Apr 8th, 2016

The Reach of Washington’s Anti-Indemnity Statute

John Moore

John Moore

Washington’s workers’ compensation laws generally prohibit employees from suing their employers when they are injured on the job.  But workplace accidents can still lead to litigation for employers when indemnity agreements are in place.

In the construction context, indemnity agreements are ubiquitous.  A subcontractor will often agree to indemnify a general contractor if an injury arises out of the work of the subcontractor.  For example, if an electrician is electrocuted on the job site and sues the general contractor, the electrical subcontractor may be required to indemnify the general for any losses it suffers as a result of the subcontractor’s fault.

These indemnity agreements are so commonplace that Washington has its own anti-indemnity statute.[1]  The statute voids these indemnity provisions if the indemnity provision requires indemnification for the negligence of the indemnitee.  To use our example of the electrician, the agreement would only be valid if it excluded indemnification for the negligence of the general contractor (indemnitee).  It would be invalid if it lacked that exclusion.  This makes sense.  If the general contractor’s negligence led to the electrocution, the subcontractor should not be required to indemnify the general contractor for that.

But what happens outside the construction context where the anti-indemnity statute does not apply? Are indemnity agreements that fail to exclude indemnification for the negligence of the indemnitee void?

I recently handled a third party indemnity claim against an employer that arose out of workplace injuries to one of its employees. The employee was suing various defendants and one of the other defendants claimed indemnity because of a purported agreement with my client. My client and the defendant had a business relationship outside of the construction context, so the anti-indemnity statute did not apply.  I was able to get the claims dismissed by arguing, in part, that the indemnity agreement was void because it did not exclude the negligence of the indemnitee.

Unfortunately, the case law is not well settled outside of the construction context, so I expect businesses to try to shield themselves from tort liability and pass losses back to employers through indemnity agreements.  Employers should closely examine agreements with business associates, distributors, and other middlemen for indemnity provisions.  If the provision does not exclude indemnification for the negligence of the indemnitee, the provision may not be enforceable.

[1] RCW 4.24.115