Third-Party Contribution Claims & Special Employers: The Intersection of
Torts and Workers’ Compensation
Aaron S. Brown1
Introduction
Until the 20th century, employees in America had difficulty recovering tort
damages for workplace injuries.2 Initially, what has been dubbed the “unholy trinity” of
employer defenses (the fellow servant rule, voluntary assumption of the risk, and
contributory negligence) barred most claims.3 Even after states began to loosen these
rules, most employees did not have the resources or sufficiently valuable claims to
obtain representation.4
In response to these difficulties and others, states began to pass workers'
compensation laws. Under these laws, employers insured against injuries “arising out of
and in the course of employment.”5 Employees benefited from the fact that workers'
compensation laws were no-fault in nature (i.e., they did not require proof that the
employer was negligent).6 They also benefited from an administrative process designed
to ensure timely compensation.7 Employers, however, also benefited—most notably
from the fact that workers' compensation laws limited awards to an amount that was
1 Aaron S. Brown, Juris Doctor Candidate, May 2022, Mitchell Hamline School of Law; B.A.
Philosophy with honors, and B.A. Biblical Studies with honors, 2018, University of Northwestern – St.
Paul.
2 Richard A. Epstein, The Historical Origins and Economic Structure of Workers' Compensation
Law, 16 GA. L. REV. 776, 777 (1982)
3 See Paul C. Weiler, Workers' Compensation and Product Liability: The Interaction of a Tort
and a Non-Tort Regime, 50 OHIO ST. L. J. 825, 827 (1989).
4 Id. at 827.
5 See Minn. Stat. § 176.011 subd. 16 (2020).
6 See Minn. Stat. § 176.001 (2020).
7 Id.
predictable and “reasonable.”8 In addition, workers' compensation laws immunized
employers from tort actions, in which they might otherwise face liability for noneconomic harm, such as pain and suffering or even punitive damages.9
Workers’ compensation schemes across the country have long been criticized as
having limited benefits and providing insufficient financial compensation for injured
workers.10 Beginning in the 1970s, especially when products liability law became more
plaintiff-friendly, it is not surprising that injured employees began to seek additional
recovery against potential third-party tortfeasor defendants in the tort system.11 Thirdparty tortfeasors, however, frequently bore a heavy burden in these kinds of cases.
Because of joint and several liability, third-party tortfeasors faced liability for the full
amount of an employee’s harm.12 Yet, because workers’ compensation laws, such as the
one in Minnesota,13 contained exclusive remedy provisions, third-party tortfeasor
defendants were not able to seek contribution from employers, even where it was clear
that an employer’s negligence contributed to the harm, and sometimes even to the vast
majority of the harm. Employers, meanwhile, retained a statutory right of subrogation
See Weiler, supra note 3, at 826, see also Minn. Stat. § 176.001 (2020).
See Larson’s Workers’ Compensation Law §1.03, at 1-5 (Bender 2001) (hereinafter Larson’s
Workers’ Compensation) (“The ultimate social philosophy behind [workers'] compensation liability is
belief in the wisdom of providing, in the most efficient, most dignified, and most certain form, financial
and medical benefits for the victims of work-connected injuries which an enlightened community would
feel obliged to provide in any case in some less satisfactory form…”); See also Minn. Stat. § 176.031
(2020).
10 See, e.g., Joan T.A. Gabel, Escalating Inefficiency in Workers' Compensation Systems: Is
Federal Reform the Answer?, 34 WAKE FOREST L. REV. 1083, 1123 (1999).
11 Weiler, supra note 3, at 828 (“It is not hard to fathom why individual workers have developed
such an increased propensity to bring tort suits rather than rely on guaranteed [workers' compensation]
benefits. This phenomenon is the product of recent trends that have made [workers' compensation] less
valuable and tort liability (especially, though not exclusively, for defective products) much more valuable.
