LegalMatch: Employment Law

Comparable Pay for Comparable Work: Why Massachusetts’ New Salary Law is Important

On 7/1/2018, Massachusetts’ Act to Establish Pay Equity will come into effect. Frequently billed as the strongest wage equality law in the United States, most of the media coverage of the Act focuses on its rules about discussing salary histories. Under the law, employers cannot ask about a job candidate’s salary history until a job offer is extended. It also allows employees to share salary information without fear of punishment. The goal of this provision is to put all candidates and employees on equal footing in salary negotiations—regardless of race, religion, disability, national origin, or gender.

However, the salary history provision is only one part in the Massachusetts law. The law’s requirement of equal pay for comparable work is equally important—and was one of its initial goals.

The History of the Pay Equity Act

Massachusetts has had equal pay legislation since 1945. However, most courts interpreted these laws narrowly, only requiring equal pay for almost identical work. This interpretation permitted employers to pay different wages to men and women doing similar (but technically different) jobs. Unscrupulous employers could avoid paying equal wages by making small changes to job duties and titles.

In 1989, a group of 41 female cafeteria workers sued the Everett Public Schools, alleging unequal pay. The cafeteria workers, who engaged in heavy lifting and the sanitization of kitchens, were paid significantly less than male janitors. The case was litigated for nine years. Eventually, the Superior Judicial Court denied the women’s claims, finding that “comparable work” should be narrowly defined to jobs that were very similar.

Beginning in 1998, a group of legislators and activists worked to change Massachusetts’ law to require equal pay for truly comparable work. Governor Charlie Baker finally signed the Pay Equity Act in 2016. One of the Everett cafeteria workers was present at the signing.

What Is Comparable Work?

The Pay Equity Act requires employers to pay equal pay for comparable work. It defines “comparable work” as “work that is substantially similar in that it requires… similar skill, effort and responsibility and is performed under similar working conditions.” A finding of comparability cannot be limited to a review of job titles or job descriptions. Under the new Act, it is likely that the Everett cafeteria workers would have been entitled to equal pay.

Additionally, the Pay Equity Act prevents an employer from reducing a worker’s seniority due to Family Medical Leave Act time off (including time off for pregnancy and caregiving duties).

Why Is Equal Pay For Comparable Work Important?

57% of American women are in the workforce. Today, more women earn college degrees than men. However, statistics show that women are regularly paid less than their male counterparts. The Massachusetts law, along with the Lilly Ledbetter Fair Pay Act, and recent state laws in New York and California are an important recognition of the value of all American’s work.

Many Americans are familiar with the concept of equal pay for equal work. The media has publicized high profile claims by female professional athletes (most recently the U.S. Women’s national soccer team) who have fought for equal compensation. However, the average American woman still earns $0.79 to a male worker’s $1.00. This number is even lower for some women of color.

This inconsistency is multi-factorial. Women are more likely to work part-time. They are also more likely to be the targets of caregiver discrimination and subtle gender bias. Some employers assume that women are more likely to be distracted by family obligations, leading to a decrease in promotions and job responsibilities. These stereotypes have also led to an increased push for paid leave and other legal protections for mothers, fathers, and other caregivers.

The Massachusetts law is a significant strengthening in equal pay protections and may cause a ripple effect through other states. Thirteen states and the District of Columbia have already enacted laws prohibiting pay secrecy. Reframing salary discussions may increase pay equity. Giving workers the legal right to equal pay for comparable is another important tool.

It is also worth noting that equal pay laws protect all Americans, not just women. If a man believes he is receiving unequal pay for comparable work, he may also have a legal claim. As Dorothy Simonelli, one of the Everett cafeteria workers commented, ““I have 10 grandchildren – five boys, five girls,” Simonelli said. “This is for them and all the future women in the workplace. R-E-S-P-E-C-T.”

Authored by Leigh Ebrom, LegalMatch Legal Writer

Department of Labor Introduces New Retirement Savings Plan that Protects Investors

The Department of Labor has recently introduced a new rule for retirement investors. The goal of this “fiduciary” rule is to help guarantee that Americans saving for retirement are able to receive investment advice that is in their best interest. Also known as the conflicts of interest rule, this new rule was first introduced by President Obama as a means of providing for retired folk who want nothing more than to live out the rest of their lives in comfort.

However, Americans cannot retire if they are buying into bad retirement investments. The retirement advisors who handle the money can take advantage of these retirees by taking their retirement funds and investing in places that they shouldn’t, resulting in a low return.

ERISA and the Purpose of this Plan

To provide some background, the legislative body that has governed retirement savings accounts to this day has been ERISA. Enacted in 1974, the Employee Retirement Income Security Act is federal in nature and hence is present in all fifty states. ERISA gives certain protection to individuals who enter into retirement savings plans. However, this law has become somewhat outdated as the 401(K) and IRA have become more popular options these days. Defined benefit plans are not as common as they were before and now retirement advisors control what goes on with the investments.

