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Macysyn v. Hensler

329 N.J. Super. 476, 748 A.2d 591 (App. Div. 2000)

CORPORATIONS; LIABILITY; OFFICERS; WORKERS’ COMPENSATION—A person actively engaged in the limited role of a corporate secretary is not “actively engaged” in the business of a corporation for purposes of determining personal liability under the workers compensation act.

A hardware store employee was blinded in one eye in the course of his employment. His corporate employer was uninsured and his claim petition was amended to name the corporation’s president and secretary. The Worker’s Compensation judge asserted the authority to determine whether the individual acting as secretary was “actively engaged” in the corporate business of the hardware store within the meaning of N.J.S. 34:15-79. This was because that statute provides that an employer who fails to provide worker’s compensation insurance is guilty of a disorderly persons offense and is guilty of a crime of the fourth degree if the failure is willful. Where the employer is a corporation, the president, the secretary, and the treasurer “who are actively engaged in the corporate business” are liable for failure to secure the protection prescribed by the statute. The Worker’s Compensation judge found that the secretary was actively involved “to the extent of questioning why certain debentures and notes were necessary and obviously had the power by refusal to prevent the president from taking a course of action although admittedly she never took that step. For this person now to say that she was not actively involved in the business is spurious. She was aware of all the corporation’s assets and liabilities or at least should have been as the secretary of the corporation, who is required by law to assure that appropriate corporate records are kept.” As a threshold matter, the Appellate Division inquired as to whether the Worker’s Compensation judge had the authority to determine whether a corporate officer would be civilly liable for payment of an award. It made a grammatical analysis of the statute, finding that there was no evidence that the Legislature intended to confine the statute to criminal proceedings. Further, the statute addresses the power of the Director of the Division of Worker’s Compensation to collect assessments and “other penalties, fines, or assessments” from individuals who can be held liable for the failure of a corporation to provide worker’s compensation insurance. In addition, the Court found that, on a practical basis, to require an employee to first receive a determination from the court that a corporate officer is personally liable for the payment of an award and then to litigate the award before a Worker’s Compensation judge would be wasteful. Otherwise, an injured employee would first need to convince a prosecutor to initiate criminal proceedings against a corporate officer. In the Court’s view, it was unlikely that the Legislature intended to create such hurdles to an injured worker. Further, the determination of civil liability in a worker’s compensation proceeding gives a corporate officer found liable an opportunity to pay the award and perhaps avoid the possibility of being criminally prosecuted.

That having been determined, the Appellate Division reviewed whether the corporate secretary was “actively engaged” in the corporate business. There was no doubt that she did everything that was required of her as a corporate secretary. “In that respect, she was actively engaged in the limited role of a corporate secretary.” According to the Court, however, the statute “does not require the secretary of the corporation to be actively engaged as the secretary but, rather, to be actively engaged in the ‘corporate business.’ The corporate business of the employer in this case was that of a hardware store. In that context, [the secretary] clearly did not actively engage in the management of the corporation’s business. She received no salary and made no business decisions affecting the operation of the hardware store in any way. Her involvement was circumscribed to the bare-bone function of a corporate secretary, i.e. the keeper of the corporate seal.” Based upon this analysis, the Appellate Division reversed the decision against the corporate secretary, but affirmed the power of a Worker’s Compensation judge to make determinations as to whether a president, secretary or treasurer is “actively engaged” in the corporate business.

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