Borrowed Servant Rule - Definition
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Borrowed Servant Rule Definition
A borrowed servant rule is a legal rule which maintains that an employer is responsible for the activities of a borrowed employee or temporary employee. According to this doctrine, if an employer hires temporary employees such as laborers, electricians, and technicians to do temporary assignments in a company, during their period of employment with the company, the employer is liable for their actions. The borrowed servant rule is legally-binding to all employers. This doctrine maintains that employers owe borrowed servants (employees) the same responsibilities they owe their real employees.
A Little More on What is the Borrowed Servant Rule
Under the borrowed servant rule, special employers are held liable for the actions of their borrowed employees, that is, such an employer is liable for all actions of the temporary employee that happen while under their control. The regular employer of the particular worker is free from liability in a borrowed servant rule, rather, the liability is transferred to the employer who temporarily borrowed the employees. Under this doctrine, regular employers are exempt from liability given that the borrowed employees perform their duties to the special employer and not the regular employer.
Borrowed Servant Liability
The illustration below will enhance a proper understanding of the kind of liability special employer are responsible for under the borrowed servant rule; Chris owns a fumigation store, one of his clients requested he help fumigate his residence on a particular day. Chriss sales attendant is on sick leave on that day and Chris does not want to leave his store locked. Chris goes to Brandy, his friend who has a drug store across the street and negotiates with his friend to release one of his employees to help manage sales at his store. If on the day the borrowed employee assumes duty, the employee sells a wrong fumigation product to a client or the employee slips and injures at work, Chris is responsible for the liability and not Brandy. The borrowed servant rule is commonly used in workers compensation insurance claims. A borrowed servant rule is similar to a captain of the ship doctrine. In the latter doctrine, the manager of a firm is the captain of the firm, when such a manager has a borrowed employee in the, he is responsible for all the actions of the employee. The excuse that the borrowed employee is not directly working under a manager is not a tenable reason to be exempted from the captain of the ship doctrine.
Reference for Borrowed Servant Rule
Academic research on Borrowed Servant Rule
Social work supervisor liability: Risk factors and strategies for risk reduction Lynch, J. G., & Versen, G. R. (2003). Social work supervisor liability: Risk factors and strategies for risk reduction.Administration in Social Work,27(2), 57-72. The purpose of this article is to explore direct and indirect liability of social work supervisors. Specific case law is examined as it applies to malpractice liability-enterprise liability, educational malpractice, negligent hiring, negligent supervision, and borrowed servant rule. Case examples are used to illustrate areas of risk. Strategies for risk reduction are also presented. The shadow banking system: implications for financialregulation Adrian, T., & Shin, H. S. (2009). The shadow banking system: implications for financial regulation.FRB of New York Staff Report, (382). The current financial crisis has highlighted the growing importance of the 'shadow banking system,' which grew out of the securitization of assets and the integration of banking with capital market developments. This trend has been most pronounced in the United States, but it has had a profound influence on the global financial system. In a market-based financial system, banking and capital market developments are inseparable: Funding conditions are closely tied to fluctuations in the leverage of market-based financial intermediaries. Growth in the balance sheets of these intermediaries provides a sense of the availability of credit, while contractions of their balance sheets have tended to precede the onset of financial crises. Securitization was intended as a way to transfer credit risk to those better able to absorb losses, but instead it increased the fragility of the entire financial system by allowing banks and other intermediaries to 'leverage up' by buying one anothers securities. In the new, post-crisis financial system, the role of securitization will likely be held in check by more stringent financial regulation and by the recognition that it is important to prevent excessive leverage and maturity mismatch, both of which can undermine financial stability. FromServantto Master: The Financial Sector and the Financial Crisis Mah-Hui, M. L. (2009). From Servant to Master: The Financial Sector and the Financial Crisis.Journal of Applied Research in Accounting and Finance,4(2), 12-19. The roots of the present financial crisis can be traced to the significant structural changes in the United States economy and its financial system after the 1960s. Paramount among these is the growth of the financial sector and its overshadowing of the real economy. With a slowdown