Mainstay Business Solutions, a temporary staffing and employee leasing business, went insolvent. The California Self-Insurers’ Security Fund was required to assume Mainstay’s liabilities for workers compensation benefits, paying out about $49 million in benefits beyond the assets Mainstay had posted for payment of benefits. The Fund then sued Mainstay’s customers for reimbursement of the amounts the Fund had paid Mainstay’s employees in benefits. Held, under Lab. Code 3744, the Fund can recover from Mainstay’s customers. The section grants the Fund the right to recover from special employers who rent employees from a self-insured general employer like Mainstay, and the Fund’s suit for reimbursement is not subject to the exclusive jurisdiction of the Workers Comp. Appeals Board. Effective Jan. 1, 2013, Lab. Code 3701.9 sought to remedy this problem by requiring special employers to provide their own workers compensation coverage for the workers they hired from a temporary staffing or leasing general employer.
California Court of Appeal, Third Appellate District (Mauro, J.); October 13, 2017; 2017 WL 4638608.