Small Firms Fighting Co-employee Suits

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Gov. Fob James may be working hard to recruit more private business investment into Alabama (INC., July, page 60), but some small businessmen say one section of the state's laws still needs his attention.

Alabama is one of the few states in the country that allow unrestricted co-employee suits, or the right of one employee to sue another in personal on-the-job injury actions. In most states, workmen's compensation is the only remedy for on-the-job injuries.

"Co-employee suits shouldn't be allowed," says Frank Mason, president of a Birmingham corporation that manufactures aluminum building products. "It means that individuals within a company are exposed to liabilities that don't have a lid on them. This could wreak havoc on a small business."

Business groups have lobbied the state legislature to repeal the law, but so far they have been unsuccessful. One of the strongest supporters of co-employee suits is the Alabama Trial Lawyers Association, whose members in some cases take contingency fees totaling 50% of the final settlement. "These lawyers want to keep things just the way they are," says Walter Smith, legislative director in the Alabama State Chamber of Commerce.

"Insurance to cover co-employee suits is very expensive, and a lot of smaller plants can't afford it," Smith adds. "The result is that many businesses who might settle here are being driven away" to more hospitable states.

The strategy now is to introduce a bill revoking co-employee suits in up-coming special sessions of the 1981 state legislature, and if that fails, to introduce the bill again in 1982. Lobbyists like Smith hope Governor James will support the effort. "Business is finding out they don't have the friends they thought they did," Smith says. "But we're expecting that to change."