Workers' Compensation Newsletter

Injuries That Take Place During Company-Sponsored Activities and Employer Liability

Workers’ Compensation plans are governed by state law, therefore coverage for specific types of employee injuries may vary from state to state. In general, however, to be compensable under Workers’ Compensation laws, the injury must arise out of an accident that occurs within the course and scope of employment. Whether an injury that occurs in the context of a company-sponsored recreational event “arises out of” and is “within the course and scope of employment” is a question of fact to be determined by a state’s Workers’ Compensation Board or the Court. Such coverage cases have often been litigated.

Company-Sponsored Activities and Workers’ Compensation

Many state Workers’ Compensation schemes do not cover injuries occurring outside the course and scope of the employment. Some states have specifically issued legislation declaring that injuries arising out of voluntary participation in off-duty recreational, social or athletic activities, such as a company picnic, do not constitute part of an employee’s work-related duties, and therefore are not compensable under Workers’ Compensation law. On the other hand, other states and courts have held that such injuries are compensable.

Courts have considered the following factors in determining if the activity comes within the course and scope of the employment:

  1. The extent to which employee attendance is expected or mandatory
  2. The benefit received by the employer from the activity which gave rise to the injury and the extent the employer pays for the activity
  3. The time and place relationship between the risk of the injury and the employment

Variance in Courts’ Determination of “Course and Scope”

As mentioned, Workers’ Compensation laws vary by state. As such, court opinions have differed in finding whether an injured employee is within the “course and scope” of their employment (for Workers’ Compensation eligibility purposes) while attending a company-sponsored activity. Thus, depending on the weight given to any or all of the above factors by the court and according to applicable state Workers’ Compensation law requirements, such an injury may or may not be compensable.

For example, a New York appellate court held that an employee, who sustained an injury while playing in a union-sponsored softball game, was not entitled to receive Workers’ Compensation benefits. The court reasoned that the recreational activity was not within the employee’s course and scope of employment just because the event had some positive effect on employee morale, i.e., “employer benefit.” This was not sufficient employer involvement.

Avoiding Workers’ Compensation Coverage

Since results on which injuries are compensable vary, employers should review applicable state Workers’ Compensation statutes. Overall, however, some factors that may reduce the risk of employer liability for injuries at company-sponsored sports activities include:

  • Requiring waivers from employees for participation
  • Emphasizing voluntary participation
  • Reducing the amount of employer sponsorship—requiring employee contributions
  • Avoiding alcoholic beverages at activity
  • Avoiding sports events on company time and company property
  • Maintaining consistency regarding the treatment of injuries
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