Illinois Appellate Court Says That An Employee of a Staffing Company Can Sue the Company’s Customer for Retaliatory Discharge

Borrowed Employee Has Retaliatory Discharge Claim

In a case of first impression, the Illinois Appellate Court determined that an employee of a staffing company could sue the company’s customer for retaliatory discharge.
Carrie Hester filed a complaint alleging that she had been assigned to work at Gilster-Mary Lee Corp. (“Gilster”) by her employer, Manpower, Inc. and that Gilster was her “de facto employer.”

Hester’s complaint included allegations that on September 13, 2006, under threat of subpoena, Hester gave testimony in the workers’ compensation case of another Gilster employee. The next day, Gilster informed Hester that it would not be using her services any longer and that if she wanted other employment she would have to return to Manpower, Inc.

Gilster filed a motion to dismiss Hester’s complaint, arguing that Hester’s actual employer was Manpower and that Gilster had not fired Hester. The trial court entered an order granting the motion to dismiss. Hester appealed.

The issue was whether there is a cause of action for retaliatory discharge for a borrowed employee whose employment with the borrowing employer is terminated for testifying in a coworkers’ worker’s compensation claim.

The rights and remedies of the Workers’ Compensation Act apply to borrowed employees. 820 ILCS 305/1(a)(4). A borrowing employer is primarily liable for payment of a borrowed employee’s workers’ compensation claim.
Additionally, borrowing employers can claim the protections of the Act. Nevertheless, Gilster argued that it should not be held accountable for terminating Hester’s employment.

According to the appellate court, the public policy considerations which led to recognition of an action for retaliatory discharge in Kelsay v. Motorola, Inc., 74 Ill.2d 172 (1978), apply equally to a claim by a borrowed employee against a borrowing employer. Therefore, an action for retaliatory discharge is available to a borrowed employee.

Gilster argued that Hester’s allegation that Manpower was her “employer” and Gilster was her “de facto employer” was an admission that defeated her claim. However, Hester alleged that Gilster set her daily hours, work schedule, hourly wage, job assignments, and her workplace, that no one from Manpower supervised her work in any way, and that she worked side-by-side with regular Gilster employees.

According to the court of appeals, the public policy of providing efficient and expeditious remedies for injured employees would be seriously undermined if borrowing employers such as Gilster were permitted to abuse their power by discharging their borrowed employees in retaliation for exercising their rights under the Act. When faced with that dilemma, many workers like Hester would simply choose not to exercise their rights in order to retain their employment.
Finally, the court had to decide whether Hester had alleged that her discharge was in retaliation for participation in a protected activity. The court found that Hester stated a cause of action for retaliatory discharge because there is a clear public policy favoring the prompt and efficient resolution of workers’ compensation cases.

The case was remanded for further proceedings. Hester v. Gilster-Mary Lee Corp., 386 Ill. App. 3d 1104, 326 Ill. Dec. 372, 899 N.E.2d 589, (5th Dist. 2008).