To better protect these investments, this new rule will increase measures that will protect the retiree’s investments. The advisor must act as fiduciary for the investor (retiree) and this means that the advisor must put the interest of the investor before their own. Just as the board of directors of a large corporation owes a fiduciary duty to its shareholders, here too the same concept applies. A retirement advisor places the retirement savings money aside until the time is right for the retiree to pull from it. ERISA is not being repealed; rather its focus will be shifted to better provide for these hardworking people who have spent their lives saving money and want to reap the benefits.

The reason this enactment has been created is because there are times when advisors will provide ill advice to the investor or will misguide the investor as to what savings plan they should go into. Investors might intentionally even use these savings funds to invest elsewhere, which could lead to a net loss for the investor. Other times it’s as simple as the investor not reading the fine print of the plan, which ends up hurting them in the long run.

The goal of this piece of legislation is to ensure that retiree’s investments are handled wisely and that these retirees are given the right advice, regardless of whether they want to open a Roth IRA or some other form of retirement savings account. If advisors do not act in the best interest of the investors, then there are penalties that will be enforced against them. The legislation comes with many provisions and some of these provisions act as incentives for these advisors to do the best job that they can. If they do not, they can be personally liable to restore any losses to the plan, or to restore profits that were mishandled by them.

Ultimately, this seems like a huge improvement over the old system. As mentioned before, ERISA is still the name of the game. With this new enactment, the landscape is slowly shifting to give investors a little more breathing space. Although ERISA has provided safeguards to investors in the past, this has not been enough to give full protection to their assets. Part of it has to do with the fact that employers do not always comply with ERISA. Other reasons are that retirement advisors are profit seeking as much as anyone else. However, as the fiduciary, the advisor must do whatever is in their power to give their client, in this case the investor, the best possible deal out there. It should not be a self-serving engine but a tool that they have at their disposal to best meet the investor’s needs.

Only the Beginning

This new legislation is a good start but there is more work to be done. There are many stories out there that show that many investors lose out simply because they don’t know what a retirement plan is and what is best for their particular needs. With the right guidance and support, they will be able to reap the benefits of the seeds that they have sowed many years back. There can be even better safeguards that can be used to further protect these investors. Employers can fund programs, which educate their employees on the different savings plans.

Many Americans today don’t have a good understanding of how these different savings plans work and how they can best serve their particular needs. Advisors are only a part of the story. There has to be a bigger involvement by the managers and heads of companies in educating the lower echelon on these different investment strategies. Society will be better off if savings accounts are effectively run.

Authored by Sam Behbehani, LegalMatch Legal Writer

Are Unpaid Internships Exploitive and Illegal or a Necessary Stepping Stone?

Are unpaid internships legal? Considered by some to be an important first step into an increasingly competitive workforce, the legality of unpaid internships is still unclear. This is despite the fact that in recent years, interns have won lawsuits against major corporations (including Sirius XM Radio, NBCUniversal, Conde Nast and Viacom Inc.), with plaintiffs claiming that they did the work of paid employees and thus should be compensated for their labor.

Ultimately, it seems that the question of whether unpaid internships are actually legal is less important than whether they should be legal.

Landmark Lawsuit Leads to More Confusion

Looking to get his foot in the door in Hollywood, Eric Glatt left a career on Wall Street to intern for the Darren Aronofsky film Black Swan. Glatt’s internship duties included performing administrative and clerical work for no pay. Before long, Glatt felt exploited, and decided that he wasn’t learning anything from his internship. So he, along with another intern, Alex Footman, filed a lawsuit against Fox Searchlight Pictures.

The lawsuit alleged that the internship went against federal and New York state minimum wage laws—that since the interns were doing the work of employees, they deserved to be paid like employees. The case had major repercussions on the world of unpaid internships, with interns at companies like Hearst, Conde Nast and Warner Music subsequently filing class-action lawsuits against their host companies.

It wasn't until July 12th, five years after Glatt’s lawsuit was initiated, that a proposed settlement was filed in the case. The settlement, if approved by a judge, will allow Glatt to collect $7,500 for his work on Black Swan. Additionally, other former Fox Searchlight interns will receive a range of payments for their labor. Nevertheless, Glatt v Fox Searchlight Pictures, Inc. never definitively answered an important question: when is it ok for businesses to employ unpaid interns?

‘Immediate Advantage’ vs. Academic Benefit

In 2015, after Glatt v Fox Searchlight Pictures, Inc. made it to the Second Circuit Court of Appeals, a judge rejected the Department of Labor’s widely known, six-factor test that assesses the legality of unpaid internships. The test centers around the idea that employers should not be able to derive an “immediate advantage” from an intern’s work. In contrast, if an intern is found to contribute to their company in a meaningful way, then they have to be paid.

