Workers’ Compensation Claims: Where Should They Be Filed? Where Should They Be Allowed?

Ohio, like many other states, has a number of its major metropolitan areas on or within commuting distance of its border with another state. Therefore, residents of Ohio may engage in employment in a state other than the one in which they live (or vice versa), and, indeed, may suffer a workers’ compensation injury in that different state. This can be problematic for employers when deciding in which state their employees should be covered for workers’ compensation purposes, where a claim will be filed, and, more importantly, where the claim should be allowed.
In order to determine whether employment is sufficiently localized to Ohio (or any other state), Ohio courts generally consider the following factors:
(1) the place of contract of employment, supposedly carrying with it, as a part of the contract, the law of the state in which the contract was made; (2) the specific provisions of the [Workers’] Compensation Act of the state of the employer with reference to its extraterritor[i]al operation; (3) the state in which the employee’s name and pay are included in payroll reports submitted by the employer; (4) the place of accident; (5) the residence or domicile of the employee; (6) the place of the employee’s activities or performance of the work assigned; (7) the right of recovery outside of the state of employment; (8) the relation of the employee’s activities or performance of assigned work to the employer’s place of business, or situs of the industry; and (9) the place or state having supreme governmental interest in the employee, as affecting his social, business and political life.
(Prendergast v. Industrial Comm. of Ohio (1940), 136 Ohio St. 535, 543.)
The claim should be filed and allowed in whichever state has the most contacts. If the factors between Ohio and the other state are equal, Ohio courts will generally find for the employee and a filing in Ohio, as Ohio Revised Code § 4123.95 demands liberal construction of workers’ compensation laws in favor of employees and the dependents of deceased employees.
Ohio Revised Code § 4123.54(H)(1) does provide a means for an employer to avoid the issue of localized contacts by specifying which state’s workers’ compensation system is applicable for employees whose contracts were entered into outside the State of Ohio. (See Ohio BWC Forms C-110 and C-112.) This mechanism is useful to provide a measure of cost and containment certainty for an employer with employees in many different states.
As the nation’s workforce continues to diversify, become more mobile and, indeed, have the capability to telecommute to any state in the union, Roetzel & Andress will continue to provide guidance to employers on this topic. If you should have any questions with regard to the location of coverage of your employees or the location of a claim, please contact any of our offices to discuss this matter further with one of our workers’ compensation attorneys.



Fifth Circuit Rules that Tip Pooling Arrangement is in Violation of the FLSA

As a general rule, the Fair Labor Standards Act (FLSA) requires employers to pay a minimum wage of $7.25 per hour to employees, but that amount is reduced to $2.13 per hour for tipped employees, so long as the tips earned cover the differential. Furthermore, employers may not pay the $2.13 per hour unless “all tips received by [the] employee have been retained by the employee” with the exception of “pooling of tips among employees who customarily and regularly receive tips.” (29 U.S.C. § 203(m).)
On September 14, 2011, the Fifth Circuit addressed the issue of whether food “expediters” or “quality assurance” workers at Chili’s Restaurants fall within the category of employees who customarily and regularly receive tips so as to permit them to take advantage of the tip pooling practice. (Roussell v. Brinker Int’l Inc., No. 09-20561 (5th Cir. September 14, 2011).)
In Roussell, waiters and waitresses claimed that they were coerced into sharing tips with the “expediters” and “quality assurance” workers—employees who inspect completed food orders from the kitchen, garnish plates and delegate to servers and bussers the delivery of the food to the customers—in violation of the FLSA. Notably, the Department of Labor’s Field Operations Handbook provides:
[I]t does not appear that the Congress, even in requiring as a general principle that tipped employees retain all their tips, intended to prevent tipped employees from deciding, free from any coercion whatever and outside of any formalized arrangement or as a condition of employment, what to do with their tips, including sharing them with whichever co-workers they please.
(Department of Labor Field Operations Handbook § 30d04(c) (Dec. 9, 1988) (emphasis added).)
Thus, the relevant inquiry became whether Chili’s Restaurants operated a legal tip pool—the determination of which hinges upon: (1) whether the “expediters” and “quality assurance” workers were tip eligible; and (2) whether the managers coerced the servers to share their tips with the “expediters” and “quality assurance” workers. The Fifth Circuit held that Chili’s Restaurants violated the FLSA on both grounds because the workers at issue were not regularly or customarily tipped, and the “decision” to share tips with the “expediters” and “quality assurance” workers was not free from coercion.
It is highly recommended that employers review their tip pooling policies to ensure compliance with the relevant provisions of the FLSA.



