The construction industry’s reliance on subcontractors and temporary workers continues to grow in 2025, making the question of who is liable when a “borrowed” worker is injured more pressing than ever.

With ongoing labor shortages and tighter immigration scrutiny, many contractors are turning to staffing agencies and subs to fill critical roles. While this practice helps projects stay on track, it also introduces complex liability challenges when accidents occur.

A borrowed employee is typically hired by one company but temporarily assigned to another with consent. While working for the borrowing employer, responsibility for safety and oversight usually shifts as well. The challenge comes when injury strikes — leaving the courts, insurers, and contractors to determine where liability rests.

Determining Responsibility

Attorney Jerry Lehocky, founding partner of Pond Lehocky Giordano in Philadelphia, said the key factor is the level of control the borrowing contractor exerts.

“If there is insufficient control by the general contractor over the work performed by the employee, then the subcontractor or labor-supplying group remains the employer of that employee,” Lehocky said. “If the borrowed employee is not an employee of the general contractor, then that general contractor could face exposure under a negligence action brought by the employee in addition to a workers’ compensation action against the subcontractor. The amount of monetary exposure to the general contractor is multiples of what the workers’ compensation exposure is.”

Even strong contract language does not necessarily shield contractors, Lehocky added. “The contract could state very specifically that the supplying employer remains the ‘employer’ for purposes of workers’ compensation; however, if the actual facts are that the general contractor is in actuality controlling the work performed by the employee, the contract language can be easily voided.”

Contract Provisions and Jobsite Control

Attorney Maria Moffatt of Gerstle Snelson in Dallas emphasized that several factors determine liability: state laws, employment agreements, and, most importantly, who actually supervises the worker on site.

“Therefore, the provisions of the contract as to supervision of workers, safety meetings and general control of the jobsite become very important,” she said. “And then if there are contracts or employment agreements governing the borrowed employee, those provisions have to be read in conjunction with the prime contract’s provisions.”

In practice, this often means the prime contractor or owner is responsible for safety unless clearly stated otherwise.

Attorney Carol Sigmond of Greenspoon Marder in New York pointed to the “borrowed employee doctrine”, which generally makes the borrowing employer liable. “Sometimes, the employee is deemed a ‘special employee,’ which is a matter of state law, so the rules will vary from state to state somewhat,” she said. Courts often examine who has oversight, decision-making authority, and day-to-day control.

Practical Legal Safeguards

Experts agree that contracts should clearly identify responsibilities when borrowed employees are used. That includes oversight, payroll, wage determination, insurance, tools, and scope of work.

Moffatt advised: “The best practice is to include a provision that outlines the responsibilities of the company that is the owner or general contractor — who is in charge by contract of the construction site — and the company that supplies the labor or workers.”

In Florida and other states, courts presume general employment, noted Matthew Koskinen of Dickinson Wright. “Factors that the courts utilize in determining whether this relationship exists revolve around the existence of a contract, the work being performed at the time of injury being that of the special employer, along with the special employer’s control over the borrowed employee’s work,” he said. Agreements, insurance clauses, and indemnity provisions are critical for protection.

His colleague Adam Richards added that workers’ compensation coverage remains the central issue. “Throughout the country, an employer is typically immune from liability in exchange for providing such insurance coverage, unless an exception applies, such as intentional misconduct or gross negligence,” he said. Ensuring proper coverage for borrowed employees is a key defense.

The Bottom Line

Borrowed employees remain a valuable solution for labor shortages, but they also create layers of liability that can be costly if overlooked. Contract clarity, insurance verification, and legal consultation before workers set foot on site are essential.

As Moffatt advised: “A contractor should always consult with an attorney first if they are going to be using workers or employees that belong to another employer or contractor.”

In today’s construction landscape, transparency and proactive agreements are the safest path forward — protecting contractors, subs, and borrowed employees alike.

Originally reported by Keith Loria in Construction Dive.