The Court of Appeals addressed the issue of injuries at a company sponsored event in Gazette Communications v. Powell, No. 0-633 (Oct. 6, 2010). http://www.iowacourts.gov/court_of_appeals/Recent_Opinions/20101006/0-633.pdf. Claimant injured himself while at a bowling event organized by an employee activity committee. This injury occurred on June 11, 2005. Claimant also alleged an injury on June 20, 2005. The commissioner concluded that the employer derived a substantial direct benefit from the participation of the claimant and thus the injury arose out of and in the course of employment. A 50% industrial disability award was made.
The district court reversed, citing Briar Cliff College v. Campolo, 360 N.W.2d 91, 94 (Iowa 1984). The case was remanded to determine the effect of the June 20 injury. The Court of Appeals affirmed the decision of the district court, and focused on the issue of participation in the company event, and the so-called "business related benefit test." Citing Professor Larson, the court noted that when an employer derives substantial direct benefit from the activity "beyond the intangible value of improvement of employee health and morale," the activity can be deemed to arise out of and in the course of employment. In Campolo, a teacher who suffered a heart attack following participation in a student-teacher basketball game was found to be eligible for benefits. This finding was made on the basis that the school prided itself on close relationships between student and faculty, of which participation in the basketball games was a part. Because of this direct benefit from the activity, Mr. Campolo was found to be within the scope of his employment.
The court in Powell found that Larson's conclusion that "morale and efficiency benefits are not alone enough to bring recreation within the course of employment" was consistent with the court's ruling in Campolo. The commissioner in Powell had found that the sole benefit to Gazette was an increase in employee morale. The court was bound by this factual finding, and felt constrained to apply the portion of Campolo which found that an increase in morale was not sufficient to bring the activity within the scope of employment. To do otherwise, according to the court, would "permit complete coverage of all the employer's refreshing social and recreational activities."
Recent legislative sessions have seen bills to constrict the compensability of recreational activities. In light of the decision in Powell, it would certainly seem that legislative action is unnecessary, as many, if not most recreational activities can be said to be primarily for the purpose of increasing employee morale. Thus, in the situation where participation in an event is voluntary, it will be the rare circumstance where compensability will be found. To the extent that the employer can be said to require rather than simply encourage participation, it is more likely that an injury will be said to arise out of and in the course of employment, but in Powell, the decision at the commissioner level makes clear that employees were strongly encouraged to participate. This was not enough for the district court or court of appeals.
The effect of Powell is likely to make it more difficult to recover in a situation involving participation in an employer-sponsored event, and claimant's counsel will need to investigate the benefit of the activity to the employer more vigorously in order for recovery to be possible. Although Powell does not preclude recovery, particularly in light of the reported decision in Campolo, as a practical matter it will likely raise the bar for recovery.
Neifert, Byrne & Ozga, P.C.
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