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More Good News | Kasich Asks Ohio BWC Board to Rebate Another Billion

 

By David J. SchmittDavid J. Schmitt

Governor Kasich announced recently that the Ohio Bureau of Workers’ Compensation (BWC) Net Asset Fund should return an additional $1 billion to Ohio employers as a premium rebate. The rebate will be based on the premiums paid by private and public employers during their 2012 policy year, equal to 60 percent of their premiums.

The Ohio BWC Board of Directors will consider the recommendation at the August meeting and will likely approve the proposal in September. If the voting timeline is kept, Ohio employers could receive a second round of premium rebate checks as early as October.

Governor Kasich also revealed that the Ohio BWC will invest in the extension, expansion and research of various existing safety programs to assist Ohio businesses with the prevention of workplace injuries.

Urgent Note: An employer with a lapsed status on September 5, 2014 will NOT be eligible for the premium rebate. Employers must be in an active, reinstated, combined or debtor-in-possession status effective September 5, 2014.

If you have any questions regarding the rebate or need assistance curing a lapsed status, please contact David Schmitt at 513-852-2587 or by email at djs@corsbassett.com.

EEOC Issues New Guidance Related to Pregnancy Discrimination Act

 

by Jack B. HarrisonJack B. Harrison

Recently, the U.S. Equal Employment Opportunity Commission (EEOC) approved a new guidance on the Pregnancy Discrimination Act (PDA).  The EEOC adopted this new guidance by a 3-2 vote.  The new guidance represents the EEOC’s first significant update on the subject of discrimination against pregnant employees in over thirty years.  The new guidance, “Enforcement Guidance on Pregnancy Discrimination and Related Issues” is intended to replace the EEOC’s 1983 Compliance Manual chapter related to the issue of pregnancy discrimination.  Additionally, the new guidance addresses the application of the Americans with Disabilities Act (ADA) to pregnancy-related disabilities.

The PDA prohibits an employer from firing, refusing to hire, demoting, or taking any other adverse action against a woman if pregnancy, childbirth, or a related medical condition is a motivating factor in the adverse employment action.  Under the PDA, where pregnant women are able to work, they must be allowed to do so under the same terms and conditions as other employees.  In situations where pregnant women are not able to work, the PDA requires that they be given the same rights, leave privileges, and other benefits available to other similarly-situated employees.  In its new guidance, the EEOC underscores the position that the PDA’s treatment of discrimination based on pregnancy, childbirth, or a related medical condition is considered a form of sex discrimination.

As part of its guidance on this issue, the EEOC issued a list of what it considers to be “best practices” for employers.  Prudent employers should review their policies that may impact pregnant employees in light of the EEOC’s guidance and its list of “best practices.”  This list of “best practices” is as follows:

General

  • Develop, disseminate, and enforce a strong policy based on the requirements of the PDA and the ADA.

    Make sure the policy addresses the types of conduct that could constitute unlawful discrimination based on pregnancy, childbirth, and related medical conditions.

    Ensure that the policy provides multiple avenues of complaint.
  • Train managers and employees regularly about their rights and responsibilities related to pregnancy, childbirth, and related medical conditions.

    Review relevant federal, state, and local laws and regulations, including Title VII, as amended by the PDA, the ADA, as amended, the FMLA, as well as relevant employer policies.
  • Conduct employee surveys and review employment policies and practices to identify and correct any policies or practices that may disadvantage women affected by pregnancy, childbirth, or related medical conditions or that may perpetuate the effects of historical discrimination in the organization.
  • Respond to pregnancy discrimination complaints efficiently and effectively. Investigate complaints promptly and thoroughly. Take corrective action and implement corrective and preventive measures as necessary to resolve the situation and prevent problems from arising in the future.
  • Protect applicants and employees from retaliation. Provide clear and credible assurances that if applicants or employees internally or externally report discrimination or provide information related to discrimination based on pregnancy, childbirth, or related medical conditions, the employer will protect them from retaliation. Ensure that these anti-retaliation measures are enforced.