Although the Department of Labor’s test has long been seen as a protection against the exploitation of unpaid interns, the Second District introduced its own seven-factor test in its ruling. The court’s test focused on the extent to which an unpaid internship is connected to an educational institution. In other words, the new test is concerned with whether an unpaid intern will be able to receive some academic benefit (like college credit) for their work.

According to the Second Circuit, the Department of Labor’s test is outdated as it does not reflect the reality of today’s internships, a reality in which many young people need an internship just to start their career. Yet, however much the world of internships has changed since the Department of Labor’s test was first created, it is undeniable that the Second Circuit’s ruling gives companies wiggle room not to pay their interns.

What Does the Ruling Mean For Other Internship Programs?

The Second Circuit court’s seven-factor test could be applied to employers located in states within the court’s jurisdiction (including Connecticut, New York, and Vermont). Additionally, the Eleventh Circuit (Florida, Georgia and Alabama) has already adopted the test.

However, just because some states have adopted the Second Circuit court’s approach toward unpaid internships does not mean that it will become a national standard. The Department of Labor has not modified its test in spite of the Second Circuit’s questioning its relevance. This means that, at least for now, tying an unpaid internship program to an academic program will not completely excuse all employers from having to pay their interns minimum wage.

It is undeniable that internships continue to be beneficial for companies as well as workers. A study from the National Association of Colleges and Employers found that nearly 62% of interns are eventually converted to employees, a 13-year high. To restrict the opportunities presented by internships to those who can afford to work for free for a summer or a semester seems unfair to those who can’t. Likewise, having to pay to work (as students do when they use college credit to score internships) hardly seems like a fair trade off between employee and employer. If unpaid internships are not always illegal, then they certainly should be.

Authored by Andrea Babinec, LegalMatch Legal Writer

Florida Supreme Court Unchains Attorney’s Fees for Workers’ Compensation: Will This Help Employees?

Over the last decade there has been a nationwide trend of changing the rules when it comes to workers’ compensation.  There has also been a trend of these changes not being in the best interests of the employees workers’ compensation seeks to protect. If you were told that Florida has substantially limited the amount an employee’s attorney can receive in fees in a workers’ compensation case, you’d probably think that Florida was bucking this unfortunate trend.  What if I told you that this was actually a serious blow against employees in workers’ compensation cases…and the Florida Supreme Court agrees?

Attorney Fees in Workers’ Compensation Cases

So I’m obviously crazy, or at a minimum, a lawyer trying to pull the wool over your eyes. How could lowering attorney’s fees be a bad thing?  The answer lies in the nature of fee agreements in worker’s compensation cases and how attorney fees work when an employee wins a workers’ compensation case.

In most states, the law limits a lawyer’s fee to a percentage of the amount their client, the employee suing, receives in workers’ compensation benefits. This way, hiring an attorney can’t cost more than the employee receives out of their services. However, despite this, attorneys will still track of their hours and tell clients their hourly rate.

Many states allow for situations where the employer or the employer’s insurer essentially pays the employee’s attorney fees.  This usually occurs where the employee wins the case after the employer substantially slowed down the legal process—often by attempting to litigate the employee into the ground.  In most states, the fees the employer has to pay aren’t subject to the limitations that would apply if the employee was paying.  This means that, when an employer is particularly aggressive in a case, they run the risk of getting stuck with the full bill based on the hours they made the attorney work.

Florida Fees: A Trip Down Legislation Lane

Rules requiring employers to pay their employees attorney fees in certain situations have been a part of Florida law since 1941.  Statutory limitations on attorney fees have cropped up in Florida law for nearly as long.  Percentage based caps on attorney fees have been repeatedly introduced in statutes passed by Florida legislators, only to be subsequently rejected by the Florida courts.

Each time a court has questioned a statute requiring percentage caps, the Florida legislators have tightened their grip and made a stricter version of the law. In 2009, Florida legislators introduced the current, and strictest, version of the law.  The 2009 version removed any mention of a requirement of “reasonableness” in fees, instead requiring all fees to follow a percentage formula in the statute. The statute left no way to dispute the statutory scheme for attorney’s fees.  The only awards that could be accepted by an attorney, or even awarded by the court, were fees capped at a percentage based on the amount and duration of the award for benefits.  Florida law actually made it a crime for a lawyer to accept any other type of fees, whether their client agreed to them or not.  Most importantly, the new statute applied these caps in almost every situation where an employer would have to pay an award of attorney fees to their employee.

