Employment Law: Working Around the Comp Bar

by John P. Gause, Esq.
Published: Maine LAWYERS REVIEW, July 8, 1998

The Maine Workers’ Compensation Act’s exclusivity provision frequently comes up in the context of employment discrimination claims. The Act bars common-law actions for personal injuries that arise out of and occur during the course of employment. The same conduct that gives rise to a claim for statutory employment discrimination will often justify a parallel tort action, and tort claims frequently make their way into employment discrimination complaints. Many of these claims have developed a reputation for being easy targets for defense counsel armed with a motion to dismiss based on the Workers’ Compensation Act. The importance of tort causes of action in this field should not be overlooked, however.

There are numerous advantages to bringing a tort claim along with a statutory employment discrimination claim. There is unlimited recovery in a successful tort action. whereas the federal and state employment discrimination statues are subject to strict damages caps; insurance coverage is more likely in tort cases; the six-year statute of limitations in tort is far more forgiving than the six-month deadline for filing a charge of discrimination under the Main Human Rights Act (MHRA); and individual supervisors can be named in tort, which is generally not the case under federal and state civil rights laws.

The workers’ compensation exclusivity provision states that a covered employer is exempt from civil actions at common law “involving personal injuries sustained by an employee arising out of and in the course of employment.” All employees, supervisors, officers and directors of the employer are immune. Statutory causes of action that have their origins in the common law are also barred. The Act does not apply to the MHRA and federal antidiscrimination law such as the Civil Rights Act of 1964, the Americans with Disabilities Act, and the Age Discrimination in Employment Act.

The Comp exclusion limits itself to personal injuries “arising out of and in the course of employment.” A significant amount of case law has interpreted these terms. In Comeau v. Maine Coastal Services, the Law Court articulated a non-exhaustive list of factors to be considered in the case-by-case determination of whether conduct meets this standard. The factors include:

Whether the employee was promoting the employer’s interests or was accommodating the needs of the employer, whether the activity was within the terms and conditions of employment or served a business purpose, whether the employer or employee created a risk, whether the employee reacted recklessly, whether the employer prohibited the employee’s conduct, and whether the incident occurred on the employer’s premises.

! The bar applies to both intentional and unintentional acts. The pivotal case on point is Li v. C.N. Brown Co. In Li, the Law Court held that a personal representatives’s claim that the decedent’s former employer intentionally caused the decedent’s death was barred by the Workers” Compensation Act. The Court held that “the Act applies to all work-related injuries and deaths, however caused, not just accidental injuries and deaths.” It reasoned that egregious intentional torts would result in employers facing criminal sanctions, not civil actions.

Justice Glassman’s dissent sharply criticized. the majority opinions and emphasized the distinction between injuries that occur “in the course of” employment and those that “aries out of” employment. While an injury occurs “in the course of” employment simply by taking place while the employee is at work, for an injury to “arise out of” employment, it must be “implied in the contract of employment.” Justice Glassman pointed out that no rational person could conclude that the decedent contracted with C.N. Brown to place the decedent’s life at risk. Glassman posited that, “carrying the reasoning of the Court to its logical conclusion would result in a determination that the Act confers immunity on an employer who, during the work hours of the employee willfully and intentionally directs an unknowing employee to descend a flight of stairs, knowing the stairway is unlit and is missing several consecutive steps; shoots the employee at the workplace; or pushes the employee out of a third floor window.”

The Law Court had occasion to address the meaning of the term “in the course of” employment in Hebert v. International Paper Co. Hebert injured his back in a fall on company property. He became disabled and went out of work. After he went home, Hebert’s brother brought him a sign that allegedly had been posted in the mill, which read, “Stair Safety Slogan: for an easy out, when our job’s in doubt, say your prayers and use the stairs. Pat Hebert.” The sign was later posted throughout the mill on several occasions despite Hebert’s protests. Hebert alleged intentional and negligent infliction of emotional distress.

The Law Court found that, assuming that Hebert was at all times employed by International Paper, the injury did not occur “in the course of” Hebert’s employment. “The question is whether the injury occurs within the period of the employment at a place where fulfilling those duties or engaged in doing something incidental thereto.” Because Hebert was at home at the time of the injury, and he was not performing any job functions, the Act did not prevent him from bringing his tort claims.