Hiring, Promotion, and Other Employment Decisions

  • Focus on the applicant's or employee's qualifications for the job in question. Do not ask questions about the applicant's or employee's pregnancy status, children, plans to start a family, or other related issues during interviews or performance reviews.
  • Develop specific, job related qualification standards for each position that reflect the duties, functions, and competencies of the position and minimize the potential for gender stereotyping and for discrimination on the basis of pregnancy, childbirth, or related medical conditions. Make sure these standards are consistently applied when choosing among candidates.
  • Ensure that job openings, acting positions, and promotions are communicated to all eligible employees.
  • Make hiring, promotion, and other employment decisions without regard to stereotypes or assumptions about women affected by pregnancy, childbirth, or related medical conditions.
  • When reviewing and comparing applicants' or employees' work histories for hiring or promotional purposes, focus on work experience and accomplishments and give the same weight to cumulative relevant experience that would be given to workers with uninterrupted service.
  • Make sure employment decisions are well documented and, to the extent feasible, are explained to affected persons. Make sure managers maintain records for at least the statutorily required periods. See 29 C.F.R. § 1602.14.
  • Disclose information about fetal hazards to applicants and employees and accommodate resulting requests for reassignment if feasible.

Leave and Other Fringe Benefits

  • Leave related to pregnancy, childbirth, or related conditions can be limited to women affected by those conditions. Parental leave must be provided to similarly situated men and women on the same terms.
  • If there is a restrictive leave policy (such as restricted leave during a probationary period), evaluate whether it disproportionately impacts pregnant workers and, if so, whether it is necessary for business operations. Ensure that the policy notes that an employee may qualify for leave as a reasonable accommodation.
  • Review workplace policies that limit employee flexibility, such as fixed hours of work and mandatory overtime, to ensure that they are necessary for business operations.
  • Consult with employees who plan to take pregnancy and/or parental leave in order to determine how their job responsibilities will be handled in their absence.
  • Ensure that employees who are on leaves of absence due to pregnancy, childbirth, or related medical conditions have access to training, if desired, while out of the workplace.

Terms and Conditions of Employment

  • Monitor compensation practices and performance appraisal systems for patterns of potential discrimination based on pregnancy, childbirth, or related medical conditions. Ensure that compensation practices and performance appraisals are based on employees' actual job performance and not on stereotypes about these conditions.
  • Review any light duty policies. Ensure light duty policies are structured so as to provide pregnant employees access to light duty equal to that provided to people with similar limitations on their ability to work.
  • Temporarily reassign job duties that employees are unable to perform because of pregnancy or related medical conditions if feasible.
  • Protect against unlawful harassment. Adopt and disseminate a strong anti-harassment policy that incorporates information about pregnancy-related harassment; periodically train employees and managers on the policy's contents and procedures; incorporate into the policy and training information about harassment of breastfeeding employees; vigorously enforce the anti-harassment policy.
  • Develop the potential of employees, supervisors, and executives without regard to pregnancy, childbirth, or related medical conditions.
  • Provide training to all workers, including those affected by pregnancy or related medical conditions, so all have the information necessary to perform their jobs well.
  • Ensure that employees are given equal opportunity to participate in complex or high-profile work assignments that will enhance their skills and experience and help them ascend to upper-level positions.
  • Provide employees with equal access to workplace networks to facilitate the development of professional relationships and the exchange of ideas and information.

Reasonable Accommodation

  • Have a process in place for expeditiously considering reasonable accommodation requests made by employees with pregnancy-related disabilities, and for granting accommodations where appropriate.
  • State explicitly in any written reasonable accommodation policy that reasonable accommodations may be available to individuals with temporary impairments, including impairments related to pregnancy.
  • Make any written reasonable accommodation procedures an employer may have widely available to all employees, and periodically remind employees that the employer will provide reasonable accommodations to employees with disabilities who need them, absent undue hardship.
  • Train managers to recognize requests for reasonable accommodation, to respond promptly to all requests, and to avoid assuming that pregnancy-related impairments are not disabilities.
  • Make sure that anyone designated to handle requests for reasonable accommodations knows that the definition of the term "disability" is broad and that employees requesting accommodations, including employees with pregnancy-related impairments, should not be required to submit more than reasonable documentation to establish that they have covered disabilities. Reasonable documentation means that the employer may require only the documentation needed to establish that a person has an ADA disability, and that the disability necessitates a reasonable accommodation. The focus of the process for determining an appropriate accommodation should be on an employee's work-related limitations and whether an accommodation could be provided, absent undue hardship, to assist the employee.
  • If a particular accommodation requested by an employee cannot be provided, explain why, and offer to discuss the possibility of providing an alternative accommodation.
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Door Open for Challenges to Required "Fair Share" Fees for Public Employee Unions

 

by Jack B. HarrisonJack B. Harrison

In addition to its Hobby Lobby decision, the Supreme Court issued another decision on the last day of its term that may have implications for unions and employers going forward.  In Harris v. Quinn, the Supreme Court was faced with the question of whether certain Illinois partial-public employees could be required to pay “fair share” fees when they elected not to join the public employees union.  While the Supreme Court’s decision in this case is narrow, it does lay the groundwork for future challenges to “fair share” fees for all public employees.

