Finn’s father, Jeff Howe, shared his family’s story in “Paying for Finn: A special-needs child” for CNN’s Money Magazine. According to Howe, Finn is representative of 8% of all U.S. children because he is a child with special needs: he is autistic. His household is one of 25% of all U.S. households with a family member with special needs.

As the Howe family has learned, raising a child with special needs comes at great cost, both financial and emotional. Howe goes into great detail explaining his family’s journey with Finn. He does not hold back from sharing the specifics of his family’s finances and the costs associated with Finn’s care.

The financial burden for raising a child with special needs is staggering, to say the least, even for a family with considerable means. For families with less financial resources available to them, the financial burden is even more overwhelming.

Howe briefly mentions how he knows that he needs to set up a trust and will, but is paralyzed by deciding who will be the guardian for his child. This is a frequent issue. Families of children with special needs are looking not only to who may take care of their child in the rare event something happens to the parent prior to their child turning 18 but also for who may permanently care for their child even in adulthood.

It is important for families to remember that a legal guardian of an adult is responsible for making the placement and medical decisions regarding that adult, but is not responsible for providing for the daily care of that adult in the legal guardian’s own home.

Further, any decision that is made may be changed by the parents at a later date to meet the adult child’s needs.

While Howe and his wife have made great strides in planning for the future, the lack of completion of their estate plan, especially a supplemental support trust, makes much of their financial planning irrelevant if something were to happen to them.

Read Finn’s story here. If you have a child with special needs, make sure your plans for your future start with considering the plans for the future care of your child.

Posted by Attorney Misty A. Watson. Watson’s practice focus is estate-related: planning, administration, and probate. She creates trusts, wills, financial, and health care powers of attorney, guardianships, and conservatorships.

OPIS, and the other plaintiff parties, are operators and managers of skilled nursing facilities in Florida. In the course of their operations, the nursing facilities received requests from spouses and attorneys-in-fact for the medical records of deceased nursing home residents. Because the parties requesting the records were not “personal representatives” pursuant to HIPAA and its implementing regulations, the facilities refused to disclose the records.  As a result, the requesting parties filed complaints with the U.S. Department of Health and Human Services Offices for Civil Rights, which concluded that the nursing facilities acted properly.

The Florida Agency for Health Care Administration, however, issued citations against the nursing facilities for violating Florida law by refusing to release the records because the state statute requires licensed nursing homes to release a former resident’s medical records to the spouse, guardian, surrogate, or attorney-in-fact of any such resident. Fla. Stat. § 400.145(1). Because of the conflicting interpretations of the relevant laws, the nursing facilities filed a complaint for declaratory judgment. The district court granted the nursing facilities’ motion for summary judgment, explaining that the Florida statute affords nursing home residents less protection than is required by the federal law; therefore, the state law is preempted by HIPAA.

Stricter Federal HIPAA Law Trumps State Law

At the heart of the issue is whether the state statute, in which the “unadorned text…. authorizes sweeping disclosures, making a deceased resident’s protected health information available to a spouse or other enumerated party upon request, without any need for authorization, for any conceivable reason and without regard to the authority of the individual making the request to act in a deceased resident’s stead,” conflicts with federal law, according to Judge Susan H. Black. Finding that it does conflict, the jurist wrote, the state law “frustrates the federal objective of limiting disclosures of protected health information” and is therefore “preempted by the more stringent privacy protections” imposed by federal law.

The Privacy Rule, promulgated under HIPAA, permits disclosures to the individual whose information is being protected, as well as disclosures to the individual’s personal representative.  45 CFR § 164.502(a)(1)(i), (g)(1) (“[A]covered entity must … treat a personal representative as the individual for purposes of this subchapter.”)

In Missouri, simply being an attorney or other representative of a deceased or incapacitated person does not automatically convert that person into a “personal representative” within the meaning of the HIPAA Privacy Rule. A legal proceeding – typically in the probate context – is required which places that official designation on a party.

How Long Is Health Information Protected?

Prior to March 26, 2013, the federal law did not contain any time limitation with respect to the disclosure of a deceased individual’s protected health information. As of March 26, 2013, “[a] covered entity must comply with the requirements of [the Privacy Rule] with respect to the protected health information of a deceased individual for a period of 50 years following the death of the individual.” 45 CFR § 164.502(f). Stated another way, with the Final Omnibus Rule, which is based on statutory changes under the Health Information Technology for Economic and Clinical Health Act (HITECH), all protections and restrictions on protected health information of persons who have been deceased for 50 years have been removed. This change is intended to remove barriers to historical research.

