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Everything You May or May Not Want to Know About Temporary Disability Benefits Under New Jersey Workers’ Compensation Law

There are many issues that arise regarding the payment of temporary disability benefits under the New Jersey Workers’ Compensation Act. This blog will cover some of the basic issues and some of the complex issues.

Q. When is an employee eligible for temporary disability benefits?

The employee must have lost more than seven days of time due to a work injury or occupational disease (not necessarily consecutive days) in order to receive payment of temporary disability benefits. Example: employee is injured on October 1st at work, does not complete that day of work, and the authorized treating doctor keeps the employee out until October 9th. This is more than seven days because N.J.S.A. 34:15-38 provides that you count as day one the first day that the employee cannot complete work. That would be October 1st. When a worker is out for any period of time, weekends and holidays that fall within that period of time are counted as lost days.

Q. What is the rate of payment in New Jersey?

The rate is 70% of wages subject to a maximum and a minimum rate. For 2024 injuries the maximum is $1,131 per week and the minimum is $302 per week. Temporary disability payments are not taxable.

Q. What if the employee works for a board of education?

School board employees have a unique provision that no other employees have in New Jersey. The Education Law under 18A:30-2.1 provides that full salary must be paid to school board employees who are injured under workers’ compensation for one year from the first date of lost time. The IRS takes the position that the entire full salary payment is not taxable when a school board employee is out of work due to a workers’ compensation injury.

Q. What if the employee works for a municipality, county or the State? 

Most public entities have collective bargaining agreements that provide for full salary payments in lieu of workers’ compensation. These are negotiated agreements which trump workers’ compensation law. Most of the CBA provisions have an end date to the full salary, perhaps six months or a year, but some do not. Practitioners need to review the relevant CBA.

Q. Is there any statutory end date for temporary disability benefits?

Yes, 400 weeks is the statutory limit.

Q. How does one calculate an average weekly wage and temporary disability rate for non-salaried employees?

This is by far the most complex issue when dealing with temporary disability benefits. One must bear in mind that N.J.S.A. 34:15-37 (which is the law that defines wages) was written in 1945. The economy was vastly different and many laws that we deal with routinely today did not exist. The statute provides for three basic rules which I will simplify:

  1. If the employee is paid by output (piecework), use an average of the 26 weeks preceding the date of accident.
  2. If the employee works a standard work week, take the hourly rate of pay and multiply by the hours worked. So, an employee who works 40 hours per week at $20 per hour has a wage of $800 per week with a temp rate of $560.
  3. If the employee works in a job that has fewer hours than the ordinary work week, use the actual hours worked by that employee times the hourly rate and calculate an average weekly wage.

Sounds simple, right?  The problem is that there is an infinite variety of fact patterns that are encountered in cases. Judges and practitioners often use the 26-week payment period because that generally makes sense for long-term employees, even though it was designed for piecework workers when the law was passed in 1945. There are, however, some real problems with using the 26-week method.

  1. What if the employee only worked 5 or 10 weeks before the injury or even one day before the injury?  
  2. What if the 26-week period included four weeks of unpaid FMLA leave?  Does one exclude that period of time? Judges generally say yes, we should use 22 weeks then.
  3. What if the 26-week period included a one-time longevity payment for years of service that skews the amount of wages?
  4. What if the employee gets a large annual bonus that just happens to fall inside or outside that 26-week period?  Should that bonus be counted?
  5. What if the employee’s union settled a protracted negotiation with a large wage increase that is retroactive to a date three years ago when the accident occurred?  Does that get counted?

These issues and other variations are dealt with every day in workers’ compensation court. In resolving these disputes, it is important to remember the underlying principle:  temporary disability benefits are meant to compensate an injured worker for the amount of money he or she would have been paid but for the work injury or occupational disease. There are wage disputes in thousands of workers’ compensation cases each year, but these disputes are resolved in court without litigation in almost every case.

Q. On a related topic, what do wages include in the first place?

This statute is also very old. Wages generally are payments that are taxable to the employee, including commissions, overtime pay, tips, gratuities, bonuses, and lodgings furnished by the employer free of charge to the employee. N.J.S.A. allows only $25 per week for board and lodging to be counted toward wages. But again, this statute goes back to 1945 and there is currently a bill to amend this provision in the legislature. There is no mention in the statute about how to treat mileage reimbursement for use of one’s vehicle for work purposes, but this is not likely a “wage” because the IRS does not tax standard rate mileage reimbursement.

Q. When does the employer have a right to terminate temporary disability benefits in New Jersey?

Unlike most states, termination of temporary disability benefits in New Jersey does not generally depend on the return-to-work date. New Jersey is an MMI state, meaning that both medical and temporary disability benefits end at maximal medical improvement, even if the employee cannot return to his or her job. Sometimes an employee returns to work full duty before MMI is reached. The rule is that temporary disability ends on the earlier of return-to-work full duty or MMI. So, use whichever date occurs first.

Q. What is the rule on termination of temporary disability benefits based on a light duty return-to-work offer?

The law on terminating benefits based on a light duty job offer stems from an important case called Harbatuk. That case established that an employer can terminate temporary disability benefits on a light duty offer. If the employee refuses to accept the light duty job offer, the employer does not have to pay temporary disability benefits. The employer must show that it communicated the offer of light duty to the employee. When there are issues on light-duty return to work, they usually focus on whether the employee can safely perform the light duty job. The opinion of a treating doctor or the results of a functional capacity examination can be helpful. If the light duty job comes to an end before the employee has reached MMI or can return to work full duty, temporary disability benefits must be reinstated.

Q. What if the employee is treating but keeps missing therapy or medical appointments. Can the employer terminate temporary disability benefits in that event?

Yes, under N.J.S.A. 34:15-19, failure to cooperate with medical treatment allows the employer to terminate workers’ compensation benefits. Once the employee returns to treatment, benefits resume but the employer does not go back and repay the period of non-cooperation.

Q. Does the employer owe temporary disability benefits to a seasonal employee even when the seasonal employee would not have worked?

There are many seasonal employees in every state. Teachers have been considered seasonal employees by our Supreme Court as well as landscapers, employees of golf courses that are closed for the winter, and many other employees whose jobs depend on the weather. The general rule is that employers do not have to pay temporary disability benefits during the off season, so teachers will not be paid during the summer months when they would not have taught for the school. There is an important exception, however. The New Jersey Supreme Court makes clear in the Outland case, (which concerned a teacher), that if the employee can prove he or she would have worked another job in the summer but for the work injury, then temporary disability benefits must be paid. The burden of proof is on the employee. In that case, temporary disability benefits would be based on the actual wages for the secondary employment.

