The New Jersey Premises Rule Is Under Attack

The New Jersey Premises Rule Is Under Attack

One of the pillars of the New Jersey Workers’ Compensation Act has been the rock solid “premises rule,” which has been in place since 1979 when the workers’ compensation law was substantially amended.  That rule says that a worker is covered for workers’ compensation when he or she arrives on premises owned or controlled by the employer. Injuries off premises are not covered.   The law does protect someone who is sent by the employer on a special assignment, of course. The premises rule has been consistently followed by judges and the courts for 41 years.  The premises rule was passed because the previous rule, known as the “going and coming rule,” had become so riddled with exceptions as to become completely unhelpful.

Now attorneys representing claimants have pressed the legislature to pass S 771 which will constitute the first major exception to the premises rule contained in N.J.S.A. 34:15-36.   The bill was passed by a 3-1 vote in the Senate Labor Committee on December 10, 2020.  The proposed bill states:  “Employment shall also be deemed to commence, if an employer provides or designates a parking area for use by an employee, when an employee arrives at the parking area prior to reporting for work and shall terminate when an employee leaves the parking area at the end of a work period; provided that, if the site of the parking area is separate from the place of employment, an employee shall be deemed to be in the course of employment while the employee travels directly from the parking area to the place of employment prior to reporting for work and while the employee travels directly from the place of employment to the parking area at the end of a work period.”
If you read this carefully, you will notice that there would no longer be any statutory requirement that the employer must own or control the parking lot.  The current law would be gutted. The new language is “if an employer provides or designates a parking area,” and an injury occurs, then workers’ compensation coverage will now be extended to that employee all the way to and from the parking lot. Ownership and control don’t matter.  The only issue will be whether the employer has a role in providing for the parking. This also applies to the trip at the end of the day when the employee leaves the premises and is injured on the way to the parking lot which the employer does not own or control.  

Why is this bill being proposed?  Frankly, it is a way to overturn the statute and go back to the exceptions under the highly ridiculed “going-and-coming rule.”  The battle cannot be brought in court because the New Jersey Supreme Court has already spoken in Hersh v. County of Morris.  In that 2014 case the County of Morris did not own or control the parking lot off premises, but it worked out an arrangement with the private parking lot owner of the Cattano Garage to lease only 65 spaces for some county employees out of more than 300 spaces in the garage.  The County paid for the off-site parking.  Mrs. Hersh was injured walking from the lot to the County office in a public street, and the New Jersey Supreme Court ruled against Mrs. Hersh because she was not on the premises owned by the County when she was injured but rather in a public street, and because Morris County did not own or control the private Cattano Garage.

What does this mean for public entities like Morris County, which won the Hersh case?  For Morris County or a large municipality that has insufficient parking for its employees and engages in a contractual arrangement for parking spaces with a private owner, it will mean that the public entity must pay workers’ compensation benefits for any injury that takes place in the lot or in the public street on the way to the public entity’s premises, and the same will be true at the end of the work day.  Lack of ownership will not matter, nor will it matter that the employee pays for the parking by means of a deduction from his or her paycheck. If the employer has a role in providing for off-site parking, that will make the employer strictly liable for benefits, including medical, temporary disability and partial permanent disability benefits.

The first exception to any law is almost always the prelude to many more exceptions.  The cracks created by this proposed law are likely to widen soon.  Here is what employers will assuredly deal with next.  Suppose an employee during a lunch break decides to take a walk to the private parking lot arranged by the employer to get some cigarettes or a personal item in his or her car and is hit by a car in the public street on the way to the lot that the public entity does not own or control.  Is that injury covered merely because it happens during the work day?  Under current law, the answer is no.   Under the new law, the answer is likely to be yes. The argument by attorneys for claimants will be, “why should these employees be treated any differently than on-premises employees who walk out to their car in the municipally owned parking lot to get their cigarettes?  Don’t they have the same right to get cigarettes from their cars in the private lot provided for by the employer?”
Judges will give the statute liberal interpretation, and a great many more injuries off premises will now be deemed to be covered.  The employer will have major proof problems in court rebutting the allegations of such a claim if this law passes.  Consider this:  how will an employer even know that the employee was walking to his or her car when the injury occurred in the public street?  All the employee has to say when he or she is injured is that the destination was his or her car.  The employer may suspect that the real destination was the deli or the CVS across the street, but how does the employer prove it if the employee got struck while crossing the street?

Consider this scenario as well.  Suppose Jim Smith has a three block walk to get to the premises of the public entity.  In the morning Smith parks in the private parking lot that the municipality provides for some employees, and then he proceeds to a coffee shop directly on the way to the municipal building.  Leaving the coffee shop, he falls on snow in the public street and breaks his leg. Is that injury covered because it was directly on the way to the municipal building?  The answer is no under current law, but maybe yes if this bill passes.

This bill has strong support from unions and claimants’ attorneys, and from several legislators who practice workers’ compensation representing workers.  If the bill passes, public entities and all employers generally are going to see an increase in workers’ compensation costs if they arrange for off-site parking on premises they don’t own. This in turn will translate into higher taxes to fund the rising costs of off-premises injuries.  Ironically, the premises rule was passed 41 years ago in part because the Legislature wanted to get skyrocketing workers’ compensation costs under control!  Now the pendulum is swinging back to the pre-1979 days.
By:  John H. Geaney
Capehart Scatchard