Employer Immunity And Other Urban Legends

Maryland Court Confuses Wisconsin Exclusive Remedy Rule

For years now, lawyers, judges, and even courts in other states have been confused over the Exclusive Remedy Rule that exists here in Wisconsin. A clear example is the 1994 decision by the Maryland Supreme Court in Hastings v. Mechalske, Hastings v. Mechalske, 650 A.2d 274 (Md. 1994). In deciding the case, the Court said:

Maryland FlagTo reach that result, we adopted the Wisconsin approach to employer immunity. Under that approach, a corporate officer or supervisory co-employee is subject to liability for negligence if he breaches a duty of care which he personally owed to the plaintiff. The negligence must have been directed toward the particular plaintiff and the tortious act must have been outside the scope of the employer’s responsibility. The co-employee is not liable for merely breaching a duty that the employer owed the injured employee. Id.

The only problem is that isn’t the law in Wisconsin. Other courts and judges have further propagated the notion that Wisconsin somehow allows a third-party action to be filed against a corporate officer or supervising co-employee if that individual somehow steps outside of his role as a supervisor. That is not true, and the record must be set straight.

In Wisconsin, recovery of compensation benefits is an injured workers’ exclusive remedy against his employer for an on-the-job injury. Wis. Stat. § 102.03(2) (2000). As a general rule, employers have immunity from personal injury suits filed by their employees. A third-party tortfeasor also has no common law rights of contribution against an employer because the statute makes payment of compensation benefits the employer’s exclusive liability for a work-related injury. Id.; Houlihan v. ABC Ins. Co., 542 N.W.2d 178 (Wis. App. 1995), review denied, 546 N.W.2d 470. Wis. Stat. § 102.03(2) provides as follows:

(2) Where such conditions exist the right to the recovery of compensation under this chapter shall be the exclusive remedy against the employer, any other employee of the same employer and the worker’s compensation insurance carrier. This section does not limit the right of an employee to bring action against any co-employee for an assault intended to cause bodily harm, or against a co-employee for negligent operation of a motor vehicle not owned or leased by the employer, or against a co-employee of the same employer to the extent that there would be liability of a governmental unit to pay judgments against employees under a collective bargaining agreement or a local ordinance. Wis. Stat. § 102.03(2) (2000).

As a result of this “Exclusive Remedy Rule”, when a negligent third party is liable to an injured worker, it cannot require contribution from an employer, even if the employer was substantially more at fault than the third party. Wis. Stat. § 102.03(2) (2000). Note that if officers and directors of the employer somehow take on a different legal entity, such as a partnership which leases facilities to the employer, that can eliminate the partners’ immunity as individuals under the exclusive remedy provision under Wisconsin law. Couillard v. Van Ess, 447 N.W.2d 391 (Wis. App. 1989), review denied, 451 N.W.2d 198. But this is far different from allowing an officer or supervising co-employee from being sued as a third party for donning the hat of a co-employee.

Despite the Exclusive Remedy Rule, Wisconsin recognizes the Dual Capacity Doctrine. Henning v. General Motor Assembly Div., 419 N.W.2d 551 (Wis. 1988). This is the doctrine which states that an employer may be found liable while wearing a hat other than that of an employer. The classic example is an employee of Ford who sued Ford when he was injured in a defective automobile. The employee sued Ford because Ford manufactured the automobile, not because it was his employer. In order to be liable under the Dual Capacity Doctrine, the function in which the employer engages, which results in the injury to the employee, cannot be directly related to any other duty of the employer. If the function which a supervisor of the employer performs negligently is directly related to a duty of the employer, then the Dual Capacity Doctrine is not engaged, and the employer cannot be held liable. Id. The Dual Capacity Doctrine applies only if the employer occupies “a second capacity … independent of those imposed on him as an employer.” Jenkins v. Sabourin, 311 N.W.2d 600 (Wis. 1981). But this too is a far cry from allowing a third-party action against an officer or supervising co-employee.

The confusion stems from the fact that prior to 1978, the Exclusive Remedy Rule did not apply to actions brought against co-employees. Both case law and the workers’ compensation statute allowed an injured worker to sue a co-employee who was responsible for his injuries. However, in 1978, the Wisconsin Act was amended to make the Exclusive Remedy Rule applicable to an action against “any other employee of the same employer.” Lampada v. State Sand & Gravel Co., 206 N.W.2d 138 (Wis. 1973). The 1973 Lampada decision discussed the applicability of the Exclusive Remedy Rule to a co-employee and held that a co-employee could be sued at that time at common law. However, the portion of the Wisconsin Workers’ Compensation Act which was relied upon in Lampada has been superseded by the legislature’s subsequent amendment. Wis. Stat. § 102.03(2) (2000). Wis. Stat. § 102.03 now applies the Exclusive Remedy Rule to “the employer, any other employee of the same employer and the worker’s compensation insurance carrier.” Id. The Act does allow an employee to be sued when he commits an assault intended to cause bodily harm. Id. Therefore, where a co-employee commits an assault on the claimant, that co-employee may become a third party for purposes of a third-party action or subrogation. Jenson v. Employers Mut. Cas. Co., 468 N.W.2d 1 (Wis. 1991). The term “assault” means both a civil “assault” and a civil “battery”. Id.

In addition, Wis. Stat. § 102.03(2) unambiguously states that an injured employee is not limited to workers’ compensation benefits when he is injured by a co-employee’s negligent operation of a motor vehicle “not owned or leased by the employer.” Wis. Stat. § 102.03(2) (2000); Gorzalski v. Frankenmuth Mut. Ins. Co., 429 N.W.2d 537 (Wis. App. 1988). Here, the term “leased” means a contract by which one owning such property grants to another the right to “possess, use and enjoy” the property for a specified period of time in exchange for a periodic payment of a stipulated price, referred to as rent. Id.

Decades after this legislative amendment and change in the law, we still see cases and lawyers referring to the “Wisconsin approach” to employer immunity. They claim that in Wisconsin, a corporate officer or supervisory co-employee may be subject to third-party liability for negligence if he breaches a duty of care which he personally owes to the injured plaintiff, provided the negligence is directed toward the particular plaintiff and the act is outside the scope of the employer’s responsibility. Kruse v. Schieve, 213 N.W.2d 64 (Wis. 1973). While this was true prior to 1978, it is no longer the case, and the “Wisconsin approach” to employer immunity as set forth and propagated by decisions in other states appears to be a bit of an urban legend. Wisconsin currently does not allow third-party actions against co-employees or the employer, in the absence of an assault intended to cause physical harm.

If you should have any questions regarding this article or Wisconsin’s approach to employer immunity, please do not hesitate to contact Gary Wickert at gwickert@mwl-law.com.

Gary L. Wickert

Gary L. Wickert is an insurance trial lawyer and partner with the law firm of Matthiesen, Wickert & Lehrer, S.C. Gary has nearly four decades of litigation experience and is regarded as one of the world’s leading experts on insurance subrogation. He is the author of several subrogation books and legal treatises and a national and international speaker and lecturer on subrogation and motivational topics.