New Limits to Employee Coverage Under an Employer’s CGL

Norman Rodich, a partner in the business litigation practice group, wrote an article for the Daily Journal’s Insurance supplement published on November 12th about Baek v. Continental Casualty Company. The case stemmed from a massage therapist’s alleged sexual assault of a client during a massage. The court determined that the therapist was not covered under his employer’s commercial general liability policy.  Rodich wrote that the appellate court determined there was no indication that the alleged assault was motivated by work-related events or conditions. Further, the alleged acts giving rise to the claim were undertaken solely for the therapist's own benefit, not the employer's. Thus, the court concluded, the therapist was not covered under the employer's policy even though the alleged assault occurred at the workplace and during the workday.

Under Baek, where an employer's CGL policy provides that its employees are additional insureds, "but only for acts within the scope of their employment ... or while performing duties related to the conduct of [the employer's] business," an employee alleged to have committed a sexual assault is not covered as an additional insured under the policy where there is an insufficient nexus between the employee's alleged conduct and the employer's business. Where the alleged conduct is not "fairly attributable" to work-related events and represents a "stepping away" from the employer's business because the employee engaged in the conduct solely for personal benefit, the employee is not covered under the employer's policy even if the alleged conduct occurred at the workplace and during the workday.

Although Baek involved an alleged sexual assault, the decision may have implications in other situations where acts giving rise to a claim against an employee, though committed at work, are undertaken for the employee's personal benefit and not triggered by work-related conditions or events.

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