Opinion ID: 3134387
Heading Depth: 2
Heading Rank: 3

Heading: Ill 2d at 514; see, e.g., Rhodes v. Industrial Comm'n, 92 Ill. 2d

Text: 467 (1982) (employee's recovery in a common law action barred further recovery from the employer under the Workers' Compensation Act). ADM maintains that just as an employer has the right to decide whether to avail itself of the protections of the Workers' Compensation Act in a direct action brought by an employee, the employer also has the option to decide, in advance of potential litigation by injured employees, whether to avail itself of the Act's protections in a third-party action for contribution. In essence, ADM simply maintains that if an employer determines it advantageous to promise to assume liability for its own negligence, it may not avoid its contractual agreement if it later perceives the promise to be detrimental. According to ADM, neither the Workers' Compensation Act nor our decision in Kotecki prohibits an employer from entering into an agreement prior to the commencement of litigation to assume full liability for damages commensurate with its relative degree of fault. We agree. Initially, we note that the Workers' Compensation Act does not expressly preclude the operation of the basic tenets of contract law where a workers' compensation claim is involved. Fredericks v. Liberty Mutual Insurance Co., 255 Ill. App. 3d 1029 (1994). The Workers' Compensation Act contemplates a trade off between an employer and an employee in which the employee relinquishes his or her right to recover damages for work-related injuries under a common law negligence theory, while the employer forgoes common law defenses in exchange for liability that is fixed according to a statutory scheme. Kelsay v. Motorola, Inc., 74 Ill. 2d 172, 180-81 (1978). This statutorily imposed bargain promotes the fundamental purpose of the Act, which is to afford protection to employees by providing them with prompt and equitable compensation for their injuries. Kelsay, 74 Ill. 2d at 180-81. The equilibrium contemplated by the Workers' Compensation Act may be disrupted when an employer pays benefits to an injured employee and later is sued by a third party for contribution in an action involving the same injured employee. Kotecki, 146 Ill. 2d 155. In Kotecki, this court restored the balance of the Workers' Compensation Act, in light of the Joint Tortfeasor Contribution Act (740 ILCS 100/1 et seq. (West 1992)), by weighing the competing interests of the employer as a participant in the workers' compensation system, and the equitable interest of the third-party plaintiff in not being forced to pay more than its established fault. Kotecki, 146 Ill. 2d at 164. Kotecki confirmed Doyle's conclusion that a negligent employer is liable for contribution to a third party, regardless of the Workers' Compensation Act. (Emphasis in original.) Kotecki, 146 Ill. 2d at 160. A third party's right of contribution exists from the time that the person seeking recovery is injured. Rakowski v. Lucente, 104 Ill. 2d 317 (1984). In holding that a third-party plaintiff may seek contribution limited only by the amount of workers' compensation benefits paid by the employer, this court upheld a third-party defendant's right to contribution, while preserving the employer's important right to rely on the protection of the Workers' Compensation Act. Lannom v. Kosco, 158 Ill. 2d 535, 540 (1994). Our concern for the employer in Kotecki centered on whether the employer will be forced to pay too much, thereby losing the protection that the Workers' Compensation Act is supposed to provide. (Emphasis added.) Kotecki, 146 Ill. 2d at 163. The law is clear that an employer may not be compelled to forgo the protections of the Workers' Compensation Act. However, the relief sought by ADM in this case is premised upon an allegation that All Tri-R voluntarily decided to forgo the protection of the Act by virtue of its promise. We determine that nothing in Kotecki prohibits an employer from agreeing to remain liable for its pro rata share of damages proximately caused by its negligence, notwithstanding the employer's ability to avail itself of the Kotecki cap on its liability. We further conclude that neither the language of the Workers' Compensation Act nor public policy prohibits our determination that an employer may waive the protection of the Workers' Compensation Act. Section 23 of the Workers' Compensation Act provides that [n]o employee  shall have power to waive any of the provisions of this Act in regard to the amount of compensation which may be payable to such employee  except after approval by the Commission . (Emphasis added.) 820 ILCS 305/23 (West 1994). In enacting section 23 of the Workers' Compensation Act, the General Assembly made an inherent determination regarding the relative bargaining power between an employer and an employee. See generally Checker Taxi Co. v. Industrial Comm'n, 343 Ill. 139 (1931) (employer could not escape workers' compensation liability by virtue of a contract with its employee). No similar prohibition exists with respect to an employer's power to forgo its rights under the Act. This court held in Board of Education v. Chicago Teachers Union, Local No. 1, 86 Ill. 2d 469 (1981), that the Workers' Compensation Act does not prevent parties from agreeing to supplement the benefits conferred by the Act. In Board of Education, an employee sought to enforce provisions of a collective-bargaining agreement between the Chicago board of education and the Chicago Teacher's Union. Under the terms of the agreement, the board had agreed to provide employees with certain benefits in cases where a teacher had been assaulted. However, the board sought to avoid its promise by arguing that enforcement of the agreement would be contrary to provisions the Workers' Compensation Act, which provide that the Act is the exclusive remedy for employee claims. See Ill. Rev. Stat. 1977, ch. 48, pars. 138.5, 138.11. This court rejected the board's arguments and determined that the agreement at issue merely provided for supplemental benefits for employees who were subjected to special dangers. Board of Education, 86 Ill. 2d at 475. These benefits were contemplated outside of and in addition to the benefits under the Workers' Compensation Act. Finally, we concluded that the exclusive remedy provision of the Workers' Compensation Act does not bar this type of benefit. Board of Education, 86 Ill. 2d at 475. The common thread in Doyle, Kotecki and Board of Education is that an employer has the power to waive those protections afforded by the Workers' Compensation Act which are intended to benefit the employer. An employer's decision to invoke or relinquish the protections of the Workers' Compensation Act may involve considerations of business judgment. See generally Geise, 159 Ill. 2d at 514. Therefore, we conclude that the appellate court in Herington properly followed Doyle to its logical conclusion by determining that the decision to forgo the protection of the Workers' Compensation Act is within the realm of discretionary business decisions made by an employer and does not violate the terms or policy of the Act. Indeed, our decision that an employer may relinquish the liability limitation set forth in Kotecki, by contract, is consistent with Illinois public policy which favors freedom of contract. See Electrical Contractors' Ass'n v. A.S. Schulman Electric Co., 391 Ill. 333 (1945).