The Case of Castellanos

This new version of the law was the point of contention in the recent Florida Supreme Court case Castellanos v. Next Door Company.  The case started as a fairly straightforward workers’ compensation case.  Marvin Castellano was injured on the job, and Next Door authorized him to seek medical treatment.  The doctor Castellano’s employer sent him to said he had injuries to his head, neck and right shoulder.  The doctor recommended a course of treatment.  However, Next Door and their insurer Amerisure refused to authorize the recommendations of their own doctors.  Castellano sought benefits in court.

This is where things got nasty for Mr. Castellano. Next Door and Amerisure raised, according to the Florida Supreme Court, between 13 and 16 defenses refuting Mr. Castellano’s claims.  His attorney worked around 107 hours refuting these defenses while Next Doors attorneys worked 113 hours. 

When the dust settled, Mr. Castellano was victorious. He received his benefits of $822.70.  Even better, he was awarded attorney fees due to Next Door’s vigorous refutation of his claims.  Castellano’s attorney asked for the value of his hours worked—$36, 817.50.  However, with his recovery capped to a percentage of benefits by statute, the attorney fees paid by Next Door were slightly less than this—$165.54.  This is an equivalent to $1.53/hour.  To put that in context, the average attorney fee is $200-$400/hour.

However, while many experts testified to the “manifest unfairness” of this award, the Florida Supreme Court didn’t make its ruling based on “unfairness.”  A lawyer is free to simply not represent a client with a case that won’t make money.  Instead, the court found the statute unconstitutional for violating due process.

Due Process in Paying What’s Due

Due process is a Constitutional right, protection against being deprived of life, liberty, or property without due process of law.  The Florida statute regarding attorney fees workers’ compensation cases required attorney fees to always match the amount provided by the formula in the statute.  There was no way a court or party could present evidence to change this amount.  The Florida Supreme Court took issue with this, stating that this made the statute violate constitutional due process as an irrebuttable presumption.

An irrebuttable presumption is where a law says that something will always be the case, regardless of any evidence to the contrary. They are generally considered constitutional no-nos.  The Florida Supreme Court said the statute stated that its formula would always produce a reasonable fee. 

However, if the goal of the statute was to standardize and prevent excessive fees, it failed. The statute also had the possibility to issue unreasonably high fees where a lawyer received huge benefits on a simple case.

As the statute didn’t actually achieve its goal, there wasn’t a reasonable basis for such an unyielding rule. In fact, the court argued the scheme created more difficulties than it solved.  When an employer or insurer can be certain that they will never be held responsible for greater attorney’s fees than the statutory amount, there is no disincentive against attempting to bury a plaintiff under numerous defenses and filings.

With the Florida Supreme Court ruling the statute unconstitutional as it was, the current statute couldn’t continue as law.

So What's Next?

Castellanos wasn’t the only case with this issue. The Florida Supreme Court noted that they had 18 other cases dealing with very similar fact patterns. Without the potential of a reasonable attorney fees award, there was nothing to stop employers from denying workers’ compensation, then drowning that employee in defenses they couldn’t hope to overcome without legal assistance.

The Florida Supreme Court’s change won’t let lawyers steal benefits out from under the nose of unsuspecting clients. Instead, it will protect those clients against employers looking to abuse the complexity of workers’ compensation claims.

Authored by Jonathan Lurie, LegalMatch Legal Writer and Attorney at Law

Oklahoma Supreme Court Says No to Workers’ Compensation Law Which Checkmates Employees

The Oklahoma courts have been methodically dismantling parts of a sweeping overhaul to workers’ compensation made in 2013. Just a few weeks back, the Oklahoma Workers’ Compensation Commission ruled that a provision of the overhaul which allowed employers to write their own workers’ compensation plan violated Oklahoma’s State Constitution. Now, in the case of Maxwell v. Sprint PCS, the Oklahoma Supreme Court has ruled that another provision of the 2013 workers’ compensation changes tramples the Due Process Clause of both the Oklahoma State Constitution and the Constitution of the United States of America.            

Permanent Partial Disability in Oklahoma: Damned if You Do; Damned if You Don’t

The section of law that the Oklahoma Supreme Court found to have so grievously violated the constitutional rights of employees was a provision allowing employers to defer payment of workers’ compensation in cases of permanent partial disability (PPD) where an employee returns to their pre-injury job.  A PPD is where an employee permanently loses some, but not all, function in a body part due to a workplace injury.

Under the Oklahoma deferral rule, when an injured employee—having healed their injury as much as possible—returns to the position they held before their injury, or an equivalent job, their workers’ compensation payments were put on hold. While they worked at their old job, the amount owed to them for workers’ compensation decreased by 70% of their average weekly wage every week.  Under Oklahoma’s 2013 workers’ compensation scheme, an injured worker receives 70% of their average weekly wage (with some limitations) over a statutorily determined number of weeks based on where they were injured.  This means that every week an employee worked at their old job they essentially lost one week of workers’ compensation.