The Court has recognized that the bar only applies when a defendant is sued in his capacity as an employee, supervisor, or director the the employer. It does not prevent claims against independent contractors or employees or supervisors who wear two distinct legal hats. In Labelle v. Crepeau, the defendant was the president, treasurer, and majority shareholder of a corporation employing the plaintiff. He also owned, in his individual capacity, the premises occupied by the corporation. The plaintiff was injured at work, and he brought a premises liability claim against the defendant. The Law Court held that the comp bar did not preclude the claim because the corporation was a separate and distinct legal entity from the defendant in his capacity as landlord.

Numerous tort claims arise out the the same facts that make a claim for statutory employment discrimination. In Caldwell v. Federal Express Corporation, the United States District Court for the District of Maine, Brody J., addressed the scope of the exclusivity provision. Caldwell was employed as a temporary courier by Federal Express. Her supervisor promised her a permanent position when one became available, but when the position opened up, the supervisor gave it to someone else. Caldwell alleged that she was denied the position because of her age and gender and in retaliation for filing charges of sexual harassment. She also claimed sexual harassment by her supervisor. Her complaint alleged violations of state and federal statutory employment discrimination law as well as tort claims for intentional infliction of emotional distress, negligent infliction of emotional distress, breach of an implied contract of good faith and fair dealing, libel and slander, and negligent failure to supervise employees.

Judge Brody dissected Caldwell’s common law causes of action under the Maine Workers’ Compensation Act. The court found that Caldwell applied for the permanent position after she had finished working for Federal Express. Therefore, her claims with respect to the refusal to hire occurred outside the “course of employment.” Some of her claims for sexual harassment were precluded depending on where the harassment took place. The harassment that occurred while and because Caldwell was at work was barred under the Act; the harassment that occurred outside the workplace was actionable. The court also dismissed those portions of Caldwell’s libel and slander claims that pertained to “job-related information.”

There are various ways to get around the exclusivity bar. The first and most obvious way is to look for conduct that occurred before or after the plaintiff was employed by the defendant. Claims arising out of an employer’s failure to hire someone based on his protected-class status would not be subject to the bar because the failure to hire did not occur “in the course of employment.” Claims of fraud or interference may aries in these circumstances. If an employee is terminated because of his protected-class status, claims for defamation or false light may arise in the former employer publicly claims that the employee was terminated for poor job performance.

The language of the Act limits itself to claims for “personal injuries.” Claims for purely economic loss are not covered. This means that, even in the conduct complained of arises out of and in the course of employment, the employee can allege causes of action for negligent breach of contract, fraud, or interference with an advantageous business relationship. Intentional or negligent misrepresentation could arise if an employee is promised a promotion and later refused it due to an impermissible reason. An interference claim may arise if a supervisor pressures an employer to terminate an employee because of the employee’s protected-class status.

In harassment cases, the physical location where the harassment occurs in important. Harassment that takes place at work will most often be subject to the bar. It will often happen, however, that sexual advances and comments will carry over outside of the physical workplace. Claims for intentional and negligent infliction of emotional distress against individual supervisors or coworkers may be actionable if part or all of the sexual behavior took place after work hours and outside of the office. This may occur when workers socialize after work or a boss invites a subordinate to dinner and makes sexual advances.

The identity of the bad actor is also important. The bar only applies to actions against employees, supervisors, and directors of the employer. If the actor is wholly independent from the employer or carries a “dual persona,” the exclusivity provision cannot be invoked. There are many situations in which independent persons are at least partially responsible for adverse employment actions. The employer may have hired an outside consultant to assist in downsizing, which could give rise to tort claims arising out of an improper termination. An employee may be subjected to harassment by a regular customer, subjecting the customer to liability for the employee’s resulting emotional distress.

Although the Law Court has not yet carved out the exception, courts may find that the bar is inapplicable to cases of extreme or outrageous conduct. The First Circuit recently suggested that is would consider creating an exception under certain, limited circumstances. In Breton v. The Travelers Insurance Company, the court recognized that other states have allowed actions for personal injuries to go forward in cases of “extreme cruelty or venality.” Cases involving blatant and outrageous acts of harassment or discrimination should be plead in tort despite the risk of losing on a dispositive motion.

The Workers’ Compensation exclusivity provision serves a valid purpose. It made it possible for workers to have definite recovery within the Workers’ Compensation system for work-related injuries. The bar is not universally applicable, however. In many employment discrimination cases, the exclusivity provision should not interfere with victims’ full recovery by way of common-law causes of action.