12 See, e.g., Hendrickson v. Minnesota Power & Light Co., 104 N.W.2d 843, 849 (1960).
13 See Minn. Stat. § 176.031 (2020).
8
9
against the employee’s damages award to recover the amount paid in workers’
compensation.14
Historically, Minnesota did not allow for third-party tortfeasors to bring a
successfully contribution claim from a negligent employer because (1) there was no
common liability to the employee, i.e., the employer was not liable in tort to the
employee because of the exclusive remedy provision of Minnesota’s workers’
compensation law; and (2) the policy interest of the employer in paying no more than
his workers' compensation liability because of an employee injury.15
To better understand this inequitable situation, consider an example. Suppose
that Edward Employee works for Major Manufacturing Company where his job is to
assemble widgets at Major's plant. One day, a piece of equipment that Edward uses on
the job malfunctions, causing severe injury to his hand. Edward files a workers'
compensation claim and receives $10,000 in benefits for the injury. Subsequently,
Edward files a products liability claim against Component Company, which
manufactured the equipment that malfunctioned. In this action, a jury awards Edward
$50,000 as full compensation for his harm. Following the traditional approach, Major
then seeks subrogation against the award, requesting reimbursement of the $10,000
that it (or its insurer) paid in workers' compensation.
These results are simple enough, assuming that there is no evidence of negligence
on Major's part. But suppose that Major did not properly service the equipment—an act
of negligence that contributed to Edward's harm. Many states would still permit Major
to obtain subrogation, while denying Component any right of contribution or offset. The
14
15
See, e.g., Minn. Stat. 176.061 subd. 5 (2020).
Hendrickson v. Minnesota Power & Light Co., 104 N.W.2d 843, 849 (1960).
theory behind the outcome is that the "claim of the employee against the employer is
solely for statutory benefits; his claims against the third party is for damages. The two
are different in kind and cannot result in a common liability."16 The unfairness to the
third-party tortfeasor is obvious. The third party remains liable for the full amount of
harm, while the negligent employer not only avoids tort responsibility, but retains the
ability to recover its workers' compensation payments through subrogation.
I.
Employer Contribution Policies in Various Jurisdictions
The majority view of the nation’s courts is that a negligent employer’s
contribution of damages to a third-party tortfeasor is barred by the exclusive remedy
provision of the states’ workers’ compensation statutes.17 Georgia decisions illustrate
this view. In Georgia, as in most states, an employer paying workers’ compensation
benefits is immune from third-party tort actions for contribution or indemnity.18
Additionally, in Georgia third-party tortfeasors owing an employee a damage award are
not permitted to deduct (set off) the employer’s workers’ compensation payments from
the damages award, even if the employer’s negligence contributed to the employee’s
injuries.19 Thus, the third party tortfeasor is forced to pay the entire damage award even
though it is only partially negligent.
In denying a third party tortfeasor’s right to set off in Georgia, the Court in
Hudson v. Union Carbide Corp. stated that there was a “lack of legal” basis for set off in
Larson, supra note 9, § 121.02, at 121-12.
Joel E. Smith, Modern Status of Effect of State Worker’s Compensation Act Right of ThirdPerson Tortfeasor to Contribution or Indemnity from Employer of Injured or Killed Worker, 100.
A.L.R.3d 350, 355 (1980) (“The nearly unanimous view is that contribution
18 Georgia Dep’t of Human Resources v. Joseph Campell Co., 411 S.E.2d 871, 823 (G.A. 1992)
(“An employer who pays workers’ compensation benefits to an employee is immune from liability as a
third-party defendant in the employee’s tort action.”).
