing company and the client company are subject to the exclusive remedy provisions of the workers’ compensation act.”
Based on evidence that the PEO was licensed in
Texas, held and workers’ compensation policy and that the client company was the PEO’s customer the court held that: “We conclude that [the client company] conclusively proved the affirmative defense that the exclusive remedy provisions of the workers’ compensation act applies in this case.”
The Texas Supreme Court previously addressed the consequences of a client entering into a PEO arrangement with a PEO that does not carry workers’ compensation insurance.
Tex. Workers’ Compensation Ins. Fund v. Del Industrial, Inc., 35 S.W.3d 591 (
Tex. 2000). The Supreme Court’s decision in
Del Industries strongly supports the conclusion that exclusive remedy protects the client company, provided the PEO holds a
Texas license and carries
Texas workers’ compensation insurance. Although the hints are there, Del Industries does not actually decide the question.