This Florida case, together with the Final Omnibus Rule changes, illustrates that the federal government is serious about continuing to strive to enhance the standards for patient health information privacy and security. Not since the HIPAA Privacy and Security Rules were first implemented in 2003 have such sweeping changes occurred.

Posted by Attorney Laura Gerdes Long. Long practices in tort, insurance defense, legal malpractice, health care, and employment law. Well-versed in employment law policies and processes related to HIPAA, she serves as a trainer and advisor to health care providers, insurers, self-insured employers, and municipalities.

As many families have experienced, the terms of service for most types of online accounts from most providers do not generally allow for the transfer of access to an account in the event of death. As more people begin to store important documents, photos, videos, and other items of sentimental value online, gaining access to the information has become an increasingly important issue in estate planning, according to Brett Watz with Mind of the Geek.

On Thursday April 11, 2013, Google addressed this issue head on by rolling out its Inactive Account Manager. This feature allows a Google user to designate a particular person (or persons) as manager of the Google account once it becomes inactive. This trusted friend or family member will receive access to the user’s emails, videos, photos, and documents in the inactive Google account for many of its services, such as Mail and YouTube. The user selects which data can be accessed. Note that it appears that this policy does not extend to information contained in paid Google services (see The Digital Reader’s post by Nate Hoffelder).

The Google user determines the time for which the account may be inactive (three, six, nine or 12 months) prior to allowing access by the designated manager. Texts and e-mail alerts will be sent to the account holder prior to allowing the inactive account manager access to the account. The user has the option to have the Google account be automatically deleted after requested actions are completed (such as data downloads) or a specified time period of inactivity ends.

Facebook recently began allowing family members to have an account memorialized upon the death of the account holder. Hopefully this service offered by Google will encourage other websites to allow similar access.

Want to check out or set up your Google Inactive Account Manager?

• Sign into your Google account, and click on “Account” (or go to www.google.com/settings and sign in).
• Look for the “Account Management” section. Under “Control what happens to your account when you stop using Google,” click on “Learn more and go to setup.”
• Inactive Account Manager will open click “Setup” to begin the set up process.
  • Select how you want to receive your initial alert
  • Choose the length of your “timeout period” – the length of time your Google account can remain inactive without you signing in before your account will time out (three, six, nine or 12 months)
    • Add friends, family members and, if applicable, trustees (up to 10 individuals) who will be notified when your account becomes inactive. Decide which trusted contacts will receive notification only that you stopped using your account and which ones will be given access to your data.
    • Trusted contacts will receive appropriate notifications. Those with access to your data will be given a link to download your data, as well as a date by which the data must be downloaded. This date is important as you have the option to have your account deleted after a designated period.
  • Decide if you want Google to delete your account after your requests have been completed or after your determined length of inactivity ends.

More information on Inactive Account Manager

Must Read for Trusted Contacts

Posted by Attorney Misty A. Watson. Watson’s practice focus is estate-related: planning, administration, and probate. She creates trusts, wills, financial, and health care powers of attorney, guardianships, and conservatorships.

Suppose you plan to buy a large supply of Disney books from an overstocked Barnes & Noble retailer in Taiwan, and then offer your employees the opportunity to purchase the books at a deep discount as gifts for Christmas.  You reason that if the employees don’t buy up all of the books, you can always sell the remainder to a discount book chain or on the Internet.

You are approached by the human resources department manager and advised that Disney is very litigious about protecting its copyrights. Because your company is not an authorized seller for Disney products, the manager fears losing an infringement lawsuit.

Fortunately, your legal counsel is familiar with this issue. Upon learning that you intend to make the initial purchase from an authorized Disney retailer in Taiwan, counsel advises that your company is protected by the “First Sale” Doctrine of the Copyright Act.

And the U.S. Supreme Court agrees. In Kirtsaeng v. John Wiley & Sons, the Court held that a legally obtained copyrighted work can be imported into the U.S. and resold without permission from the copyright owner even if it was manufactured and sold overseas. The ruling applies to sale of physical, tangible works and not digital works that are licensed and not easily resold because of license agreements. The Court explained that in a complex and interconnected world, buyers, sellers, and retailers should be able to import and sell products without having to search out the copyright owner to determine if the U.S. copyright owner approves of the sale.

