Court of Appeal Rejects Staffing Agency's Comp Policy Dispute

Los Angeles,CA(WorkCompAcademy.com) - The plaintiff in the case, Affiliated Temporary Help, is an employment agency, providing temporary staffing services and handling payroll, workers’ compensation and human resource services for the temporary employees it places.

The defendants include Infiniti HR, LLC a professional employer organization (PEO), a full-service human resources firm that assists businesses on an outsourced basis. CTK North American, LLC, doing business as CTK North American Insurance Services, a licensed insurance broker. HR Map LLC an administrator of PEO services and worked in that capacity for Affiliated.

In February 2015 Affiliated entered into a one-year contract with Infiniti HR to provide PEO services, including payroll, human resources, benefits administration and workers’ compensation services. Affiliated also elected to be covered under Infiniti HR’s workers’ compensation policy.

New management discovered that Infiniti HR had "deceptively" switched Affiliated from a no-deductible workers’ compensation policy to one with a $200,000 deductible, which, Affiliated alleged, effectively meant Affiliated was paying Infiniti HR to self-insure. Affiliated terminated the contract in writing in January 2020 after this discovery.

Affiliated sued CTK, and HR Map,, among other parties, for violation of California’s unfair competition law (UCL) (Bus. & Prof. Code, § 17200et seq.) and financial elder abuse in violation of the Elder Abuse and Dependent Adult Civil Protection Act (Elder Abuse Act or Act) (Welf. & Inst. Code, § 15600 et seq.).

The trial court dismissed CTK and HR Map after sustaining their demurrers to the complaint without leave to amend. On appeal Affiliated contends it pleaded facts sufficient to constitute causes of action against CTK and HR Map and, at the very least, the court erred in denying leave to amend the complaint.

The Court of Appeal affirmed the trial court in the unpublished case of Affiliated Temporary Help v. CTK North American - B308558 (August 2022).

Under certain defined circumstances, the Elder Abuse Act covers the deprivation of property not held directly by an elder or dependent adult, the Act’s scope is not nearly as broad as Affiliated contends. It cannot be read to cover the facts of this case, and in any event Affiliated is not a protected party that can recover under the provisions of this Act.

Unfair Competition Law prohibits, and provides civil remedies for, unfair competition, which it defines as "any unlawful, unfair or fraudulent business act or practice."

Affiliated contends that unlicensed insurance sales (Insurance Code section 1631) can serve as the basis for a UCL claim.

Section 1633 makes unlicensed insurance sales a misdemeanor. Although Affiliated’s UCL cause of action alleged CTK violated those provisions, it failed to plead sufficient facts to support that conclusory claim.

"As Affiliated acknowledged in its complaint, CTK is a licensed insurance broker. Even accepting as true the allegation that CTK somehow induced Affiliated to hire Infiniti HR without disclosing that Infiniti HR was not licensed, if that was transacting insurance business, CTK was licensed to do so."

Moreover, Affiliated failed to allege any factual basis for its assertion that CTK had a duty to disclose the license status of Infiniti HR.

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