Circumventing Workers Compensation Preemption

Recently, one of our clients was sued by an allegedly negligent third party that injured one of its employees.

The employee received workers compensation benefits because he was injured in the course and scope of his employment.

However, the employee also filed suit against the third party, alleging  that the third party was negligent. Such a complaint is indeed proper.

However, the third party, in turn, sued the employer (our client) for indemnity because the third party claimed that the employer should have obtained consent and agreed to indemnify the third party before allowing the employee to enter onto the third party’s land. In this case, the third party was a city and the client required access to such land to conduct its business.

Leaving aside the obvious absurdities, lawyers in such situations should be aware that indemnity claims of this type would eviscerate the Workers Comp preemption protection that employers enjoy.

Notably, the court in Difko Admin. (US) Inc. v. Superior Court (1994) 24 Cal. App. 4th 126, 133 found that:

 The workers’ compensation system, in its relationship to general tort law, is designed to afford the injured employee a speedy and secure remedy for his injuries. The trade-off is that he may not sue his employer in tort; similarly, a third party defendant cannot directly seek indemnification against the employer if the judgment against it represents more than the third party’s “share” of the damages under comparative fault principles. (Lab. Code, § 3864.) The intent of the statutory scheme is to “insulate the employer from tort liability.” (Privette v. Superior Court (1993) 5 Cal.4th 689, 697, quoting S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, 354.) The rules operate to protect the employer not only from actual tort liability, but, as a general rule, from the expenses of that type of litigation.

[A] third party defendant who wishes to establish his right to a Witt v. Jackson offset based on the employer’s concurrent negligence may only do so by raising the issue as defensive matter in his answer, in all cases in which the employer does not seek reimbursement for benefits provided to the employee by an independent action against the third party defendant . . . . The trial court therefore erred in denying [the employer’s] motions to dismiss.

(Id. (emphasis added); see also C.J.L. Construction, Inc. v. Universal Plumbing (1993) 18 Cal. App. 4th 376, 391-92.)

Eventually, the third party accepted the employer’s nominal settlement, apparently realizing the weakness in its claim against the employer.

Employers should seek competent counsel when an employee is injured due to alleged tortious conduct of a third party to evaluate and protect the employer’s rights.