Supreme Court of Ohio Sets Guidelines for Wrongful Discharge Based on a Violation of Public Policy

Since 1994, Ohio law has recognized a claim for wrongful discharge in violation of a public policy. This is a judicially created cause of action that is ever evolving. In 1994, the Supreme Court of Ohio stated that in order to state such a claim, the plaintiff must be able to point to a clear public policy articulated in the Ohio or United States Constitutions, federal or state statutes, administrative rules and regulations, or the common law. Frequently, plaintiffs with no clear claim under federal or Ohio discrimination laws have couched their claims as ones for wrongful discharge in violation of a public policy. The alleged public policy has varied greatly.
On September 15, 2011, the Supreme Court of Ohio issued its decision in Dohme v. Eurand Am., Inc. (Case No. 2010-1621). In Dohme, the plaintiff alleged he was terminated for raising questions and issues related to plant safety. The typical wrongful discharge in violation of public policy claim will cite to similar public concerns, such as preventing criminal activity, ensuring accurate accounting practice, etc. In Dohme, the Supreme Court determined it was not enough to simply state a general policy exists. Instead, a plaintiff must identify a specific public policy and identify “federal or state constitutional provisions, statutes, regulations, or common law that supports the policy … .” The Supreme Court further explained:
Based on the foregoing, we conclude that to satisfy the clarity element of a claim of wrongful discharge in violation of public policy, a terminated employee must articulate a clear public policy by citation to specific provisions in the federal or state constitution, federal or state statutes, administrative rules and regulations, or common law. A general reference to workplace safety is insufficient to meet the clarity requirement.
The Supreme Court made it clear that it is an employee’s burden to articulate a specific public policy, and courts are not permitted to identify a source of public policy for plaintiffs.
This ruling is good news for employers. In the past, employers have been forced to defend actions that alleged an employee was terminated for conduct such as complaining about the manner in which an employer treats customers. Plaintiffs then typically cite some nebulous public policy. The Supreme Court made clear that such general allegations will not suffice.  

Contact: Jon Secrest


Supreme Court of Ohio Rules That State Claims to Recover Workers’ Compensation Benefits Subject to Six-Year Statute of Limitations