If the injured employee refused to return to work, their workers’ compensation was deferred in the same manner. So no matter what an employee did, once their employer offers them their job back, they stopped receiving workers’ compensation.

On its face, the rule already seems wrong. An employer could hire back a seriously injured employee, just to arbitrarily fire them once their workers’ compensation runs out.  In fact, this is exactly what happened to one of the employees in the case that led the Oklahoma Supreme Court to rule the deferral scheme unconstitutional.  If the employee doesn’t want to go back, they still don’t get their workers’ compensation. However, it wasn’t what the rule did that ultimately led the Oklahoma Supreme Court to rule it unconstitutional - it was how they did it. 

Why is it Unconstitutional?

The Due Process Clause prevents the government from depriving a person of life, liberty, or property without due process of law.  There are two types of due process, substantive and procedural. Substantive due process deals with the government regulation taking away a fundamental right. Procedural due process deals with the right to have the opportunity to make your case for yourself before the government takes away your life, liberty or property.

The Oklahoma Supreme Court ruled that the deferral provisions violated workers’ right to procedural due process. Workers have a property interest in an award of workers’ compensation. This means they receive due process protections before those workers’ compensation benefits can be taken away from them.  As part of the protections of due process, Oklahoma due process requires that “all parties must be apprised of the charges so they may test, explain or rebut it. They must be given an opportunity to cross-examine witnesses and to present evidence." 

This was an opportunity not given to workers seeking a hearing on their deferral. When a worker asked for a hearing upon returning to work, their employer was allowed to show any evidence they wanted at that hearing while the worker was only allowed to show medical evidence. The only evidence considered at these hearings was whether the worker had in fact returned to work.

The Court ruled that this meant that the hearings presumed that an injured worker has no loss of wage earning capacity because they have returned to work earning the wages they made before their injury. However, this presumption doesn’t take into account the loss of work life or future job opportunities from the injury.  Thus, the hearings denied injured workers the chance to present “evidence of loss of wage-earning capacity [which] could include the injured employee's age, education, work history, vocational training, transferable skills, job opportunities, fitness to perform certain jobs, wage levels, or other information relating to his or her employment situation.” By not allowing employees to present all their evidence at these hearings, the procedures of the deferral provisions denied those employees due process.

The Future of Oklahoma Workers’ Compensation

The decision in Maxwell v. Sprint was a 7-2 decision on the part of the Oklahoma Supreme Court. Two separate judges included concurring opinions arguing that the opinion of the rest of the judges didn’t go far enough in just saying that the deferral provision “trampled” constitutional rights. 

The 2013 changes to Oklahoma’s workers’ compensation system were employer-friendly to say the least—reducing potential awards for employees nearly across the board. Being employer-friendly is not by itself a bad thing, but with two separate provisions of the changes already found unconstitutional, it calls into question the changes as a whole. Time will tell whether Oklahoma will need to make further changes to its workers’ compensation law in order to protect workers in the state.

Authored by Jonathan Lurie, LegalMatch Legal Writer and Attorney at Law

Opting Out: Should Employers Be Allowed to Write Their Own Workers’ Compensation Plans?

If you were told that your employer could choose whether to give you lunch breaks, you’d probably not expect many lunch breaks. However, in Texas and Oklahoma, the states have allowed employers to decide whether or not to participate in workers’ compensation.

Workers’ compensation is a set of laws which employers are required to abide by in nearly every state. Often called “The Grand Bargain,” workers’ compensation limits liability to employers by allowing employees to forgo their right to sue their employer and providing caps to employer liability in return for medical benefits and wage-replacement. These benefits are given on a no-fault basis and can last indefinitely. 

In other words, if you’re injured and it’s your fault, you can still receive benefits for the rest of your life if necessary. These benefits are paid by the employer. The idea behind this system is that employers gain protection from being sued while employees get benefits without having to go through a long and costly legal battle. The workers’ compensation claims are handled by state government departments.

For decades, Texas has followed an opt-out approach to workers’ compensation. Texas employers allow employers to choose whether or not they want to participate in the state’s workers’ compensation program. In February 2014, Oklahoma began allowing companies to opt-out of workers’ compensation as well. Instead, employers may write their own opt-out workers’ compensation plans or purchase liability insurance.

Employer opt-out plans have recently come under attack by news sources such as NPR and Propublica. What’s more, the Oklahoma Workers’ Compensation Commission has unanimously ruled that the opt-out plans violate their State Constitution. The U.S. Department of Labor has even begun an investigation to determine whether these opt-out laws violate federal law.

Despite all this, proponents of these opt-out plans argue that they are better for both employer and employee alike. So what are the arguments for and against these programs?

