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Workplace Harassment and Workers’ Comp

Discussion of workplace harassment reached a fever pitch last fall when media reports streamed seemingly endless claims against Hollywood moguls and corporate giants alike. The #MeToo movement has added force to the discussion, no doubt leaving employers feeling exposed.

Although harassment allegations are often handled in civil courts, certain allegations can be litigated in workers’ compensation claims. Decisions in the past few years by our appellate courts and federal courts interpreting North Carolina law seem to indicate that whether alleged workplace harassment will be treated exclusively through workers’ compensation may depend on how it is pled.

It is well established in North Carolina that an injured worker can be compensated under the North Carolina Workers’ Compensation Act (“the Act”) for a mental injury. Jordan v. Cent. Piedmont Cmty. Coll. This is true for both mental injuries resulting from a compensable occupational disease or an injury by accident. See id; Pulley v. City of Durham.

Our Court of Appeals considered the viability of a workplace harassment claim in Hogan v. Forsyth Country Club Co., decades before #MeToo. Hogan involved former female employees of the defendant country club who brought a civil lawsuit alleging that a chef at the club was verbally abusive, made sexual advances and sexually derogatory remarks. Their claims included intentional infliction of emotional distress (IIED) and negligent infliction of emotional distress (NIED).

On appeal, the club argued that the employees’ claims for IIED were barred by the exclusivity provision of the Act. The Court of Appeals disagreed, noting that the damages alleged by the employees included losses that would not be covered under the Act and that the wrongs alleged fell outside the scope of workers’ compensation.

In a more recent case, the Court of Appeals reached a different outcome in Shaw v. Goodyear Tire & Rubber Co. Shaw claimed she was harassed by her male supervisor, including verbal abuse and intimidation, but the court specifically noted that no physical contact or sexual harassment was alleged. Shaw filed a civil complaint including claims for wrongful discharge and NIED, the only claims that went to trial.

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After a jury verdict in Shaw’s favor, her employer appealed, arguing that the trial court lacked subject matter jurisdiction over Shaw’s NIED claim because it fell exclusively under the Act. The Court agreed, vacating the jury verdict, explaining that Shaw’s central allegations in the NIED claim were that she complained to her employer about the harassment by her male supervisor; her employer negligently handled her complaint; and her employer’s negligence led to emotional distress and, eventually, her wrongful discharge.

The Court also specifically declined to extend the exception, allowing employees to bring a civil action against a co-employee for willful, wanton and reckless conduct, to employers accused of similar conduct.

Interestingly, the Court also concluded Shaw’s NIED claim was an “accident” under the Act which arose out of and in the course and scope of her employment. However, it noted this holding is limited to the unique circumstances of the case, emphasizing that it was “crucial” to Shaw’s allegations that the claimed emotional distress was due to the employer’s mishandling of her claims, not the actual harassment by her supervisor itself.

Since Shaw, courts reviewing workplace harassment claims have come down on both sides. In Lingle v. Pain Relief Centers, P.A. (unpublished), three former employees of a medical practice alleged a physician at the practice sexually harassed them and had inappropriate physical conduct, including NIED claims. The defendants argued, in part, that the employees’ claims for NIED were barred by the exclusivity provision of the Act.

The federal court reviewing the case disagreed, ruling that the employees’ NIED claims could proceed to trial. It emphasized that the emotional injuries alleged by the employees were unrelated to their employment and, quoting Hogan, that sexual harassment was a risk, “to which the employee could be equally exposed outside the employment.”

The federal court in Hall v. Rockinham County (unpublished), reached the opposite conclusion regarding an employee’s NIED against her employer. Hall was employed as the Director of 911 Communications and alleged harassment by her supervisor, making several employment law claims and NIED against her employer and supervisor.

The Court ruled that the NIED claim against Hall’s employer was exclusively under the jurisdiction of the Industrial Commission and should be dismissed from civil court, stating that Halls’ injury arose out of her employment, which included the risk that her employer would not properly supervise her workplace or handle her complaints. However, multiple other claims were allowed to proceed in civil court.

A federal court reached a similar outcome in Baldwin v. Trademen International, Inc. (unpublished). Baldwin involved claims by two employees that their supervisor sexually harassed them and created a hostile work environment. The Court held that the employees’ negligence claims directly against their employer were barred by the exclusivity provision. In its ruling, the Court explained that, based on Shaw, negligence claims based on an employer’s mishandling of sexual harassment complaints falls within the Act.

Reviewing Shaw, Lingle, Hall and Baldwin offers employers guidance on which NIED claims a civil court will deem workers’ compensation claims. If a court concludes that the claim is one of negligent mishandling of harassment complaints or investigation by the employer, it is more likely to be within the exclusive jurisdiction of the Industrial Commission.

However, NIED claims based on the negligence of a co-employee or injuries alleged to be caused by the harassment itself (as opposed to the mishandling of complaints) may be allowed to proceed in civil court. Employers are advised to consult their employment law and workers’ compensation attorneys when workplace harassment issues arise to determine the best defense strategy.