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Defense Digest

New Jersey Workers’ Compensation and Property Leases. Two Greats Tastes That Don’t Taste Great Together

Defense Digest, Vol. 27, No. 5, December 2021

December 1, 2021

by Robert J. Fitzgerald

Key Points:

  • The premises rule limits recovery to injuries which occur on the physical limits of the employer’s premises.
  • The pivotal questions under the the premises rule are (1) where was the situs of the accident and (2) did the employer have control of the property on which the accident occurred?
  • Compensability of an accident depends on the right of control of the employer, it is not necessary to establish that the employer actually exercised that right.

In the recent case of Walker v. Saker Shop Rite, 2021 WL 4058011 (N.J. Super. App. Div. Sept., 7, 2021), the New Jersey Appellate Division revisits compensability for “parking lot” cases under the New Jersey workers’ compensation statute.

On December 11, 2018, the petitioner, a 70-year-old employee of a supermarket, stepped into a pothole as she walked to her car in the parking lot after completing her shift. The Workers’ Compensation Judge found that the accident did not occur in an area under the employer’s control nor in an area designated for employee parking. Therefore, the claim petition was denied.

On appeal, the court went into a detailed analysis of the factual and documentary evidence. It noted that the petitioner had been working for the employer for 31 years. She drove to work and parked in the parking lot abutting a side entrance to the store. The shopping center where this accident occurred contains eight to ten stores, with the supermarket occupying the last leased space on the south end. The side parking lot contained a cabana that the employer put there for the convenience of its employees to smoke cigarettes or drink their coffee. The store used the sidewalk to hold shopping carts. The petitioner testified she had parked in this same area since the store was opened 25 years ago.

At trial, the petitioner acknowledged that the employer previously told its employees to park out by the street. However, she testified that she used the side parking lot due to safety concerns. She recounted that years before the accident, she had engaged in a conversation with an assistant manager, where she explained why she parked in the lot and the assistant manager didn’t say to move. In addition, other employees also parked in the side lot rather than the designated area near the street.

Pursuant to the lease, the store pays a common area maintenance (CAM) fee to the landlord, based on its pro-rata share of the entire shopping center, for maintenance of the parking lot. The lease indicated that the “landlord shall keep and maintain or permit the operator of the premises to keep and maintain the common area in good condition and repair.” In February 2018, the supermarket and the landlord amended the lease, allowing the store to complete reconfiguration work for a sidewalk and parking lot project.

At trial, the store’s human resources manager testified that new employees were directed to park in the “designated employee parking area.” On cross examination, she acknowledged regularly observing store employees parking in non-designated parking areas and asking them to move their cars to the designated area. She also testified that certain employees had the responsibility of retrieving shopping carts from the parking lot and were asked to keep an eye out for any hazards in the parking lot and report such hazards to management.

Based on its detailed analysis of the factual and documentary evidence, the Appellate Division reversed the denial and found the case to be compensable. Specifically, it found substantial evidence that the employer used and exercised control over the parking lot area abutting its supermarket, including the area where the petitioner fell. The Appellate Division also determined that there was no evidence that the employer’s directive to park in the designated employee parking area was for the safety of its employees. Moreover, the court focused on the lease agreement, noting:

We find largely irrelevant that the landlord was responsible for maintaining the parking areas of the shopping center, as Saker’s lease clearly granted Saker, its ‘customers, invitees, licensees . . . and employees’ the right to use the parking areas. While the landlord maintained the parking areas, the lease required Saker to pay ‘additional rent,’ reflecting a proportionate share of CAM charges, which included the cost of maintaining parking areas.

Because the employer Saker used and exercised controlled control over the parking lot here, we conclude petitioner’s injury is compensable under the premises rule. In addition, the February 2018 lease amendment clearly expressed the intention to permit Saker to exercise control of the parking lot and do all things necessary to reconfigure and repave the lot. Saker, in fact, completed the work, albeit after the accident. Nevertheless, the execution of the lease amendment ten months before petitioner’s accident, reflects Saker’s authority to exercise control of the parking lot.