19 Hudson v. Union Carbide Corp., 620 F. Supp. 558, 563 (N.D. Ga. 1985).
16
17
that state.20 The Court cited one judge’s observation that creation of such a right would
“open the proverbial Pandora’s box of legal problems.”21 The Hudson court thus
consigned to the Georgia Legislature the burden of establishing a set off right, refusing
to do so on its own.22
What seems to have made this decision necessary in the Hudson court was the
fact that states that permit set off of damages equal to the amount paid in workers’
compensation benefits also grant the employer the right of subrogation to recoup those
payments.23 As Georgia no longer provides for employer subrogation, the employer
could not recoup any of the workers’ compensation benefits paid to the employee
following contribution from a third party.24 If courts were to force employers with no
subrogation rights to contribute to third-party tortfeasors, the courts essentially would
be holding the employers liable twice for the same infraction—once to the employee
through the workers’ compensation scheme and once to the third party. A double
recovery against the employer not only would violate the employer’s rights under the
exclusive remedy provisions of the workers’ compensation statutes, but also would fly in
the face of the notion that a party should be held liable only once for damages it caused
to another party.25
The Hudson court’s policy is sound in that it provides adequate compensation to
the employee while also protecting the exclusive remedy doctrine by limiting the
Id.
Id. at 562 (quoting Hudson v. Union Carbide Corp., No. D-08596, slip. op. at 3-9 (Ga. Super.
Ct. Fulton County, Jan. 2, 1985)).
22 Id. at 564 (“[T]his court recognizes
23 Id. The right of subrogation obligates the employee to reimburse the employer for workers’
compensation benefits already paid to the employee when the employee collects damages from a third
party.
24 Id.
25 Lynn C. Cobb & Frank M. Edlridge, Georgia Law of Damages, § 1-8, at 8 (1979) (“A person may
not be subjected to double liability for the same damages growing out of the same tort.”).
20
21
employer’s liability to payments under the workers’ compensation statute. One is likely
to argue, however, that such a policy not only provides an unjust windfall to the
employee, but also unfairly burdens the third-party tortfeasor with the entire damages
award even when the third-party tortfeasor was only partially negligent. Such an
argument provides support for the approach to employer contribution taken by the
minority of jurisdictions, which aim to balance the exclusive remedy doctrine against
the need to distribute damages equitably based upon fault.
In spite of most states’ reluctance to force a partially negligent employer to
contribute to a third-party tortfeasor when the employer has provided workers’
compensation benefits to an employee, certain states have devised special methods of
employer contribution. These states, generally speaking, provide an employer with a
right of subrogation to recoup workers’ compensation benefits paid to the employee.
Pennsylvania was the first state to break ground in this area. In Elston v.
Industrial Lift Truck Co., the Pennsylvania Supreme Court held that an employer may
be liable for contribution to a third party tortfeasor when the parties’ combined conduct
caused injury to the employee.26 The Elston court limited the employer’s contribution to
the third party to the workers’ compensation benefits paid to the employee.27 In limiting
the employer’s contribution, the court emphasized that the employer could be exposed,
absent such a limitation, to a potentially larger liability when a third party contributed
to the worker’s injury than when the employer’s negligence was the sole cause of the
injury.28
Elston v. Industrial Lift Truck Co., 216 A.2d 318, 320 (Pa. 1966).
Id. Pennsylvania had adopted a policy of subrogation so the employer could recoup the workers’
compensation funds paid to the employee following its contribution to the third party-tortfeasor.
28 Id.
26
27
Thus, with a limited contribution system intact, Pennsylvania could “pursue its
policy of requiring joint-tortfeasors to share the burden of their fault without dislocating
its statutory compensation scheme.”29 Notwithstanding the Elston holding, however, in
1974, the Pennsylvania legislature abolished the doctrines of contribution and implied
indemnity in an amendment to the state’s workers’ compensation statute.30 The Elston
decision nonetheless had an impact on later contribution and indemnity decisions in
other jurisdictions, such as in Minnesota.
II.
