Workers' Compensation: Contractual Choice of Law Held Governing

The choice of law embodied in a contract is governing a recent NJ Appellate Division ruled.

A worker who was the sole owner, operator, member and employee of an NJ registered business was injured in the state of Pennsylvania while transporting freight for a Colorado-based freight brokerage firm. The Colorado company had entered into a one-year vehicle equipment lease contract with the injured worker. The contract contained the provision that Colorado law “shall govern this Contract.”

The injured worker filed a NJ workers’ compensation claim petition and then sought to implead the injured workers’ own NJ company as a party respondent. The judge of compensation (JOC) in NJ heard the testimony of the injured worker and the Colorado company’s chief operating officer. The JOC did not reference the contract, did not consider Colorado law, and ruled based only on NJ law in favor of the injured worker.

The NJ appellate court reversed the JOC remanded the case. It held that Colorado law must be followed which favors the Colorado company holding that the employment status was that of an independent contractor thereby extinguishing the right to claim workers’ compensation.

NJ courts must uphold contractual choice provisions if the ruling does not violate public policy. In making that determination the court must consider whether the state has no substantial relationship to the parties and there is no reasonable basis for the parties’ selection of governing law, or the application of the law of the selected state would be contrary to the fundamental policy of NJ which has a materially greater interest than the chosen state.

Morales v. Supreme Auto Transport, Docket No. A-0702-20, 2021 WL 2285230 (Decided June 4, 2021).

UNPUBLISHED OPINION. CHECK COURT RULES BEFORE CITING.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

This opinion shall not “constitute precedent or be binding upon any court.” Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3. Superior Court of New Jersey, Appellate Division.

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Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thomson-Reuters). For over 4 decades the Law Offices of Jon L Gelman 1.973.696.7900 jon@gelmans.com has been representing injured workers and their families who have suffered occupational accidents and illnesses.