An employer will not be afforded the protections of Workers’ Compensation Law §11 against third party liability without first securing Workers’ Compensation whether or not the employee sustained a “grave injury”.

The New York Court of Appeals has recently ruled that without obtaining workers’ compensation for its employees, an employer cannot benefit from the protections of Workers’ Compensation Law §11 whether or not the employee sustained a grave injury.  Boles v. Dormer Giant, Inc., 2005 WL 405355 (February 22, 2005).

In Boles v. Dormer, the plaintiff (Boles) alleged injuries resulting from an accident that occurred while in the course of employment with Personal Touch Home Improvements, Inc. (Personal Touch).  At the time of the accident, Personal Touch was subcontracted by the defendant, Dormer Giant, Inc. (Dormer), to assist with a remodeling project.

Boles subsequently commenced suit only against Dormer for the alleged injuries.  As such, Dormer commenced a third-party action against Personal Touch for common law indemnification and contribution.  It should be noted however, that Boles could have also sued his employer directly as Personal Touch did not secure workers’ compensation for its employees, but failed to do so.

Boles moved for summary judgment under Labor Law §240(1) on the issue of liability against Dormer.  Personal Touch in turn cross-moved for summary judgment against Dormer to dismiss the third-party complaint.  In support of its position, Personal Touch argued in relevant part that §11 bars liability because Boles did not sustain a grave injury.  Dormer argued in opposition that §11 does not apply because Personal Touch did not secure workers’ compensation. 

Workers’ Compensation Law §11 protects an employer from contribution and indemnification claims arising out of accidents that occur while in the course of employment.  An exception to the rule arises if the employee sustained a grave injury as defined by the section. 

The Supreme Court and the Appellate Division, Second Department ruled that Boles did not sustain a grave injury and the third-party complaint against Personal Touch was dismissed in accordance with §11. Dormer appealed to the New York Court of Appeals. 

The issue before the Court of Appeals was whether §11 shields an employer from tort liability where the employer failed to secure workers’ compensation.  The Court answered “no,” thereby reversing the lower Court’s ruling.  In doing so, the Court looked to the legislative intent and public policy behind §11.  The Court noted that Workers’ Compensation was constructed as a bargain between labor and management.  Labor obtains necessary medical care benefits and compensation for workplace injuries regardless of fault while employers obtain a degree of protection from tort liability with the exception of grave injuries.  The Court held that Personal Touch did not adhere to its part of the bargain and, as such, cannot be afforded the protection of §11.  In terms of public policy, the Court noted that if an employer was provided with the protections of §11 without securing workers’ compensation, it would be unfair to the law-abiding employers.  Furthermore, there would be no incentive to obtain workers’ compensation which would discourage employers from upholding their end of the bargain.