ABTL Report - Fall 2026 Edition - Flipbook - Page 17
ABTL - Los Angeles
Fall 2026
Overview of the Workers’ Compensation System...continued from Page 16
independent contractor is generally not liable for injuries to
the contractor or its employees.
but were not technically their employer.
Another related tactic used by injured employees to bring
a civil tort action is the alter ego doctrine. Injured employees
have argued in the joint venture context, for example, that
the owner of their employer—who should be entitled to the
protections of workers’ compensation exclusivity as a coemployee—is subject to liability in tort because he is also the
owner, and the alleged alter ego, of related companies that
might have had some role in workplace safety.
Workers’ compensation has some limited application beyond
the direct employer-employee relationship. Under the Privette
doctrine, one who hires an independent contractor is not
liable for injuries sustained by the independent contractor’s
employees in the course of that work. (Lopez v. C.G.M.
Development, Inc. (2002) 101 Cal.App.4th 430, 434 (Lopez).)
There are two justi昀椀cations for the Privette doctrine. One is the
hirer’s right to delegate workplace safety to the independent
contractor. The other is the workers’ compensation exclusive
remedy provision. (Ibid.) The idea is that, “ ‘it would be unfair
to impose liability on the hiring person when the liability of the
contractor . . . is limited to providing workers’ compensation
coverage.’ ” (Id. at p. 439.)
Alter ego is an extreme remedy and is rarely applied.
(Highland Springs Conference & Training Center v. City of
Banning (2016) 244 Cal.App.4th 267, 281.) There are many
factors that a court takes into account when determining
whether a corporate form should be disregarded. (Zoran Corp.
v. Chen (2010) 185 Cal.App.4th 799, 811–812 [these factors
include, but are by no means limited to: (1) commingling of
funds and other assets the unauthorized diversion of corporate
funds or assets to other than corporate uses; (2) the treatment
by an individual of the assets of the corporation as his own;
(3) the confusion of the records of the separate entities; (4)
the failure to adequately capitalize a corporation; (5) the use
of a corporation as a mere shell, instrumentality or conduit for
a single venture or the business of an individual or another
corporation; (6) the concealment and misrepresentation of
the identity of the responsible ownership or concealment of
personal business activities; (7) the contracting with another
with intent to avoid performance by use of a corporate entity
as a shield against personal liability, or the use of a corporation
as a subterfuge of illegal transactions].)
The two exceptions to the Privette doctrine are the “retained
control” exception and the “concealed hazard” exception.
There are two narrow exceptions to the Privette doctrine.
Hooker v. Department of Transportation (2002) 27 Cal.4th 198
established the “retained control” exception. (Id. at p. 202.) In
Hooker the court explained that if a hirer retains control over
safety conditions at a worksite and negligently exercises that
control in a way that af昀椀rmatively contributes to an employee’s
injuries, liability can be imposed on the hirer and the exclusive
remedy rule would not preclude the employee from suing the
hirer. (Ibid.) In McKown v. Wal-Mart Stores, Inc. (2002) 27
Cal.4th 219, a company hired a contractor to install sound
systems in stores. (Id. at p. 223.) The company requested that
the contractor use the company’s forklifts. (Id. at p. 225.) The
forklifts were not properly equipped and an employee of the
contractor was injured. (Ibid.) The court held that negligently
furnishing equipment was a form of exercising retained control
and that the hiring company was liable because its equipment
af昀椀rmatively contributed to the injuries. (Ibid.; Bowen v. Burns
& McDonnell Engineering Co., Inc. (2024) 103 Cal.App.5th
759, 765; Lopez, supra, 101 Cal.App.4th at p. 434; .)
In order for the alter ego doctrine to be applied, “there must be
such a unity of interest and ownership between the corporation
and its equitable owner that the separate personalities of the
corporation and the shareholder do not in reality exist.” (Sonora
Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523,
538.) In addition, “there must be an inequitable result if the
acts in question are treated as those of the corporation alone.”
(Ibid.) Arguably, for such an alter ego argument by an injured
employee to succeed, therefore, a court would have to 昀椀nd that
the bene昀椀ts the injured employee would receive under the Act
are somehow inequitable. Given the Legislature’s embrace
of the workers’ compensation bargain, tort plaintiffs face an
uphill battle.
The second exception to the Privette doctrine is the “concealed
hazard” exception. (Kinsman v. Unocal Corp. (2005) 37
Cal.4th 659, 674.) Under this exception, a hirer of a contractor
may be liable if (1) he or she knew or reasonably should have
known of a concealed hazard, (2) the contractor did not know
and could not have reasonably ascertained the condition, and
Under the Privette doctrine, a person who hires an
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