Current Minnesota Law on Employer Contribution and Allocation
Procedure
The Minnesota Supreme Court in 1977 recognized that the combination of the
exclusivity provision and the subrogation provision creates an inequitable situation in
which a third-party tortfeasor could be required to “bear the burden of a full commonlaw judgment despite possibly greater fault on the part of the employer.”31 The Court
also weighed the employer’s interest with great respect. Namely, if contribution is to be
allowed, then the employer may be forced to pay his employee through the conduit of a
third-party tortfeasor an amount in excess of his statutory workers’ compensation
liability. Thus, allowing contribution would arguably thwart the central concept behind
workers' compensation, i.e., that the employer and employee receive the benefits of a
guaranteed, fixed-schedule, non-fault recovery system, which then constitutes the
exclusive liability of the employer to his employee. However, if contribution is not to be
allowed, the third-party tortfeasor is forced to subsidize a workers’ compensation
Id.
See Pa. Stat. Ann. Tit. 77, § 481(b) (2019).
31 Lambertson v. Cincinatti Welding Corp., 257 N.W.2d 679, 684 (Minn. 1977).
29
30
system in a proportion greater than its own fault and at a financial level far in excess of
the workers’ compensation schedule.
Lambertson fashioned an equitable remedy, holding that a third-party tortfeasor
may seek contribution from an employer, in proportion to the amount of causal fault
allocated to the employer by the jury, up to the amount of workers’ comp benefits paid
or to be paid.32 It reaffirmed that “there is no common liability to the employee in tort,”
but could not “find any continuing persuasive force” holding that contribution is
foreclosed.33 It concluded that contribution should be available to a third-party
tortfeasor notwithstanding the absence of common liability under the law.34
Following Lambertson, questions remained regarding how workers’ comp
benefits aligned with common law tort damages and how to resolve the blurry
intersection between an employer’s obligation to pay part of the employee’s cost of
recovery and its potential liability to the third-party tortfeasor for contribution.
In Johnson v. Raske Bldg. Sys., Inc., 276 N.W.2d 79 (Minn. 1979), the court outlined a
procedure to effectuate the contribution remedy. Known as the “Johnson procedure”,
the third-party tortfeasor defendant pays the total amount of the judgment in favor of
the plaintiff to the plaintiff (damages less plaintiff’s fault), and then the employer pays
the tortfeasor for the employer’s Lambertson contribution liability and the employer
recovers its full subrogation lien from the employee.35 The net effect was a reduced
workers’ comp lien recovery.
32
Id. at 689.
Id. at 688.
34 Id.
35 Johnson v. Raske Bldg. Sys., Inc., 276 N.W.2d 79, 81 (Minn. 1979)
33
The rule in Minnesota provides fairness to all parties involved. In states that
permit subrogation it would be inequitable to force third-party tortfeasors to pay the
entire damages award to an employee when the third-party tortfeasor was only partially
negligent. Such a result is eliminated under the Lambertson rule. Additionally, by
limiting the employer’s contribution to its workers’ compensation payments and by
permitting subrogation of the amount already paid to the employee, the employer will
not be held liable twice for the same injury, and the exclusive remedy doctrine of
workers’ compensation law is preserved.36
In Cambern v. Sioux Tools, Inc., 323 N.W.2d 795 (Minn. 1982), the Supreme
Court decided that an employer’s fault should not be combined with the defendant’s
fault for purposes of determining whether the employee can recover under the thenapplicable comparative-fault statute, reasoning that “Lambertson did not disturb the
rules for finding fault, only how liability based on fault that was found by the jury was to
be allocated between defendants.”
In 2000, Minnesota amended Minn Stat. § 176.061 to reflect
the Lambertson decision by adding subdivision 11, which reads:
To the extent the employer has fault, separate from the fault of the injured
employee to whom workers’ compensation benefits are payable, any nonemployer third party who is liable has a right of contribution against the
employer in an amount proportional to the employer’s percentage of fault but not
to exceed the net amount the employer recovered pursuant to subdivision 6,
paragraphs (b) and (c). The employer may avoid contribution exposure by
affirmatively waiving, before selection of the jury, the right to recover workers’
compensation benefits paid and payable, thus removing compensation benefits
from the damages payable by any third party.
