By Christopher D. Vanderbeek
In September 2011, Missouri’s Western District Court of Appeals rendered its opinion in State ex rel. KCP & L Greater Missouri Operations Co. v. Cook. The Court ruled that Missouri employees may sue their employers in civil court where they have allegedly suffered an “occupational disease” as a result of their employment. It is important to note that the Court did not bar employees from filing workers’ compensation claims based on occupational diseases. Rather, the Court essentially gave employees with occupational diseases the option of either filing a workers’ compensation claim or filing a civil lawsuit.
Prior to KCP & L, the general understanding among employers, employees, the State of Missouri, and workers’ compensation legal practitioners was that the Missouri workers’ compensation system was the exclusive remedial forum for any claim involving a work-related injury, whether it be a broken arm or lung cancer. This general understanding was derived from Section 287.120 of the Missouri statutory code. Section 287.120 (the “exclusivity provision”) states as follows:
- Every employer subject to the provisions of this chapter shall be liable, irrespective of negligence, to furnish compensation under the provisions of this chapter for personal injury or death of the employee by accident arising out of and in the course of the employee’s employment, and shall be released from all other liability therefor whatsoever, whether to the employee or any other person.
- The rights and remedies herein granted to an employee shall exclude all other rights and remedies of the employee, his wife, her husband, parents, personal representatives, dependents, heirs or next kin, at common law or otherwise, on account of such accidental injury or death, except such rights and remedies as are not provided for by this chapter.
The intent behind the exclusivity provisions was that Chapter 287 of the Missouri statutory code would provide the exclusive remedy for all claims based on work injuries. However, the Court in KCP & L exploited an oversight in legislative wording – the legislature only made the workers’ compensation system the exclusive forum for claims based on injuries (or deaths) caused by accidents.
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12/20/11 12:30 PM
Business Law, Employment Law, Workers' Compensation | Comments Off |
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Employees Can Now Sue for Occupational Diseases: Understanding Breeds a Solution to the Problem
By Christopher D. Vanderbeek
Missouri Appeals Court Says Employees Can Sue Employers in Civil Court for Occupational Disease Claims
Missouri’s Western District Court of Appeals recently decided that an employee can sue his employer in civil court for an “occupational disease” claim. In KCP & L Greater Missouri Operations Co. v. Cook, the employee claimed that he contracted mesothelioma as a result of his employment. The court ruled that Gunter was allowed to file suit in civil court because, under Missouri law, the workers’ compensation forum is not the exclusive forum for a claim premised on an “occupational disease” injury, such as mesothelioma, even if the injury is allegedly work-related. (Note the distinction between an “occupational disease,” which develops over a period of time, versus an injury that happens instantaneously or acutely as a result of a single accident.)
This is a major change from prior law. Historically, the exclusive remedy for every employment-related injury was a workers’ compensation claim. And workers’ compensation is a system that clearly benefits employers (as well as third-party workers’ compensation insurance carriers). Relative to the civil realm, the workers’ compensation system places a dramatically lower ceiling employer and insurer liability vis a vis employee benefits.
There are generally two types of “occupational disease” injuries. The first type is an actual disease, such as mesothelioma, that results from an employment condition. The second type is a “repetitive use” injury, which results from the employee overusing the injured body part. Although it is yet to be seen whether or not Missouri courts will allow pursuit of repetitive use claims in the civil forum as well, a plain-language reading of the court’s opinion in KCP & L suggests that they will.
What This Means for Missouri Employers
This does not necessarily mean that a large number of employees will pursue injury claims in civil court. Repetitive use injuries like carpal tunnel syndrome are caused by repetitive use of the injured body part, plain and simple. It would be difficult for an employee to prove that his employer’s negligence cause this sort of injury. To prove negligence, an employee must prove that the employer knew or should have known that a harmful condition existed and that its employees were at risk as a result. If the employee cannot prove negligence, it would be foolish for his attorney to file a civil lawsuit rather than a workers’ compensation claim.