The plaintiffs in Harris were “personal assistants” who provided homecare services under the Illinois’ Home Services Program.  Under this program, eligible individuals may receive Medicaid funding for homecare services from a personal assistant.  Under the terms of this program, while the state pays the salary for the personal assistant, the individual who receives the care from the personal assistant is deemed to be the employer.  In 2003, the Illinois Legislature adopted a statute under which personal assistants were deemed to be “public employees” solely for the purpose of collective bargaining under the Illinois Public Labor Relations Act.  The statute specifically did not provide any benefits normally available to public employees to personal assistants.  Following the passage of the statute, the SEIU, the relevant public employees’ union, entered into a collective bargaining agreement with the state under which personal assistants that chose not to join the union were required to pay “fair share” fees.  These fees were automatically deducted from the personal assistants’ Medicaid payments.

In Harris, personal assistants alleged that the “fair share” fees were unconstitutional, arguing that the fees violated their First Amendment rights by requiring them to support a union against their wishes.  In addressing this issue, both the district court and the court of appeals rejected this First Amendment argument, relying primarily on the prior decision of the Supreme Court in Abood v. Detroit Board of Education, 431 U.S. 209 (1977). In Abood, the Supreme Court held that even where public employees choose not to join a union, they may still be required to pay “fair share” fees.

In Harris, the Supreme Court reversed the decision of the lower court, refusing to apply the reasoning of Abood to the personal assistants in this case.  Writing for the Court, Justice Alito noted that, in this case, the personal assistants at issue were not full-fledged public employees, but rather were deemed public employees solely for the purposes of collective bargaining.  The Court concluded that the “fair-share” fee requirement violated the personal assistants’ First Amendment rights, in that the state had not met its burden of showing that the fee requirement served a compelling government interest in the least restrictive manner.

Most importantly, however, the Court strongly criticized the reasoning underlying its prior decision in Abood.  While the Court did not overrule Abood, it certainly provided a framework for future challenges to “fair share” fees.  In dissent, Justice Kagan attempted to create a firewall against future challenges to the reasoning of Abood, pointing out how “deeply entrenched” the rule from Abood has become and noting that the Courts own “precedent about precedent makes it impossible for this Court to reverse that decision.”

Like its decision in Hobby Lobby, the Supreme Court’s decision in Harris, while intentionally narrow, opens the door to future challenges to required “fair share” fees in the public employee context.  It will be important for employers and unions, particularly those in the public sector, to continue to monitor this issue.

UPDATE | The State of Ohio Settles Worker's Comp Overpayment

 

by David J. SchmittDavid J. Schmitt

A lot can change in a few weeks. Only a matter of days ago, the State of Ohio appealed the San Allen litigation to the Ohio Supreme Court. If you have seen my earlier blog posts on this case, you may recall that pursuant to the trial court ruling, employers who paid Ohio Worker’s Compensation premiums between 2001 – 2008, and which were not group-rated, were found to be entitled to reimbursement for a portion of their premiums.

In the case of San Allen, Inc., et al, v. Stephen Buehrer, Administrator of the Ohio BWC, Cuyahoga County Court of Common Pleas, Case No. CV-07-644950, the plaintiffs consist of Ohio employers who paid workers compensation premiums during the indicated period, and which did not receive group-rated premium discounts. The lawsuit contended that the BWC’s premium discounts for group-rated employers were too steep and that the BWC overcharged other employers to make up the difference.

The plaintiffs initially requested close to $1.3 Billion in reimbursement for class members. In a decision issued December 28, 2012, Judge Richard McMonagle that the class was entitled to reimbursement in the amount of $860 Million Dollars.

Unsurprisingly, the Ohio BWC appealed the decision to the Cuyahoga County Court of Appeals.  That Court has upheld the lower court’s decision, and was unstinting in its criticism of the BWC, stating,  “Reduced to its irreducible essence, this appeal is about a cabal of Ohio Bureau of Workers’ Compensation bureaucrats and lobbyists for group sponsors who rigged workers’ compensation premium rates so that for employers who participated in the BWC’s group-rating plan, it was “heads we win” and for employers who did not participate in the group-rating plan, it was “tails you lose”.