Procedurally, if the employer waives or settles the right to recover workers’
compensation benefits paid and payable, the employee or the employee’s
dependents have the option to present all common law or wrongful death
36 Id. (When contribution is permitted, the “right of reimbursement protects the employer from
double liability; without it the employer would be liable to the employee for workers’ compensation
benefits and to the third-party tortfeasor for contribution…”).
damages whether they are recoverable under the Workers’ Compensation Act or
not. Following the verdict, the trial court will deduct any awarded damages that
are duplicative of workers’ compensation benefits paid or payable.
In 2014, the Minnesota Supreme Court addressed the effect of Minnesota’s joint
and several liability statute37 on an employee’s claim against a third-party tortfeasor.
In Staab v. Diocese of St. Cloud, 853 N.W. 2d 713, 722 (Minn. 2014), the court held that
a tortfeasor who was not more than 50% at fault was not jointly liable for the fault of a
party who was not sued but was placed on the verdict form. However, unlike an
employer protected by the Exclusive Remedy Rule, the plaintiff in Staab was not
prevented from suing the other at fault party.
In Gaudreault v. Elite Line Servs., LLC, 22 F. Supp. 3d 966, 978 (D. Minn. 2014),
a federal judge for the first time applied Staab to a third-party action where the
defendant was seeking contribution from the otherwise immune employer. The court
said that where the defendant’s fault is less than 50% and it seeks contribution from the
employer, the defendant was only liable for its percentage of fault, not the employer’s. In
other words, because Johnson was decided before the amendment to Minn. Stat. §
176.061(11), the judge did not follow the “Johnson procedure.”38
However, in 2019, the Minnesota Supreme Court essentially upholds the Johnson
procedure and confirms that the Minnesota comparative fault statute, Minn. Stat. §
604.02, the fault of the employer does not reduce the amount of the judgment entered
against a third-party tortfeasor.39 Frederick Fish was injured while on loan by his
employer, Albany Manufacturing, Inc., to Wells Concrete Productions Company
Minn. Stat. § 604.02
Gaudreault v. Elite Line Servs., LLC, 22 F. Supp. 3d 966, 981 (D. Minn. 2014)
39 Fish v. Ramler Trucking, Inc., 935 N.W.2d 738, 744 (Minn. 2019) (“the text of the rest of
section 604.02 tells us the phrase ‘severally liable’ does not include employers.”).
37
38
(Wells).40 He was injured while working aboard a flatbed trailer being pulled by a semitractor driven by an employee of Ramler Trucking, Inc. Pursuant to the loaned-servant
agreement, Albany’s insurer paid workers’ comp benefits to Fish.41 Fish sued Ramler for
negligence, who in turn brought a third-party contribution action against Albany and
Wells.42 Ramler, Albany, and Albany’s insurer settled their respective contribution and
subrogation claims before trial in a “reverse-Naig” agreement.43
The jury apportioned fault 75% to Wells, 20% to Ramler, and 5% to Fish.44 The
jury awarded damages of $527,340.54.45 The court reduced the judgment by the amount
of workers’ comp benefits received and an additional 5% for Fish’s fault. From the
remaining $278,913.58, the court took 20% (Ramler’s percentage of fault) and ordered
judgment in the amount of only $55,782.72, effectively reducing the damages by the
amount of fault attributed to the employer (Wells), ignoring the Johnson procedure
which has been in place since 1979.46
The Minnesota Supreme Court held that in order for the comparative fault statute
to be triggered, persons must be “severally liable,” and the Court’s precedence in
Hendrickson and Lambertson have made it clear that employers liable in workers’
compensation and third parties liable in tort are not commonly liable, either jointly or
severally, because the employer is shielded from tort liability.47 Thus, the Johnson
procedure, and its being codified in Minn. Stat. § 176.061 subd. 11, makes it clear that “a
Fish v. Ramler Trucking, Inc., 923 N.W.2d 337, 339 (Minn. Ct. App. 2019).