Q. Does New Jersey have “partial temp?” 

No, New Jersey does not have “partial temp” as the term is defined in other states. This usually refers to a situation where an employee has reached MMI and can return to work, but the new job now pays less than the employee used to earn before the accident. In other states there are often workers’ compensation laws that require the employer even after MMI to pay for a portion of the new job’s wage loss. New Jersey does not have any such law.

I have been asked many times if the following restricted hours scenario qualifies as partial temp. Frankly, the term “partial temp” does not appear in our statute. Consider a situation where the authorized doctor is treating an injured worker, Rebecca, and she has not yet reached MMI. Assume that Rebecca normally gets paid $25 per hour for a 40 hour week for a total of $1,000 per week. She gets paid $700 per week in temporary disability benefits while out of work. After Rebecca has spine surgery, the treating doctor recommends that she phase into her job and work just four hours per day for four weeks. Her employer then pays her $20 per hour for four hours per day or $500 per week (half pay). Rebecca’s lawyer argues that she is entitled to be compensated for the 20 hours she could not work because of the restriction placed on her by the authorized doctor. The issue for the Judge of Compensation to decide will be whether these 20 lost hours are considered payable as temporary disability benefits.

There is no published case on this precise issue. The key to the resolution of this issue will be the court’s interpretation of N.J.S.A. 34:15-38. This statute reads that temporary disability includes days lost and any fraction of days thereof that the employee is unable to work due to the accident. Rebecca will argue that she is owed $350 per week in temporary disability benefits. (70% times $500). She will argue these lost hours count toward temporary disability as defined in New Jersey. Judges who have encountered this situation have recommended payment by the carrier or employer for the half days that the employee cannot work. Once MMI is reached, however, Rebecca would have no argument if her new job resulted in a lower wage.

Q. Does New Jersey allow employers to stop temporary disability benefits when an employee is fired for cause?

Yes, the leading decision is Cunningham v. Atlantic States Cast Iron Pipe Co., which involved termination of an employee who violated his “last chance” agreement. The petitioner had previously injured his knee at work and was under active treatment for his knee when he was fired. After his termination his treating doctor saw petitioner, and the doctor issued a note stating petitioner was unable to work. The petitioner filed a motion for temporary disability benefits and the Judge of Compensation ruled in his favor. The employer appealed, and the  Appellate Division reversed in favor of the employer. The Appellate Division ruled that petitioner had no wages to replace because he had been terminated for cause. Other cases have followed the rule in Cunningham. There are no published cases that address termination of temporary disability benefits when a downsizing or mass firing of employees occurs.

Feel free to email the undersigned with any questions not addressed in this blog.

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Acting Governor Signs Legislation Increasing Counsel Fees to 25% in Workers’ Compensation Cases

On Thursday, August 22, 2024, Acting Governor Nicholas Scutari signed legislation increasing counsel fees for petitioners’ attorneys from 20% to 25%.  This change in the law is codified in N.J.S.A. 34:15-64. The statute now reads as follows:  “The official conducting any hearing under this chapter may allow to the party in whose favor judgment is entered, costs of witness fees and a reasonable attorney fee, not exceeding 25 percent of the judgment.”

This new counsel fee legislation affects both parties and petitioners’ attorneys. The New Jersey Division of Workers’ Compensation has historically assessed against employers the obligation to pay 60% of the fee of the injured worker.  Injured workers pay 40% of the fee of their own attorney in New Jersey.  While this practice is not codified in any law or regulation, the 60/40 split between employer and injured employee on counsel fees has been followed by judges for well over 70 years.

What does this mean in actual practice?  Consider a hypothetical award of 35% permanent partial disability for a high wage earner.  At 2024 rates, such an award would amount to $110,880.  Assume the Judge of Compensation awards a counsel fee of 25% on a judgment for 35% permanent partial disability:

  Total Counsel Fee at 25%:       $27,720
Assessed against respondent:     $16,632
Assessed against petitioner:        $11,088

Compare this to a counsel fee of 20% on an award of 35% permanent partial disability before August 22, 2024:

 Total Counsel Fee of 20%:         $22,176.00
Assessed against respondent:     $13,305.60
Assessed against petitioner:        $8,870.40

For Section 20 settlements, the law remains the same.  Injured workers pay the entire counsel fee, now 25% instead of 20%. On a Section 20 settlement of $100,000 a petitioner now pays $25,000 as opposed to $20,000 prior to August 22, 2024.

Undoubtedly, this increased counsel fee percentage will be applied to any Order for Medical and Temporary Disability Benefits.  The law does not specifically mandate that a judge must award 25%, but neither did prior law mandate a percentage of 20%.  In actual practice, the maximum percentage is usually assessed.  

The question on everyone’s mind is when does this law take effect?  Most legislation that passes in New Jersey sidesteps this question. This piece of legislation is quite clear: “This act shall take effect immediately and shall apply to all claims pending on or after the date of enactment.”  That means it applies to all cases currently pending in the Division of Workers’ Compensation or filed after August 22, 2024. It does not matter that the case was filed years ago. The key word is “pending.”  If the case settled a month ago, it is no longer pending.  If it is open and unresolved, it is pending.

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Federal Court Rejects Intentional Harm Burn Case Filed Against Auto Repair Shop and Holds Only Remedy Lies in Workers’ Compensation Court

Plaintiff Eric Lopez was badly burned working for Corozal Auto Repair Inc.  Lopez filed a civil suit against his employer alleging that the conduct of his employer amounted to intentional harm.  The employer argued that Lopez could not sue and that his only remedy was in the New Jersey Division of Workers’ Compensation.

Plaintiff alleged three specific sets of actions by the Auto Repair Shop and its owner amounted to intentional harm.  First, he noted that the burns he suffered stemmed from the placement of a drip pan under a car.  Gas was dripping from a car that needed repairs, so the shop owner put a drip pan under the car.  The next day, the shop owner asked the plaintiff Lopez to help him push the car into a garage bay.  As they were pushing the car, a spark ignited probably from the jack propping up the car.  That led to a fire, which spread to the plaintiff causing serious burns.  Plaintiff argued that the shop owner’s placement of the drip pan under the car to collect the leaking gas was an intentional wrong.

Next, plaintiff argued that the shop owner’s response to the fire in spraying windshield wiper fluid on plaintiff was an intentional harm.  When the fire broke out, the shop owner panicked, according to the defendant’s version of facts.  He grabbed something liquid, which turned out to be windshield wiper fluid, and poured it on plaintiff.  The windshield wiper fluid accelerated the fire because it was a Category 3 flammable liquid.