The Arguments for Opt-Out Plans

Proponents of opt-out plans argue that the plans substantially lower the cost of doing business. The savings are reported to be as high as 40-90% over conventional workers’ compensation.  They say that this allows businesses to create more jobs and alleviates the need to “get hung up on squeezing an employee.” In other words, the plans allow companies to be more generous with individual employees. Supporters of the plans also argue that by forgoing the liability protections of workers’ compensation, the threat of lawsuits prevents companies from mistreating employees.

The Dangers of the Opt-Out Plans for Employees

While proponents may argue that opt-out plans can be more individually generous for employees, the opposite has proved to be true in almost every aspect of the plans.

Opt-out plans generally let companies decide what constitutes a workplace injury and thus easily deny claims. The plans also fail to cover a laundry list of items that are normally covered by workers’ compensation plans, such as asbestos exposure and wheelchair vans. While workers’ compensation normally provides benefits for as long as the injury persists, the majority of Texas opt-out plans limit benefits to two-years after an injury or death of an employee.   

Although it varies state to state, workers’ compensation normally provides between 2 and 30 days for an employee to report an injury. Opt-out plans often require employees to report within 24 hours or before the end of their shift or have their benefits denied. In one instance, an employee was denied for calling 27 hours after an accident. Another was denied benefits because they did not feel the effects of their accident until after their shift.

Normally, a denied workers’ compensation claim has several avenues for appeal. Opt-out plans only allow appeal through your employer.

Threat of Lawsuits Ensuring Better Plans?

Employers’ opt-out plans do not offer equivalent benefits to state-mandated workers’ compensation. However, the threat of lawsuits could potentially leave employers more safety conscious, balancing out the downsides of the opt-out plans.  Unfortunately, it is unlikely that this will be the case as employers choosing to opt-out haven’t exactly been under substantial pressure from lawsuits. 

A 2010 Stanford study revealed that 81% of employers saw little to no increase in litigation against them as a result of their choice to opt out of workers’ compensation. There are several explanations for these findings.  First, 85% of employers’ opt-out plans require employees to arbitrate rather than sue. Arbitration generally leads to much lower payouts from employers.  Another explanation for employers seeing so few lawsuits is mandatory settlement clauses in the majority of employers’ opt-out plans. These clauses state that if an employee turns down whatever offer their employer makes, they will never receive benefits of any kind.

Opt-Out Plans Shifting Costs

It is likely that the dangers of increased liability are sufficiently counteracted by the potential benefits to employers. However, how do these benefits to employers translate to the average taxpayer?

Those who slip through the cracks for workers’ compensation often end up relying on government disability benefits. As an example, 7% of new SSDI beneficiaries in New Mexico in 2010 were due to workplace injuries.  If extrapolated to the rest of the country, this costs taxpayers $12B annually. These opt-out systems will leave many more employees unable to work with no access to workers’ compensation other than government disability benefits.

Thus, instead of employers paying for the costs of workplace accidents, these costs are spread across taxpayers. Ensuring a safety net for those who are rendered unable to work is important; however, allowing employers to shift their own costs to taxpayers is a bad policy. No matter how these opt-out plans are implemented, their cost will be borne by the entirety of the public.

There is little question that these opt-out plans will reduce costs to employers. These reduced costs may even lead to more available jobs. However, the cost to employees and the public at large is simply too great. Allowing employers to opt out of responsibility is not a reasonable option.  

Authored by Jonathan Lurie, LegalMatch Legal Writer and Attorney at Law

New Mexico’s Intoxicated Employees Law: Common Sense or Employer Loophole?

Does an employee who is injured while drunk or high deserve full workers’ compensation benefits?  New Mexico recently passed S.B. 214, a law which addresses this very issue—limiting worker's compensation to employees who are found to be intoxicated. 

If an employer has a written policy barring alcohol and drug use at work and a post-incident test (at the employer’s expense) reveals that the employee was intoxicated during the incident, S.B. 214 reduces that employee’s benefits by 10-90%. The exact amount of the reduction is based on how much the employee’s intoxication contributes to the incident leading to injury or death. Where a worker refuses to submit to a test after an incident, they are denied all workers’ compensation benefits under the law. This law works in addition to an overarching rule that states where an employee’s intoxication is the actual cause of their injury, they receive no benefits whatsoever.

When asked about signing the law, the Governor of New Mexico said, “If an employee is drunk or high on the job, they shouldn't be rewarded with full workers compensation benefits when they injure themselves…It’s a matter of common sense, and that's why I'm signing this legislation.”  At first glance, the law does seems like common sense.  If somebody chooses to show up to work drunk or high and it leads to an accident, or even contributes to one, it hardly seems fair to hold an employer fully responsible for the results of that person’s poor judgment.  The law even takes into account prescription drugs, excluding their effects from the definition of intoxication so as to avoid penalizing workers for their medical conditions. 

