A construction worker was killed while operating a dump truck. When his death occurred, he was on loan from his employer to my client, also a construction company. Due to his death, the worker’s family was entitled to death benefits under the Alabama workers’ compensation statute. But which company had to pay the benefits? My client or his day-to-day employer? The answer hinged on the answers to a couple of tests.

In Alabama an employer has different responsibilities for regular employees than it does for independent contractors or special employees. An employer may be held liable for the conduct of employers, where it may not be for the conduct of independent contractors. However, there are certain circumstances in which an independent contractor can become a “special employer” of the employee.

Alabama’s Statutory Employee Test

First, to determine whether a worker is an employee versus an independent contractor, Alabama has a statutory test. Alabama uses a reserved right of control test to determine whether a worker is an employee or an independent contractor. This is a common law right-to-control test. See Tuscaloosa Veneer Co. v. Martin, 172 So. 608 (Ala. 1937) (“If there is no evidence that defendant reserved no control, except an inference from the circumstances, the question was one for the jury.”); see also Hudson v. DuraWear Corp., 344 So.2d 182 (Ala. Civ. App. 1977); Birmingham Post Co. v. Sturgeon, 149 So. 74 (Ala. 1933); White v. Henshaw, 363 So.2d 986, 988 (Ala.Civ.App. 1978).

More recently, the Alabama Supreme Court has held, “The test for determining whether a person is an agent or employee of another, rather than an independent contractor with that other person, is whether that other person has reserved the right of control over the means and method by which the person’s work will be performed, whether or not the right of control is actually exercised.” Martin By & Through Martin v. Goodies Distrib., 695 So.2d 1175, 1177 (Ala. 1997).

The Special Employer Test

In Alabama, there is a three-prong test for determining whether an employee of a general employer can become the employee of a “special employer.”

“When a general employer lends an employee to a special employer, the special employer becomes liable for workman’s compensation…only if: (a) the employee has made a contract of hire, express or implied, with the special employer; (b) the work being done is essentially that of the special employer; and (c) the special employer has the right to control the details of the work. When all three of the above conditions are satisfied in relation to both employers, both employers are liable for workmans’ compensation.” See G.UB.MK Constructors v. Garner, 44 So. 3d 479 (Ala. 2010), quoting Terry v. Read Steel Products, 430 So. 2d 862, 865 (Ala. 1983). Notably, all three conditions must be present for a finding of a special employer.

Furthermore, the Alabama Court of Civil Appeals has held that in order for a person to be considered an employee, “the other party must retain the right to direct the manner in which the business shall be done, as well as the results to be accomplished, or, in other words, not only what shall be done, but how it shall be done.” Atchison v. Boone Newspapers, Inc., 981 So. 2d 427, 431 (Ala. Civ. App. 2007). The reserved right of control is the test of the relationship between the parties. Id.

If for purposes of liability or workers’ compensation you need to determine whether a business is a special employer or statutory employer, there are  two applicable tests. Follow the analyses and you can determine the responsibilities the business owes to the employee and liabilities it may be subject to on his behalf.