Case Looks at Employment Contracts that Waive Third-Party Claims
When you’ve been hurt at work, and your injury is caused in part by someone other than your employer or a co-employee, the workers’ compensation laws in New Jersey do not prevent you from filing a “third-party claim” against that unrelated party. A number of employers have attempted to prevent third-party claims by employees by having them sign an employment contract that specifically waives that right. The New Jersey Supreme Court has heard oral arguments on a case that will determine whether such provisions in an employment contract are void as contrary to public policy.
In the case before the New Jersey Supreme Court, Schering-Plough (now Merck & Co.) filed an appeal, asking the court to overturn a ruling by the Appellate Division. In the lower court ruling, the court affirmed the trial court ruling denying Schering-Plough’s motion for summary judgment. Schering-Plough had asked the trial court to throw out a claim by a security guard injured at one of its facilities, arguing that the security guard had entered into an employment agreement whereby he agreed not to sue a third party for any injuries suffered on the job. The guard was not an employee of Schering, but worked for Allied Barton Security Services, a contractor with Schering-Plough. The Appellate Court concluded that the contract between the security guard and Allied Barton violated public policy, as well as the intent and spirit of the New Jersey Workers’ Compensation Act.
In arguments before the New Jersey Supreme Court, Schering argued that the agreement between the guard and Allied Barton was an enforceable contract and should be honored. In response, the security guard’s attorney referred to the contract as an “adhesion contract,” one that the guard had no choice but to sign if he wanted the job. He noted that the courts have long discouraged the enforcement of contracts where one side has all the bargaining power.
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