The Court of Appeals also returned the case to the trial court for a recalculation of damages, based on the State’s assertion that some employers were being credited for years in which they were not actually class members. This led to a reduction in the award from $860 Million to $650 Million.  

Even after this reduction, the State appealed the case to the Ohio Supreme Court, but continued to negotiate with class counsel. Yesterday, a tentative settlement in the amount of $420 Million was announced. I describe this as “tentative” because the settlement must be approved by the trial court judge. Judge McMonagle has shown himself to be sympathetic to the plaintiff employers, and there is some chance, albeit a small one, that he may refuse to approve the settlement and tell the parties to negotiate further. Additionally, attorney’s fees will be deducted from the total, and those too must be approved by the judge.

Once approved, class counsel will be required to notify all class members of the settlement and the method by which they can submit their claim for reimbursement. While the formula is not yet known, it will undoubtedly be based on the amount of premiums paid and the number of years in which the company was a class member, i.e., was not group rated.

As developments continue to arise in this case, Cors & Bassett will provide further information and guidance to assist you. Please contact David Schmitt  at djs@corsbassett.com or by phone at 513-852-2587 if you would like to discuss this matter further.

Is the Affordable Care Act on the Ropes?

 

by Hans M. ZimmerHans M. Zimmer

In a somewhat surprising opinion issued by the federal Court of Appeals for the DC Circuit (Halbig v. Burwell), the court ruled that the federal government lacks the authority to provide subsidies on healthcare.gov to encourage persons currently without health insurance to buy insurance. The court based its decision on the language in the statute that limits subsidies to health insurance policies that can be purchased on exchanges run by state governments. At present, state-run exchanges are available in only 16 states and the District of Columbia. The remaining 36 states operate the exchange through healthcare.gov.

The plaintiff, Jacqueline Halbig, is a West Virginia resident who never had health insurance but also did not want to buy it. Under the Affordable Care Act (“ACA”), she would either have to buy insurance or pay the penalty imposed by that statute as the individual mandate. West Virginia is one of the 34 states that does not have its own exchange but relies on healthcare.gov, the federal exchange. The court ruled that the plain language of the statute limited subsidies to exchanges “established by the states” and as West Virginia had not established such an exchange, no subsidy could be granted. The effect of this interpretation is that not only does the individual mandate disappear in states that do not have their own exchange, but the employer mandate disappears along with it. The judges writing the opinion conceded that the effect of their ruling would be to drastically reduce the number of persons who would be able to gain coverage, but that it was not their job to write laws, only to interpret the law as written by Congress.

This opinion is directly contrary to an opinion issued by another federal circuit court of appeals the same day (King v. Burwell). That court heard the same arguments advanced in the DC Circuit but said that the language in the statute limiting subsidies to exchanges “established by the state” was ambiguous. As the language in the statute was ambiguous, the court relied instead on the regulation issued by the IRS, which permits the subsidies in “exchanges” and then goes on to define exchanges as marketplaces established either by the states or by the Department of Health and Human Services. The court viewed the regulation issued by IRS as a reasonable exercise of its regulatory discretion and upheld the subsidies.

The split between 2 federal circuits on an issue this crucial to the implementation of ACA likely means that the United States Supreme Court will again have to decide the future of ACA. The Obama administration already announced their decision to appeal earlier this afternoon.  In 2012, the Supreme Court generally upheld the validity of ACA in a very divided opinion with the majority ruling stating that ACA was a valid exercise of Congress’ power to impose taxes as opposed to an invalid limitation on the rights of individuals in the country to decide their own fate with respect to health insurance. It will be interesting to follow the course of this issue over the next year. Current numbers indicate that over 8,000,000 individuals in states where the only marketplace is healthcare.gov are subject to the individual mandate and the penalties imposed. These individuals would now be free from that mandate. In addition, in those same states, 250,000 firms with 57,000,000 employees would now be freed from the employer mandate that requires employers to offer “affordable” insurance to their employees. In contrast, only 5,000,000 individuals signed up for coverage in the 34 states relying on the federal exchange and are receiving the subsidy that was declared illegal by the DC Circuit.Given the number of persons involved on both sides of this issue, Supreme Court involvement appears likely.

