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Serious Accident Following Annual Holiday Party Found Not Compensable

By on June 11, 2021 in Compensability with 0 Comments

All too often holiday parties end with some unfortunate injury.  Is such an injury covered in workers’ compensation?  It depends on the circumstances. The Court in Regalado v. F&B Garage Door, A-0083-20, (App. Div. June 8, 2021), found that the injury in this case did not arise out of and in the course of employment.

Some of the facts in the case were undisputed.  On Friday, December 23, 2016, the company hosted its annual holiday party at a local restaurant.  The party was for employees, friends and family.  No company clients or vendors were invited. The owner of the company, Frida Ferrera, said that the purpose of the party was to thank employees for their hard work throughout the year. 

Petitioner, Ms. Regalado, invited her brother as in prior years.  Since neither of them drove, the owner drove them to the party.  The vehicle in which they all drove was owned by Martinez, who was not employed by the company.  Everyone at the party except the owner consumed alcohol. No one was paid to attend the party nor compensated for travel time.

The parties also agreed on the circumstances of the accident.  After the party ended, Ferrara drove first to her own home.  She exited the vehicle and then Martinez, the car owner, got in the driver’s seat.  Minutes later Martinez drove into a parked car, which caused the vehicle to flip over, resting on its roof.  Petitioner and her brother were treated at the ER and petitioner required surgical procedures to her neck and jaw.

Petitioner filed a workers’ compensation claim petition.  She argued that the owner told her she would not receive a holiday bonus if she did not attend the holiday party.  This allegation and others made by petitioner were disputed.  Petitioner also claimed that she received her cash bonus at the restaurant.  During testimony, however, petitioner said that she would not have attended the party if transportation had not been provided.

Respondent produced three lay witnesses.  They all testified that bonuses had already been paid prior to the holiday party.  The owner denied saying that petitioner’s bonus was contingent on attending the party.  The owner testified that the party was optional and there were no job ramifications for refusal to attend. Another employee testified that he attended the party for two years and was never told his bonus was contingent on attending.  He also said the bonus was paid prior to the party.

The only documentary proof offered by petitioner was a bank statement listing her deposit history between December 9, 2016 through January 10, 2017.  Those documents showed $540 was deposited on December 27, 2016.  Petitioner’s math did not add up.  She said this amount represented three days of pay at $60 per day plus a $300 cash bonus received at the party.  That total was $480, not $540.

After hearing testimony on several days, the Judge of Compensation found petitioner not credible nor consistent.  He observed that petitioner testified to receiving different amounts on different days of testimony.  He also thought it was contradictory for petitioner to say that she would not have attended the party without transportation being provided but then maintain that her attendance was essentially mandatory.  As for the bank deposit, the Judge of Compensation noted that there was no showing when petitioner received these funds.  The judge dismissed the case and petitioner appealed.

The Appellate Division explored the requirements under N.J.S.A. 34:15-7.  It noted that for a social activity to be compensable petitioner must prove that there is a benefit to the employer beyond improvement of health and morale. In this case the party was clearly about employee morale since only coworkers, friends and family were invited, not clients or vendors.

That left one remaining legal argument made by petitioner, namely that her attendance was mandatory.  There is a line of cases in New Jersey that establishes compensability when an employee is required to perform some activity, whether recreational or social.  The Court found no evidence that petitioner was in fact required to attend, or that there were threats of reprisal to her for non-attendance.  The Court viewed the party as an informal gathering on an optional basis.  It gave no weight to petitioner’s argument that her bonus was on the line because other witnesses made clear that the bonus was paid prior to the party.  The Court agreed with the Judge of Compensation that petitioner’s statement that she would not have attended the party absent transportation conflicted with the so-called mandatory nature of the party.

The lesson from this case is that employers who wish to host holiday parties and other similar events should make clear in writing that attendance is optional and voluntary and that there are no adverse job consequences for non-attendance.

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About the Author

About the Author:

John H. Geaney, a shareholder and co-chair of Capehart Scatchard's Workers' Compensation department, began an email newsletter entitled Currents in Workers’ Compensation, ADA and FMLA in 2001 in order to keep clients and readers informed on leading developments in these three areas of law. Since that time he has written over 500 newsletter updates.

Mr. Geaney is the author of Geaney’s New Jersey Workers’ Compensation Manual for Practitioners, Adjusters & Employers. The manual is distributed by the New Jersey Institute for Continuing Legal Education (NJICLE). He also authored an ADA and FMLA manual as distributed by NJICLE. If you are interested in purchasing the manual, please contact NJICLE at 732-214-8500 or visit their website at www.njicle.com.

Mr. Geaney represents employers in the defense of workers’ compensation, ADA and FMLA matters. He is a Fellow of the College of Workers’ Compensation Lawyers of the American Bar Association and is certified by the Supreme Court of New Jersey as a workers’ compensation law attorney. He is one of two firm representatives to the National Workers’ Compensation Defense Network. He has served on the Executive Committee of Capehart Scatchard for over ten (10) years.

A graduate of Holy Cross College summa cum laude, Mr. Geaney obtained his law degree from Boston College Law School. He has been named a “Super Lawyer” by his peers and Law and Politics. He serves as Vice President of the Friends of MEND, the fundraising arm of a local charitable organization devoted to promoting affordable housing.

Capehart Scatchard is a full service law firm with offices in Mt. Laurel and Trenton, New Jersey. The firm represents employers and businesses in a wide variety of areas, including workers’ compensation, civil litigation, labor, environmental, business, estates and governmental affairs.

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