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11/23/11 10:59 AM
Business Law, Employment Law, Litigation | Comments Off |
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Occupational Disease Claims: Civil Court an Option for Employees
By Laura Gerdes Long
Fate of the Patient Protection and Affordable Care Act Lies in Hands of Supreme Court
According to the National Law Journal, the Supreme Court justices granted review in three of the five petitions that it had before them regarding the Patient Protection and Affordable Care Act, all from the 11th Circuit Court of Appeals. That court had struck down the mandate that individuals who can afford health insurance must purchase coverage or pay a penalty.
The Journal article lists the issues on which the Court would hear arguments and the amount of time allotted to each issue, for a total of five and one-half hours.
Oral arguments will be made by the United States Solicitor General, 26 state attorneys general (handled by a single lawyer from a Washington firm), and the National Federation of Independent Business (NFIB).
Typically, Supreme Court oral arguments are scheduled for two hours of argument. Arguments are likely to be held in March.
Undoubtedly, with all of the questions raised by the health care act, five hours will not be sufficient time to answer all of them.
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.
11/17/11 1:37 PM
Business Law, Healthcare, Litigation | Comments Off |
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Supreme Court: Will Five and a Half Hours Be Enough?
By Marcia Swihart Orgill
Substantial Risks Exist for Misclassifying an Overseas Consultant as an Independent Contractor
Part of a series on issues related to Manufacturers, Distributors and International Trade
With both the IRS and the Department of Labor targeting the misclassification of U.S. employees as independent contractors, many companies are re-examining their worker classifications. While most U.S. companies are aware of the costly consequences of such misclassification, they may not be cognizant of the considerable dangers of misclassifying foreign workers as independent contractors.
Frequently, U.S. companies choose to engage local representatives in their overseas markets as independent contractors rather than employees in order to avoid compliance with foreign employment laws, withholding tax requirements and social welfare/insurance contributions. In many countries, these obligations may be considerably more onerous than they are in the United States.
However, the consequences of misclassifying a foreign worker as an independent contractor are frequently more costly as well.
For example, in Germany an employer is obligated to remit social security type payments for its employees that are equal to about twenty percent of the employee’s compensation to German social welfare and insurance agencies. The employer is also required to withhold from the employee’s compensation the employee’s social security obligations which are also equal to about twenty percent of his/her compensation.
If an employer fails to withhold the requisite amount from the employee’s wages, the employer becomes liable for the employee’s social security obligations. The employer many not seek reimbursement for this amount from the employee, regardless of any contractual agreement that provides for such reimbursement. The look back period for collection of these social security payments is thirty years in some cases.
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11/14/11 4:41 PM
Business Law, Employment Law, International, Manufacturing and Distribution | Comments Off |
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Beware: It’s Risky to Misclassify an Overseas Consultant
By Jeffrey R. Schmitt
November 5, 2011 marked “Bank Transfer Day” around the United States, as initiated by 27-year old Los Angeles art dealer Kristen Christian, via this facebook page in early October. The movement, purposefully or not, coincided with the Occupy Wall Street movement and spread throughout the United States, denouncing big banks and the Wall Street financial industry. Perhaps the greatest alleged perpetrator, and possibly the greatest victim, of the Occupy and Bank Transfer Day movements was Bank of America, who announced earlier this year it intended to implement $5.00 monthly service fees for certain deposit accounts. Bank of America’s plan imploded when other big banks failed to follow suit with their own fees, and Bank of America became the sole target of criticism for its planned fee policy.
The result, in part, was the concept of Bank Transfer Day, where consumers were urged to withdraw their deposits from big banks and move their money to smaller and locally run credit unions. The result, according to the Credit Union National Association (CUNA), was that more than 40,000 people signed up for accounts at credit unions on November 5th, corresponding to about $80 million in deposits. CUNA represents most of the chartered credit unions in the United States, and reports that its members saw increases in new account activity during the month of October and early November, prior to Bank Transfer Day.
While Bank Transfer Day created headlines and long lines at credit unions on a Saturday morning, did it really have the desired impact on Bank of America and other big banks? The answer is probably not, given the size of the market share that Bank of America and other top banks in the United States hold, a loss of even tens of thousands of customers in a given week probably does not represent much of a blip on the banks’ radars. In fact, most large banks are flush with deposits right now, given the unstable market and the desire for many people and investors to remain liquid. Additionally, banks are benefitting from the low interest rates on deposit accounts, which means that many consumers are not even shopping rates to find the best return on their deposits, as has historically been the case.
