It's settled law that workers' compensation insurance covers employees when their injuries “arise out of and in the course and scope of employment.” But it's possible that employees who are injured while participating in company-sponsored recreational activities may also qualify for workers' compensation. This determination of coverage is both state- and fact-specific, with each state applying its own interpretation of whether injuries “arise out of and in the course of employment” when they occur as a result of employer-sponsored activities.
Florida, California, Texas, New York, Michigan, Oregon, and Colorado are among the states with strict statutory provisions specifying that employee injuries arising out of voluntary recreational activities are not compensable – unless the employer directly or indirectly requires participation and stands to gain substantially from the activity. Other states apply more lenient standards when making their determinations.
Thus, compensation decisions often hinge on whether the activity is deemed truly voluntary. If an employee feels that he or she has been forced into participating or is worried that not participating will result in a penalty of some sort, then the employee’s decision may be deemed involuntary, and any injuries he or she suffers as a result will be covered. Ultimately, the trigger for workers' compensation coverage is the particular set of facts in an individual case.
It should also be noted that the employer need not actually “host” the event for liability to be imposed. For example, if an employer directs its employees to attend an event sponsored by a customer, workers’ compensation liability may nonetheless exist because in this instance, the employer has required the employee to attend and will benefit from the goodwill generated by the staff toward the customer.
Generally, employer-sponsored picnics, sports events, recreational leagues, and company retreats are meant to foster team building, inspire loyalty, and boost employee morale. Such events are usually well-received by employees and may serve as a reward for hard work. However, employers would be wise to consider the potential risks involved when planning these events. To minimize exposure, employers should:
- make clear to employees that attendance and participation are not mandatory; and
- when possible, plan events away from the company premises and on weekends to support the argument that the events are social and not work-related.
When these and other appropriate risk-management measures are taken, the likelihood increases that employer-sponsored recreational events will not only be great successes but won’t result in workers’ compensation claims.
For further guidance on this topic, please contact our Risk Management Team.
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