Lastly, the plaintiff argued that the owner’s failure to have proper fire suppression equipment violated relevant fire codes.  The New Jersey Fire Code required repair garages to have fire extinguishers at a certain distance, no less than 30-50 feet. There was only one fire extinguisher where there should have been more. This was a likely violation of the New Jersey Fire Code.

The federal district court reviewed the extensive New Jersey case law on intentional harm and noted that plaintiff must meet the “substantial certainty” test.  The court noted that even an injury stemming from gross negligence is insufficient to satisfy the intentional wrong exception.  The court quoted from Richter v. Oakland Bd. of Educ., 246 N.J. 507 (2021) for this proposition:

  1. The employer must know that his actions are substantially certain to result in injury or death to the employee, and 2) the resulting injury and the circumstances of its infliction on the worker must be a) more than a fact of life in industrial employment and b) plainly beyond anything the Legislature intended the Workers’ Compensation Act to immunize.

With respect to the argument concerning the placement of the drip pan to collect leaking gas, the court said that “… knowing that placing a drip pan creates ‘a danger of fire’ is not the same as knowing that placing a drip pan creates a ‘substantial certainty’ of injury or death.”  The court reasoned that not all fires lead to injury or death.  Further, just knowing that there is some danger is not the same as having substantial certainty that the danger will occur.  In this case, the court observed that the shop owner was exposed to the very same risk.  The fire just happened to engulf the plaintiff Lopez but could just as easily have engulfed the shop owner as both men were pushing the car into the bay. It made no sense to the court that the shop owner would have taken this action knowing it was substantially certain to injure himself. 

With respect to the argument about the windshield washer fluid, the court considered the deposition testimony of the shop owner, who said that when he saw his employee covered in flames, he just reached for the first liquid that he could find.  The court found that this effort to provide quick assistance was not in any way consistent with the argument that the shop owner poured the flammable liquid on his employee with substantial certainty that it would injure him.  The court agreed that this was a mistake, and a negligent one, but certainly not undertaken by the owner in a split second with intent to harm.  The court reflected on the landmark case of Millison v. E. I. duPont de Nemours & Co., 101 N.J. 161 (1985), which noted that any level of intent short of “virtual certainty” would not be enough to establish intentional harm.

Concerning the lack of sufficient fire suppression equipment, the court considered that this would amount to a likely violation of the New Jersey Fire Code.  The court said that “… fire code violations are like other safety code violations:  standing alone, in the absence of other relevant factors, fire code violations do not count as intentional wrongs for purposes of the New Jersey Workers’ Compensation Act.”  The court relied on Van Dunk v. Reckson Associates Realty Corp., 210 N.J. 449 (2012) for the proposition that a violation of a safety code is just one factor in proving an intentional harm claim.

The court said, “There is no proffered evidence, for example, of awareness that one fire extinguisher was not enough; of prior fires; of prior safety complaints; of failed inspections; of other safety issues; of deception of safety regulators, or of a generally casual or reckless culture with respect to workplace safety.”

For these reasons, the federal court dismissed the civil lawsuit and found that the only remedy of the plaintiff was to file a claim petition in the Division of Workers’ Compensation.

This case can be found at Lopez v. Corozal Auto Repair Inc., No. 21cv17366, 2024 U.S. Dist. LEXIS 80642 (D.N.J. May 2, 2024)

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The Little Known “Authorized Vehicle Rule” in Workers’ Compensation

I had the pleasure of Speaking on Law Day in Plainfield Workers’ Compensation Court on May 1, 2024 and wanted to share with readers part of the discussion in our session, namely the discussion of the New Jersey authorized vehicle rule contained in N.J.S.A. 34:15-36.  This is one of the most unknown but significant rules pertaining to when work starts and when work ends.  Practitioners, adjusters and employers are far more aware of the premises rule, the special mission rule, and the paid travel time rule than they are about the authorized vehicle rule.

Since the passage of the major overhaul of the New Jersey Workers’ Compensation Act in 1979, there have only been two significant published decisions that addressed in any detail the authorized vehicle rule, both cases involving the New Jersey Supreme Court.  The first was in 1992 in the case of Zelasko v. Refrigerated Express, 128 N.J. 329 (1992).  The case involved a truck driver who owned his own tractor and trailer.  Because his home community prohibited parking a trailer overnight, he had to park the trailer in a neighboring town in a friend’s yard.

On April 12, 1990, Mr. Zelasko made a delivery to Supermarkets General in Woodbridge.  He then drove to the terminal of his employer, Refrigerated Express, in Old Bridge to unload some pallets.  After that he started to drive to the neighboring town where he parked his trailer.  On the way he heard some rattling noises from the remaining pallets and became concerned about a problem.  He pulled off the road and stopped the truck.  He climbed onto the trailer to check the pallets but then fell from the trailer, suffering injuries.

The petitioner argued that his injury was covered under the authorized vehicle rule.  The Court focused on the following language of the statute which actually blends into one phrase two different rules (travel time and the authorized vehicle rule):   “…. But the employment of employee paid travel time by an employer for time spent traveling to and from a job site or of any employee who utilizes an employer authorized vehicle should commence and terminate with the time spent traveling to and from a job site or the authorized operation of a vehicle on business authorized by the employer.”  The Court rejected petitioner’s claim because it concluded that petitioner had concluded his day when he returned to his employer’s place of employment to drop off pallets.  There was a lengthy dissent from Justice Handler, who argued that petitioner’s day was not finished because he still had to drive to a neighboring town, unhook the trailer and safely secure its contents.

Thirty one years later, the New Jersey Supreme Court in 2023 delivered a more detailed opinion on the authorized vehicle rule in Keim v. Above All Termite & Pest Control, 256 N.J. 47 (2023).  The facts were unusual in this case.  The petitioner was a pest control technician who was given a company vehicle to transport pesticides and chemicals needed for work.  His day generally began by checking his iPad for assignments and then leaving from his home to go to the client location for pest control.  However, his employer required all the technicians to refill their pesticides and chemicals at the employer’s location in Monmouth County.  There was a limit to how much pesticide quantity the technicians could keep in their truck due to concerns about spoilage of the chemicals and possible theft.  Technicians would have to make sure they had just enough chemicals in their vehicles to meet the needs of the jobs each day. 