The facts are simple.  Kirtsaeng, a Thailand citizen, moved to the U.S. to study mathematics at Cornell University, and entered a Ph.D. program in mathematics at the University of Southern California.

John Wiley and Sons, Inc. (“Wiley”) publishes academic textbooks.  Wiley is the copyright owner in that it has various foreign and domestic copyright assignments, permissions, and licenses.  Wiley publishes two versions of a textbook: one that is printed and published in the U.S. and another that is manufactured and sold abroad. Through various affiliated entities, Wiley licensed foreign subsidiaries to publish and print its textbooks abroad. Each foreign-version textbook contained warnings that the copy was only to be sold in a particular country or geographical region outside of the U.S.

Kirtsaeng financed his studies by selling these foreign-version textbooks in the U.S. Being entrepreneurial, he asked his family and friends to purchase these much less expensive foreign-version textbooks abroad. He then sold them in the U.S. at a price less than Wiley charged for its U.S. version of the same textbook.

Wiley sued Kirtsaeng for copyright infringement, claiming that his unauthorized importation and his later resale of its foreign-version books amounted to an infringement of Wiley’s Section 106 (3) exclusive right to distribute as well as Section 602’s related import prohibition.  Kirtsaeng defended his right to import and sell the books by claiming that the books he acquired were “lawfully made” and that he had acquired them legitimately.

Section 106 of the Copyright Act grants “the owner of copyright under this title” certain “exclusive rights” including the right to “distribute copies … of the copyrighted work to the public by sale or other transfer of ownership.”  17 U.S.C. Section106 (3). These rights are qualified by various limitations set forth in the next several sections of the Act. Sections 107 through 122 are typically titled “Limitations on exclusive rights” and include, for example, the principle of “fair use” (Section 107), permission for limited library archival reproduction (Section 108), and the “first sale” doctrine (Section 109).

Section 109(a) sets forth the “first sale” doctrine as follows:

“Notwithstanding the provisions of section 106 (3) (the section that grants the owner exclusive distribution rights), the owner of a particular copy of phonorecord lawfully made under this title… is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”

This means that once a copy of a book or other copyrighted work has been lawfully sold (or its ownership lawfully transferred), the buyer of that copy and subsequent owners are free to dispose of it as they wish. In short, the “first sale” has “exhausted” the copyright owner’s Section 106 (3) exclusive distribution right.

The Supreme Court essentially declared that the first sale doctrine in 17 U.S.C. Section 109 (a) superseded the import-control provision of Section 602 (a) (1).

The “first sale” doctrine thus covers legitimate goods initially purchased by you as a third party in the U.S. or abroad. It is an important limitation upon a copyright holder’s exclusive right to sell the copyrighted product. It applies to more than phonograph records as in the original language of the statute.  Once that copyright owner has made the first sale, the buyer can resell it to anyone. If you purchase the book as the third party, you are also free to resell it.

The Supreme Court case involved books, but the doctrine applies to any copyrighted work, e.g., clothing pattern designs, packaging materials, wheel covers, pill shapes, and a whole host of other products with copyrightable elements.

If you are unsure of your particular situation, always check with counsel.

Posted by Attorneys Ruth A. Binger and Jeffrey L. Michelman. Binger serves both emerging and mature businesses concentrating in corporate law, intellectual property and technology law, digital media law, and labor and employment law. Her commitment to the success of small to medium-sized businesses, and her understanding of multi-faceted issues inherent in operations, are what distinguish Binger’s practice. Michelman represents clients in intellectual property and entertainment law matters. His practice involves the protection of intellectual property, trade secrets and “know how” and legal issues regarding E-commerce and social networking activities. Michelman’s entertainment law practice involves everything from endorsement, recording and appearance/reality TV contracts to movie/TV options to book deals.

Decisions made in haste or poorly executed have a very long damage tail including lawsuits, reduced morale, and loss of business momentum. By looking through the lens of both human nature and law, managers and owners can learn to make and execute decisions that are generally defensible both inside and outside the company culture. Knowing what could be coming and where it’s coming from will create a wiser decision process, a more legally defensible position, and buy-in from your watchful employees.