Id.
42 Id.
43 Id.
44 Id.
45 Id.
46 Id.
47 Fish v. Ramler Trucking, Inc., 935 N.W.2d 738, 744 (Minn. 2019)
40
41
third party [tortfeasor] must pay more than its share of fault, but provides that
disproportion may be offset, to some extent, by contribution from the employer.” 48
III.
The Loaned Servant Doctrine & Special Employers
But which employer must pay contribution? What is becoming more common in
employment relationships is the use of staffing agencies to which employees may be
assigned temporarily to specific workplaces under the direction and control of another
employer. These staffing agencies have been more commonly called “labor brokers,”
which is a business that hires employees and in effect sells their services to a second
employer in need of temporary help.49 In a typical employment broker agreement, the
staffing agency is considered the general employer and the temporary employer to
which the employee is assigned is the special employer.50 It is not necessary that a
staffing agency be used in order for this special employment situation to occur. The
Minnesota Supreme Court has held that the “borrowed” or “loaned” employee doctrine
provides that where a “general” employer loans an employee to a “special” employer, the
special employer becomes liable for workers’ compensation benefits if the borrowed
employee becomes injured while working for the special employer.51
The “special” employer becomes liable for worker’s compensation benefits only if:
(1) The employee has made a contract for hire, express or implied, with
the special employer;
(2) The work being done is essentially that of the special employer; and
(3) The special employer has a right to control the details of the work.52
Id.
Ulstad v. Brenny, 645 N.W.2d 767, 770 (Minn. Ct. App. 2002).
50 Hernandez v. Specialty Staffing, slip. op., No. WC06-168 (W.C.C.A. Oct. 31, 2006).
51 Danek v. Meldrum Mfg. & Eng’g, Co., 252 N.W.2d 255 (Minn. 1977).
52 Id. at 258.
48
49
When all three of these conditions are satisfied in relation to both the general and
the special employer, both employers are liable for workers’ compensation benefits.53
However, the Minnesota Legislature has expressed that the two employers may agree
between themselves which entity would be responsible for the provision of workers’
compensation benefits.54 In Aultman v. Search Resources, Inc., 58 W.C.D. 89 (W.C.C.A.
1997), the court held that the special employer was liable for workers’ compensation
benefits unless there was an express agreement establishing a different allocation of
liability in accordance with Minn. Stat. § 176.071, which states:
When compensation is payable under this chapter for the injury or death of an
employee employed and paid jointly by two or more employers at the time of the
injury or death these employers shall contribute to the payment of the
compensation in the proportion of their wage liabilities to the employee. If any
such employer is excluded from the provisions of this chapter and is not liable for
compensation, the liability of those employers who are liable for compensation is
the proportion of the entire compensation which their wage liability bears to the
employee's entire wages. As between themselves such employers may arrange for
a different distribution of payment of the compensation for which they are liable.
The question arises, then, is a “special” employer liable to a third-party tortfeasor
for the injuries to a temporary worker partly caused by the special employer’s negligence
even when the special employer and general employer expressly agreed that the general
employer would pay workers’ compensation benefits to the injured worker? More
specifically, is the special employer liable for contribution when the special employer
does not pay workers’ compensation benefits to the employee because the general
employer did so?
The Minnesota Court of Appeals has held that although special employers and
general employers may contract between themselves for the distribution of workers’
53
54
Id.; see also Smieja v. City of Bowerville, 406 N.W.2d 325 (Minn. Ct. App. 1987).
