A North Carolina court has affirmed a state agency's decision denying an employee's workers' compensation claim for injuries sustained at her employer's annual holiday party, concluding that the injury had not arisen out of or in the course of her employment.

The Case

Melissa Lennon worked as a deputy clerk of court in the accounting division of the Harnett County clerk of court's office in Hartnett County, North Carolina.

In 2013, Ms. Lennon's division was tasked with planning the annual office holiday party at the Chicora Country Club in Dunn, North Carolina. During her normal work hours and for which she was paid, Ms. Lennon helped design the invitations and assisted with securing catering and planning the program. She also volunteered to serve as the “emcee” for the event. All employees were invited to attend.

Regardless of whether they attended, all employees were expected to contribute $13 to pay for a gift to the clerk of court and for cleaning up after the party.

A group of private attorneys and their spouses sponsored the party by paying for the cost of renting the venue and the food served to the guests.

On the night of the party, as Ms. Lennon was entering the country club, she tripped and fell and suffered an acute nondisplaced fracture of the distal radius of her left wrist, coccyx fracture, and superior glenoid tear of her left shoulder.

Following the accident, Ms. Lennon received short-term disability benefits. She then filed a claim with the county clerk's office for additional compensation under the North Carolina Workers' Compensation Act (the “Act”) including for days missed from work, permanent partial disability, and medical expenses.

The office's insurance carrier denied her claim and Ms. Lennon requested a hearing before the North Carolina Industrial Commission.

Following a hearing, a deputy commissioner denied the claim, agreeing with the office's assertion that Ms. Lennon had not been injured within the course and scope of her employment and the full commission denied her appeal.

The full commission upheld the ruling, finding:

3. The Office of Clerk of Superior Court for Harnett County has had an annual Christmas party for over twenty years. Each division within the Clerk's Office rotated annually the responsibility to serve as the host and to plan the event. The division assigned to host the event was responsible for selecting a caterer, maintaining an RSVP list of attendees, collecting money for gifts provided for the maintenance employees and for the Clerk of Superior Court and collecting money to cover the after party cleaning fee.

4. In late 2013, employees of the Clerk's Office voted to have a party similar to those that they had held in previous years. The Accounting Division was responsible for hosting the holiday party that year. Plaintiff worked with Assistant Clerk Cheryl Brown, Plaintiff's supervisor, in designing the party invitations, arranging the catering and planning the program for the event. Plaintiff volunteered to emcee the event as well.

…

7. On December 5, 2013, the Clerk's office held its annual Christmas Party at the Chicora Country Club. The Country Club was in another city approximately fifteen to twenty minutes away from the Clerk's Office. The Christmas party was held in the evening after work. The use of the Country Club was sponsored by a group of private attorneys and their spouses. The same private firm paid for Defendant's employees' dinners served during the Christmas party. Employees bringing guests paid an additional $13.00 per guest.

8. The money collected from employees for the Christmas party was used to purchase gifts for the maintenance staff. Employees also donated small gifts that were given away at the Christmas party as door prizes. In lieu of a personal gift to their supervisor, Marsha Johnson, the employees of the Clerk's Office made a donation on behalf of Ms. Johnson to one of her favorite charities. Her staff presented her with a certificate to represent the donation to the charity.

9. Ms. Johnson spoke at the Christmas party thanking her employees for their hard work and team effort. Ms. Johnson gave gifts of wooden writing pens to all of her employees as a token of appreciation for their work. No service awards were presented to employees.

…

20. The Full Commission finds that Plaintiff was not required to attend the Christmas party as part of her employment. Plaintiff's attendance at the Christmas party was purely voluntary, evidenced by the fact that the employees who did not attend were not subject to any discipline for their failure to attend.

21. The Full Commission finds as fact that while Plaintiff was attending the Christmas party, she was doing so for her own benefit. Although Plaintiff testified that she felt obligated to attend the party, there is no evidence that she was in the course and scope of employment at the time of the injury.

…

25. Defendant did not sponsor, fund or mandate participation in the Christmas party.

Ms. Lennon went to court, challenging the decision. In particular, she objected to the finding that her attendance at the party had not been required.

North Carolina Law

The North Carolina Workers' Compensation Act provides compensation for:

injury by accident arising out of and in the course of the employment….

N.C. Gen. Stat. § 97-2(6) (2015).

The Court's Decision

The court affirmed.

In its decision, the court explained that injuries occurring during recreational and social activities related to employment could fall within the purview of the Act when:

- They occurred on the premises during a lunch or recreation period as a regular incident of the employment; or

- The employer, by expressly or impliedly requiring participation, or by making the activity part of the services of an employee, brought the activity within the orbit of the employment; or

- The employer derived substantial direct benefit from the activity beyond the intangible value of improvement in employees' health and morale that was “common to all kinds of recreation and social life.”

It next pointed out that it had a six question analysis to help to determine whether an injury arose out of employment:

(1) Did the employer in fact sponsor the event?

(2) To what extent was attendance really voluntary?

(3) Was there some degree of encouragement to attend evidenced by such factors as:

a. taking a record of attendance;

b. paying for the time spent;

c. requiring the employee to work if he did not attend; or

d. maintaining a known custom of attending?

(4) Did the employer finance the occasion to a substantial extent?

(5) Did the employees regard it as an employment benefit to which they were entitled as of right?

(6) Did the employer benefit from the event, not merely in a vague way through better morale or good will, but through such tangible advantages as having an opportunity to make speeches and awards?

The court then rejected Ms. Lennon's argument that the commission had erred when it had ruled in its finding of fact 20 that her attendance at the party had not been required. It observed that the commission had not determined that hosting duties included attending the party.

The court also was not persuaded by Ms. Lennon's contention that she had been required to attend the party because she had volunteered to emcee the event, concluding that “[t]he findings of fact of the Industrial Commission are conclusive on appeal when supported by competent evidence, even though there be evidence that would support findings to the contrary.”

The court then affirmed the commission's denial of Ms. Lennon's claims, on the basis that her injury had not arisen out of or in the course of her employment.

The case is Lennon v. N.C. Judicial Dep't, No. COA16-476 (N.C. Ct.App. Dec. 6 2016). Attorneys involved include: Law Offices of James Scott Farrin, by Douglas E. Berger and Susan J. Vanderweert, for Plaintiff-Appellant; Attorney General Roy Cooper, by Special Deputy Attorney General Sharon Patrick-Wilson, for Defendant-Appellees.

About the Author

Steven A. Meyerowitz, Esq., Director, FC&S Legal

Steven A. Meyerowitz, Esq., is the Director of FC&S Legal, the Editor-in-Chief of the Insurance Coverage Law Report, and the Founder and President of Meyerowitz Communications Inc. As FC&S Legal Director, Mr. Meyerowitz, a member of the team that conceptualized FC&S Legal, provides daily analysis and commentary on the most significant insurance coverage law decisions from courts across the country and news regarding legislative and regulatory developments. A graduate of Harvard Law School, Mr. Meyerowitz was an attorney at a prominent Wall Street law firm before founding Meyerowitz Communications Inc., a law firm marketing communications consulting company.

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