Practicing the following 10 rules will put you on a road map of common sense when dealing with issues related to employee discipline or termination:

1. Investigate. Investigating the facts protects the integrity of the process and lessens the ability of an employee to establish an unlawful motive. Poking in the weeds also provides feedback to you on what is working, what is not working, and what should be changed. Look for facts – not hearsay and speculation. Determining credibility is your job. Companies are human collaborative efforts containing many actors with varying motives and agendas that can be constructive, bad, opportunistic or even crooked. Consider plausibility, demeanor, motive to lie, corroboration, and past record when making judgment calls.
2. Interview witnesses and the employee in question. Ask the employee in question to explain what happened in front of two management witnesses. Write down exactly what the employee states and ask him/her to sign it.  Ask the employee for objective facts or witnesses to support his/her position. Your aim is to pin down the employee to “one recollection.” Interview complainants and witnesses by asking who, what, where, when and how questions. Let them know that you will try to keep the investigation as confidential as possible under the circumstances and in compliance with the law. This arduous process prevents tears at the fabric of your culture.
3. Use suspension/time out. No decision has to be made in one day. Give management time and space to make a calm and thorough investigation by suspending or sending the subject employee home with or without pay.
4. Be fair. Human nature and the law are interested in what you did in the past with similarly situated employees. We all have a fairness gene in us. If you lack past practice, have you checked your employment manual for support? Employment manuals with signed employee receipts carry a great deal of weight because they provide proof that the employee was aware of the rule at issue. Past warnings and the employee’s personnel file are also instructive.
5. Determine the unique circumstances, if any, that are present. Look at any variable that may make this situation unique. Has the employee complained of harassment or retaliation? Filed a worker’s compensation claim? Just returned from an authorized leave? Has the employee just started a new medicine? Performed a heroic deed? How do you articulate what the “straw” is that is breaking the proverbial employment back? Are there factors involved that require extra proof, such as age, sex, disability, religion, national origin, etc.? What is the tenure of the individual? Does the employee have a reasonable excuse? Has management acquiesced to the behavior before? Is this a setup in some way by an opportunistic co-worker?
6. If necessary, determine cause. Of course, cause is not necessary, except in the myriad of unique circumstances mentioned in Rules 4 and 5. Do you have direct, objective evidence? Or is it mere circumstantial evidence or even conjecture? Taxing yourself to investigate further now will save you a great deal of time, energy, and resources later if a claim is filed.
7. Gather all of the facts before making the decision to discipline or terminate. Like you and your children, juries hate bullies and look at the totality of the circumstances. See Rule 4. If you feel uncomfortable with any rule, consult your employment attorney.
8. Establish a company policy for method of delivery. The decision should be a kept at a “need-to-know” basis. The manager and a witness should have no more than a seven minute meeting with the employee. Meet on Tuesday afternoon when everyone has left for the day. Remember, your method of delivery could be your downfall if you are sued by an ex-employee. The manager should advise the employee that a final decision has been made that the employee is not working out. The manager then should provide all of the final details regarding employment with the company. The discussion should include the severance package (if any), vacation days left to be paid out, and COBRA information.  The manager should provide the employee with a copy of any agreements the employee signed with the company. Beware that releases require written documents. If the employee is over 40, the release must comply with the Older Workers Benefit Protection Act. The manager should wait while the employee packs up his/her belongings and collect any company property in the employee’s possession, including laptop and smart phone. All server access for the employee should terminate immediately after the employee leaves the premises.
9. Maintain control over internal communication. The company should communicate to co-workers that the individual is no longer with the company and the company wishes the former employee well in his/her future endeavors. All information regarding the former employee should be kept confidential and on a need-to-know basis. There is no reason to broadcast it to employees. There are many laws that require confidentiality such as the Americans with Disability Act and the Family Medical and Leave Act. If applicable and relevant, this same very limited information could be communicated to customers.
10. Know the rights of terminated employees: service letter statues/personnel file review, etc. Each state is different in rights given to employees after termination. Some states force employers to issue service letters setting forth the true reason for discharge. Other states allow employees to review personnel files. Be aware of the location of the workplace and the applicable law.

This common sense approach to employee terminations should help you make the tough decisions. If you feel uncomfortable at any time while applying these rules, please check your “gut” with an employment attorney. Although employment law attempts to codify human nature, the law has many surprises, turns, and non-intuitive applications, and you don’t want to become entangled in one.

