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State: N.J.
Geaney: Serious Accident Following Annual Holiday Party Not Compensable: [2021-06-14]

All too often, holiday parties end with some unfortunate injury. Is such an injury covered in workers’ compensation? It depends on the circumstances.

John H. Geaney

John H. Geaney

In Regalado v. F&B Garage Door, a court found that the injury did not arise out of and in the course of employment.

Some of the facts in the case were undisputed. On Dec. 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 the purpose of the party was to thank employees for their hard work throughout the year. 

Petitioner, Viridiana Regalado, invited her brother as in prior years. Since neither of them drove, the owner drove them to the party. The vehicle was owned by Elka 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, Ferrera 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 emergency room, and she 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 Dec. 9, 2016, through Jan. 10, 2017. Those documents showed $540 was deposited on Dec. 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 or 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 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 co-workers, 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.

John H. Geaney is an attorney, executive committee member and shareholder with Capehart Scatchard, a defense law firm in New Jersey. This post appears with permission from Geaney's New Jersey Workers' Comp Blog.