On the date of petitioner’s accident, he was driving to the employer’s location in Monmouth County to refill the supplies in his truck.  Petitioner had concluded that he did not have sufficient supplies to perform his scheduled daily assignments.  He was involved in a car accident on the way to his employer’s location with serious injuries.  The employer argued that petitioner was on his way to work and therefore the premises rule applied.  The Judge of Compensation dismissed the case.  Petitioner appealed and the appellate division reversed in petitioner’s favor.  The Supreme Court then affirmed in favor of petitioner.

The Court did not hold that the drive to work was a special mission, partly because the Court had already decided that this was an authorized vehicle rule case and perhaps partly because the statute says that a special mission must involve a commute away from the employer’s place of employment.  The Court found that petitioner was using an authorized vehicle when the accident occurred, on business authorized by the employer and with authorization from his employer.  The Court said, “Above All provided an authorized vehicle for operation by Keim.  Keim’s operation of that vehicle to the shop on the morning of the car accident was solely for business expressly identified and authorized by Above All, namely, to replenish supplies. The entire arrangement, both as to the vehicle’s location and the need to replenish supplies, reflected a business decision expressly designed by the employer to further the employer’s interests in safeguarding and maintaining the quality of its supplies and in minimizing travel time for employees, thus facilitating a robust appointment schedule.”

Most employees who use their car for business do not have company cars:  lawyers, accountants, sales persons, real estate agents, certain nurses, and others.  Does the authorized vehicle rule require that the company own the vehicle?  The Court said no.  The rule is not limited to just employer provided vehicles. It could apply to a vehicle owned by the employee. The Court did not go into further details about how a personally owned vehicle will be deemed an authorized vehicle but the quote in the preceding paragraph seems to focus future analysis on whether the actions of the employee are furthering the employer’s business interests.

Does this case suggest that the drive to work is now compensable?  The Court addressed this issue, “However, the ‘authorized vehicle rule’ does not apply every time an employee is driving a vehicle authorized by an employer.  And importantly, the ‘authorized vehicle rule’ does not categorically apply when an employee is merely commuting to work in either an authorized personal or work vehicle.”  Drives from home to work and back from work to home will almost always be considered not covered under workers’ compensation.

I want to thank the Director and Chief Judge Maria Del Valle Koch, Judge Fred Hopke and Judge Neme Akunne for hosting this very enjoyable Law Day seminar and for making everyone feel welcome in the very accommodating Plainfield vicinage.  I also want to thank my co-presenter Rick Rubenstein, Esq., and all the lawyers who attended and raised many good questions throughout afternoon seminar.

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A Brief History of the New Jersey Workers’ Compensation Act

For those who do not like workers’ compensation, blame Otto Von Bismarck.  Yes, the man known as the Iron Chancellor, who united all the kingdoms and states into one Germany, passed the first modern workers’ compensation law in 1874.  Other western European nations soon followed, and between 1911 and 1920 every state in America adopted a workers’ compensation law, all of which borrowed from Bismarck’s first modern law.  On April 4, 2024, New Jersey marks its 113th year of workers’ compensation.  Wisconsin was the first state to pass a workers’ compensation law in 1911.  Nine more states, including New Jersey, followed in 1911. 

The significance of having a workers’ compensation law can only be appreciated if you consider how injuries were treated before 1911.  Former Director of the Division of Workers’ Compensation, Peter Calderone, wrote an excellent article in 2011 explaining what life was like before modern workers’ compensation laws.  If an employee’s injury was caused by his own negligence, or by a co-employee’s negligence or was just a fact of business life, the employer paid no workers’ compensation benefits. That meant no medical treatment was offered, no lost wages and no benefits were voluntarily paid.  Fault was the main defense in all cases.  Work injuries quickly led to impoverishment for families.

Since there was no workers’ compensation law until 1911, injured workers would hire litigation lawyers who would sue the employer for medical care and damages.  Courts in every state were jam packed  with thousands of such cases.  Employers would sometimes win the suits and sometimes lose and pay high jury awards.  The process was slow and both labor groups and employers were unhappy with the system. 

While Bismarck may have started the concept of the modern workers’ compensation law, New Jersey owes its own unique version of workers’ compensation law mostly to one man named Walter Edge, who grew up in Pleasantville, Atlantic County, New Jersey and who started his first newspaper as a ten-year-old boy.  At age 17, he purchased the Dorland Agency, an advertising business, and turned it into an international advertising company with offices in the United States and Europe.  He founded the Atlantic City Press at age 22, which he sold for an enormous profit.  He got into politics at age 21.  He was elected to the Assembly at age 36 in 1909 and became a state senator in 1910.  Edge was so passionate about creating a New Jersey workers’ compensation law that he traveled to Germany and other western European countries to learn how each country’s system worked.  When he returned from Europe, he had in his mind a plan for a New Jersey workers’ compensation law.

Edge sponsored the first New Jersey workers’ compensation law in 1911 and lobbied colleagues in both parties to support it.  The legislation would take workers’ compensation out of civil courts and create an administrative remedy.  Edge wrote in 2011:  “It is generally conceded that 20 per cent of all litigation today, clogging the machinery of our courts, consists of suits between employer and employee.”  The legislation was passed with bipartisan support in the Assembly and Senate on April 3, 1911, and then signed into law on April 4, 1911 by Governor Woodrow Wilson. 

New Jersey labor groups hailed the law’s main features, which were to eliminate fault as an issue for receiving compensation benefits and to provide prompt medical benefits after an injury along with temporary disability and partial permanent disability benefits in certain cases.  Edge wrote in 1911, “. . . American citizenship and humanity does not allow an injured man to walk about the streets uncared for; as, at great expense, the public is maintaining, mainly through charity, many institutions to properly look after unfortunate people. The public is paying the bill.”  Provisions also covered permanent and total disability benefits and dependency benefits.  In return for agreeing to a no-fault system, employers received what they wanted.  That was an end the right of an employee to sue his or her employer or co-employee in civil court. This provision is referred to as the “exclusive remedy.”  

Walter Edge would go on to pass many other laws that made a difference to New Jersey residents — both labor groups and employers.  When North and South Jersey could not agree on major capital projects, he managed to forge a compromise that would lead to the construction of the Ben Franklin Bridge and the Holland Tunnel.  He became an early ally of Enoch “Nucky” Johnson (the character on whom “Boardwalk Empire’s” Nucky Thompson was based).  In fact, Johnson became Edge’s campaign manager for Governor in 1916.  Johnson was a Republican power broker in Atlantic County, and Edge was also able to get the support of the state’s leading Democrat, Mayor Frank Hague of Hudson County fame.  Hague thought the Democratic candidate too liberal for his tastes.  Edge won and became Governor, eventually serving two terms as Governor of New Jersey, separated by 25 years.  What does this biographical history of Walter Edge have to do with workers’ compensation?  Not much, but perhaps consider this a minor deviation.