Posted by Attorney Ruth A. Binger. Binger serves both emerging and mature businesses concentrating in corporate law, intellectual property and technology law, digital media law, and labor and employment law. Her commitment to the success of small to medium-sized businesses, and her understanding of multi-faceted issues inherent in operations are what distinguish Binger’s practice.

On January 14, 2013, the Wage and Hour Division of the Department of Labor issued additional guidance to help employers determine eligibility of employees to take leave under the Family and Medical Leave Act (FMLA) when the employee has an adult child with a mental or physical disability incapable of self-care due to a serious health condition.

Generally,  entitlement to FMLA leave ends when a child is 18 years old. “Incapable of self-care” means that the individual requires active assistance or supervision to provide daily self-care in three or more of the “activities of daily living” or “instrumental activities of daily living.”

The Department of Labor has provided a “Fact Sheet” and a list of “Frequently Asked Questions” to provide guidance to families, their employers, and the parent who is considering taking leave:

• Fact Sheet for Adult Children under FMLA

• Frequently Asked Questions about FMLA to care for adult child age 18 or older

Posted by Attorney Misty A. Watson. Watson’s practice focus is estate-related: planning, administration, and probate. She creates trusts, wills, financial, and health care powers of attorney, guardianships, and conservatorships.

However, as seen in a recent Missouri case in which a party attempted to assert the doctrine and avoid payment on a promissory note by claiming the “Great Recession” was an “unforeseen happening,” the doctrine may not be applicable to merely encountering financial difficulties (even if significant).

In Carpenters’ District Council of Greater St. Louis and Vicinity v. Commercial Woodworking & Contracting, Inc., et al, the United States District Court for the Eastern District of Missouri held that the recession was not the type of unanticipated, unforeseen event which qualified for a commercial frustration defense. 2012 WL 1025203 (E.D. Mo. Mar. 26, 2012).

Between April 26, 2004 and May 21, 2007, the Carpenters’ District Council of Greater St. Louis and Vicinity (“Carpenters Union”) made three loans to Commercial Woodworking & Contracting, Inc. and several individuals related to the corporation (“Commercial Woodworking”). The terms of the loan and its repayment were set forth in three promissory notes. Commercial Woodworking failed to repay upon the promissory notes. The Carpenters Union brought suit against Commercial Woodworking for repayment of the amounts remaining on the notes.

Commercial Woodworking argued that they should not be obligated to repay the notes because the promissory notes were commercially frustrated by the recession. In examining this argument, Judge Henry Autrey discussed the commercial frustration defense and its application upon contracts:

“The commercial frustration doctrine excuses performance of contractual obligations when a happening, not foreseen by the contractors, destroys, or nearly destroys, the contracted performance’s value of the contract’s purpose, provided the contractors did not cause the happening and were unable to avoid its consequence. American Laminates, Inc. v. J.S. Latta Co., 980 S.W.2d 12, 19 (Mo.App.1998). Under Missouri law, to preserve the certainty of contracts, courts are to apply this doctrine sparingly—only when its application would not work an extreme hardship. Howard, 556 S.W.2d at 483. As a general matter, if a party to a contract wants its performance to be excused upon the happening of an event arising after the formation of a contract, which event reasonably could be foreseen at the time of contracting, that party must expressly provide for that contingency in the contract, even if that event would render performance impossible, impractical, or commercially-frustrated. See Clean Uniform Co. St. Louis v. Magic Touch Cleaning, Inc. 300 S.W.3d 602, 608 (Mo.App.2009); Minor v. Rush, 216 S.W.3d 210, 213–14 3d (Mo.App.2007); Missouri Dept. of Transp. ex rel. v. Safeco, 97 S .W.3d 21, 35 (Mo.App.2002). See also 30 Richard A. Lord, Williston on Contracts §§ 77:11, 77:54, 77:95 (4th ed.2004); 17A Am.Jur.2d Contracts §§ 653, 659 (2004).”