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11/11/11 3:09 PM
Banking and Finance, Business Law | Comments Off |
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Bank Transfer Day and its Prospects for “Main Street” Banking
By Jeffrey L. Michelman
Politicians constantly speak of the small business entrepreneur as the backbone of America, and in fact many of our largest companies today started out as small businesses. Thus, it is surprising that the same politicians who boast of American small business would allow passage of “The America Invents Act.” It is likely to impact small businesses and certainly the individual garage/basement inventor in ways that the politicos haven’t yet considered.
Prior to this new Act, the law in the United States was that the first person to invent a new patentable product is the one who deserved to get the patent, thus giving that person the 20 years (from filing) a monopoly accorded to inventors who successfully achieved patents protection. This meant that there was time to do further research and development and prototype testing; there was time to raise money for achieving patent protection; and the small business owner had every opportunity to be first in line with rights to the monopoly granted under the patent statute. But now that standard has been changed by law. We are witnessing a transition from a first-to-invent system to a first-to-file system used in many foreign countries. Thus an inventor who races to the Patent and Trademark Office (PTO) to file an invention application may well be the one who successfully obtains the monopoly of patentability over a party who actually came up with the idea and invented the product first.
What’s the difference, you say. The difference is very plain to those who understand the patent system. Large corporations have in-house, or at their disposal, plenty of patent lawyers standing by ready to file for patents any new invention or twinkle in the eye of management that seems to be inventive and to get it on file quickly as a provisional patent application which requires limited filing of actual claim elements or filing as a full blown utility patent. The search for money in order to obtain patentability is not an issue for the large corporation. Thus by the time the small business entity perfects the invention and then seeks the money for the expense of patentability, the small business entity may lose in the battle for its place in line giving big business the opportunity to be successful in keeping the small business and, of course, others out of the marketplace once granted the monopoly.
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11/11/11 2:50 PM
Business Law, Emerging Business, Intellectual Property | Comments Off |
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Is The New Patent Statute Patently Unfair to Small Business?
By Ruth Binger
To add to the woes and stress of business owners, supervisors and managers, public and private decision makers who act directly or indirectly in the interest of the employer can be sued in their individual capacity under the Family and Medical Leave Act (“FMLA”).
Most of us forget it, but the same rules that apply to actions under the Fair Labor Standards Act also apply to actions brought under the FMLA (29 C.F.R. Section 825.104(d) (2009)). A July 11, 2011 decision by the Eastern District of Virginia Court, Eastern Division, titled Weth v. O’Leary (U.S. District Court of E.D. Virginia, Alexandria Division) provides important lessons regarding this issue with respect to terminating employees returning from Family Medical and Leave Act, especially if the decision makers are public officials and have sovereign immunity.
In Weth, the Court refused to grant summary judgment and allowed a FMLA case to proceed to trial because of a highly suspicious timeline, prior raises and highly positive reviews, and the lack of write ups or written documentation bolstering the performance reason defense.
Plaintiff Weth initially sued O’Leary, both individually and in his official capacity as Arlington County Treasurer. The Court granted Summary Judgment in favor of O’Leary with respect to the official capacity claim because as a state constitutional officer, O’Leary was entitled to sovereign immunity. The Court refused to dismiss the individual claim because sovereign immunity does not apply to individuals sued in their purely personal and individual capacity. The Court cited favorable decisions from various Circuit Courts (Darby v. Bratch, 287 F.3d 673, 681 (8th Cir. 2002)) where courts found that there was no reason to distinguish liability between individual corporate officers and individual public officials.
Weth was employed as a Deputy Treasurer for Litigation for the Arlington County Treasurer for six years. As late as 2009, Weth had received highly positive reviews regarding her job performance and approved salary increases.
Weth was diagnosed with cancer in September of 2009 and advised O’Leary. In December, Weth initially sent emails to O’Leary advising him that she would need surgery in January, but then advised that the surgery would be in December. Weth worked until the 21st of December, underwent surgery on the 22nd of December and returned to work on the 16th of February.
