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Indemnification provisions and claims made by your employees

The New Jersey Appellate Court (in Selby v. New Carson Hills Limited Partnership, App. Div. 36-2-2926) reviewed a case where an injured employee sued his employer’s landlord after receiving workers’ compensation benefits. The landlord moved to enforce an indemnification clause in the lease against the employer, who already paid the injured employee workers’ compensation benefits. Under the terms of the lease, the landlord argued that the employer should “indemnify” the landlord for any recovery the injured worker won against the landlord.

This case is interesting because it addresses a fairly common situation. In this case, if the landlord won, the employer would have already paid the injured employee his workers’ compensation benefits, and then would have to pay again (by reimbursing the landlord for any money the landlord had to pay the employee for maintaining the premises in a negligent fashion).

The Court, in throwing out the ‘indemnification claim’ against the employer ruled that (1) The ‘indemnification provision’ in the lease was so broad and vague it was unenforceable; and (2) that the New Jersey Workers Compensation Act prevented this indemnification which would essentially abrogate the ‘exclusive remedy provision’ of the New Jersey Act.

Question about an indemnification provision or a third-party action involving on of your employees against your landlord? Contact Greg Lois.

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