From 1911 to 1979, there really were few changes to the New Jersey Workers’ Compensation Act.  Walter Edge’s vision of workers’ compensation in 1911 has stood the test of time.  There has only been one major overhaul of New Jersey’s law, and that took place in 1979. The overhaul was necessary because New Jersey’s benefit rates were extremely low and were not keeping up with inflation.   An award of 50% permanent partial disability amounted to only $11,000 in 1979.  Even back then, that was not a lot of money.   In 1980 the same award more than tripled to $36,900.  Today an award of 50% permanent partial disability for a high wage earner amounts to over $226,000.  For their part, employers were unhappy with the endless exceptions to the going-and-coming rule and the unpredictable standards for occupational disease claims and also lobbied for change in 1979.  The Legislature passed dozens of major changes to the Act including the following:

  1. Significant rate hikes for temporary disability and permanent partial disability benefits starting in 1980;
  2. Tightening the standards for occupational disease claims to include the requirement that the petitioner show proof of a medical condition that is produced by causes which are characteristic of or peculiar to work in a material degree;
  3. Creating more stringent medical/legal requirements for cardiovascular and cerebrovascular claims;
  4. Requiring proof by objective medical evidence to support any claim for permanent partial disability and eliminating awards based solely on subjective complaints;
  5. Narrowing the countless exceptions to the former “going-and-coming rule” and adopting the “premises rule” instead.

Following these and many other amendments, the Supreme Court weighed in on its interpretation of key provisions passed in 1979, including Perez v. Pantasote, Hellwig v. J. F. Rast & Co., Inc., Saunderlin v. E.I. DuPont Co., and Jumpp v. City of Ventnor.

Where does New Jersey workers’ compensation stand today, 113 years after Walter Edge wrote the first workers’ compensation law in the state?  It remains very much where it stood in 1911 as buttressed by the 1979 amendments.  If one were to list the five main pillars of the New Jersey Workers’ Compensation Act that differentiate our law from that of other states, they would be these:

  1. Permanent partial disability benefits even for workers who are able to return to their job on a full-time basis with no restriction so long as they have proof of a substantial limitation of non-work activities;
  2. The absence of any medical fee schedule;
  3. Employer-directed medical care;
  4. The employer’s right to terminate medical and temporary disability benefits at MMI;
  5. The right of an injured worker to reopen his or her case for further medical, temporary and permanent disability benefits.

All these aspects of the law were set in motion in 1911. Other states have several of these features in their law, but no other state has all five of them.  The state that is closest to New Jersey’s system is Missouri.  Perhaps because Walter Edge was a moderate politician who routinely reached out to both sides of the political aisle throughout his career, he was able to craft legislation that offered advantages to both employees and employers. Neither employers nor employees like every aspect of the New Jersey law.  Few can dispute, however, that New Jersey has a better social policy behind its law.  The overwhelming majority of injured workers do return to work.  The New Jersey Act has its critics.  One of the most serious criticisms is that New Jersey has the highest workers’ compensation medical costs in the nation.  Overall, however, the New Jersey Act is more balanced than workers’ compensation laws of most states and remains true to the spirit of the original 1911 law.

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Should Employers Pay for Both Lawyers in the Workers’ Compensation Case?

When a workers’ compensation case settles in the New Jersey Division of Workers’ Compensation for a percentage of disability, the employer pays for its own lawyer and most of the fee of the injured worker’s lawyer.  New Jersey may be the only state that has this practice.  Judges generally assess 60% of the legal fee of the claimant against respondent and 40% against the lawyer with the bizarre result that injured workers pay a paltry 8% of the total award for their own lawyer.  Practitioners are often astonished to learn that there is no legal basis for an employer to pay for the attorney for the claimant. No statute requires this outcome and no regulation requires this. 

Given that there is no legal requirement for this practice, when did this peculiar financial burden on employers begin?  Attorney Richard Rubenstein of Livingston, NJ has done a great deal of research into the history of the New Jersey Workers’ Compensation Act and was kind enough to share some of his research on this issue.  He found cases in the 1920s in which the entire counsel fee for the petitioner was paid by the employer, provided that the case was accepted at the outset by the employer.   Employers used to have a way of avoiding counsel fees, however. For many years after the New Jersey Act was passed, employers could make a settlement offer immediately prior to a hearing to defeat the entire counsel fee.  That practice was successfully challenged in a 1950 decision based on due process arguments. Attorney Rubenstein first found a reference to a 60/40 split around the year 1950.

Based on Attorney Rubenstein’s research, we know that judges began using discretion to assess 60% percent of the employee’s counsel fee against employers as far back as 1950.  The next question is why did this happen in the first place?  My own guess is that this practice reflected the reality that workers’ compensation rates prior to 1979 were abjectly low.  Even in 1979, an award of 50% permanent partial disability amounted to only $11,000!  The major change in rates began with the 1979 Amendments.  In 1980 an award of 50% permanent partial disability trebled to $36,900.  In 2023 an award of 50% permanent partial disability, by contrast, amounts to $220,000.  That is 20 times more than in 1979. Needless to say, inflation has not risen 2,000 percent in the past 43 years.

The 60/40 split is an anachronism and makes no sense today with workers’ compensation rates having risen so much over the past 40 years.  In 2022 alone, workers’ compensation rates rose 10% in just one year!  An award of 50% was $193,800 in 2021 but one year later the same award was valued at $213,000.  One can see from the sharp rise in workers’ compensation rates that the 60/40 split is no longer warranted.  Furthermore, it costs employers millions of dollars every year.  Injured workers can afford to pay their own counsel fees on orders approving settlement with a percentage of disability just as they already do on Section 20 settlements.  There remains no legal basis for the employer to pay any portion of the petitioner’s counsel fee.

This topic is highly relevant today because there is currently a bill that would raise counsel fees for workers’ attorneys to 25% from 20%.  If the 60/40 split remains unaddressed in New Jersey, then employers will be paying 25% more in counsel fees for the injured workers’ attorney.  For example, an award on a percentage basis amounting to $50,000 will mean the counsel fee rises from $10,000 to $12,500.  Using a 60/40 split, the Judge of Compensation would require respondent to pay 60% of $12,500 or $7,500.  That amounts to 25% more than $6,000 if the counsel fee remains at 20%.

