By Valerie Dixon

In May 2013, the Globe and Mail reported that the number of temporary workers in Canada had reached record highs in 2012, jumping from 11.3 per cent in 1997 to over 13 per cent (according to a report of Statistics Canada).  The majority of that growth was in BC and Ontario. 

There are a number of reasons why temporary workers may be appealing to employers, particularly if a knowledgeable staffing agency is involved.  For some employers, the fact that a temporary worker is the employee of the staffing agency, as opposed to the employer, means fewer administrative headaches. However, a recent decision from the BC Supreme Court highlights some areas of concern for employers and staffing agencies alike with respect to responsibility for the negligence of temporary employees hired through (staffing) agencies.

In many circumstances, employers are responsible for the acts of their employees, even if the employer did not direct the employee to do the act or make the omission that resulted in damage to a third party.  This is called “vicarious liability”. 

The staffing agency in the case referred to above had contracted with a health authority to provide health care professionals on an “as needed” basis.  The contract had a few key terms:

• the health authority was required to specify to the staffing agency the experience and qualifications it required of any employee provided by the staffing agency;
• the health authority could reject any employee proposed by the staffing agency for any reason; and
• the staffing agency would indemnify the health authority for any claims arising out of the failure of the employee provided by the staffing agency to have the appropriate qualifications or experience for the work assigned by the health authority.

Ms. M was a nurse employed by the staffing agency.  The staffing agency paid her wages, as well as vacation pay, and made applicable statutory deductions.  In 2008, Ms. M was sent by the staffing agency to work for the health authority on an intermittent basis. 

On January 20, 2009, a patient of the health authority died as a result of a post-surgical accident. Ms. M was on duty at the time and was involved in the care of the patient.  Following the patient’s death, his family sued the health authority, as well as the doctors and nurses involved, including Ms. M.  The family also sued the staffing agency. 

The court was asked to deal with a preliminary legal issue – whether the health authority and/or the staffing  agency was vicariously liable for the alleged acts and omissions of Ms. M while she was on assignment at the hospital? The court concluded that even though Ms. M was an employee of the staffing agency, both the agency and the health authority were vicariously liable for alleged her acts and omissions. The reasons stated by the court for its conclusion included that:

• the health authority directed Ms. M regarding the work she performed at the hospital;
• the health authority was aware of Ms. M’s qualifications and competence, having used her intermittently over a two year period;
• the health authority had the ability to reject Ms. M (similar to an employer’s ability to hire or fire);
• the health authority held out to its patients that its nurses were competent to perform their jobs; and
• while Ms. M’s contract of employment was with the staffing agency, Ms. M’s relationship with the health authority was sufficiently close such that it was also responsible for her acts and omissions.

The court was also asked to decide whether the staffing agency was required to indemnify the health authority for the acts and omissions of Ms. M under the terms of the contract between the staffing agency and the health authority.  However, the court decided that question needed to be dealt with after a full trial of the issue of whether Ms. M was actually negligent.

This case is a sobering reminder that just because an employee is hired by an agency, does not mean that only the agency will be held vicariously liable for the acts and omissions of that employee. It also highlights the importance of properly drafted contracts between staffing agencies and employers.  If appropriately drafted, an indemnity clause can protect a business from bearing the burden of the negligence of an employee retained through a staffing agency.  Finally, it highlights the importance of employers and staffing agencies ensuring that they have appropriate insurance coverage. 

Valerie Dixon is a speaker at the 2014 HRMA Conference + Tradeshow. Her session, Human Rights – What You Need to Know, is on Wednesday, April 16. For more information, please visit bchrma.org/conf2014

Valerie Dixon is a partner with the firm Miller Thompson’s Labour & Employment and Insurance Practice Groups. She advises clients with respect to all workplace issues, including wrongful/unjust dismissal, restrictive covenants, human rights, employment contracts/policies, privacy and health and safety.