Minn. Stat. § 176.071 (2020); see also Bilotta v. Labor Pool, 321 N.W.2d 888 (Minn. 1982).
compensation benefits, both employers remain jointly liable for such benefits.55 This
means that under the loaned-servant doctrine, the employee is allowed to look to either
employer for compensation because he is deemed to be and employee of both
employers.56 The Meiske court held that the Minn. Stat. § 176.071 side agreement
between the special employer and general employer cannot be used to bar a stranger
(the third-party tortfeasor) to the side agreement from asserting its right to attempt to
show the negligence of the special employer.57 What the Minn. Stat. § 176.071 side
agreement does is terminate the special employers obligation to pay workers’
compensation benefits, and shifts that burden to the general employer.58 The Meiske
court remanded with instructions that the third-party tortfeasor was free to pursue a
Lambertson contribution claim against the special employer.59
This decision is wrong for several reasons. First, Minnesota caselaw regarding an
employer’s liability to employees in tort is absolutely barred via the exclusive remedy
provision in Minn. Stat. § 176.031.60 To allow a third-party tortfeasor to receive
contribution from a special employer would be to shatter the longstanding doctrine that
“employers liable in workers’ compensation and third parties liable in tort are not
commonly liable, either jointly or severally, because the employer is shielded from tort
liability.”61 Allowing a third-party tortfeasor a right of contribution against a special
employer without limitation (given that the special employer did not pay benefits)
would be to subject the special employer to tort liability, which goes the opposite
Meiske v. Lift-Stak & Stor, Inc., 599 N.W.2d 175, 178 (Minn. Ct. App. 1999) (citing Aultman v.
Search Resources, Inc., 58 W.C.D. 89, 93 (W.C.C.A. 1997), aff’d mem., 575 N.W.2d 106 (Minn. 1998).).
56 Id. (citing Danek v. Meldrum Mfg. & Eng’g Co., 252 N.W.2d 255, 258 (Minn. 1977).).
57 Id.
58 Id.
59 Id.
60 See supra note 47.
61 Fish v. Ramler Trucking, Inc., 935 N.W.2d 738, 744 (Minn. 2019).
55
direction of the careful crafting of a limited equitable right of contribution that was
created in Lambertson62 and further adopted by the Minnesota Legislature in 2000
under Minn. Stat. § 176.061 subd. 11.
Secondly, the allocation of fault between the special employer and the third-party
tortfeasor would have to be evaluated under Minn. Stat. § 604.02 subd. 1, which is
Minnesota’s statute guiding apportionment of damages in civil actions if a limited right
of contribution, as controlled by Minn. Stat. § 176.061 subd. 11, does not apply.
However, the Fish court made it clear that the language of Minn. Stat. § 604.02 and the
phrase “severally liable” does not include employers.63 If a third-party tortfeasor is
allowed to seek contribution via Minn. Stat. § 604.02, then a severally liable employer
would become a person “jointly and severally liable for the whole award” in tort if its
fault were greater than 50 percent.64 Thus, if the third-party tortfeasor's share turned
out to be uncollectible, by reallocation the employer could be yet further liable. 65 As the
Fish court aptly notes, this would take a “sledgehammer to the Workers’ Compensation
Act’s tort immunity for employers, a cornerstone in the Act’s foundation.”66
Thirdly, Minn. Stat. § 176.061 subd. 11 limits a third-party tortfeasor’s right of
contribution against an at fault employer to the amount the employer receives in limited
subrogation under Minn. Stat. § 176.061 subd. 6(b). However, if a special employer
never paid workers’ compensation benefits to the injurer employee, the special employer
would not have a subrogation interest against any at-fault third party. Meaning, the
third-party tortfeasor’s right of contribution against the special employer would be
See supra note 32.
Fish v. Ramler Trucking, Inc., 935 N.W.2d 738, 744 (Minn. 2019).
64 Id. at 744-45.
65 Id. at 745 (citing to Minn. Stat. § 604.02 subd. 2).
66 Id.
62
63
limited only by the special employer’s fault, but the third-party tortfeasor’s right of
contribution was crafted to be inherently limited. The Fish court makes this clear when
it described the right of contribution being that a “third party [tortfeasor] must pay
more than its share of fault, but provides that disproportion may be offset, to some
extent, by contribution from the employer.”67 This would essentially be the special
employer paying “his employee through the conduit of the third-party tortfeasor an
amount in excess of his statutory workers’ compensation liability.”68
IV.
