A New York appellate court recently ruled on a significant workers' compensation case that clarifies the responsibilities of employers and professional employer organizations (PEOs) when it comes to coverage for injured workers. The case, Matter of Rodriguez v. Sky Materials Corp., was decided on May 28, 2026, and affects workers who may find themselves in similar employment situations involving multiple employers.
The dispute began when Zoilo Cruz Rodriguez, the claimant, was injured while working on a construction site on March 5, 2019. While carrying a metal beam, he tripped and fell, leading to injuries that prompted him to file for workers' compensation benefits. The case became complicated due to questions surrounding his employer's identity—whether it was Sky Structures Corporation or Sky Materials Corporation—and whether he was also employed by Southeast Personnel Leasing, Inc. (SPLI), a PEO that had agreements with both companies.
The Workers' Compensation Board initially ruled in October 2020 that Rodriguez was an employee of Sky Materials and that State National Insurance Company, Inc. was the appropriate workers' compensation carrier. However, after further administrative review, the Board modified its decision, leading to a determination in February 2023 that Rodriguez was employed by Sky Structures and not covered by the State National policy. This decision was contested, resulting in an amended ruling in October 2024 that found Rodriguez was indeed a leased employee covered by the State National policy.
The appellate court's ruling affirmed the Workers' Compensation Board's amended decision. The judges, including Ryba, Aarons, Reynolds Fitzgerald, Powers, and Corcoran, agreed that Rodriguez was a leased employee and that SPLI and State National had not met their burden of proving he was excluded from coverage under the policy. The court noted, "SPLI and State National bore the burden of establishing that claimant was not a leased employee covered by the underlying workers' compensation policy in this particular case."
The court's opinion emphasized that the State National policy covered all employees employed during the policy period unless proven otherwise. The judges pointed out that SPLI's evidence, which included testimony from its director of human resources, failed to demonstrate that Rodriguez was not covered under the policy. The court stated, "the Board determined that SPLI and State National had failed to meet their burden of demonstrating that claimant was a nonleased employee excluded from coverage under the State National policy."
This ruling has significant implications for workers' compensation cases, particularly those involving PEOs. It clarifies that when a PEO has a client leasing agreement with a company, both the PEO and the client are considered employers for the purposes of workers' compensation coverage. This means that injured workers may have more avenues for receiving benefits, especially in complex employment situations.
The decision also reinforces the idea that workers' compensation policies are designed to protect employees broadly, and employers must ensure that they understand their responsibilities under such agreements. The ruling may encourage other injured workers in similar situations to pursue their claims, knowing that the courts may support their rights to benefits.
Looking ahead, this case may set a precedent for future disputes involving PEOs and workers' compensation claims. It highlights the importance of clear communication and documentation regarding employee status and coverage. Employers and PEOs must be diligent in understanding the implications of their agreements to avoid disputes over liability and coverage.
As for next steps, it is unclear if SPLI and State National will appeal this ruling. The court's decision is final unless challenged in a higher court. There are no related cases pending at this time, but the outcome of this case may influence future litigation involving workers' compensation and PEOs.