Op-Ed: Travel Policy Restrictions Can't Ignore Corporate Liability

Calamitous economic times, coupled with the rising cost of business travel, have impelled many corporations to adopt more restrictive travel policies. Among the changes being implemented are requiring employees to schedule outbound and return flights on the same day—this to avoid the cost of a hotel stay—and requiring employees to rent cars and drive themselves to and from the airport rather than utilizing black car service. Such cost-cutting measures make for longer and more exhausting travel days, with the attendant risk to travelers who may find themselves behind the wheel of a car at the end of a 14-hour workday.

These changes in corporate travel policies and the recent enactment in the United Kingdom of the Corporate Manslaughter and Corporate Homicide Act focused renewed attention on the duty of care owed by U.S.-based companies to employees who travel, an employer's potential exposure if an employee sustains an injury while on a business trip and the worker's compensation in the United States.

U.S. worker's compensation statutes focus on two straightforward inquiries: Was the injured party an employee and did his or her injury or death occur in the course of employment? If both questions are answered affirmatively, the injured employee is entitled to a worker's compensation award.

If an employee is covered by worker's compensation, then the employee is barred from pursuing any other legal action against the employer, subject to limited exceptions. Worker's compensation statutes guarantee recovery to an injured employee or the survivors of a deceased employee, as long as the incident occurred "in the course of employment." The key inquiry is whether the employee was performing a work-related duty when the accident occurred, a determination made by considering the circumstances surrounding the injury. It is inconsequential whether the employee or employer could have prevented the accident. Fault is not relevant.

To ensure the viability of the worker's compensation system, a state may require employers to purchase private worker's compensation insurance, make contributions to a state worker's compensation fund or self-insure. In New Jersey, for example, employers must purchase worker's compensation insurance or otherwise be eligible for state-regulated self-insurance. An employer who fails to insure can be liable for criminal and civil penalties and lose its shelter against further lawsuits by its employees. The New Jersey legislature has created an "Uninsured Employer's Fund," which makes worker's compensation payments when the employer is not insured or, if a self-insured company, has defaulted on compensation payments due an employee.

Under worker's compensation statutes, there are often two components to an employer's liability to an injured employee. First, the employee is compensated for the loss of future wages caused by the injury based upon a statutory schedule that takes into account the nature and seriousness of the injury. Second, many states also require employers to cover the medical expenses incurred by the employee. This system results in smaller compensation awards than could typically be realized in a personal injury action, in the absence of a worker's compensation statute. The trade-off struck by worker's compensation statutes is certainty of recovery for the employee and limitation of exposure for the employer.

The U.S. worker's compensation system should not be construed as less protective of employees or more tolerant of inappropriate practices or policies adopted by employers than the U.K. system. The premiums paid by a company for worker's compensation insurance are likely experience-based. That, and the cost to a company when an employee misses work to due an injury, provides ample financial incentives for a U.S.-based employer to take steps to minimize worker's compensation claims. Moreover, conduct giving rise to a worker's compensation claim may subject a U.S.-based company to governmental fines or other regulatory action under statutes, such as the Occupational Safety and Health Act of 1970. Whether operating under the U.K. or U.S. regulatory framework, a company is well advised to be prudent in adopting or changing policies that affect its travelers.