- Court
- New York Supreme Court, Appellate Division, Third Department
- Case
- Matter of Rodriguez v. Sky Materials Corporation
- Date
- May 28, 2026
- Slip Op. No.
- 2026 NY Slip Op 03342
Background
Claimant Zoilo Cruz Rodriguez was working on a construction site on March 5, 2019, when he tripped and fell while carrying a metal beam. He filed two workers’ compensation claim forms naming his employer as Sky Structures Corporation and Sky Materials Corporation, respectively. A further complication arose because it was unclear whether Rodriguez was also employed by Southeast Personnel Leasing, Inc. (SPLI), a professional employer organization (PEO) that had entered into client leasing agreements with both Sky entities to handle payroll and human resources responsibilities, including securing workers’ compensation coverage. Following hearings, a Workers’ Compensation Law Judge established the claims and determined which employer and carrier were liable. The Workers’ Compensation Board affirmed, finding that State National Insurance Company, Inc. was the liable carrier. SPLI and its carrier appealed.
Holding
The Appellate Division affirmed the Board’s determination that State National Insurance Company was the liable workers’ compensation carrier. The Court addressed the complex employment relationship created when a PEO enters into a client leasing agreement with a construction company. Under such arrangements, the PEO assumes certain employer responsibilities, including securing workers’ compensation coverage, while the client company retains control over the work itself. The Court examined which entity was the actual employer for workers’ compensation purposes and which carrier bore liability for the claim, applying the legal framework governing PEO relationships and analyzing the specific terms of the leasing agreements between SPLI and the Sky entities.
Takeaways
When a professional employer organization enters into a client leasing agreement with a construction company and assumes responsibility for securing workers’ compensation coverage, the PEO’s carrier may be found liable for claims arising from the work performed under the agreement. The determination of which entity is the employer for workers’ compensation purposes in a PEO relationship depends on the specific terms of the leasing agreement and the nature of the relationship between the PEO, the client company, and the worker. Both the PEO and the client company may have employer responsibilities, and the allocation of workers’ compensation liability will follow the terms of the coverage arrangement.
Why It Matters
This case is significant for the growing number of construction companies that use professional employer organizations to manage payroll, human resources, and workers’ compensation coverage. The decision clarifies how liability is allocated in PEO relationships when a worker is injured on the job and the identity of the responsible employer is contested. Construction companies and PEOs should ensure that their client leasing agreements clearly define the allocation of workers’ compensation responsibilities and that the PEO’s workers’ compensation coverage accurately reflects the scope of the arrangement. Workers and their attorneys should be aware that PEO relationships can complicate the identification of the liable carrier and should investigate the employment structure early in the claims process.