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Workers’ Compensation Act and Contractual Indemnification – A Conflict Between Employer Rights and Responsibilities? Not in Massachusetts.

Massachusetts Workers’ Compensation Act, G.L. 152 §§ 1-86 offers employers certain protections from qualified employee-prosecuted work-related negligence actions at common law.  It does not protect employers from honoring contractual indemnification provisions to third parties upon proof that the injuries are attributable to the employer’s negligence.

The Massachusetts Workers’ Compensation Act, G.L. 152 §§ 1-86 (the “Act”), is intended to strike a balance between employee and employer rights in the context of workplace injuries, offering insurance compensation for to workers for personal injuries arising out of an in the course of employment.   These benefits often consist of compensation for medical expenses and lost wages.  The exclusivity provision of the Act prohibits an employee from collecting benefits from an insured employer or co-employee and seeking redress in the Courts unless said employee provides written notice of their intention to preserve common law tort remedies in lieu of Workers’ Compensation benefits.   See G.L. 152 § 24.  This provision applies to work-related negligence claims, not to intentional torts motived by something other than the employment at issue.  In essence, a covered employee must opt to either insure his right to compensation from a covered employer if injured on the job, or take their chances in a court of law.   Given the no-fault nature of the Act, nearly every Massachusetts employee chooses to be covered rather than to litigate.

Commercial contracts between sophisticated entities commonly contain an indemnification provision.  Generally, one party is performing services and the other is paying for them.  The performing party agrees to assume liability for damages the paying party suffers due to the services the performing party has rendered.  Put differently, if the performing party’s execution of its contractual responsibilities results in the paying party defending litigation or other claims, the performing party agrees it is responsible for covering the cost.  In addition to the actual damages the paying party is required or potentially required to pay, the performing party often also agrees to cover attorney’s fees and other costs associated the claim at issue.

What happens then when the performing party is an insured employer and the insured employer’s employee sues the paying party for a work-related injury?   Massachusetts law preserves the rights of sophisticated parties to allocate risk through contractual agreements, while simultaneously insulating insured employers from common law claims in the context of work-related injuries.  Even where the injured employee has not blamed his insured employer for the injuries suffered, a third party can successfully present evidence that the claimed damages are attributable to the employer’s conduct.  To avoid extensive motion practice on this issue, disciplined pleading is crucial to successfully invoking indemnification.

 

About The Author

Caroline B. Lapish

Caroline B. Lapish brings over a decade of litigation experience in multiple jurisdictions to her practice at Adler Pollock & Sheehan… Read More

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