Central Mut. Ins. Co. v. True Plastics, Inc.
(Mass. Ct. App. July 10, 2013)
A Massachusetts appellate court recently held that the phrase “short-term workload conditions” as used in a liability policy’s definition of “temporary worker” was unambiguous and could include workers hired on an indefinite basis.
The claimant was injured while operating a molding machine at the insured’s plant. The claimant was not an employee of the insured company (a manufacturer of plastic components), but rather had been assigned to work at the insured company by an employment agency. Because of the accident, the claimant applied for, and received, workers’ compensation benefits under the employment agency’s workers’ compensation insurance policy. She then sued the insured company to recover for her injuries. The insured company sought indemnification and a defense from its CGL insurer, which brought an action seeking a judgment declaring that it owed no duty under its policy.
The insurer argued that the claimant was a leased employee (an action by which was excluded under the policy), rather than a temporary employee (an action by which was covered by the policy). The policy defined the phrase “temporary worker” as “a person who is furnished to [the insured] to substitute for a permanent ‘employee’ on leave or to meet seasonal or short-term workload conditions.” The court held that the phrase “short-term workload condition” is to be assessed prospectively from the time the worker was furnished. Thus, even if a worker’s assignment ends up being lengthy, the court stated that he or she will still be a “temporary worker” within the meaning of the policy, provided the insured held an objectively reasonable expectation at the time that the worker was furnished to meet a short-term workload condition.
The court held that the insured met its burden of proving that the claimant was furnished to meet a short-term increase in its workload caused by a large order, and was therefore a “temporary worker” under the CGL policy. The insured’s assessment that an additional worker, working five to six weeks, was needed to complete the order was objectively reasonable. The order was unusually large, the insured’s own employees were fully occupied filling other large orders, the claimant completed one-half of the order in three weeks, and the insured was unable to complete the order after the claimant was injured. The insured was not required to disclose to the employment agency a finite period for which it sought an employee. The court also ruled that the fact that the insured had a regular practice of meeting its fluctuating workflow with temporary employees did not mean that the order was anything other than a “short-term workload” condition or that the claimant was furnished for any reason other than meeting that short-term condition.