My Boss Made Me Do It! The Appellate Division Examines the Compensability of Injuries That Occur During Employer-Sponsored Social Events

New Jersey - Workers' Compensation

Once again, the Appellate Division has addressed the issue of whether injuries sustained during social activities related to employment are compensable in Trautman v. Marpal Disposal/Republic Svcs., Docket No. A-2525-08T1 (June 24, 2009). Section 7 of the New Jersey Workers' Compensation Statute provides that injuries that occur during social or recreational activities are not compensable. However, there is an exception. If injuries occur during a social activity that (1) is a regular incident of employment and (2) the activity produces a benefit to the employer beyond improvement in employee health and morale, then the injuries are considered compensable. This exception was added to address the ever increasing amount of claims stemming from employer-sponsored sporting events, like softball games.

Another exception has since been created by case law. If the employer compels an employee to participate in a recreational or social activity and sustains injuries, those injuries are also compensable, even though the activity may not be a regular incident of employment and does not produce a benefit to the employer. Lozano v. Frank DeLuca Const., 178 N.J. 513 (2004). In essence, if the employer requires employee participation in the activity, then the activity becomes part of the employee's work duties as a matter of law. Compulsion can be either direct or implicit. If a petitioner is alleging that the employer implicitly or indirectly compelled the employee to participate in the activity, the court will then need to determine whether the employee's belief was objectively reasonable:

When an employee alleges indirect or implicit compulsion, we hold that the employee must demonstrate an objectively reasonable basis in fact for believing that the employer had compelled participation in the activity. Whether the employee's belief is objectively reasonable will depend largely on the employer's conduct and must be assessed on a case-by-case basis. Relevant factors include, but are not limited to, whether the employer directly solicits the employee's participation in the activity; whether the activity occurs on the employer's premises, during work hours, and in the presence of supervisors, executives, clients, or the like; and whether the employee's refusal to attend or participate exposes the employee to the risk of reduced wages or loss of employment. The absence of one factor is not fatal. As noted, that list is not exhaustive and other fact patterns may suggest compulsion. However, an employee's mere subjective impression of compulsion standing alone will not bring an activity within the scope of employment. Id., at pp.534-35; see also McCarthy v. Quest Intern. Co., 469 (App. Div. 1995), certif. denied, 143 NJ 518 (1996).

In Trautman, the essential facts were not in dispute. Only two witnesses testified: the petitioner, who was employed by the respondent as a sales administrator, and Laura Navatta, the respondent's operations and safety supervisor. The petitioner and Navatta testified that they were required to attend an evening banquet sponsored by their employer in Atlantic City during a convention. The banquet was designed to attract potential customers, and employees were expected "to speak to prospective customers, as well as current clients of the company." After the banquet was over, the petitioner "followed the group" to two other bars in succession. While she was at the second bar, the petitioner was speaking to a potential customer, and she introduced him to her sales manager. The petitioner testified she wanted to return to her room because she was "ready to go to bed," but her sales manager, who was also her immediate supervisor, told her, "If I have to be here, so do you." The petitioner then testified about going outside with her sales manager for a discussion about the manager's pending departure from the company:

Q. Do you know what it is that Ed wanted to talk to you about?

A. The changes that are going to occur because he was going to be stepping down. He briefly did, you know, but he wanted to go into a little more detail.

Q. Did the higher-ups at Marpal know at that time that Ed was stepping down?

A. Yes.

Q. So you went outside and then what happened?

A. I don't think we were out there five minutes and the next thing you know somebody came outside. It was very vulgar language. . . I don't remember what he said. All I remember saying was, "Oh, my God." So he just very politely said, "Hey, buddy, would you mind coming down on the language a little. I am trying to have a talk with," he called me his secretary. And the next thing you know this guy was in our face. . . . I was pulling him out so he wouldn't go after the guy and the guy hit me. I was trying to prevent it.

Navatta testified that "there were literally hundreds of people in attendance" at the banquet, and the banquet was "a way to drum up business." She also observed the petitioner and her sales manager leave the bar prior to the assault. Although, according to Navatta, the events that took place after the banquet were "strictly social," she did not dispute that the petitioner and her sales manager were talking to a potential customer, that her sales manager told the petitioner that she had to remain at the bar, and that the sales manager and the petitioner left the bar to discuss changes that were going to occur at the company because of his departure.

At trial, the workers' compensation court determined that the petitioner's claim was not compensable because her activities were "merely social."

The petitioner has the burden of proving that her injury was within the scope of her employment, and . . . it is clear to me that the bar hopping and the excessive drinking was merely social, based upon the fact that there were no suggestions or directions from the respondent that she do any of these things, or that she go for the walk or have any conversations with [the sales manager] and that it clearly appeared to be all a social event.

The Appellate Division reversed and remanded the case for further findings. The court noted that the compensation court did not make any credibility findings and ignored the petitioner's testimony that she remained at the bar to discuss business with a potential customer and work-related issues with her sales manager. In language directed to address the compulsion issue, the court noted it was "undisputed" that the petitioner remained at the bar, even though it was late and she "wanted to leave" because the sales manager told her: "If I have to be here, so do you." Based on this statement, the court determined that the petitioner's attendance at the bar was required by the respondent, thus making the assault and injuries compensable.

This case highlights a couple of important points for employers in New Jersey. First, employers should be wary when sponsoring recreational or social events for employees. Softball games, company picnics, and the big one this time of year - holiday parties - can all lead to significant financial liability for often what was an unexpected loss. Second, even though the statute requires that the test to determine implicit compulsion to be viewed objectively, the court will always consider that workers' compensation is remedial social legislation. This legislative policy requires that all issues be given a liberal construction to afford coverage to as many workers as possible. Translation - ties will not go to the employer. Finally, during underwriting, carriers should also inquire as to what social or recreational activities an employer sponsors. There could be a far greater potential exposure posed by an employer's social or recreational activities than by the creation of their product or service. If you have questions about your workers' compensation liability for sponsoring social or recreation events for employees, you should contact your defense counsel as soon as possible.

*Bob is an associate in our Cherry Hill, New Jersey, office and can be reached at (856) 414-6009 or RJFitzgerald@mdwcg.com.

Defense Digest, Vol. 15, No. 4, December 2009