New Law Confirms Protections for Clients of Wisconsin Staffing Agencies and PEOs

On February 28, 2018, Wisconsin Governor Scott Walker signed a bill that confirms the Wisconsin Legislature’s long-standing intent to protect clients of staffing agencies and PEOs (professional employer organizations) from tort claims brought by workers injured at work. The bill was necessary to clarify the law following a January 9, 2018 Wisconsin Court of Appeals decision, Rivera v. West Bend Mutual, which allowed the estate of a staffing agency employee to bring a negligence lawsuit against the staffing agency’s client. The decision surprised employers and workers’ compensation advisors who had long understood Wisconsin law to prohibit such claims.

Under Wisconsin’s century-old workers’ compensation system, employees injured at work are entitled to various benefits and rights under a no-fault claims process. In exchange for those benefits and rights, the injured employee cannot sue his employer for damages in a tort claim. The workers’ compensation claim is the injured employee’s “exclusive remedy.”

Beginning in 1981, the Wisconsin Legislature began to extend this exclusive remedy principle and protection to various third-party employers, including clients of staffing agencies and PEOs. Despite these statutory provisions, the Rivera court found that so long as the injured employee of a temporary staffing agency had not filed a workers’ compensation claim, he had the right to bring a tort claim against the agency’s client.

The Wisconsin Legislature responded to the Rivera decision by quickly drafting and passing SB 781, which confirms that injured workers of staffing agencies or PEOs cannot sue staffing agency or PEO clients in tort for those work-related injuries and must instead file a workers’ compensation claim.

For the thousands of Wisconsin employers that partner with staffing agencies and PEOs, it is – fortunately – business as usual with the passage of 2017 Wisconsin Act 139.