Further, Judge Autrey noted:

As a general rule, when a party contracts to do “a thing possible to be performed, he will not be excused … because unforeseen difficulties are encountered.” Webb–Boone Paving Co. v. State Highway Comm’n, 351 Mo. 922, 173 S.W.2d 580, 584 (1943) (quoting United States v. Spearin, 248 U.S. 132, 136, 54 Ct.Cl. 187, 39 S.Ct. 59, 63 L.Ed. 166 (1918)). Thus, a party to a contract must perform thereunder “unless performance is rendered impossible by an Act of God, the law, or the other party.” Farmers’ Elec. Coop., Inc. v. Mo. Dep’t of Corr., 977 S.W.2d 266, 271 (Mo. banc 1998). In order for a contingency not resulting in impossibility to excuse performance, the party wishing to be excused must provide for that contingency in the contract. Stein v. Bruce, 366 S.W.2d 732, 734 (Mo.App.1963).

Upon this rationale, Judge Autrey reasoned that Commercial Woodworking’s commercial frustration defense was based not on an impossibility of performance, but rather on an unforeseen difficulty, i.e. the economic recession affecting the Commercial Woodworking’s ability to repay the loans. Such difficulty, Judge Autrey stated, did not excuse their performance under the doctrine because the recession was not an act of God, the law, or the Union.

Carpenters’ District Council represents just one of the many lawsuits originating out of the recession.  As one of the first opinions to address the doctrine and the recession, it is unclear whether this analysis will be adopted by other courts to hold the doctrine of commercial frustration per se inapplicable to contracts affected by the recession or whether the doctrine may still be available to litigants under certain circumstances.

Regardless of how that question is resolved, Carpenters’ District Council demonstrates the need for parties to consider the range of potential events which may affect their ability to perform the contract and clearly address such contingencies before signing off on the next contract or loan.

Posted by Attorney David A. Zobel. Zobel primarily represents individuals and corporations in the defense of civil litigation, including contract, negligence, and real estate matters. In addition to his court room work, Zobel assists in advising clients on contract and employment issues and regarding issues arising under the Sunshine Law.

Now that President Obama has been elected to a second term, those who resisted implementing the first set of provisions (waiting for the Court to rule) will have to begin earnestly working to comply with both provisions already in effect and forthcoming provisions, including key provisions which require compliance in 2014: the individual mandate and the employer mandate.

Provisions currently in effect include:

• No lifetime limits on coverage.
• Restrictions on annual limits.
• No “rescissions,” meaning health plans cannot cancel coverage once you are sick unless you committed fraud when you applied for coverage.
• Dependent care coverage is provided up to age 26 for adult children without employer-sponsored coverage.
• Federal small business tax credits have also been available for employers who provide coverage, with credits differing depending on the size of the company and increasing to 50 percent in 2014.
•  Many consumer employees have already experienced not having to pay out-of-pocket costs for certain preventative services, such as breast cancer screenings and cholesterol tests, and the disqualification of over-the-counter drugs as medical expenses for Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs).
• Insurers will have to provide rebates to consumers if they spend less than 80 to 85 percent of premium dollars on medical care.

The impact of both the individual mandate and the employer mandate will not be fully known until closer to 2014; however, there has been great speculation about who will be most impacted.

The individual mandate will force those who do not have health insurance to secure such, or pay a fine. The Act, however, scales back the fines for the very poor, and provides exceptions for others, like adults under 26 who may remain on their parent’s plans. Thus, the biggest issue for individuals with employer-sponsored health insurance plans is whether their employer, just as they were able to do before the law was passed, will drop coverage, or substantially alter it, causing higher deductibles, a change in premiums, co-pays or network coverage. Many employers are weighing these options.

More than 160 million people get their health insurance directly through their employer.  Employees, like employers, are concerned how the Act will affect them.  For those employers with fewer than 50 employees, there will be no requirement that they provide insurance.  Some fear that this provision may lead to employers with just over 50 employees to cut jobs to avoid having to pay for insurance or paying the fine. Employers in the retail and hospitality industries, who have large numbers of part-time and lower-paid workers, will likely be some of the most affected.  For those employers who have 50 or more employees, who work 30 hours or more per week, they must extend coverage, or face penalties.  If they do not provide insurance, there will be a fine of $2,000 per employee, with the first 30 employees excluded from the fine.

The Mercer consulting firm conducted a survey after the Act was upheld, and found that more than 60 percent of employers anticipate some increase in their health benefit costs due to the Act. Of the 1,203 employers surveyed, six percent said they were likely to stop providing health benefits after the insurance exchanges open. In the retail and hospitality industries, that number rose to nine percent.

