Day Laborer “Employee” Under Temp Agency's CGL Policy?

This loss occurred in Texas . The insured provides temporary staffing. The insured provided a day laborer to a client. This individual was provided to client with no certification to drive a forklift and that was not part of his responsibilities. In any event apparently during a break he entered the warehouse and attempted to drive a forklift (kind of a joy ride) and crashed into a pillar causing significant damages.
The service agreement with the client is brief. It indicates the insured provides payroll funding, workers comp and liability insurance and all other employer burdens. There is no hold harmless agreement.
Several questions:
1. Would this worker be considered an employee under the insured's CGL policy?
2. Could his actions not be considered in the course and scope of his employment?
3. Could the Expected or Intended Injury or Contractual liability exclusion apply?
4. Do you think this leased or temporary worker may have also be covered under the party we leased him to, if they have a standard CGL policy?

Ohio Subscriber

1. Based solely on the facts provided and the definitions provided by the CGL policy, I see no reason why this individual would not qualify as an employee of the staffing company under the CGL policy. 

2. The employee's actions might be considered to fall outside the course and scope of his employment.  Although we are dealing with the CGL policy here, Texas law on what is considered in the course and scope of employment mainly comes from workers comp cases.  Assuming CGL situations would be treated similarly, it is worth noting that Texas courts have held that the workers comp insurance carrier is relieved from paying benefits to an injured employee if the injury is caused by the employee's horseplay.  Tex. Lab.Code Ann. § 406.032 ( Vernon 1996). Horseplay has also been considered as a deviation from the course and scope of employment and, thus, not an injury covered by the Act. See United Gen. Ins. Exch. v. Brown, 628 S.W.2d 505; Mejia v. Liberty Mut. Ins. Co., 544 S.W.2d 690 (Tex.App.-Houston [14th Dist.] 1976. Several cases have held that, when an employee turns aside from his or her employment and willingly engages in acts such as practical joking, scuffling, or “fooling,” the employee is engaged in horseplay. Mejia, 544 S.W.2d at 691 (practical joking).

Of course this would be a fact-based determination for a judge or jury to make, but from your description it seems the individual's behavior would fall into one of the above categories.  If so, he would not be considered an insured under the staffing agency's policy.

3. Expected/intended exclusion- Although I probably would need more info on the specifics regarding the incident (did the employee yells “yahoo, watch me crash into this pillar!” or was he just messing around on his break and wanted to see what it would like to zip around in the forklift? )  – assuming the latter, this exclusion would not apply to preclude any coverage, especially given that the insured should receive the benefit of doubt in favor of coverage.

Contractual liability exclusion- based on brief language in service agreement I don't think this exclusion would apply either.

4. Whether the individual would be covered under the policy of the party he was leased to would depend on whether he is determined to be a leased or a temporary worker under the policy. The difference is critical, as a leased worked would be considered an employee of the lessor, while a temporary worker would not.  Based on the individual's being provided by a temporary staffing company, and just for one day, it seems this is more of a temporary worker situation.  However, you reference his being “leased” to the party, so perhaps it has already been established that he a leased employee.  Either way, a determination of whether he is either a temporary worker or a leased worker as defined by the CGL will need to be made to determine coverage.