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Wisconsin Legislature closes worker’s compensation exclusive remedy “loophole”

March 05, 2018

Work Injury ClaimMost employers in Wisconsin know that the Wisconsin Worker’s Compensation Act (Act) precludes an employee from suing his employer in a tort action (e.g., negligence actions seeking compensatory and punitive damages) for a work-related injury. The basis for this prohibition lies in the Act’s exclusive remedy provision, which states that “the right to recovery of compensation . . . shall be the exclusive remedy against the employer, any other employee of the same employer and the worker’s compensation insurance carrier.” Importantly, the Act’s benefits constitute the exclusive remedy whenever the employee has a right to worker’s compensation benefits, even if the employee never makes a claim for benefits.

On Jan. 9, 2018, however, the Wisconsin Court of Appeals ruled that the exclusive remedy provision does not prohibit lawsuits by temporary employees against the temporary employer (as opposed to the temporary help agency that actually pays the employee). The court based its reasoning on the language of section 102.29(6)(b)1, which states that “[n]o employee of a temporary help agency who makes a claim for compensation may make a claim or maintain an action in tort against any . . . employer that compensates the temporary help agency for the employee’s services.” (Emphasis added.) According to the court, the Act gave temporary employees a choice between seeking guaranteed benefits against their employer (the temporary help agency) and seeking tort damages against the temporary employer.

In response to this court ruling, the Wisconsin Legislature enacted 2017 Wisconsin Act 139. With Act 139, the Legislature modified the language of the Act to prohibit tort actions by an employee (whether temporary, leased or loaned) “who has the right to make a claim for compensation[.]” In other words, if an employee could file a claim for worker’s compensation benefits, he cannot assert tort claims against temporary employers. 

With these revisions, the Legislature has greatly expanded the Act’s exclusivity and eliminated significant financial risk for employers who use temporary, leased or loaned employees. The changes made by Act 139 will first apply to all claims for worker’s compensation benefits and tort actions made on or after March 1, 2018.

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