Increase in Wage and Hour Lawsuits Likely to Continue

The Obama administration allotted $117 billion for the U.S. Department of Labor (DOL) in the proposed budget for the 2011 fiscal year, setting aside $25 million for the DOL to combat employee misclassification. In total, the DOL Wage and Hour Division expects to hire 90 new investigators to focus on employers who misclassify employees as independent contractors and deprive them of benefits such as overtime.

The result is that employers are likely to face more enforcement actions from the DOL related to wage and hour issues. This follows the current trend of increasing actions brought under the Fair Labor Standards Act (FLSA). Since 2004, there has been an 11% increase in wage and hour enforcement actions and a 77% rise in private lawsuits related to wage and hour disputes by the DOL.

An employer’s classification of an individual as an independent contractor bears no weight as the DOL and courts look to a number of factors to determine whether an individual is an independent contractor or employee. Such factors include:
  • an employer’s right to control the manner and means by which work is accomplished;
  • the skill required to perform specific job duties;
  • the duration of the relationship between the parties;
  • the employer’s discretion over when and how work is performed; and
  • the method of payment.
Unfortunately for employers, there is no bright line test to determine whether an individual is an employee or an independent contractor and the DOL and courts examine such relationships on a case-by-case basis.

Even more troubling for employers is the rise in private class-action lawsuits related to wage and hour issues. In 2009, Wal-Mart settled a FLSA suit for $11 million; Lowe’s paid $29 million; and Wachovia paid $39 million. These suits are often fact-intensive and employers stand little chance of succeeding on a motion to dismiss claims brought under the FLSA. Further, the FLSA’s attorney fee provision for prevailing plaintiffs results in increased monetary liability for employers. It is important to ensure that you are complying within FLSA regulations as to these issues.

Author: Jon Secrest


Appellate Court Declares Six-Year Statute of Limitations on Workers’ Compensation Subrogation Claims

In an unusual twist, the Second District Court of Appeals of Ohio ruled that a claim for subrogation under Ohio’s workers’ compensation subrogation statute is governed by the six-year statute of limitations and not the two-year statute applicable to personal injury and negligence claims. In the case of Corn v. Whitmere, an employee sued a third party tortfeasor for injuries allegedly sustained in a motor vehicle accident arising during the course and scope of his employment. He also joined his self-insured employer as a defendant. The employer then filed a cross claim against the tortfeasor seeking reimbursement for workers’ compensation benefits paid pursuant to Ohio’s workers’ compensation subrogation statute. The trial court dismissed the employer’s cross claim as untimely since it had been filed more than two years after the date of the employee’s injury.

The Court of Appeals disagreed. The Court ruled that in the usual insurance setting, the subrogated insurer stands in the shoes of the insured-subrogor and has no greater rights than those of the insured-subrogor. Therefore, if the insured’s claim against the tortfeasor is based on negligence, the subrogated claim must also be based on negligence and is governed by the same two-year statute of limitations. The self-insured employer’s cross claim for workers' compensation subrogation, however, is not applied in the same way. Instead, the self-insured employer’s claim arises out of a statute. As a result, the cross claim is subject to the six-year statute of limitations found under Ohio Revised Code §2305.07.

Self-insured employers in Ohio should take note. Even though an injury may be more than two years old and the injured worker has never asserted a claim against the third party tortfeasor, the self-insured employer could still bring a claim under Ohio’s workers’ compensation subrogation statute for up to six years after the date of the employee’s injury.

Author: Charlie Smith


Male Nurse Claims Sleep Deprivation for Loss of Job

A recent Sixth Circuit case involving the firing of a male nurse who claimed to have sleep deprivation provided an interesting analysis of discrimination cases involving reverse sex discrimination and the American with Disabilities Act (ADA). The male nurse was terminated because he failed to complete his charting responsibilities during his night shift. He claimed that he was let go because of his sex, and also that his employer failed to accommodate his disability, namely sleep deprivation.

The Court said the man failed to show sufficient evidence of reverse sex bias, even though he claimed that a female nurse didn't properly chart one patient. The facts were that the male nurse failed to chart four patients, so his actions were more serious. The court also provided guidance on how a plaintiff must establish a prima facie reverse discrimination case, saying that a plaintiff must show "background circumstances to support the suspicion that the defendant is that unusual employer who discriminates against the majority."

In his ADA claim, the male nurse only provided uncorroborated testimony as to his sleeping two to four hours per night. He also claimed that he asked to be transferred to the day shift, an allegation denied by the employer. The Court, while recognizing that sleep is a major life activity under the ADA, said the nurse did not prove that his sleep issues rose to the level of substantial impairment, saying that "sleeping between two and four hours per night, while inconvenient, simply lacks the kind of severity we require of an ailment before we will say that the ailment qualifies as a substantial limitation."

Author: Doug Kennedy


COBRA Extends Health Insurance Continuation Premium Subsidy

As part of the Defense Appropriation Act for 2010, the 65% subsidy for COBRA continuation premiums has been extended up to 15 months for eligible employees. The subsidy was previously limited to 9 months. Eligible workers will pay only 35% of their premiums to their former employers. To qualify, a worker must have been involuntarily separated between September 1, 2008 and February 28, 2010. This only applies to employees who are employed with a company that maintains more than 20 employees and has previously provided health insurance coverage. Also keep in mind the 65% subsidy is reimbursed to the coverage provider through a tax credit in most situations.

In Ohio, state continuation coverage is also available under Ohio’s “mini-COBRA” program. If an employee has less than 20 employees, those employees can receive continuation coverage under the state continuation law rather than the federal law. Coverage under the state’s program has been extended up to 12 months and no longer requires proof of entitlement to unemployment compensation in order to be eligible. As long as the employee can show that they were involuntarily terminated and for reasons other than gross misconduct, they are eligible. The small employer will not be obligated to pay any portion of the premium. The former employee will pay 35% of the premium and the insurance company will claim the credit from the IRS for the 65% subsidy of the premium not paid by the former employee.

Therefore, employees of both small and large employers have additional assistance available to them for extending health insurance coverage during these hard times. Please consult your counsel if you have any questions concerning an employee’s eligibility or any further extension of benefits.

Author: Charlie Smith