Employment Contract Modification Gave Jurisdiction

Friday, May 9, 2014 | 0

Vincent Burley, a truck driver and Georgia resident, began working for U.S. Foods in 2000, when he entered into an employment contract in South Carolina. This contract included language that allowed U.S. Foods to modify the terms. In 2002, U.S. Foods reorganized and offered Burley either a severance package or a transfer to a different division of the company, although Burley’s title and responsibilities would remain the same. Burley chose to remain with the company and transferred to the Charlotte division. The transfer also involved a change in how Burley was compensated and he received a raise as a result. The route he traveled never included North Carolina, either prior to or after the transfer. Burley physically went to the Charlotte office to finalize the transfer and necessary paperwork.
 
Burley was injured in September 2009 while making a delivery in Georgia. U.S. Foods denied the claim under North Carolina law, but admitted compensability under Georgia law. Deputy Commissioner Baddour found the employment contract was not “made” in North Carolina because the “final act” to create the employment contract did not occur in North Carolina, and therefore the Commission did not have jurisdiction. The Full Commission affirmed. Burley appealed.
 
On April 1, 2014 in Burley v. U.S. Foods, Inc., the Court of Appeals reversed the holding of the Full Commission relying on principles of common law contract formation. The Court found that when Burley was transferred to the Charlotte division, the terms of his employment contract changed and a new contract was created. See, e.g., Spartan Leasing Inc v. Pollard, 101 N.C. App. 450, 457, 400 S.E.2d 476, 480 (1991). Burley was offered either transferring or taking a severance package and this constituted a new contract offer which he accepted, and because he received greater compensation, the contract was supported by consideration. In addition, the Court found that because this acceptance occurred while Burley was physically at the Charlotte office, the “last act” of making this contract occurred in North Carolina, thus making it a North Carolina contract and resulting in jurisdiction of the North Carolina Industrial Commission. Murray v. Ahlstrom Indus. Holdings, Inc., 131 N.C. App. 294, 296, 506 S.E.2d 724, 726 (1998).
 
Judge Dillon dissented and essentially concluded that no contract was made in North Carolina.

RISK HANDLING HINT:

Risk managers should be aware of the likelihood that an injured worker can elect to pursue their claim in North Carolina if any part of the employment or contract is performed or entered into in the state. This is especially true in this age of technology where cell phones and electronic devices make multistate employment transactions more frequent.

Teague Campbell is a workers' compensation defense law firm with offices in Raleigh and Asheville, North Carolina. This column was reprinted with permission from the firm's Risk Alert newsletter.