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Workers' compensation after hours | Pie Insurance

Workers’ comp insurance may cover employees who are injured during a company event, even if it’s outside the scope of their job. Here are some key considerations to keep in mind.
Workers' compensation after hours | Pie Insurance

When does workers’ compensation insurance apply?

Workers’ compensation insurance sounds like it should be straightforward: it pays medical, disability, rehabilitation, and death benefits for employees injured or killed during the course of their employment. But the phrase “during the course of employment” can be more nuanced than you might think. 

For example, does an accident during a commute count? Or a fall just outside the office building, before clocking in? What about an employee on their lunch break, or one who’s visiting the office on a day off? There are a number of factors involved in answering each of these questions. In each case, the question comes down to whether or not the employee was performing job duties or acting in their employer’s interest—or for their employer’s benefit—versus just going about activities not related to, or directed by, their employer.

Does workers’ comp insurance cover after-hours employee events?

One common scenario employers may wonder about is whether or not their workers’ compensation insurance covers employees participating in after-hours events. It probably won’t surprise you that the answer isn’t strictly yes or no, and depends on a number of factors:

  • whether the employee was being paid to attend the event
  • whether the employee was required to attend the event
  • whether the employee faced (or was threatened with) negative consequences if they chose not to attend the event, and
  • whether or not the event took place on company property, and during normal working hours. 

Ultimately, the more directly the event is related to employment and job function the more likely it is that an accident or injury would be compensable by workers’ comp insurance. 

With this in mind, here are some considerations employers may want to think through when planning employee events and trying to assess their own liability for accidents that may occur. Keep in mind that laws vary by state and some states are much more stringent with their definitions of what constitutes “job-related” activities, so the below are general considerations.

Is the event employer-sponsored and/or encouraged?

“Employer-sponsored” refers to who is paying for the event. In many cases, employers arrange and pay for employee activities and other types of events that employees are required or expected to attend. It’s important to also understand that, even if the event is not fully or partially paid for by the employer, the employer may still encourage employees to attend. For example, does the employer promote the event to employees?

Is the event truly voluntary, or do employees feel pressured to attend?

In the case of an event that’s truly required as part of the job, this is clear-cut. But sometimes the intention of an event is voluntary, yet employees still feel pressure to attend. If the company culture puts pressure on employees to be at an event or implies there will be negative consequences for not attending, then the event is not truly voluntary and the employer’s workers’ comp insurance is more likely to be responsible for an accident.

Is the event employee organized?

Employees form their own friendships and it’s not uncommon for them to organize events that have no real relationship with the job or company. The line can get fuzzy however if the employee-organized event takes advantage of company resources or locations. How involved is the employer when it comes to employee-organized events? Do they contribute funds, provide location or other resources, or encourage attendance? Employers should consider the liability implications of blurring the line between employer-sponsored and non-employer-sponsored events.

Will alcohol be served or allowed?

Not surprisingly, the consumption of alcohol increases the chances of an accident occurring. Employers should be clear about their policies surrounding alcohol at company events, even if the alcohol isn’t provided by the employer. A company summer picnic, for example, where bringing your own beverages is allowed, could still result in liability for the employer.

Is there physical activity involved?

The presence of sports doesn’t inherently make an employer more responsible for accidents that occur, it just makes accidents more likely. Employers should consider the risk levels of company events that include sports and make their position extremely clear that such events are voluntary for employees. If such events are not voluntary, then the company’s workers’ compensation insurance is responsible for the risk of employee injuries.

Is the event on-premises and/or during work hours?

Either one or both of these considerations can increase the employer’s responsibility in the case of an accident. In some states, an event need only be on-site or during work hours for workers’ compensation insurance coverage to apply.

Does the employer benefit from the event, beyond fostering employee happiness?

You could argue that an employer always benefits from employee activities because happier, more engaged employees are more productive and profitable. Legally though, the company will be more likely to be responsible from a workers’ compensation insurance perspective if the company is getting a more direct benefit. For example, a company-sponsored charity event that brings good press coverage and is likely to attract customers would have a greater likelihood of being found to benefit the company than an after-hours employee bowling game—even if the employer pays for (or sponsors) both activities equally. 

Each of these considerations can play a role in the decision-making process for your business. We’re not saying you shouldn’t have employee activities! There are just a number of factors to consider, and each can play a role in the level of liability your company and your workers’ compensation insurance coverage take on.

Remember, every situation is different and state workers’ compensation laws are subject to change, so be sure to do your research and speak with a trusted advisor.

Thanks for reading! Please note that this content is intended for educational purposes only. As laws change regularly, you should refer to your state legislation and/or an advisor for specific legal counsel. If you’re a small business owner, learn more about workers’ compensation insurance or check your current rate in 3 minutes.