In a decision released on September 7, 2011, the Supreme Court of Ohio ruled 7-0 (Justice Pfeifer concurring in judgment only) that a claim asserted by the state under R.C. 4123.931(G) seeking subrogation (reimbursement) of workers’ compensation benefits from the proceeds of a lawsuit judgment or settlement recovered by an injured worker from a third party is subject to the six-year statute of limitations set forth in R.C. 2305.07 for claims “upon a liability created by statute.”
The case, Ohio Bur. of Workers’ Compensation v McKinley, 2011-Ohio-4432, arose out of injuries Jeffrey McKinley suffered in 2003 while working for his employer at a work site owned by Heritage-WTI. McKinley was granted state workers’ compensation benefits. McKinley subsequently filed suit against his employer and Heritage. In 2004, McKinley and Heritage settled for an undisclosed amount and notified the BWC of the settlement.
In November 2008, BWC filed suit against McKinley and Heritage in Columbiana County, Ohio, asserting that they were jointly and severally liable to the state for failing to honor the state’s subrogation interest in the settlement that had been reached between them. Heritage filed a motion to dismiss the state’s claim as untimely, arguing that the state’s subrogation claim was derivative of McKinley’s tort claim against Heritage, and therefore subject to the same two-year statute of limitations applicable to McKinley’s claim. The trial court agreed and granted the motion to dismiss.
The BWC appealed. On review, the 7th District Court of Appeals reversed the trial court and reinstated the bureau’s claims. The court held that BWC’s claim was not subject to the two-year limitations period applicable to McKinley’s tort claim because R.C. 4123.931(G) “creates an independent right of recovery for the statutory subrogee.”  Accordingly, the court of appeals held that the BWC’s 2008 subrogation lawsuit was timely because it had been filed within the six-year statute of limitations set forth in R.C. 2305.07 for claims based on “a liability created by statute.”
Heritage sought Supreme Court review. The Court agreed to determine whether BWC’s subrogation claim was subject to the two-year limitations period applicable to McKinley’s underlying tort claim, or the six-year limitations period applicable to claims based on a liability created by statute.
Justice Cupp, affirming the decision of the 7th District, wrote:  
(A) statutory subrogee that pursues recovery of its subrogation interest under R.C. 4123.931(G) clearly does much more than merely substitute for and “stand in the shoes of” a claimant. These subrogation statutes set forth an overall scenario in which the claimant, the third party, and the statutory subrogee are three independent actors playing discrete and delineated roles. The statutory subrogee pursues an independent recovery in its own right under R.C. 4123.931(G) as a separate and distinct actor.
Workers’ compensation subrogation recovery would not exist ‘but for’ R.C. 4123.93 and 4123.931. ... Because R.C. 4123.931 creates an independent right of recovery that would not otherwise exist, we conclude that a statutory subrogee’s claim under R.C. 4123.931(G) to recover its subrogation interest is governed by the six-year statute of limitations of R.C. 2307.05 for a liability created by statute. 
Justice Pfeifer entered a separate opinion in which he concurred with the majority judgment that the claim asserted by BWC under R.C. 4123.931(G) in this case was subject to a six-year limitations period, but wrote that state reimbursement claims advanced against third parties under other subsections of the same statute are not subject to the same time limit.
Roetzel & Andress will continue to provide further information and guidance to assist you as developments arise in this matter. If you should have any questions, please contact any of our offices to discuss this matter further with one of our workers’ compensation attorneys.



Disability Retirement as a Defense in Workers' Compensation Claims

In this weak economy, many people—including workers who have been laid off—are filing for Social Security disability benefits and disability retirement under an Ohio retirement system. A disability award can be used to defend the pursuit of temporary total and permanent total compensation in a claim.

Temporary total compensation is to compensate a claimant for lost wages while treating for the allowed injuries in a claim and the claimant has the intention to return to work. Permanent total compensation is awarded to claimants whose allowed claim conditions render them unable to engage in sustained remunerative employment; i.e., the allowed conditions remove them from the work force. 

For employees who qualify for disability benefits for medical conditions unrelated to the allowed conditions of their claims, any attempts to collect temporary or permanent total compensation should be rigorously defended. By qualifying for disability benefits, one is removing oneself from the work force. The award of disability benefits under these circumstances should act as a bar to the award of either temporary or permanent total compensation.

The 10th Appellate District of the Court of Appeals decided such a case earlier this year. (State of Ohio ex rel. Patricia Rouan v. Industrial Commission of Ohio and Mahoning County, 2011 Ohio 1897.) The claimant, who was injured in 2004, was awarded Public Employees Disability Retirement benefits in 2005 for depression that was not an allowed condition in her claim. After qualifying for Disability Retirement, the claimant sought the payment of temporary total compensation. The Court of Appeals reviewed the facts and applicable case law and decided that the claimant “abandoned the entire workforce with her disability retirement and for reasons unrelated to her industrial injury, she cannot receive the loss of wages at the heart of a temporary total disability compensation, as the possibility of employment no longer exists. Rather, her abandonment of the workforce severed any causal relationship between her industrial injury and her claimed disability.”

Roetzel & Andress has experience in this area. We expect to see more workers pursing compensation under these circumstances and stand ready to assist employers who are confronted with this situation.

Contact: Brian A. Tarian