PA Supreme Court Upholds Waiver Of Claims Clause In Employment Contracts
Many companies use temporary employees, leased employees or retain independent contractors as part of their normal operations. An important issue in any such arrangement is apportioning liability between the company supplying the labor and the company receiving the labor for accidents caused by the workers or injuries sustained by these individuals while performing their services. These clauses are often the focus of litigation following an accident. The Pennsylvania Supreme Court has recently issued a ruling which could help companies that hire such workers insulate themselves from liability claims brought by these employees.
In Bowman v. Sunoco, Inc, 65 A.3d 901, 2013 Pa.LEXIS 796 (2013), the Pennsylvania Supreme Court affirmed the validity of a waiver of third party claims in an employment contract. In Bowman, the Plaintiff was employed by Allied Barton, a security company, which had a contractual relationship with Sunoco to provide security guards for Sunoco’s facilities. Allied Barton required its employees to sign employment contracts which contained the following waiver:
I understand that state Workers’ Compensation statutes cover work-related injuries that may be sustained by me. If I am injured on the job, I understand that I am required to notify my manager immediately. The manager will inform me of my state’s Workers’ Compensation law as it pertains to seeking medical treatment. This is to assure that reasonable medical treatment for an injury will be paid for by Allied Workers’ Compensation insurance.
As a result, and in consideration of Allied Security offering me employment, I hereby waive and forever release any and all rights I may have to:
- make a claim, or
- commence a lawsuit, or
- recover damages or losses from or against any customer (and the employees of any customer) of Allied Security to which I may be assigned, arising from or related to injuries which are covered under the Workers’ Compensation statutes.
Bowman v. Sunoco, Inc., 65 A.3d 90, n1 (Pa. 2013)
The Plaintiff was injured when she slipped and fell on snow or ice while performing her duties at a Sunoco Refinery. She brought a suit against Sunoco. The Court of Common Pleas of Philadelphia granted Defendant judgment on the pleadings based on the terms of the waiver form. The only issue raised by the Plaintiff on appeal was that section 204 of the Workers Compensation Act rendered the waiver of claims void as against public policy.
The Supreme Court rejected that argument, holding that the Section 204 prohibition on waiving claims was limited to the right to collect workers compensation benefits. Since the Plaintiff did receive workers compensation benefits, a fact repeated often in the opinion, the waiver did not violate public policy.
The opinion, though, did leave some questions open for future litigation. The Plaintiff did not respond to the pleading which raised this defense. While the Appellate Courts never did address potential waiver issues, the Courts did note that the Plaintiff was not asserting the defenses of duress, contract of adhesion or fraud. The Plaintiff also did not contend that she did not understand the disclaimer that was signed. Therefore, despite the ruling, one should expect a challenge to the waiver clause in any future litigation.
No waiver form, though, can relieve a party for their own reckless conduct. It is important for any company utilizing such forms to remember that their impact is limited to the effect they have on any potential suits. They cannot alter how the company conducts business or adheres to basic safety guidelines.
Companies which use or supply independent contractors, leased employees or temporary employees must be aware of the significance of how their agreements impact potential workers compensation and liability claims. Indemnification clauses, insurance requirements and now waiver of claims forms play a vital role in defining the risk each company assumes when providing or receiving workers. The attorneys at Reger Rizzo and Darnall, LLP have extensive experience drafting these agreements as well as engaging in litigation over the terms of such agreements.