12.2.7 Employer Indemnification|Contribution to Third Party

• Jurisdiction: Arizona

. An employer’s contractual obligation to indemnify a third party sued by an injured employee is not abrogated by the exclusive remedy provision of the Workers’ Compensation Act.^[129] In order to be enforceable, however, the contract must specifically state that the parties intend indemnity. A contract provision that merely states that the work will be done in a “workmanlike manner’’ is not a basis for contractual indemnity but refers only to the quality of the work to be performed.^[130]

Under a “general’’ indemnity agreement, an indemnitee is not entitled to be indemnified where his or her own active negligence has contributed to the injury.^[131] The parties can contract for indemnity, however, for losses caused by the indemnitee’s active negligence, and such agreement will be enforced if it is sufficiently specific regarding that intent.

The rationale for allowing indemnity against an insured employer is that the action is for “reimbursement’’ rather than “damages,’’ and is not based on the employee’s injuries but upon the breach of an independent duty owed by the employer to the third party.^[132] There is nothing in the Workers’ Compensation Act that prevents an employer from contractually assuming liability for its employees’ injuries.^[133]

It is now common for construction contracts and subcontracts and industrial or commercial leases to contain specific indemnity clauses. Since the effect of these...