The Compensability of After-Hours Work Injuries

From the law office of: Foster Swift Collins & Smith PC – Alicia W. Birach, Michael A. Cassar, Brian G. Goodenough, Tyler J. Olney and Michael D. Sanders,/

Industries should be aware about laws dealing with compensability of after-hours injuries that occur on the employers’ premises. While the compensability of these injuries is often in the “grey area,” your determination will be heavily dependent upon the facts of each situation. What follows is a brief overview of the prevailing case law and a basic framework for making a compensability decision in these types of scenarios.

The Case Law

In a fairly well-known case, the Michigan Supreme Court delineated some of the factors that should inform your decisions regarding compensability. See Nemeth v Michigan Building Components, 390 Mich 734 (1973). In Nemeth, the employee received the employer’s permission to stay after-hours (after “clocking out”) and use a radial saw that he also generally used during working hours. The employee wanted to use the radial saw to do some personal work for one of his co-workers.

The claimant injured his hand while operating the saw, and he ended up losing four of his fingers. He sought workers’ compensation benefits. The magistrate denied benefits, and the appellate court denied the employee’s application for leave to appeal the magistrate’s decision.

On appeal, the Michigan Supreme Court stated: There is a sufficient nexus between the employment and the injury in a case where an employee sustains an injury while using equipment provided by an employer on the employer’s premises so the recovery of workmen’s compensation (now “workers’” compensation) should be allowed even though the injury occurred after working hours and the equipment was being used for a purpose other than the manufacture of the employer’s products. Nemeth, 390 Mich at 738.

In so holding, the Michigan Supreme Court relied heavily on the following factual determinations:

That the injury took place on the employer’s premises where the employee generally worked.

That the employer had granted permission to the employee to stay after work and to use the employer’s equipment for the employee’s personal benefit.

That the employer also derived a benefit from the employee’s activities – in this regard, the court noted that employers often expend large sums of money in order to establish goodwill. The court observed that many employers rely on Christmas parties and other social affairs to further this goal. Injuries suffered by employees during such social affairs are often considered to arise out of and in the course of the employment. Thus, in Nemeth, the Court held that the employee’s use of the machine after-hours similarly served to promote and maintain good employer/employee relationships.

Nemeth is still good law and has been cited by Michigan’s other appellate courts. For instance, in Connor v Pulley, 1997 Mich App LEXIS 641, an unpublished Michigan Court of Appeals opinion, the court denied benefits to an employee who was injured while trying to move the vehicle of another subcontractor’s employee from a muddy track adjacent to the construction worksite. The court distinguished the situation presented in that particular case from the one presented in Nemeth as follows:

The claimant’s activities and injuries in Connor took place on the employee’s day off, not after-hours on a workday.

The claimant’s activities and injuries did not occur on the employer’s premises.

The employee’s activities and injuries did not benefit the employer – as a matter of fact, the court specifically upheld the magistrate’s and Appellate Commission’s factual finding that had the supervisors been present, the employee, who was paid by the hour, would not have been permitted to leave his job to provide the subcontractor’s employee with such assistance. The employer denied that the employee’s actions were of any benefit whatsoever.

Obviously, the facts in Connor were sufficiently different from those in Nemeth – and the denial of benefits was justified.

Finally, there is one Appellate Commission case that cites the Nemeth case that is worth mentioning here. In Fagan v Dynamic Finishing, LLC, 200 ACO #480, a conservative-leaning panel of the Appellate Commission upheld Magistrate Donna Grit’s denial of benefits in a somewhat similar factual situation. In that case, the employee asked the employer if he could take some concrete slabs home to use to fill-in a ravine on his property. The slabs were located up against a fence in the back part of the employer’s property. While loading the concrete slabs into his car, after-hours, the employee sustained a serious and disabling back injury.

The magistrate denied benefits and the Appellate Commission affirmed, based on the following:

Although the employer provided its permission to the claimant to load up and take home the concrete slabs, the employer vehemently denied that it derived any benefit whatsoever from the claimant’s activities. Although the claimant indicated that his removal of the concrete slabs made it easier for truck drivers to gain ingress and egress from the employer’s property, the magistrate and the Appellate Commission rejected that testimony. Neither the magistrate nor Appellate Commission determined that the employer derived any benefit in the form of improved employee morale.

The magistrate and the Appellate Commission also seemed to place great weight on the fact that the activities took place outside the normal course of employment and were performed for purely personal reasons – with no “special benefit” whatsoever to the employer. Specifically, there was no evidence that the employer’s permission somehow created goodwill.

Conclusion

The compensability of a worker’s injury while on the employer’s premises after-hours requires a very fact-intensive inquiry. If you are handling one of these situations, we recommend that you consider making the following inquiries.

• Was the worker injured while on the employer’s premises after-hours?
• Did the worker have permission to be on the employer’s premises after-hours?
• Did the worker have the employer’s permission to perform the activity he or she was doing at the time of the injury?
• Did the employer derive a benefit (for example, improved employee morale and goodwill) by permitting the worker to perform the activity on the employer’s premises after-hours?