However, the provisions of the law creating a minimum reduction in benefits offer an exploitable loophole for negligent employers.

S.B. 214’s History of Rejection

S.B. 214 replaces New Mexico’s previous approach to reducing workers’ compensation for intoxicated employees whose intoxication is not the cause of their injury. The old law simply applies a flat 10% reduction in benefits for anybody found to be voluntarily intoxicated at the time of their accident. 

The most common concerns raised by opponents to the change have been the increased litigation and the burden to families of intoxicated workers who receive no workers’ compensation or medical benefits. The concern of increased litigation is a real one. It is unlikely that employers will not test every employee in an accident to see if they are intoxicated when doing so has the potential to decrease their liability. Every time that there is an intoxicated employee involved in an accident, there will need to be a full analysis of the facts to determine exactly how much that intoxication impacted the accident. This is a much more involved process than simply determining whether the inebriation actually caused the accident.

S.B. 214 does make efforts to address the concern of burdening the families of deceased or injured intoxicated workers. The law states that intoxication cannot reduce medical benefits of a deceased worker's dependents. This serves to alleviate much of the potential burden on families, but not all of it. Workers’ compensation supports those with workplace injuries that keep them from working, as there is no way to reduce these benefits without putting some strain on those who would rely on that injured worker’s income. Many workers’ compensation systems, including New Mexico’s, are no-fault systems. This means that employees receive benefits even if a workplace accident is their own fault. S.B 214 represents a departure from this underlying tenet in the case of intoxicated workers.

Minimum Reductions: 10% Off For Unsafe Employers

Despite these concerns, there is a reasonable argument behind S.B. 214—where the intoxication of an employee is not the actual cause of their injury, but still contributes, an employer should not be held fully responsible. However, there is no explanation behind requiring a 10% minimum reduction in benefits—regardless of an employee’s actual level of culpability.  By deciding to enact a law that requires a full factual analysis of every situation to determine level of culpability, New Mexico has declared that they consider the additional time spent on litigation for this analysis to be worthwhile.  So why not allow an analysis determining culpability for 0-100%? The only real reason seems to be that S.B 214 is piggybacking off the very law it seeks to replace. 

Employees should not show up to work under the influence of alcohol or drugs. Reducing workers’ compensation to intoxicated employees based on how much their inebriation contributes to an accident is not without basis. That being said, giving what amounts to a 10% discount to an employer who is entirely at fault for injuring their employee is bad policy-making.

Whatever they choose to do going forward, New Mexico’s new law has the potential for an improvement over their previous flat 10% reduction to benefits. However, the arbitrary minimum reduction to benefits must be addressed before employers can use it as a convenient loophole to being held fully accountable for their negligent actions.

Authored by Jonathan Lurie, LegalMatch Legal Writer and Attorney at Law

The Basics of Hiring an Employment Lawyer

Employment Law

A Guide to Obamacare and Religious Exemptions

The Supreme Court is currently deciding Little Sisters of the Poor Home for the Aged v. Burwell, a case about contraceptives that has implications for both religious freedom issues and employment law.

Background

The Little Sisters of the Poor have been part of the Catholic Church since 1839 when it was founded in France. They have 2,372 members worldwide who primarily minister to the elderly.  Due to the nature of their work, the Sisters rely on many employees who help them provide important care for impoverished seniors. Here in the United States, they describe themselves as an “equal opportunity employer,” and say that their staff members “truly become part of [their] family.” They add: “if you are interested in working in the field of geriatrics, wish to make a difference in the lives of others and feel called to a high level of commitment, we invite you to visit us...” 

Due to their Catholic faith, the Little Sisters of the Poor do not wish to provide any form of birth control coverage to their employees, as is currently mandated by Obamacare, also known as the Affordable Care Act. While the government has made an “accommodation” for religious employers, the Sisters argue that it is not a true exemption and still forces them to provide access to birth control.

Which Employers Must Currently Provide Health Insurance?

Under Obamacare, most employers with more than 50 full-time employees must provide a certain level of health insurance to at least 95% of their employees to avoid penalties. Penalties are high and are multiplied by the number of employees without coverage. The Eighth Circuit ruled in favor of The Little Sisters partly because of this:  "compelling the participation" of the nonprofits "by threat of severe monetary penalty" gave them no room to exercise their religious choices.

A few types of employers are exempt from providing healthcare under this mandate:  

• Small employers with fewer than 50 employees
• Employers who have provided healthcare coverage since before March 30, 2010 and have been “grandfathered” in, preserving whatever coverage already existed
• Employers who do not provide proper healthcare coverage but who have no employees who qualify for a subsidy or tax credit based on that lack of coverage (generally speaking, high-income individuals who can fully afford health care on the market or who already have care)

What are Employers Supposed to Provide?  