in long-term growth rates, the United States progressively became a debt-driven economy, evidenced by debt explosion in all sectors, particularly the financial sector and household sectors. This is related to the increasing imbalance in wealth and income distribution that produces under-consumption for the vast majority and excess savings for a small minority. Under-consumption by the former is solved through debt assumption, while excess savings for the latter is solved through financial innovations to enhance profits and yields for investors. Changes in the financial industry in terms of heightened speculative and Ponzi financing resulted in greater fragility and instability in the financial system. Consequently, what has become known as a Minsky moment arrived in 2007/8. The financial sector and financial instruments such as derivatives, instead of deriving from and serving the real economy, have become the drivers of the real economy. The role of fiscalrulesin determining fiscal performance Kennedy, S., Robbins, J., & Delorme, F. (2001). The role of fiscal rules in determining fiscal performance. Kennedy, Robbins and Delorme examine the importance of fiscal rules in determining budgetary outcomes. After briefly reviewing the rationale for rules, the paper compares the rules introduced in several countries at the national and subnational levels. It notes that while several countries have introduced restrictions on deficit, debt, tax and expenditure levels, some countries have focused their efforts on increasing transparency and accountability in the conduct of fiscal policy. Kennedy, Robbins and Delorme also evaluate the evidence about the impact of rules in terms of budgetary consolidation in the 1990s. The evidence indicates that both countries with rules and countries without rules implemented successful fiscal adjustments. From this, the authors conclude that rules may be helpful in achieving fiscal consolidation and may even be necessary in certain countries, but they are clearly not necessary in all countries. They also find that empirical studies of fiscal rules generally support this conclusion. However, determining the conditions under which fiscal rules are indeed necessary to ensure fiscal discipline remains an area for further research. Workmen's Compensation and the Logics of SocialInsurance Witt, J. F. (2003). Workmen's Compensation and the Logics of Social Insurance. This working paper sets out an account of the enactment and significance of the workmen's compensation statutes that swept, in the words of an observer, "like a prairie fire" across the nation during the 1910s. The paper critiques leading accounts of the enactment of the statutes, observing that workmen's compensation statutes increased ex post employer liability costs in critical early jurisdictions; singled out work accident cases from among other accident cases such as streetcar and railroad passenger cases that were filling the common law dockets at the same time; and created an administratively cumbersome solution to the non-enforcement of ex ante waivers, notwithstanding that a simpler legislative fix (one with which several important states experimented) was to make such waivers enforceable. As an alternative account, the paper describes a multi-layered process of institutional agenda-setting and interest group politics. Courts structured the priorities and agenda of social insurance reformers, orienting them toward workmen's compensation statutes, which fit more easily within the structures of late nineteenth-century constitutional law than social insurance for sickness, old-age, or unemployment. In turn, social insurance advocates placed compulsory workingmen's insurance programs on the legislative agenda from among an array of policy alternatives for dealing with the accident problem. Finally, sophisticated employers provided the political power to push the statutes through state legislatures. Sophisticated employers' interests were not so much in reducing or standardizing their accident costs as they were in using compensation statutes to equalize accident costs across firms. The result was a deeply ambiguous coalition for reform, rich with possibilities for the further developments in modern social policy and yet sharply divided in its basic goals and outlooks. Financial crisis of 2007-2010 Chang, W. W. (2011). Financial crisis of 2007-2010.Available at SSRN 1738486. This paper discusses the causes and impacts of the financial crisis of 20072010 and examines the reforms aimed at the prevention of its recurrence. The causes to be discussed include housing and commodity bubbles, easy credit conditions, subprime lending, predatory lending, deregulation and lax regulation, incorrect risk pricing, collapse of the shadow banking system and systemic risk. The impacts to be examined include the major financial institutions, the financial wealth, the economies of the U.S. and other countries Iceland, Hungary, Russia, Spain, Ukraine, Dubai, and Greece. The paper further discusses emergency policy responses, principles of financial reforms and various regulatory proposals. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the Basel III accord are also discussed. Concluding remarks provide a brief discussion of the latest economic problems in 2011.