For employers, workers' compensation laws act as both a sword and a shield. While injured employees do not have to prove negligence resulting in the injury, they cannot sue the employer for personal injury outside of the compensation structure. This workers' compensation exclusivity applies to claims against supervisors, officers, and directors of the company when they act on behalf of the employer. Earlier this month, the North Carolina Court of Appeals held that this prohibition on personal injury suits does not extend to those individuals when they serve in a capacity outside of the company’s role as employer.
In Nelson v. Smith, the plaintiff alleged that he suffered significant injuries from exposure to mold in his workplace. His workers' compensation claim against the company was settled, and the plaintiff executed a general release of claims against the company and its affiliated parties as part of this settlement. The plaintiff then sued his former employer’s president and secretary in their capacities as owners and landlords of the building leased to the company where he worked. The trial court dismissed the complaint based on workers' compensation exclusivity and the general release agreement.
The Court of Appeals reversed this dismissal, remanding the case for trial. The court said that workers' compensation exclusivity only applies to the company’s officers to the extent they are sued based on their acts or omissions on behalf of the employer. It does not apply to other roles or companies they may be involved with, even if those other entities have common ownership with the employer.
Similarly, the general release did not apply to the plaintiff’s claims because as landlords, the defendants were not acting in their capacities as officers of the employer. The release only covered claims relating to the plaintiff’s employment and separation from employment. It did not apply to affiliated entities or individuals based on their roles as owners or landlords of the building leased to the employer.
Many companies use affiliated entities to purchase and lease their business locations. While general premises liability insurance coverage may provide protection from employee claims, these real estate owners cannot rely on the workers' compensation exclusivity umbrella to avoid lawsuits from injured employees.
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