The rationale for the increase in counsel fees is that petitioner’s attorneys in workers’ compensation are much like their counterparts in civil litigation.   Their fee is contingent on success.  If there is no recovery, there is no fee.  That is true.  But here is where the argument falls apart.  Attorneys who practice in civil litigation are permitted to charge their clients one third of the first $750,000.  Meanwhile, injured workers only pay 8% of the award on an order approving settlement in workers’ compensation cases!  Consider this anomaly: sometimes an injured worker has both a workers’ compensation case as well as a civil third-party case.  What sense does it make that the same individual pays 8% for his or her attorney in the comp case but pays one third in the civil case?  In many situations, the workers’ compensation case has more settlement value than the civil case.  Workers are benefiting from dramatically higher rates but still paying an absurdly low percentage to their own attorneys.  Workers get the benefit of the skills of their lawyers and higher awards almost every year, but employers end up footing most of the legal bill.  Passage of the proposed bill raising attorneys’ fees to 25% should be conditioned on petitioners paying for their own attorneys in all cases, not just Section 20 settlements.  This is not 1950 or 1979.  Rates have skyrocketed, and there is no compelling argument that employers need to continue to subsidize injured workers by reducing their obligations to their own lawyers.

Judges have the power to decide what portion of the petitioner’s counsel fee is paid by the employer, if any, or by the injured worker.  The 60/40 split is an archaic convention and nothing more.  The Division should address this issue not just because employees can afford to pay their attorneys considering much higher permanency awards but also because the State needs employers.  New Jersey has the highest net outmigration of residents of any state in the nation. In 2022, 64,000 more residents left New Jersey than entered New Jersey.  They leave for many of the same reasons employers leave the state.  Among the reasons is that Florida and a few other states (Texas and Tennessee among them) have more friendly economic environments with no state income tax. Requiring injured workers to pay most or all of the fee of their own attorneys will save employers millions of dollars every year.  That may actually help the State retain employers.

The post Should Employers Pay for Both Lawyers in the Workers’ Compensation Case? appeared first on NJ Workers' Comp Blog.

Coverage Issues and General Contractor/Subcontractor Allegations

Coverage Issues in Workers’ Compensation

A common issue arises where an employee works for an employer who does not maintain proper workers’ compensation coverage and alleges that there is a general contractor with coverage from whom they will seek benefits. As noted in our recent article, https://njworkerscompblog.com/how-to-properly-cancel-a-workers-compensation-policy/, claims that are denied for lack of coverage based on a cancelled policy often result in ongoing litigation regarding issues related to whether the policy was cancelled effectively. In these cases, the claimant’s counsel will often seek to bring any potential entity with whom the petitioner’s employer worked with and argue that they are liable for benefits as a “general contractor.” Therefore, an issue that can be simultaneously tried in connection with whether a policy was appropriately cancelled is whether there is a liable entity pursuant to Section 79.

Section 79 of the Workers’ Compensation Statute provides for penalties to employers who fail to carry workers’ compensation insurance but also provides a pathway for liability to a general contractor when a subcontractor they work with does not have coverage. The language of Section 79 provides:

Any contractor placing work with a subcontractor shall, in the event of the subcontractor’s failing to carry workers’ compensation insurance as required by this article, become liable for any compensation which may be due an employee or the dependents of a deceased employee of a subcontractor. The contractor shall then have a right of action against the subcontractor for reimbursement.

N.J.S.A. 34:15-79. The purpose of the foregoing is to protect the employee by permitting him to recover from a general contractor who gets direct benefit of the employee’s work.

In order for Section 79 to apply, three essential elements must be met: “(1) a contractor, (2) a subcontractor, and (3) failure by the subcontractor to carry workman’s compensation insurance.” Gaydos v. Packanack Woods Development Co., 64 N.J. Super. 395, 399 (Cty. Ct. 1960). “A contractor is ‘[o]ne who formally undertakes to do anything for another; specifically, one who contracts to perform work, or supply articles.” Jordan v. Lindeman & Co., Inc., 23 N.J. Misc. 194, 196 (Cty. Ct. 1945). A subcontractor is noted to be “one who enters into a contract with a person for the performance of work which such person has already contracted with another to perform. In other words, subcontracting is merely ‘farming out’ to others all or part of work contracted to be performed by the original contractor.” Brygidyr v. Rieman, 31 N.J. Super. 450, 454 (App. Div. 1954).

The foregoing criteria are highly fact sensitive and will often result in a number of fact witnesses testifying as to the issue of whether there was a general contractor/subcontractor relationship. As a result, some of the following examples provide guidance to litigants.

In Pollack v. Pino’s Formal Wear & Tailoring, 253 N.J. Super. 397 (App. Div. 1992), Pino’s Formal Wear decided to expand their business and have an extension put on their building to add dry cleaning services. Pino’s Formal Wear arranged for the co-respondent, Ernest Polgardy, to purchase the dry-cleaning machinery and to have the machinery installed. The decedent-employee was hired by Ernest Polgardy to install burners and to hook up the machines. The decedent-employee fell from a ladder and was injured. He ultimately passed away shortly thereafter from a number of conditions related to alcohol withdrawal and liver failure. The petitioner-dependent argued that that due to the decedent-employee’s fall, he was not able to drink which resulted in liver failure and death.

The petitioner-dependent filed claim petitions against Pino’s Formal Wear alleging that Pino’s Formal Wear was liable for benefits as the general contractor and that Ernest Polgardy, his direct employer, was an uninsured subcontractor.  The Appellate Division found that Pino’s Formal Wear was not a general contractor within the meaning of N.J.S.A. 34:15-79. It noted that Pino’s Formal Wear relied upon Ernest Polgardy’s skill and knowledge to purchase and install the dry-cleaning machinery with no restrictions placed on Ernest Polgardy. The relationship between Pino’s Formal Wear and Ernest Polgardy was that of owner and contractor, not general contractor and subcontractor. Therefore petitioner’s claim was dismissed.

In Brygidyr v. Rieman, 31 N.J. Super. 450 (App. Div. 1954), the petitioner was injured while washing windows for a building that was owned by Respondent Schwaben Halle. The petitioner filed claim petitions against Schwaben Halle and Federal Window Cleaning Company as an alleged uninsured subcontractor. The petitioner testified that he was regularly employed by another company but that in his free time he worked for Federal Window Cleaning Company and that on their instructions he was washing the windows of Schwaben Halle. Schwaben Halle, however, asserted that it was a cultural and singing society which owned and operated the building. The Appellate Division found that under these circumstances, Schwaben Halle could not have been a contractor and that “the washing of windows was not in the line of Schwaben’s regular business, and the contention that it had contracted to keep the windows clean is without merit… To hold otherwise would mean that any property owner who contracted for services would be liable for injuries sustained by the contractor’s employees.” Id. at 453-54.

