Massachusetts workers' comp exclusivity and employer liability insurance gaps.

What employers liability insurance actually covers in Massachusetts

The Massachusetts Workers Compensation and Employers Liability Insurance Manual defines “workers compensation” for policy purposes as every obligation imposed on the insurer by c. 152, including compensation, statutory medical aid, and loss from liability for damages tied to employee injuries under Section 25 of the Act. That statutory benefit coverage is what the WCRIB’s own coverage summary labels Part One of the standard policy.

Part Two is different. It’s the employers’ liability insurance section of the same standard policy, and it applies to bodily injury by accident or bodily injury by disease, with bodily injury under the form including resulting death. Where Part One pays scheduled statutory benefits regardless of fault, Part Two responds when a claim, proceeding, or suit is actually brought against the employer for a covered bodily injury. The insurer has the right and duty to defend those claims and pays certain additional costs beyond the damages themselves. Under Massachusetts rules, you cannot buy this coverage on its own; employers’ liability insurance without accompanying workers’ compensation insurance is not available in the Commonwealth, so Part Two only exists bundled onto a comp policy.

Workers’ comp exclusive remedy: what § 24 actually waives

The reason Part Two matters is M.G.L. c. 152, § 24, the exclusive remedy provision. Under § 24, an employee is held to have waived the right of action at common law, or under another jurisdiction’s law, for a personal injury that is compensable under c. 152. The Department of Industrial Accidents describes this as barring “all other civil remedies related to an injury” once it has been compensated under the workers’ compensation system.

That waiver isn’t automatic and permanent for every worker, though. An employee preserves the right to sue at common law only by giving the employer written notice of that election at the time of hire, or within 30 days of the employer becoming insured or self-insured if the employee was hired earlier. If the employee later wants to waive that reserved right instead, the waiver takes effect five days after delivery to the employer. If the employee never preserved the common-law right, § 24 also deems the employee’s spouse, children, parents, and other dependent next of kin to have waived derivative claims arising from the same compensable injury, including emotional distress, loss of consortium, and loss of parental guidance and companionship.

The DIA frames this as a trade-off: workers get a fixed, no-fault benefit under the comp system, while employer exposure to liability for workplace injuries and illnesses is limited, except in cases of wilful negligence. The exclusivity clause also does not block an EEOC discrimination charge or an ADA suit after a right-to-sue letter; that’s a separate exposure, and the employment practices liability insurance guide covers it in detail.

Where exclusivity stops: third-party claims and wilful misconduct

Exclusivity protects the employer, not every party connected to the injury. Section 15 preserves the injured employee’s ability to sue “any person other than the insured person employing such employee” for the same injury, and nothing in §§ 15, 18, or 24 bars that outside action. Either the employee or the workers’ comp insurer can pursue that third party, though the insurer cannot start such an action until it has paid compensation under specified sections and until 7 months have passed from the date of injury.

When a recovery does come from a third party, the insurer is repaid first, up to what it has paid the employee in comp benefits; the excess, meaning the amount by which the gross recovery exceeds compensation paid, goes to the employee. There’s a deadline consequence, too: under § 41, if a third-party action under § 15 is discontinued, a workers’ comp claim must be made no later than 60 days after that discontinuance, and where the employee has died, no compensation claim may be made later than 4 years after the death.

Separately, § 28 carves out an exception for the employer’s own conduct. If an employee is injured because of the “serious and wilful misconduct” of the employer, or of a supervisor exercising powers of superintendence, the compensation amounts otherwise payable are doubled. That’s not a lawsuit outside the comp system, but it’s a direct financial consequence tied to how the injury happened.

Why Part Two can’t be bought alone, and what it excludes

Because employers’ liability in Massachusetts only exists bundled with workers’ compensation, reviewing your Workers’ Compensation policy is the only way to review your employers’ liability protection. That protection has boundaries. The standard policy’s employers’ liability section excludes bodily injury to employees to the extent their claims are governed by other named federal compensation schemes, including the U.S. Longshore and Harbor Workers’ Compensation Act, an Outer Continental Shelf Lands Act reference, the Federal Coal Mine Health and Safety Act, and the Federal Employers’ Liability Act. It also cross-references an exclusion tied to a migrant and seasonal worker protection statute.

There’s a carve-back worth knowing if you have employees working abroad: a foreign-employment exclusion in Part Two does not apply to bodily injury to a citizen or resident of the United States, even when the employment giving rise to the claim is outside the United States and Canada. And if your operation actually touches longshore or harbor work, that coverage doesn’t come automatically; it can only be added to the standard policy by attaching the Longshore and Harbor Workers’ Compensation Act Coverage Endorsement, WC 00 01 06 A.

PEOs, leasing companies, and out-of-state employers

Multi-employer arrangements complicate both Part One and Part Two. Under a professional employer agreement endorsement, Part One and Part Two of the client’s policy apply as though both the PEO and the client are the employer and insured. But that endorsement excludes workers the client pays directly and temporary workers, and it isn’t intended to satisfy the PEO’s own separate duty to secure workers’ comp coverage. Labor contractors and employee-leasing companies have their own obligation on top of that: WCRIB Manual Rules IX-E and IX-F require them to purchase and maintain their own standard workers’ compensation and employers’ liability policy for leased employees. Massachusetts also regulates this space directly through 211 CMR 111.00, the state regulation covering workers’ compensation requirements for employee-leasing companies and their client companies.

Out-of-state employers don’t get a pass either. Any employer operating in Massachusetts must cover all employees working in the Commonwealth under Massachusetts workers’ compensation law, and courts look at whether there’s “significant state contact,” as illustrated in Mark Mendes’ case, 486 Mass. 139 (2020). If your operation moves crews or staff across state lines, this is worth confirming before a claim forces the question.

What happens if you don’t carry it: fines, stop-work orders, and the assigned risk pool

For the fuller mechanics of the statutory system behind all of this, see Workers’ compensation insurance in Massachusetts. The duty to carry it, set out in M.G.L. c. 152, § 25A, applies regardless of hours worked or headcount, with one narrow exception for domestic employees working under 16 hours a week. Skip it, and the Department of Industrial Accidents’ Office of Investigations can issue a stop work order, with a minimum fine of $100 per day starting on the date of issuance. Appeal the order, and fines accrue at $250 per day while the appeal is pending; the order stays in effect until coverage is actually obtained. Beyond the civil fines, an uninsured employer can face criminal penalties of up to one year of imprisonment and/or a fine of up to $1,500 upon conviction, plus debarment from public contracts.

Once you’re insured, cancellation protections cut the other way: a workers’ comp insurer may cancel a policy mid-term for only three reasons, non-payment of premium, fraud or material misrepresentation, or a substantial increase in the hazard insured. If a carrier does cancel or non-renew and two other carriers decline to write the risk, the Massachusetts Assigned Risk Pool, managed by the WCRIB, provides coverage at the same rate a voluntary-market carrier would charge. Getting a renewal review before that becomes your only option matters; the commercial insurance renewal checklist walks through what to check before your comp and employers’ liability coverage comes up for renewal.