On her return date O’Leary advised her that she needed to begin looking for a new job immediately, that she was being demoted and almost all of her job duties were being removed and that her sole responsibility was to find a job. One month later, O’Leary suspended her, sent her home with the directive that she was being relieved of all of her job duties and her sole responsibility was to find other employment.
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10/27/11 2:40 PM
Business Law, Employment Law | Comments Off |
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Terminate an Employee Returning from FMLA Leave and You Could Be Sued in Your “Individual Capacity”
By James M. Heffner
Established in 2010 by Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau (“CFPB”) has released its first edition of the Supervision and Examination Manual. The Manual is a guide to how the CFPB will supervise and examine consumer financial service providers under its jurisdiction for compliance with Federal consumer financial law.
As stated on the CFPB’s website, the Manual is divided into three parts:
- Part One describes the supervision and examination process.
- Part Two contains examination procedures, including both general instructions and procedures for determining compliance with specific regulations.
- Part Three presents templates for documenting information about supervised entities and the examination process, including examination reports.
While the Manual is designed in large part to supervise the nation’s largest mortgage servicers, it will impact all lenders who deal with consumer loans.
Posted by Attorney James M. Heffner. Heffner practices in corporate and real estate law. He is experienced in the purchase, sale, financing, and leasing of real estate, as well as the creating and negotiation of construction documents. In corporate matters, he supports business owners in structuring entities, shareholder disputes, mergers, and stock purchases/redemptions.
10/22/11 6:00 AM
Banking and Finance, Business Law, Real Estate | Comments Off |
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Consumer Financial Protection Bureau releases Supervision and Examination Manual
By James M. Heffner
New York Times article notes that banks are making more loans. Corporate lending is leading the way, up 7.2% from October 2010.
Posted by Attorney James M. Heffner. Heffner practices in corporate and real estate law. He is experienced in the purchase, sale, financing, and leasing of real estate, as well as the creating and negotiation of construction documents. In corporate matters, he supports business owners in structuring entities, shareholder disputes, mergers, and stock purchases/redemptions.
10/21/11 8:02 AM
Banking and Finance, Business Law, Real Estate | Comments Off |
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Banks Loosening the Purse Strings?
By Marcia Swihart Orgill
Both the IRS and the Department of Labor have indicated their intent to target misclassification of workers as independent contractors rather than employees. In the proposed budget for fiscal year 2012, $240 million is allocated for initiatives specifically related to enforcing this misclassification.
Employers who have misclassified workers in the past may want to consider taking part in a new program that will allow them to voluntarily correct their misclassification of workers at a relatively low cost. As part of its “fresh start initiative”, the IRS recently announced a new Voluntarily Classification Settlement Program (VCSP).
Under this program, eligible employers will only pay an amount that equals just over one percent of the wages paid to the misclassified workers in the past year, if they prospectively treat these workers as employees. The IRS will not audit employers on payroll taxes related to these workers for past years, and employers will not be subject to interest or penalties for past misclassifications.
In order to be eligible for the program the employer must:
- consistently have treated the workers in the past as non-employees,
- have filed all required Forms 1099 for the workers for the previous three years, and
- not currently be under audit by the IRS, the Department of Labor, or a state agency concerning the classification of these workers.
To apply for the program, an employer must file Form 8952, Application for Voluntary Classification Settlement Program, at least 60 days before it wants to commence treating the workers as employees.
Employers participating in the program will be subject to a six-year statute of limitations for the first three years under the program, rather than the three-year statute of limitations that generally applies to payroll taxes.
Information about the VCSP is contained in IRS Announcement 2011-64.
Posted by Attorney Marcia S. Orgill. Orgill concentrates her practice in the area of business and personal taxation—especially complex domestic and international tax strategies.
10/14/11 6:00 AM
Business Law, Emerging Business, Employment Law, Manufacturing and Distribution | Comments Off |
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Misclassification of Workers as Independent Contractors: How to Take Advantage of IRS’s New Voluntary Classification Settlement Program