It is not simply enough that employers provide health care coverage. That coverage must allow employees to have access to certain types of care, specifically preventative care for women. The Department of Health and Human Services was allowed under ACA to define “preventative care.” It “outsourced” the decision to the Institute of Medicine, which decided that this included “all FDA-approved contraceptive methods and sterilization procedures, including four methods that can prevent the implantation of a fertilized egg.”

Here, the Sisters point out that those employers with fewer than 50 employees never have to provide this kind of “immoral” coverage. Nor were those healthcare plans “grandfathered” in. Thus, only large organizations like Little Sisters have to wrestle with this moral question.

What Is the Religious Accommodation under ACA?

The religious accommodation allows a religious nonprofit organization to notify their healthcare provider or the Department of Health and Human Services that it objects to some aspect of coverage (typically, birth control provision). Once the notification occurs, either the insurance plan or a third-party administrator must provide birth control coverage to the employee.

The Sisters argue that the “so-called ‘accommodation’ is not an exemption,” as it still creates an obligation for a religious non-profit to somehow provide preventative contraceptive coverage. By notifying HHS or insurers that it will not participate in provision of birth control, they are facilitating their employees’ access to birth control through other means.

If the Sisters Win, What Options Will Employees Have?  

If The Little Sisters of the Poor win their legal battle, it will mean that employees of some religious nonprofits could not access birth control through employer sponsored health care plans. It remains to be seen how many employees would be affected by the decision without knowing which religious nonprofits would make a total moral objection to contraceptive coverage. One solution to the problem may to create another way for these employees to access birth control, perhaps directly through a government program. Potential employees who require this type of preventative health care coverage may also be incentivized to take their talents and commitment elsewhere.

Authored by Alexis Watts, LegalMatch Legal Writer

Death Benefits for Widow Whose Husband was Worked to Death

A court in Pennsylvania recently decided that a widow who alleged that her husband was worked to death should receive death benefits. Her husband, Robert Dietz, who was 48 years old, was completing a 14-hour shift when he suffered a heart attack and died on November 7, 2007. The three-judge panel decision made by the Pennsylvania Commonwealth Court was a reversal of the decision made by a workers’ compensation appeal board. 

Dietz worked in field maintenance for the Lower Bucks County Joint Municipal Authority. The work was physically demanding, and involved fixing water mains and digging up tree roots from the sewer system. The job often required the use of a jackhammer. He had worked in that role for 20 years. According to the testimony given by his widow, Judith Dietz, he frequently worked more than 40 hours per week, and was constantly on call.

Dr. Walter Schwartz, who testified on behalf of the water department, contended that Dietz’s death was the result of pre-existing health conditions, including a family history of coronary disease, his high level of cholesterol and blood fats, his peripheral artery disease, his smoking habit, and his weight. He further stated that due to these health factors, Dietz could have died at any time. According to court documents, Dietz was 6 feet 2 inches tall, and weighed 200 to 210 pounds. Judith Dietz testified that during their marriage of 13 years, he smoked a pack of cigarettes on a daily basis.

However, cardiac specialist Dr. Larry Wolk, who testified on behalf of Dietz’s family, stated that his long work day performing physically taxing labor caused his death. Judge Mary Hannah Leavitt placed more emphasis on Dr. Wolk’s testimony, and wrote that the staggering circumstantial evidence indicates that the strain from Dietz’s usual work duties caused his heart attack.

Mrs. Dietz and her minor child are seeking the standard death benefit, which consists of 60 percent of compensation plus $3,000 to be applied to burial expenses. Whether Dietz’s heart attack was caused by his job was significant because a connection between an employee’s work and his death must be made in order for the surviving spouse to qualify for workers’ compensation benefits. An attorney for the Dietz family said that the employer has 30 days to appeal the decision.

The Employer’s Responsibilities

I think the Pennsylvania Court ruled correctly when it sided with Mrs. Dietz, and awarded her and her minor child the death benefit. Although Dietz had pre-existing health conditions that could eventually have led to a heart attack, the attack he suffered occurred after a long day of physically laborious work that he had been performing for 20 years. The extreme stress and strain associated with such work took its toll on Dietz and caused him to collapse and die.

In an effort to prevent such tragedies from happening in the future, perhaps the employer could shorten the shifts, especially when the work entails such strenuous labor. The health and safety of any company’s employees should take precedence over the work itself. Employers should ensure that its employees are not overworked, especially when there are pre-existing health conditions. Just because the employee does not voice any complaints about being overworked doesn’t mean that he isn’t. An employee is unlikely to complain because he or she may feel that to do so would result in termination. Therefore, it is the employer’s responsibility to protect the health and safety of its workers.

Authored by Roxanne Minott, LegalMatch Legal Writer and Attorney at Law