High Court Voids Waiver of Third-Party Liability in Employment Contract

Justice Anne Patterson. Photo by Carmen Natale/ALM

The New Jersey Supreme Court on Monday ruled that an employment contract limiting a worker’s right to sue a third party after an injury is unenforceable.

The court, in a unanimous ruling, said such waiver provisions run afoul of the public policy of protecting employees’ rights and the plain language of the Workers’ Compensation Act.

Justice Anne Patterson, writing for the court, said that though an employee injured on the job might receive workers’ compensation benefits, the law does not bar him or her from suing a third party.

“An employee’s right to workers’ compensation benefits does not preclude his or her assertion of common-law personal injury or wrongful-death claims against a liable third party,” Patterson said.

The law, Patterson noted, does provide that any compensation that an injured plaintiff receives from a third party may be used to offset any lien from his or her employer’s workers’ compensation carrier.

In this case, Kenilworth-based Schering-Plough—through successor Merck & Co.—had asked the court to overturn the Appellate Division’s holding that summary judgment was properly denied in the case of a security guard who was injured at its facility and awarded $900,000.

The appeals court last August in Vitale v. Schering-Plough said the contract provision between plaintiff Philip Vitale, the guard, and his employer, AlliedBarton Security Services, violated public policy by contradicting the letter and spirit of the Workers’ Compensation Act because the guard was required as part of his employment to sign away his right to sue a third party.

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High Court Voids Waiver of Third-Party Liability in Employment Contract

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