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The Outsiders

How far does your workers' compensation stretch?

When someone's injured at work, is the injury covered by workers' compensation? If it is, the injured party can't sue. The question gets hazy, though, if the injured party isn't one of your employees.

Consider a recent Ohio case. An employee of Buckeye Metal Co. delivered bins to companies for collecting scrap metal. The driver helped the customers' employees unload the bins from the truck. For one customer, Halcore Group Inc., the driver would let a Halcore employee unload with a forklift. One day, when the usual employee was off, a Halcore supervisor asked the driver to teach an employee how to use the forklift. In the proc-ess, the driver got injured.

The driver sued Halcore, whose lawyers argued the driver was a "loaned servant," thus subject to Halcore's workers' compensation. However, Ohio's 10th District Court of Appeals noted that a worker only counts as a loaned servant if his or her employer loans him to a customer who directs how the work is performed. In this case, the customer had merely told the driver where to park, and the workers figured out the unloading system. Because that wasn't enough control to classify the driver as a loaned servant, the driver wasn't covered by workers' compensation at Halcore and could sue.

The lesson? Every time you tell non-employees on your premises what to do, you may be subject to substantial legal liability.

Jane Easter Bahls is a writer in Rock Island, Illinois, specializing in business and legal topics.

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This article was originally published in the July 2006 print edition of Entrepreneur with the headline: The Outsiders.

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