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The Exclusive Remedy Rule Or, How I Learned To Stop Worrying And Love Workers’ Compensation Vedang J. Patel and Joshua W. Praw
INTRODUCTION California’s Workers’ Compensation Act, and any other state that adopts such a rule, subjects employers to strict liability for injuries sustained by employees while in the course and scope of employment, whether inflicted by the employer, a co-employee, or by the employee themselves. The Act also makes workers’ compensation benefits the employee’s sole and exclusive remedy against the employer – the socalled Exclusive Remedy Rule.1 Under this system, employers assume liability without regard to fault for work-related injuries in exchange for limitations on the amount of liability, while the injured employee obtains relatively swift and certain benefits without having to prove liability. The Exclusive Remedy Rule as it pertains to parent-subsidiary entities is an entire body of law that will not be addressed in this article. In many instances, however, a third party is exclusively or concurrently at fault for an injured employee’s work-related injuries. The limitation on employer’s liability does not extend to third parties, however, and the
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employee may sue a third party for damages caused by its negligence. But what happens if the third-party tortfeasor cross-complains against the employer for defense and indemnity? Does the Exclusive Remedy Rule protect the employer from this cross-complaint? This article addresses the question under California law: to what extent is an employer liable to a third-party tortfeasor on cross-complaint for injuries to an employee? THIRD PARTY ACTIONS A third party to a lawsuit may attempt to file a cross-complaint against the employer of an injured employee. At first, it may proceed, but there are mechanisms for the employer to eventually get out of the cross-complaint. Alternatively, the third party may also assert an affirmative defense in its answer to the worker’s complaint, asserting comparative liability on the part of the employer.2 If the third party does file a cross-complaint against the employer, then the employer must answer and will be brought into the lawsuit.3 The Exclusive Remedy Rule will not work on demurrer, but will work on
Motion for Summary Judgment. Lawsuits can be very expensive and thus is an undesirable outcome for any employer, who to begin with should not be in the lawsuit. The employer will have to engage in discovery, including written discovery and depositions.4 This requires money and time and only takes away from the business’s true purposes. If the third party does not bring a cross-complaint against the employer, they may still assert affirmative defenses in their answer to a worker’s complaint. The third party may argue the worker’s injuries were due to someone else’s negligence, such as the employer.5 However, it is the third party’s burden of proof and the third party must prove that the worker’s injury was a result of the employer’s actions and not its own. HOW TO PROTECT YOUR CLIENT FROM THIRD PARTY CROSSCOMPLAINTS The bar against third party tortfeasor cross-complaints is codified in Labor Code § 3864, and interpreted by a number of California Appellate and Federal Courts.6