Overall, many employers are rethinking their strategy for addressing employee healthcare costs. The most likely outcome will be employers shifting costs to the employees in the form of higher deductibles and premiums, while continuing to provide insurance.  Others may decide to dispel with healthcare coverage all together.  According to the 2013 Walmart “Associate’s Benefit Book,” the employer plans to deny health insurance to employees hired after February 1, 2012, who do not work over 30 hours per week, as of January 2013. Therefore, in states which have elected not to participate in the Medicaid expansion, Walmart employees who work fewer than 30 hours per week will be without a means to access healthcare for themselves and their families.  In states expanding Medicaid coverage, eligibility will be determined by whether a person makes less than 133 percent of the poverty rate or $14,403 a year.

In related activities, in Missouri, the federal government will run the health insurance exchange, which is supposed to go live in 2014.  November 16, 2012, was the deadline for states to report to the federal government how they will run the exchange; instead Missouri voters approved Proposition E, limiting the governor from setting up an exchange by requiring legislative approval.  Illinois, on the other hand, plans to set up a state-based insurance exchange, which will allow small businesses and individuals to purchase private health insurance and compare prices online.  Small businesses and self-insured employers may find the insurance exchanges appealing because they will give companies a simpler method of comparison shopping.

At this point, only time will tell what all the ramifications are, but employers would be wise to review all of their options before hastily moving forward.

Posted by Attorney Laura Gerdes Long. Long practices in tort, insurance defense, legal malpractice, health care, and employment law. Well-versed in employment law policies and processes related to HIPAA, she serves as a trainer and advisor to health care providers, insurers, self-insured employers, and municipalities.

In July of 2010, Zabaneh Franchises, LLC, an income tax preparation service based in Quincy, Ill., purchased an existing H&R Block, Inc. franchise. The sale included an assignment of employment agreements with H&R Block’s employees, including that with Terri Walker. Walker had signed an employment agreement in November 2009, as she did annually beginning in 2003. Pursuant to this agreement, Walker agreed to work during the 2010 “tax season,” from January 2 through April 15, 2010. Walker completed this tax season employment without incident.

In February 2011, Zabaneh filed suit against Walker alleging that within a few months of leaving Zabaneh in April 2010, Walker started her own tax preparation business, solicited clients, and hired employees of H&R Block in violation of her employment agreement. Zabaneh’s complaint sought a temporary restraining order against Walker to bar her from engaging further in such activities. The trial court found Walker’s employment agreement to constitute a “contract of adhesion” (a “take it or leave it” imbalanced agreement favoring one party) and denied Zabaneh’s request for a temporary restraining order. The case was subsequently dismissed with prejudice.

On appeal, the appellate court was asked to consider whether Walker’s employment agreement was reasonable and enforceable. In doing so, the court noted that the Illinois Supreme Court had recently addressed the proper standard for analyzing the enforceability of restricted covenants in an employment agreement in Reliable Fire Equipment Co. v. Arredondo, 965 N.E.2d 393 (Ill. 2012).

In Arredondo, the supreme court held:

“a restrictive covenant, assuming it is ancillary to a valid employment relationship, is reasonable only if the covenant: (1) is no greater than is required for the protection of a legitimate business interest, (2) does not impose an undue hardship on the employee-promisor and, (3) is not injurious to the public.” 965 N.E.2d at 396.

The court further explained that these factors are analyzed pursuant to a totality of the circumstances test and that no factor carries any more weight than any other, but rather each factor’s importance will depend on the facts and circumstances of the specific case.

In examining Walker’s restricted activity covenant, the court took note of the competing interests of the unfair restraint to Walker’s trade and Zabaneh’s interests in protecting proprietary information. For two years after cessation of employment, Walker’s restrictive activity covenant prohibited her from preparing any tax returns for any individuals she had prepared tax returns for during her employment with Zabaneh. The covenant did not prohibit Walker from preparing taxes or providing related services to the general public or to Zabaneh’s or H&R Block’s clients generally. It only prohibited her from serving the clients Walker had serviced while employed by Zabaneh. The court reasoned this limited restriction reasonably balanced Walker’s right to earn a living with Zabaneh’s right to protect its customer relationships and its investment in developing Walker’s skills.

Accordingly, the court found the restrictive activity covenant to be reasonable, reversed the trial court’s dismissal, and remanded the case back to the trial court for further proceedings. In this case, the court stated the most important factor was the limited nature of the type of restrictions. The restrictive activity covenant:  (1) was no greater than was required to protect Zabaneh’s legitimate business interest, (2) did not impose an undue hardship on Walker, and (3) was not injurious to the public.

