The Appellate Division, Second Department, recently issued a significant decision addressing special employment and Workers' Compensation exclusivity in the context of payroll service arrangements.

In Samuel v Petainer, 2026 NY Slip Op 00925 (2d Dept Feb. 18, 2026), the Court modified a Supreme Court order and granted summary judgment to GT's Living Foods, LLC, dismissing the complaint and all cross-claims for contribution and common-law indemnification.

The plaintiff was injured when a kombucha keg exploded at a storage facility. Although he had been placed on the payroll of a third-party "employer of record" (Atrium Payroll Services), the evidence demonstrated that GT's Living Foods continued to supervise and control his day-to-day work as a brand ambassador. The Second Department held that GT's Living Foods established, prima facie, that it was the plaintiff's special employer. As a result, the plaintiff's receipt of Workers' Compensation benefits barred the negligence action against it.

This February 2026 ruling reinforces the special employment doctrine in modern workforce structures involving payroll companies and "employer of record" agreements. The Court did not treat the payroll arrangement as dispositive. Instead, it focused on supervision, control, and whose business was being furthered — consistent with established precedent, but applied to contemporary staffing models.

For defense counsel and claims professionals, the decision confirms two important points:

• Companies that outsource payroll and workers' compensation administration do not necessarily surrender employer status if they retain operational control.
• As more businesses rely on staffing platforms and managed payroll services, this decision provides a clear appellate reaffirmation that operational control — not payroll paperwork — drives special employment analysis in the Second Department.

Practically, the decision strengthens early summary judgment strategies in cases involving staffing or payrolling entities and reinforces the importance of developing a factual record on supervision and control.