A Proposal
One of the issues in this unique conflict between special employers and thirdparty tortfeasors centers on the definition of an “employer” within Minn. Stat. § 176.061.
The Minnesota Legislature assumes that the employer, whom a third-party tortfeasor
has a right of contribution against, in Minn. Stat. § 176.061 subd. 11 has a right of
subrogation against the amount paid to the employee given that this is the stated limit of
the right of contribution, or the employers fault, whichever is lesser. Chapter 176 does
define “employer” in Minn. Stat. § 176.011 subd. 10, which reads, “’Employer’ means any
person who employs another to perform a service for hire; and includes corporation,
partnership, limited liability company, association, group of persons, state, county,
town, city, school district, or governmental subdivision.” This definition would seem to
include a “special” employer, but the limitations inherent to Minn. Stat. § 176.061 subd.
11 do not exist, and the interest of the special employer in not being subjected to tort
liability is thrown to the wayside if it is to be included under Minn. Stat. § 176.061 subd.
11 but without limitation.
67
68
See supra note 48.
Lambertson v. Cincinnatti Welding Corp., 257 N.W.2d 679, 684 (Minn. 1977).
This paper proposes, simply, that “special” employers be expressly included in
Minn. Stat. § 176.061 subd. 11 with the adoption of the three-part test to determine if an
employer is a special employer as shown in Danek v. Meldrum Mfg. & Eng’g, Co.69 Most
importantly, the Legislature must specifically provide that a “special” employer’s
contribution liability to a third-party tortfeasor be capped at the amount of workers’
compensation benefits paid to the employee by the general employer, or by the amount
of fault of the special employer, whichever is less. The Legislature, then, ought to also
define what a general employer is and adopt the definition as stated in Ulstad v.
Brenny.70
This is not a solution where every party wins, but neither was the court crafted
equitable remedy in Lambertson, nor is the Legislature’s adoption and slight
modification of Lambertson in Minn. Stat. § 176.061 subd. 11. There is necessarily going
to be a trade-off between the interests of the employee, the interests of the special and
general employer, and the interests of the third-party tortfeasor. As noted in Section II,
jurisdictions across the country largely place a heavy burden on third-party tortfeasors
to bear the full damage award to injured workers without any right of contribution, but
even in jurisdictions like Minnesota where there is a limited equitable right of
contribution, this too inherently makes the third-party tortfeasor bear more than his
share of fault.71 However, this solution does provide the third-party tortfeasor with some
amount of contribution to mitigate its inequitable burden, which fits with the model of
the Court and Legislature on desiring to craft equitable remedies for third-party
tortfeasors.
252 N.W.2d 255 (Minn. 1977).
645 N.W.2d 767, 770 (Minn. Ct. App. 2002).
71 See supra note 48.
69
70
What our caselaw in Minnesota has shown is that a third-party tortfeasor’s
interest in not paying more than his percentage of fault to an injured worker is
subordinate to the interests of an employer in not paying more than the statutorily
necessary amount of benefits and the interest of the employee in receiving
compensation for his injuries. There is no compelling reason why this should not also be
the case for a special employer, but the Minnesota Legislature must make that clear and
amend Minn. Stat. 176.061 subd. 11 to limit a special employer’s contribution liability to
the amount of workers’ compensation benefits by the general employer or the fault
liability of the special employer, whichever is less. The special employer would still have
no right of subrogation against the employee given that it never paid workers’
compensation benefits to the injured worker. Thus, the Employee would receive a full
award from the third-party tortfeasor, the special employer would contribute to the
third-party tortfeasor in the amount of its fault or benefits paid by the general employer,
and the general employer retains its right of subrogation against the employee.