Most state workers’ compensation laws, or cases construing them, allow the employer and its carrier to waive its right to subrogate against a third party that caused or contributed to an employee’s injury.

The purpose of a subrogation waiver is not well understood and is a subject of some confusion in the marketplace.

Most frequently, contracting parties agree to contractually require the inclusion of a waiver of subrogation endorsement in a workers’ compensation policy simply because the requirement is contained in the form contract, and has been for many years.

On other occasions, the requirement is included in the belief that such a waiver will provide some protection or immunity from lawsuits filed by employees of other subcontractors.

Unfortunately, an effective waiver of subrogation does not prevent a subcontractor’s employee from suing the contractor.