In a more recent matter involving an action in the Superior Court filed by the carrier asserting that an employer withheld material information about its operations and use of subcontractors and thereby underpaid its workers’ compensation premiums, the Appellate Division affirmed the trial court’s order of the policyholder to pay the carrier additional unpaid premiums, plus interest, costs, and counsel fees in the amount of $145,231.00. In Fournier Trucking, Inc. v. New Jersey Manufacturers Ins. Co., No. A-1353-18T2, 2020 WL 1802840 (App. Div. Apr. 9, 2020), certif. denied, 244 N.J. 161 (2020), the trial court found that the employer-policyholder, a freight company that facilitated the transport of goods, was liable under N.J.S.A. 34:15-79 to provide workers’ compensation coverage for the employees of uninsured motor carriers it used for hauling of shipments to its customers. The Appellate Division noted that customers hired the employer-policyholder “to consolidate and transport goods; Fournier Trucking consolidates the goods itself, and then subcontracts with the carriers to perform the transportation. Therefore, Fournier Trucking is a contractor, and the carriers it uses to fulfill part of its contracts with shippers are subcontractors.” Id. at *12.

The policyholder-employer attempted to argue that the carriers it contracted with are independent contractors and therefore are not liable for workers’ compensation benefits. However, “to the extent that the carriers maintain employees, those carriers are statutorily obligated to maintain workers’ compensation coverage, as is any other employer within the state. By operation of N.J.S.A. 34:15-79(a), to the extent those carriers fail to satisfy their statutory obligation, Fournier Trucking, as the general contractor, is obliged to provide benefits to any carrier employee who suffers an injury while providing services under Fournier Trucking’s general contract. Ibid. In discussing the argument that the carriers were independent contractors, the Appellate Division stated that “a company can choose to use its own workers to carry out its responsibilities, or it can retain independent companies who may also qualify as subcontractors to discharge some of those tasks. When it does the latter, the law of our State requires the contracting company to assure that the subcontractor’s employees have adequate workers’ compensation insurance.” Id. at *14.

The issue of Section 79 liability for alleged general contractor/subcontractor disputes involve the various parties exchanging information regarding the petitioner’s work, the work site or assignment wherein the petitioner was injured, and investigation into any and all entities who were involved in the business which was related to the petitioner’s work. Carriers should perform initial investigation with their insureds regarding any possible subcontractors that they work with and claimant’s counsel should investigate with their client any information they may have regarding their work. Readers with questions regarding issues related to coverage and potential general contractor liability can reach the undersigned at knagy@capehart.com.

The post Coverage Issues and General Contractor/Subcontractor Allegations appeared first on NJ Workers' Comp Blog.

New Jersey Assembly Committee Votes To Approve Hiring Preference Bill As Part of New Jersey Workers’ Compensation Act

Employers need to be aware of an Assembly bill that would turn the workers’ compensation statute into an employment protection law.  The Assembly Labor Committee recently passed A-2617 sponsored by Assembly members Murphy, Benson, and Reynolds-Jackson.  The bill will require an employer with at least 50 employees to provide a hiring preference to an injured employee who has reached maximal medical improvement, is unable to return to his or her former position, but can perform the essential duties of an existing, unfilled position.

This bill is problematic for employers for many reasons: first, it attempts to turn a statutory benefits law – the New Jersey Workers’ Compensation Act — into an employment protection statute.  Second, there are already labor laws in New Jersey that protect employees, such as the New Jersey Law Against Discrimination and the ADA.  Third, there is no explanation of the circumstances in which employers can reject the preference or prove it should not apply.  In fact, there is no mention that the employer has any right whatsoever not to provide a job to someone who fits the criteria noted above.

Suppose the injured employee is less qualified than another applicant for the open position. Does the injured worker’s status as one who has reached maximal medical improvement trump the more qualified applicant’s credentials? Suppose the outside applicant also has a disability and is more qualified for the job? Further, in what court would the law be enforced?  New Jersey workers’ compensation judges do not have the power to enforce employment laws.  Clearly, claimants cannot prosecute failure to rehire claims in workers’ compensation court.

The Workers’ Compensation Act provides for medical, temporary and permanent partial and total disability benefits. That is all the statute has ever been intended to do.  If the law is only enforceable in civil court, why is this law not being considered as part of the NJLAD?  One overriding question employers will have is what does this proposed bill do that the NJLAD and ADA do not already do? This proposed bill also fails to mention anything at all about requests for reasonable accommodation, the need for an interactive dialogue or defenses of the employer such as undue hardship.  In that sense, this proposed bill seems to override existing disability discrimination laws.

Upon committee approval of the legislation, Murphy, Benson and Reynolds-Jackson issued the following joint statement:

“Work related injuries can be traumatic and devastating. No injured employee should be left without options for work. This bill will ensure that those who are unable to return to their previous position will still be able to put their efforts towards helping in a different role for their employers.

 “Those who have been injured in their place of work should not be cast aside with unemployment if they cannot resume their previous position. These people are still valuable employees who can contribute to their employers and company.

“The transition back to work after suffering an injury can be difficult. It is important for companies to offer ways for these employees to continue to contribute in the workplace, provide for their families, and resume successful careers.”

These sentiments are worthy of consideration, yet one must ask the committee members why would an employee who has a work-related spinal condition and reaches maximal medical improvement be entitled to greater protection than an employee who has the same spinal condition from a congenital cause and reaches maximum medical improvement?  Why should employment rights be dependent on workers’ compensation status?  The answer is they shouldn’t be and that the bill makes no sense.  Anyone who has a disability, be it work or non-work related, has equal rights under existing state and federal laws to reasonable accommodation. The committee statements stunningly suggest that that New Jersey Law Against Discrimination — one of the most progressive in the nation — has suddenly become outdated and inadequate.  This will come as news to employers and employment lawyers.

The post New Jersey Assembly Committee Votes To Approve Hiring Preference Bill As Part of New Jersey Workers’ Compensation Act appeared first on NJ Workers' Comp Blog.

Transportation Issues in Workers’ Compensation

Adjusters and employers familiar with other state workers’
compensation laws are often surprised to find out that the New Jersey Workers’
Compensation Act contains no statute requiring employers to pay for
transportation costs to get employees to medical appointments and no mileage
reimbursement provision.  

When an employer requires an injured worker who has moved
out of state to come back to New Jersey for an independent medical examination,
the employer does not have to pay for airfare, reimburse costs of travel, or
reimburse mileage.