While this case does not necessarily break new ground when addressing compensability for parking lot cases, it does show how a property lease agreement can unknowingly create a substantial workers’ compensation liability. Here, the property lease agreement and its amendments referenced by the court were focused on improving the property location. The lease spelled out the financial responsibilities between the landlord and tenant. Obviously, the petitioner had no interest or even knowledge of the negotiations and agreements as she was not in any way a party to them.

It is doubtful that in crafting the lease and its amendments the parties to the lease ever thought about how their document language would be later scrutinized under the New Jersey workers’ compensation statute. The use of terms in the lease such as a “common area maintenance fee” opened the door to the creation of workers’ compensation liability where none may have existed before. Therefore, employers should be cautioned that, when it comes to real estate and lease issues, they should consider how those documents can effect other areas, such workers’ compensation liability.

*Bob is a shareholder in our Mount Laurel, New Jersey, office. He can be reached at 856.414.6009 or rjfitzgerald@mdwcg.com.

 

Defense Digest, Vol. 27, No. 5, December 2021 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2021 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.

Firm Highlights

Thought Leadership

WCJ Improperly Refused to Conduct C&R Hearing and Erroneously Required Settlement of All Pending Petitions

In this case, the claimant sustained injuries in the course and scope of her employment as a registered nurse. The employer acknowledged the injury by a Notice of Compensation Payable (NCP).  Subsequently, a Workers’ Compensation Judge (WCJ) expanded the description of injury. The employer then filed a Termination Petition, alleging the claimant was fully recovered from the injuries. Providers filed Utilization Review (UR) Petitions, challenging UR determinations finding their chiropractic treatment to be not reasonable and necessary. A settlement of the claim was eventually reached, and the employer filed a Petition to Seek Approval of a Compromise and Release (C&R) Agreement. The C&R outlined that the agreement fully resolved all future workers’ compensation claims except for the termination and UR Petitions. Briefs were filed and one day later, the WCJ issued an Interlocutory Order which stated if instructions were not followed regarding filing of a C&R, a settlement hearing date would not be given. The employer complied with the order, and filed the C&R. Subsequently, the WCJ notified the parties that the C&R must resolve all issues in the petitions, or would not be entertained. A settlement hearing was never held, and the WCJ then issued a decision, granting the Termination Petition and dismissing the UR Petitions. The WCJ also said that the Petition for Approval of a C&R was dismissed without prejudice, as the issues in the Termination and UR Petitions went to a decision. The claimant appealed to the Workers’ Compensation Appeal Board (Board). The Board granted the claimant’s appeal, finding that the WCJ violated the requirement of Section 449 that an expedited hearing be held when a Petition for Approval of a C&R is filed.  The Board further held that it was legally incorrect for the WCJ to insist that the C&R resolve all issues raised by the pending Petitions. The Board remanded the case to a new WCJ, and Employer appealed to the Commonwealth Court. The court affirmed the Board and held that the WCJ erred, as a matter of law, by refusing to hold an expedited hearing within 30 days, once the Petition for Approval of a C&R was filed.  The court noted that the language of Section 449(b) is mandatory, and a settlement hearing is not discretionary or dependent on a party’s separate request for a stay, or whether the record has been closed. The court further rejected Employer’s argument that the case should not be remanded to a new WCJ for a new decision on the termination and and UR Petitions, as the Board passed no judgment on whether the C&R Agreement resolved the termination and UR Petitions, and left it for the WCJ to decide in connection with the Petition for Approval of a C&R.

