Wilson, Elser Named National Litigation Coordinators For Lexington Security Guard/Investigation Program

Third Party Over Suits
(Workers’ Comp Claims that Morph into Liability Claims)

By Harry P. Brett, Esq.

Indemnification clauses often contained in contracts between security service providers and their clients continue to be a major concern in the industry and that concern is spreading to the insurers of security companies.  One largely unanticipated consequence of the indemnity agreements can lead to the effective loss of the Exclusive Remedy Doctrine’s protection afforded to employers under Worker Compensation laws from lawsuits by their workers who are injured on the job.  In these instances, the result is often that a security service company may in effect pay twice for the same injury to the employee; once by payment of Workers Compensation benefits, and, a second time for the tort payment under a contractual indemnity provision.

Consider the hypothetical case of Officer Smith, an employee of ABC Security, a company that provides guards to XYZ Mall under a contract that contains an indemnity provision in favor of the mall operator.  Smith sustains an ankle fracture from stepping on a defective drainage grate during the course of his rounds.  He will make a workers compensation claim against ABC, and although the comp laws prevent an employee from bringing suit against his/her employer, the so-called “Exclusive Remedy”, there is nothing that prevents the guard from pursuing his legal remedies against any other party or person responsible for his injury; in this case, the mall, for negligence in the maintenance of the grating.

Presented with such a lawsuit, XYZ Mall would no doubt seek indemnification from Smith’s employer since the standard contracts prevalent in the industry provide for indemnity for claims “arising out of” the services supplied under the contract.  Courts in most jurisdictions will conclude that an injury incurred under these facts “arise” out of the services provided,  reasoning that absent the contract, the guard would not have been present, making rounds during which the injury was sustained.

Although some states, such as New York, have laws that purport to limit indemnity when the entity seeking indemnity is solely responsible for the injury, legal wrangling over whether the security company should have trained its employees to be more vigilant to discover, avoid, and report defective condition is hardly beneficial to the relationship between the security provider and its client.

In the not too distant past, there was speculation that one solution to this problem would be to have employees of security service companies, at the time of their employment, execute a waiver of any right to bring suit against the employer’s customer for any claim while working. While there are older court decisions enforcing such waivers, those decisions neither represent the majority view across the nation, nor are they reflective of the developments in recent years’ caselaw governing employment practices.  The protections afforded an individual with no real bargaining power when entering into a contract of employment would lead most courts to refuse to enforce such a waiver.  Similarly, courts are now very reluctant to enforce a waiver of a claim entered into before the claim actually accrued.

Despite these developments in the law, efforts to discover a better solution continue because of the increasing concerns about this type of liability exposure.  A recent review of the law from a representative sample of various jurisdictions across the country point to an approach that while not ideal, does offer some relief.  Although most courts now seem reluctant to allow the complete elimination of the claim against a third party by an injured employee as a result of a waiver, the courts apparently seem willing to enforce some limitations on the remedy, short of total elimination.  Therefore, consideration ought to be given to the inclusion in a contract of employment, or on an application for employment, an agreement for employees to Arbitrate claims against the employer’s customers.  As stated, although not ideal, an arbitration forum does provide significant benefits by eliminating valuation of any injury by juries thereby avoiding wild run away verdicts, while at the same time reducing expenses, and shortening the time for resolution of these claims.

Since these matters are the province of state law rather than federal law, arbitration clauses should be drafted by attorneys familiar with the jurisdictions in which the services are to be provided.

Harry P. Brett joined Wilson Elser in 1978 and is a partner in the New York office. He has extensive trial and appellate experience in both the state and federal court systems. Previously, he had four years experience as a criminal investigator and in addition to having a thorough background in all areas of insurance coverage disputes, he has litigated high-exposure cases in N.Y. courts and federal courts throughout the U.S. These cases involved jurisdiction, forum non conveniens, civil rights class actions, false arrest, security and transportation/terminal liability. He litigated a landmark case in New York concerning landlords’ liability for criminal acts on their premises.

Court Strikes Down Illinois Ban on E-Verify

A federal court in Illinois has stricken down a controversial 2007 Illinois law, dubbed “The Right to Privacy in the Workplace Act,” which barred the state’s employers from using the federal E-Verify system to determine whether job applicants were legally allowed to work in the country. Over 900 Illinois employers have used E-Verify, according to the Department of Homeland Security (DHS). The Illinois bill recognized E-Verify’s well-publicized problems related to the speed and accuracy of its results and prohibited employers from using it until it became more accurate and more efficient, and yielded correct results 99 percent of the time. DHS challenged the law in federal court, arguing that it was unconstitutional because it frustrated the federal government’s intention in developing the E-Verify system for employers’ use. The U.S. District Court for the Central District of Illinois agreed with DHS, finding the state law invalid under the Supremacy Clause of the U.S. Constitution because it thwarted Congress’s intention that employers use the system.

Source: HR.BLR.com

The Evolution of the Phone Interview

More and more recruiters are now turning a new corner in the evolution of the phone interview.  Instead of giving candidates a quick once-over and scheduling an in person interview, more employers are using the time to pose in depth questions usually reserved for final interviews.  Many interviewees are now finding it harder and harder to get passed the phone interview to a face to face meeting with an employer.  Unlike recent years  where interviews lasted anywhere from 10 to 20 minutes, job hunters may need to reserve 40 minutes to an hour for the phone interview.  Recent trends have also showed employers now discussing complete work history as well as work accomplishments and initiatives over the phone.  Employers say they've raised the phone-interview stakes in part because they're attracting more candidates who meet their basic qualifications. They're digging deep to identify the best ones, and in some cases adding second-round rigor to phone screens as one way to accomplish that.

Source: The Wall Street Journal