NC Risk Handling Hint -N.C.G.S. § 97-6; Employment Relationship

In a startling departure fromestablished precedent, the North Carolina Court of Appeals has elevated the position of a written agreement with regard to the determination of whether an employment relationship exists for the purposes of workers’ compensation. InGregory v. Pearson, the Court held that, “[b]ecause the [Defendant] chose [by contract] not to establish an employment relationship with [Plaintiff], it eschews both the liabilities and protections of the Workers’ Compensation Act.” The Court in Gregory went on to explain the provisions of N.C.G.S. § 97-6, which provides that “[n]o contract…shall in any manner operate to relieve an employer…of any obligation created by this Article,” did not apply as the parties’ agreement had already explicitly rejected an employment relationship in contract. In other words, because Defendant agreed in a contract that no employment relationship existed, the Workers’ Compensation Act did not apply and Defendant could not avail itself of the exclusivity provision of the Act.

 

The decision inGregory was handed down on December 31, 2012. As such, the time-frame for pursuing additional review or rehearing hasnot yet run. For the time being, however, this decision looks to be a significant development in the body of case-law which defines an employment relationship for purposes of workers’ compensation. It may be North Carolina’s first step toward allowing employers to “opt out” of the workers’ compensation system.

 

TCDG will continue to monitor this development as its outcome and impact become more clear.