For employers, the Zabaneh decision emphasizes the importance of drafting restrictive activity covenants only as broad as necessary to protect their specific and legitimate business interests.

For employees, this decision continues to emphasize the importance of reviewing the terms and covenants of their employment agreement. Duration of employment may be considered in analyzing the reasonableness of a restrictive activity covenant; however, limited employment duration will not prevent an employer from enforcing a much longer restrictive covenant against an employee.

Posted by Attorney David A. Zobel. Zobel primarily represents individuals and corporations in the defense of civil litigation, including contract, negligence, and real estate matters. In addition to his court room work, Zobel assists in advising clients on contract and employment issues and regarding issues arising under the Sunshine Law.

Missouri workers are no exception, and this causes an increasing concern for Missouri employers.  Increasing unhealthiness contributes to a higher incidence of degenerative and inflammatory musculoskeletal conditions.  Put simply, this means that less healthy workers tend to become “injured” due to work activities more often than other workers.

How can Missouri employers insulate themselves from increased workers’ compensation liability for unhealthy workers?

There are two analytical measures employers can implement to limit their workers’ compensation liability in the face of increased liability risk due to unhealthy workers.

The first measure involves employee testing, prior to and at the onset of employment.  This includes testing job applicants on the skills they would be asked to perform if hired.  If you have a job applicant who cannot type 90 words a minute due to persistent elbow and hand pain, you know there is a good chance that applicant could later allege a work-related injury if hired as a typist.  You can choose either to hire the applicant with documentation of the pre-existing elbow and hand pain, or you can choose to bypass the applicant for one better suited physically for the position.

The second measure involves maintenance.  This means (a) maintenance of employees and (b) maintenance the environments in which employees work.

(a)    Maintenance of Employees.

First, it is important to keep employees educated regarding on-the-job safety policies.  They need to be acquainted with the company policies and procedures pertaining to safety.  This means first developing these safety policies and procedures and then providing each employee with a copy of a policies and procedures manual.  This is especially important because, under Missouri law, an injured employee may forfeit up to 50 percent of the benefits to which he may have been entitled if he was injured while in violation of an established safety policy.

Second, it is important to educate employees regarding injury prevention in their specific work settings. This includes training employees meticulously in connection with each machine that they use as part of their job activities. To optimize safety and minimize risk of injury, companies must also ensure that management and supervisory personnel are trained regarding the proper operation of each machine and device used under their supervision.

(b)   Maintenance of Employment Environment.

It is important that companies maintain their employees’ work environments, both specific workstations and machines and the workplace in general.

Maintenance of specific workstations applies specifically to the incidence of repetitive use injuries (e.g., carpal tunnel syndrome, triggering in the fingers, and epicondylitis in the elbows).  It is important that workstations be as ergonomic as possible.  For example, a worker is more likely to experience pain in the hands or elbows when typing on a keyboard situated at neck-level than one situated at stomach-level.  Employers must also understand that ergonomics is tricky, and there are experts who can be brought in to assess ergonomic efficiency and risk factors.  The price of these assessments is likely worth paying if your company has many workstations in which ergonomic deficiencies could cause repetitive use injury claims (e.g., secretaries’ cubicles).

Maintenance of the general workplace involves merely ridding the workplace of removable hazards.  When it rains or snows, make sure hard floors are constantly kept as dry as possible.  When a job produces a slick substance like saw dust, make sure the floor is swept often.  If you see a raised crack in a sidewalk on a job site or on a tile floor in an office, have it repaired as quickly as possible.  In the current state of Missouri workers’ compensation law, if an employee slips on a removable hazard, such as water or ice or saw dust or a raised crack in a sidewalk, any resultant injury is work-related.  By contrast, if an employee is walking on a smooth sidewalk at a job site,  trips and is injured, the injury is not considered work-related even if the employee was working when he tripped.

Taking these suggested measures will cost you as an employer: you will spend money that you would not otherwise.

But it will be much less expensive in the long run. And you will have a much more productive workforce.

Posted by Attorney Christopher D. Vanderbeek. Vanderbeek is involved in the evaluation and defense of workers’ compensation and other insurance claims, protecting the interests of employers and insurers.