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Navigating the Complexities of Loaning and Borrowing Employers in Illinois Workers’ Compensation

On Behalf of | Jun 12, 2023 | Construction Workers' Accidents, Construction Workers' Accidents, Industrial Workers' Accidents, Injuries, Work-Related Injuries, Workers' Compensation, Workplace Accidents, Workplace Injuries |

In the realm of Illinois Workers’ Compensation, the concept of loaning and borrowing employers is a crucial one that carries significant implications for both employers and employees. This blog post aims to shed light on this complex subject, providing a comprehensive understanding of the legal responsibilities and potential outcomes when an employee is loaned to another employer.

Understanding Loaning and Borrowing Employers
The Illinois Workers’ Compensation Act, in Section 1(a)(4), specifically addresses the issue of loaning and borrowing employers. It states that if an employer loans an employee to another employer, and the employee sustains a compensable accidental injury in the employment of the borrowing employer, both the loaning and borrowing employers are jointly and severally liable for the benefits or payments due to the injured employee.

The courts have further refined this doctrine, adding additional criteria to determine whether a worker in the employ of one entity is lent to another employer under the Act. These factors include the employee’s consent, the borrowing employer’s control over the employee, the power to discharge the employee, the terms of any written contract between the two employers, the length of service for the borrowing employer, and the identity of the party for whom the employee’s services are being performed.

The Double-Edged Sword for Injured Workers
While the law provides added protection for workers by holding both employers jointly and severally liable for work-related injuries, it can also deny injured workers the opportunity to recover in a negligence action by triggering the exclusivity clause of Section 5 of the Act. Once a loaning/borrowing relationship is established, both employers share the immunity conferred by Section 5(a) of the Act against a common law claim for damages for the injuries sustained in the work accident.

Joint, Several, and Primary Liability
Although both loaning and borrowing employers are jointly and severally liable to the employee, the primary liability rests with the borrowing employer. However, an agreement between the employers can alter this, shifting the burden of liability. Benefits paid by the lending employer on behalf of the injured employee may be recovered from the borrowing employer.

The doctrine of loaning and borrowing employers in Illinois Workers’ Compensation is a complex yet vital aspect of employment law. It underscores the importance of understanding the legal implications and responsibilities when an employee is loaned to another employer. As always, it is recommended to seek legal counsel when navigating these complexities to ensure compliance with the law and the protection of all parties involved.

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