This post is adapted from an article that Isaac Mamaysky and Mark Papadopoulos published in LexisNexis Law 360.
In the camp industry, we're no strangers to liability waivers. They're commonly included in our enrollment agreements and retreat contracts, and we often require additional waivers for trips and special events. This leads to the common assumption that we should also include waivers in our employment agreements. However, while waivers are generally acceptable for campers and retreat guests in many states (but not all), they're typically considered a violation of public policy in the employment context. This post briefly considers the key provisions of a waiver agreement, the role of waivers in our enrollment agreements, and the reasons waivers aren't typically used in the employment relationship.
What are waivers?
The term waiver has a twofold meaning. While it is sometimes used to refer to a specific contractual clause that disclaims liability for various eventualities, the more useful approach is a larger waiver agreement consisting of a series of contractual provisions, each with its own legal impact, which come together to mitigate certain risks of liability. To be sure, this agreement includes the actual waiver clause, but it also includes a number of additional protective provisions that limit liability through other legal mechanisms.
Thus, in their authoritative work on this subject, Waivers and Releases of Liability, Doyice and Mary Cotten suggest that the more appropriate name for a properly drafted waiver agreement is an "Assumption of Risk, Waiver of Liability and Indemnification Agreement." As their proposed name suggests, the primary provisions of a complete waiver agreement are the assumption of risk, waiver of liability, and indemnification clauses. Other important provisions include an agreement to comply with essential policies, a parental consent for participation in all camp activities, and the covenant not to sue.
What are the intended effects of the primary waiver clauses?
Assumption of Risk: Among the strongest waiver provisions is the assumption of risk clause, which explains the inherent risks that cannot be mitigated by the camp's care. For example, some of the inherent risks of attending camp might include slipping on a basketball court, falling off a horse, tick bites, or sudden changes in weather. The assumption-of-risk clause is intended to disclose these risks and protect a camp from liability for events that were not caused by its own negligence.
Waiver Clause: Next we have the actual waiver clause, which is intended to prevent liability from injuries stemming from a camp's ordinary negligence. In other words, even if a camp did act negligently, the waiver clause is intended to limit the camp's liability. While courts sometimes accept waivers for ordinary negligence, they generally disallow waivers for gross negligence, recklessness or intentional misconduct.
Indemnification: By the indemnification clause, which is also called the hold harmless clause, the indemnifying party agrees to reimburse the indemnified party for: (1) any loss to others caused by the indemnifying party; and (2) any loss incurred by the indemnifying party. Courts typically uphold these between sophisticated businesses but are reluctant to enforce them when an individual indemnifies a business. So, these tend to be much more effective in a contract with a retreat group than they are in a contract with a camp family.
Agreement to Comply with Essential Policies: As the name suggests, the agreement to comply with essential policies is an agreement by a camper or retreat guest to follow your camp's procedures and policies. This helps establish a contributory negligence defense if a party is injured because of that party's own failure to comply with an essential rule that they agreed to follow.
Parental Consent: In a well-drafted waiver, parents provide consent for their campers to participate in all aspects of the camp program -- after the waiver explains the riskiest components of the program. This ensures that parents are aware of the inherent risks associated with camp and explicitly grant permission for their camper to participate. The parental consent helps defend a subsequent claim that a parent was unaware of a risky camp activity or did not consent to their camper participating in the activity.
Choice of Law: As discussed in detail back in October, states take different approaches to waiver enforceability. Some states don't enforce waivers at all, but many others do. The choice-of-law clause allows camps to select a relevant state with the most favorable law.
Covenant Not to Sue: The covenant not to sue has a slightly different effect than the waiver itself. While the waiver eliminates the cause of action, the covenant not to sue recognizes that a cause of action might exist but commits the party to not suing regardless of that fact.
What about the enrollment agreement?
Your enrollment agreement is a document that defines your relationship with each camp family. For example, parents agree to pay you on schedule, they agree to your refund policy, they commit to providing your required medical forms, and so on. Many of us think of the waiver agreement as something distinct and separate from the enrollment agreement. But really, a well-written enrollment agreement is your waiver agreement. It should incorporate the key provisions set forth above, among a number of others.
What about waivers in the employment context?
Courts have traditionally disfavored waiver agreements between employers and employees due to the unequal bargaining power of the parties. These types of exculpatory agreements in the employment context are generally thought to violate state public policy.
Waivers have an additionally limited role in the employment context because of the existence of workers' compensation statutes in all 50 states. Workers' compensation statutes generally provide medical expenses, lost wages, and rehabilitation costs to employees who are injured in the course and scope of their employment. These statutes were enacted to provide broad coverage of almost all work-related injuries except for the intentional acts of the employer.
If a workplace injury occurs, whether caused by the employer's negligence or the inherent dangers of the workplace, the employee's claim generally comes within the workers' compensation statute and the employee may not sue the employer directly for damages. This is sometimes referred to as the workers' compensation bar. Employers thus have less need for waiver agreements with their employees than they might with campers or retreat guests.
A wrinkle in the employment context
While waivers have been historically limited in the workplace relationship, one employment context in which courts have upheld waivers is when employees are engaged in inherently dangerous activities. Courts have upheld waivers between employers and employees covering such activities as skydiving, horseback riding, and climbing. For a variety of reasons, the workers' compensation bar did not apply in these cases.
Appropriately drafted waiver agreements for employees engaged in inherently dangerous activities can therefore provide some benefits to the parties. But these apply in limited circumstances that should be carefully considered by counsel. As a general matter, employment attorneys do not include waivers in offer letters and employment agreements.
Conclusion
Waivers are far from flawless instruments. Some states don't recognize them at all, while others construe them so strictly that enforcing them is an uphill battle. Thus, the most important elements of risk mitigation include strong safety policies, robust staff training, a highly supervised program, a well-maintained facility, and good insurance coverage. Within this context, and with a foundation of safety in place, waivers do play an important role in the risk mitigation puzzle -- at least as to campers and retreat guests. The role of waivers in employment agreements is far more limited. And if you include a waiver in your employment agreements, you should carefully analyze if it belongs there.