Thought Leadership

Commonwealth Court Reaffirms the Constitutionality of Act 111's IRE Provisions

In this case, the claimant sustained a work injury of January 6, 1994, which was acknowledged by Notice of Compensation Payable (NCP). After the claimant’s receipt of 104 weeks of temporary total disability benefits, the employer filed a Request for an Impairment Rating Examination (IRE). The IRE was performed in May 2023 and the IRE physician found that the claimant had a 5% whole person impairment, under the AMA Guides. The employer filed a Petition based on the IRE results, and the Petition was granted by the WCJ. During litigation, the claimant argued that the IRE provisions of Act 111 (Section 306(a.3) of the Act) were not applicable to her injury, since it predated June 24, 1996, the date Act 57 went into effect, and that the IRE provisions were unconstitutional. The Workers’ Compensation Judge (WCJ)) granted the Petition and the Board affirmed. On appeal to the Commonwealth Court, the claimant argued that Act 111 violated the nondelegation doctrine and that its retroactive application to the claimant’s injury was unconstitutional. The court rejected the arguments on the basis that they had already found the same arguments without merit in multiple, prior cases. The court also addressed an argument made by the claimant that Act 111 was procedurally defective under the Pennsylvania Constitution because it was only considered on two days in each House after having undergone amendments and reassignments. The court noted that the Pennsylvania Constitution requires every bill to be considered on three different days in each House. The claimant maintained that, according to the legislative history, the bill did not receive three separate days of consideration from each House when it was assigned a new bill number. The court pointed out, however, that the bill number, H.B. 1840 remained constant and was considered on three occasions by the House. Further, the court concluded that minor amendments to the bill were germane to its original subject, which was to modify the Act’s IRE process, in accordance with Protz II.

Thought Leadership

Appellate Division Reversed Trial Judge's Orders Granting a Plaintiff's Section 40 Summary Judgement Motion

In Haskins v. Casey, et al., the plaintiff Dane Haskins worked for defendant Ekornes, Inc. (Ekornes) as a material handler. In June 2021, he filed a workers’ compensation claim petition for benefits due to a left shoulder injury in December 2020. He then resolved his workers’ compensation claim in November 2022 under an Order Approving Settlement. In January 2023, he filed a lawsuit against Ekornes and later amended to add additional claims and name other defendants, including the Ekornes president, chief financial officer, and director of human resources. In May 2025, a second amended complaint alleged that after he filed the workers compensation claim, Ekornes placed him on leave under the Family and Medical Leave Act (FMLA), denied his request for a work accommodation, and ultimately terminated him from employment in December 2021. He pleaded several causes of action asserting violations of the New Jersey Law Against Discrimination (LAD) as well as fraudulent concealment and wrongful discharge. The plaintiff then moved for partial summary judgment, seeking an order enforcing Section 40 of the Workers’ Compensation Act (WCA) as well as summary judgment on his FMLA claims. The defendants opposed the motions and cross-moved for summary judgment on the FMLA claims. After arguments, the court entered an order in December 2025, denying the FMLA motion and cross motion and granting the plaintiff’s Section 40 motion. In the order, the court permitted the plaintiff to pursue compensatory damages at trial in connection with the bodily injury claim. The court also allowed the plaintiff to present evidence of any workers’ compensation benefits to support his claim. The court then denied the defendant's subsequent reconsideration motion in February 2026. The defendants that appealed the Section 40 aspect of the orders. In reviewing the appeal de novo, the Appellate Division rejected the plaintiff's argument that the work-related injury arose out of his discrimination claims under the LAD. The plaintiff argued that he should be able to pursue a personal injury claim as a part of his LAD claim, noting that the employer’s compensation carrier would be able to assert a lien against any recovery against his LAD claims. In distinguishing between the Richter vs. Oakland Board of Education, 246 N.J. 507 (2021) case, in which the Court found that any recovery would be subject to a Section 40 lien as the allegation was that the defendants failed to accommodate her pre-existing diabetic condition, which resulted in bodily injury. In this case, the Appellate Division indicated that there was no bodily injury caused by Ekornes’ failure to accommodate a pre-existing disability. Rather, the shoulder injury was a result of a workers compensation claim, for which he received appropriate benefits previously. The Appellate Division noted that if the plaintiff was successful in proving his LAD claims, he would be entitled to damages caused by the discriminatory discriminatory conduct such as lost wages and emotional distress damages and that there will be no Section 40 lien. In addition, the Appellate Division disagreed that the petitioner could present evidence about and seek damages for his shoulder injury at trial. Although the petitioner argued that a defendant who retaliated against an employee for filing a workers’ compensation claim should not benefit from the exclusivity provision of the WCA, the Appellate Division noted that the Legislature did not include this type of scenario in the statue nor did any of the case law recognize this type of claim as a remedy. As such, the Appellate Division reversed the December 2025 order granting the the plaintiff’s Section 40 summary judgment motion as well as the February 2026 reconsideration motion order. The Appellate Division noted that they did not intend to limit the plaintiff in his pursuit of his other claims on under the LAD, FMLA, and workers’ compensation retaliation causes of action.