Indemnification provisions and claims made by your employees
Your employee gets injured - you pay benefits. Your
employee then sues the premises owner, who happens to
be your landlord. You also happen to have executed a
lease with an indemnification provision. What happens
- do you have to reimburse your landlord any money he
pays out to settle your employee's claim for
injuries?
The New Jersey Appellate Court (in Selby v. New
Carson Hills Limited Partnership, App. Div.
36-2-2926) reviewed a case where an injured employee
sued his employer’s landlord after receiving workers’
compensation benefits. The landlord moved to enforce
an indemnification clause in the lease against the
employer, who already paid the injured employee
workers’ compensation benefits. Under the terms of
the lease, the landlord argued that the employer
should “indemnify” the landlord for any recovery the
injured worker won against the landlord.
This case is interesting because it addresses a fairly common situation. In this case, if the landlord won, the employer would have already paid the injured employee his workers’ compensation benefits, and then would have to pay again (by reimbursing the landlord for any money the landlord had to pay the employee for maintaining the premises in a negligent fashion).
The Court, in throwing out the ‘indemnification claim’ against the employer ruled that (1) The ‘indemnification provision’ in the lease was so broad and vague it was unenforceable; and (2) that the New Jersey Workers Compensation Act prevented this indemnification which would essentially abrogate the ‘exclusive remedy provision’ of the New Jersey Act.
Question about an indemnification provision or a third-party action involving on of your employees against your landlord? Contact Greg Lois.
This case is interesting because it addresses a fairly common situation. In this case, if the landlord won, the employer would have already paid the injured employee his workers’ compensation benefits, and then would have to pay again (by reimbursing the landlord for any money the landlord had to pay the employee for maintaining the premises in a negligent fashion).
The Court, in throwing out the ‘indemnification claim’ against the employer ruled that (1) The ‘indemnification provision’ in the lease was so broad and vague it was unenforceable; and (2) that the New Jersey Workers Compensation Act prevented this indemnification which would essentially abrogate the ‘exclusive remedy provision’ of the New Jersey Act.
Question about an indemnification provision or a third-party action involving on of your employees against your landlord? Contact Greg Lois.
