Contractual Indemnity and the Massachusetts Workers Compensation Act

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Contractual Indemnity and the Massachusetts Workers Compensation Act

Massachusetts offers employers protections in relation to employee-prosecuted work-related negligence actions in common law that qualify with the Massachusetts Worker’s Compensation Act, G.L. 152 §§ 1-86. However, contractual indemnification provisions to third parties are not covered by this act if there is proof that the injuries occurred as a result of employer negligence. This act is an attempt to balance the rights of employees and employers when workplace injuries occur that involve insurance compensation. 

This compensation often comes in the form of payments for medical expenses as well as for lost wages. This act includes an exclusivity provision that states that employees cannot collect money from their employer, a co-employee, or through the courts unless the employee states in writing their intention to give up their Worker’s Compensation benefits in order to keep their right to common law tort remedies. 

The exclusivity provision in the act only covers work-related claims that are a result of negligence. It cannot be applied to intentional torts caused by an issue other than the employment concern in question. Basically, the act forces an employee to choose between Worker’s Compensation for a covered employer or whatever settlement they might get through a court case. Most employees in Massachusetts choose to be covered by Worker’s Compensation since the act is no-fault in nature rather than choose to litigate.

This type of indemnification is common in commercial contracts involving sophisticated parties. Typically, in these contracts, there is a party performing services and one paying for the services. It is then generally the performing party that agrees to pay for any damages the paying party suffers that result from the services being performed. Basically, if there is any litigation on the part of the paying party as a result of the performing party fulfilling its contractual obligations, the performing party will pay the costs. The performing party in these cases will generally pay attorney’s fees and other costs related to the issue in question in addition to actual damages.

In a situation where the performing party is an employee and the paying party is an employer, the state of Massachusetts allows the parties involved to use contractual agreements to allocate the risk while protecting employers from common law claims for injuries that are work-related. Third parties can sometimes present evidence showing that the conduct of an employer is responsible for an employee’s injuries even if the employee has not blamed the employer. So, a careful pleading may be necessary to invoke indemnification in these cases.