Yet there are situations where it may make good sense for employers to consider providing transportation. One such situation occurs when there is an offer of light duty.  As readers well know, the Harbatuk case stands for the proposition that an employer can terminate temporary disability benefits on an offer of light duty if the injured employee refuses the light duty offer.  Suppose the injured employee is more than willing to accept the light duty offer, but the authorized treating doctor will not permit the injured worker to drive a car as a result of the work injury?   Should the employer refuse to pay temporary disability benefits when the employee does not appear for the light duty assignment?

This situation happens quite frequently because many
injuries lead to restrictions on driving following surgery or the employee may
be taking authorized prescription medications that negate driving.  When faced with this issue, most Judges of
Compensation will not endorse the termination of temporary disability benefits
when an employee wants to come back to work light duty but cannot due to a
restriction against driving imposed by the treating doctor.  Judges do not consider this to be a refusal
to perform light duty, so it may make sense in this situation to provide some
means of transportation.

Distance is often the key variable. Many injured workers
have long drives to work where no public transportation is available.  Some employers will offer to have a fellow
employee pick up the injured worker and drive the injured worker to the light
duty assignment.  In rare situations,
employers may even provide an Uber or Lyft driver.  Still other employers faced with this dilemma
will simply continue to pay temporary disability benefits until the injured
worker reaches maximal medical improvement or can return to driving.  New Jersey is a state where temporary
disability benefits end at MMI or return to work full duty, whichever is
earlier.

Another transportation issue arises when the injured worker
cannot get to physical therapy or make treating appointments because of a driving
restriction placed on the worker by the authorized physician.  Again, there is no case law on this issue,
nor any statute that addresses it. 
Employers will often come up with a creative solution because they know
that if the employee cannot get to treatment or therapy, the recovery period
will be lengthened.  

Thus far we have discussed cases involving driving restrictions.  But there is a large contingent of New Jersey workers who do not own cars and only get to work through employer provided transportation.  When an injury occurs to such an employee, there may be no way to get to the office of the treating doctor.  Some employers provide transportation in this situation.  It is also worth noting that there are a few occupational health facilities and physicians that provide transportation, picking the employee up for treatment and returning the employee to his or her residence. This is an important service that employers should bear in mind. 

The lesson in all of this is that the absence of a statutory provision on transportation has not prevented New Jersey employers from creating practical solutions to challenges in getting employees to work and to medical appointments.

The post Transportation Issues in Workers’ Compensation appeared first on NJ Workers' Comp Blog.

The Limitations of Settlements in New Jersey Comp

This practitioner is often asked two questions regarding
workers’ compensation settlements in New Jersey:  1) Can we settle out of court? and 2) Can we
get a termination agreement at the time of settlement?

There are a number of limitations on settlements in New
Jersey that are different from the practice of law in other states.  One has to do with the prohibition against
out of court settlements. The employer, third party administrator or carrier
may not reach an agreement with the injured worker to settle a workers’
compensation claim unless that claim is the subject of a claim petition
properly filed and heard before a Judge of Compensation.  An injured worker is not even eligible for an
award of permanent partial disability until he or she files a claim petition
through counsel.

Three sections of the New Jersey Workers’ Compensation Act make this clear:  N.J.S.A. 34:15-22, 34:15-39, and 34:15-50.  In all three sections, as a precondition to settling any claim of workers’ compensation, a claim petition must be filed in the Division of Workers’ Compensation, and only the Judge of Compensation can enter an order approving settlement or one of dismissal.

Another major distinction between New Jersey and other
states has to do with waiver of workers’ compensation rights in other
agreements.  The statutes cited above
make clear that the employer may not ask an injured worker to waive rights to
workers’ compensation as part of another agreement, such as a separation
agreement.  There are many laws that can
be waived in a valid separation agreement, such as rights under the ADA, FMLA,
etc., but workers’ compensation is not one of them.   These
kinds of waivers are against public policy.

Similarly, it is fairly common in many states that an employer
will get a signed letter of resignation at the time of the workers’
compensation settlement.  There are both
practical and legal reasons why this does not happen in New Jersey.  First, most injured workers are back to work
doing the very same job by the time the settlement occurs.  That is a big practical difference from other
states where workers remain out of work for years even for relatively modest
injuries.

New Jersey is not a wage loss state but rather a functional loss
state.  Most of the injured workers in
New Jersey who have formal claim petitions in the Division have already
returned to work long before the settlement, either to their former job or a
new job.  In wage loss states like
Pennsylvania, the injured worker may have been out of work for years by the
time the case is settled.  In states like
Pennsylvania, the worker who has been away from work for years may agree to
provide a letter of resignation for nominal consideration. 

In New Jersey, going back to work – even the same job – does
not detract from the ability of the injured worker to obtain a compensation
award for permanent partial disability. 
Injured workers in New Jersey may receive both temporary disability
benefits and an award of permanent partial disability as part of the same case.  There is no requirement that an injured
worker prove impairment of working capacity to obtain an award of permanent
partial disability.   All the injured
worker must do is prove objective medical evidence of impairment as well as
substantial impairment of major life activities.

Since the vast majority of injured workers are back to work in New Jersey at the time of settlement and doing the very same job as the one they did before their injury, seeking a resignation letter is fraught with legal peril.  First, the employee is often an active working unit performing essential job functions. In that situation, there is seldom any legal basis to terminate someone who is doing his or her job satisfactorily. Second, many judges would view an attempt to terminate an injured worker as part of a workers’ compensation settlement as retaliatory or a violation of the New Jersey Law Against Discrimination.  If the employee is able to perform the essential functions of the job, termination of employment as part of a settlement of a workers’ compensation claim would likely lead to immediate labor law litigation.

So can an employer ever get a resignation at the time of settlement?  It can be done but it must be done through labor counsel, following all the rules that prevail in such agreements in New Jersey.  Further, these employment releases are only done when the employee remains out of work for a very long time.  The agreement between the parties must be negotiated for separate consideration, and the injured worker will almost certainly need his own labor counsel.   There are many laws that such an agreement must cover to be effective, and any employment release must meet state and federal legal requirements. 

If the parties do reach an agreement on termination of employment through respective labor counsel, that agreement will not be placed on the record in the New Jersey Division of Workers’ Compensation.  Judges will not reference any separation agreement nor determine whether it is fair or just.  The employment agreement is executed outside workers’ compensation court with both sides having retained labor counsel to advise them.

The post The Limitations of Settlements in New Jersey Comp appeared first on NJ Workers' Comp Blog.

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