PA Supreme Court Upholds Workers’ Comp Disclaimers for Third Parties
Decision Offers Opportunity to Limit Exposure for Injuries to Employees of Contractors/Vendors
The Pennsylvania Supreme Court, in a 5-1 decision affirming the opinions below, held that the Pennsylvania’s Workers’ Compensation Act does not bar a disclaimer preventing an employee from suing a third-party customer for work-related injuries.
In Bowman v. Sunoco, Inc., the appellant, Sandra Bowman, was an employee of Allied Barton Security Services and worked at a Sunoco refinery at which Allied Barton provided security services. Bowman signed a disclaimer as a condition of her employment with Allied Barton explaining that the “Workers’ Compensation statutes cover work-related injuries” and that “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 . . . to which I may be assigned.”
Bowman slipped and fell on ice while working at the Sunoco refinery. She filed for and received workers’ compensation benefits from Allied Security’s insurer and then sued Sunoco for negligence seeking recovery for her injuries from the same slip and fall. Bowman argued that the disclaimer violated Section 204(a) of the Workers’ Compensation Act, which states that no “release of damages made before the date of any injury shall be valid or shall bar a claim for damages resulting therefrom” and is contrary to public policy.
The Pennsylvania Supreme Court disagreed, holding that the provisions of Section 204(a) “speak directly and solely to employers and employees” and “apply only to agreements to bar a claim against an employer.” The Court found no violation of public policy where the employee “is absolutely covered” by workers compensation and explained that Bowman “was not forced to sign the release, and the release did not in any way prevent her from receiving compensation for her work-related injuries as provided by the Act.” Instead, “it served as a benefit to Allied’s customers and in no way affected [Bowman’s] right to recover from her employer for work-related injuries,” observing that the release applied only to injuries for which she already was compensated under the Act – injuries for which she had bargained away her right to sue and seek civil damages.
This is an important decision for employers whose employees regularly work at the site of the third parties with whom they contract. Perhaps even more significantly, it offers to businesses that have employees of contractors and vendors on their premises regularly or periodically a vehicle for limiting their potential liability to those employees for personal injuries sustained on their premises that are compensable under the workers compensation system.
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