DOL Proposes FMLA for Eligible Employees in Same Sex Marriages

 

by Jack B. HarrisonJack B. Harrison

Recently, the Department of Labor (“DOL”) issued a Notice of Proposed Rulemaking under which it stated its intentions to extend the protections of the Family and Medical Leave Act (“FMLA”) to all eligible employees in legal same-sex marriages regardless of the state in which they live.  In releasing the proposed rule change, the DOL described the purpose of this proposed rule change as follows:

The proposal would help ensure that all families will have the flexibility to deal with serious medical and family situations without fearing the threat of job loss. Secretary Perez is proposing this rule in light of the Supreme Court's decision in United States v. Windsor, in which the court struck down the Defense of Marriage Act provision that interpreted "marriage" and "spouse" to be limited to opposite-sex marriage for the purposes of federal law.

Under the proposed rule change, the regulatory definition of “spouse” would be changed to allow eligible employees in a legal same-sex marriage to take FMLA leave for his or her spouse or family member regardless of the state in which the employee resides. Under the current regulatory definition of "spouse," only same-sex spouses who reside in a state that recognizes same-sex marriage are able to take advantage of FMLA leave.  The proposed rule would define “spouse” for FMLA purposes as follows:

Spouse, as defined in the statute, means a husband or wife. For purposes of this definition, husband or wife refers to the other person with whom an individual entered into marriage as defined or recognized under State law for purposes of marriage in the State in which the marriage was entered into or, in the case of a marriage entered into outside of any State, if the marriage is valid in the place where entered into and could have been entered into in at least one State. This definition includes an individual in a same-sex or common law marriage that either (1) was entered into in a State that recognizes such marriages or, (2) if entered into outside of any State, is valid in the place where entered into and could have been entered into in at least one State.

Thus, under the proposed rule change, coverage under the FMLA would be based on the law of the place where the marriage was entered into (“state of celebration” as opposed to “state of residence”), which would allow legally married same-sex couples to be eligible for FMLA family leave rights regardless of whether the state in which they currently reside recognizes such marriages.

Under the process following the issuance of a Notice of Proposed Rulemaking, interested parties may submit comments on the proposed rule at www.regulations.gov.  Interested parties who wish to provide comments on the proposed rule must do so on or before August 11, 2014.

Employers, particularly those in states that do not currently recognize same-sex marriages, should closely follow the developments surrounding this proposed rule.  Assuming the rule is adopted, employers should be prepared to modify their leave policies to bring them in line with the new rule.  Cors & Bassett will continue to monitor developments related to this proposed rule and will provide updates as appropriate.

Does the Hobby Lobby Supreme Court Ruling Invite Future Challenges?

 

by Jack B. HarrisonJack B. Harrison

On the final day of the term, the United States Supreme Court issued its much anticipated decision in Burwell v. Hobby Lobby.  In Hobby Lobby, the Supreme Court ruled in favor of Hobby Lobby and two other entities, holding that closely held, for-profit entities who had objections to certain aspects of the birth control mandate imposed by the Affordable Care Act ("the ACA") based on religious beliefs could invoke the protections of the Religious Freedom Restoration Act (RFRA) to avoid complying with the mandate. 

Hobby Lobby involved three closely held companies, Hobby Lobby Stores, Inc., Conestoga Wood Specialties Corporation, and Mardel, Inc., all of whom sought exemption from the birth control mandate contained in the ACA.  In its decision, the Supreme Court held specifically that:

(a) for-profit, closely held corporate entities are "persons" authorized to bring claims under RFRA;

(b) the ACA's birth control coverage mandate with respect to the four specific forms of birth control at issue in the case placed a substantial burden on the religious beliefs of the entities seeking the exemption; and

(c) while agreeing with the government’s position that providing corporate employees free access to these four forms of birth control was a matter of compelling interest to the federal government, the ACA's coverage mandate was not the least restrictive means of achieving that goal.

Justice Ginsburg, joined in full by Justice Sotomayor, authored a very strong dissent in which she clearly articulated her disagreement with all three of these holdings by the majority.  Justices Breyer and Kagan also dissented, refusing to reach a conclusion as to whether for-profit corporations had standing to bring claims under RFRA, but joining in the remainder of Justice Ginsburg’s dissent.

While the decision is expressly limited to the specific birth control mandate of the ACA, the forms of birth control specifically objected to in the case, and the specific corporate structure (i.e. closely held, for-profit entities) before the Supreme Court in Hobby Lobby, it is likely that language in the decision will spawn litigation over religious objections to generally applicable federal laws, including non-discrimination laws. 

The majority stated in its opinion the following:

The principal dissent raises the possibility that discrimination in hiring, for example on the basis of race, might be cloaked as religious practice to escape legal sanction. Our decision today provides no such shield. The Government has a compelling interest in providing an equal opportunity to participate in the workforce without regard to race, and prohibitions on racial discrimination are precisely tailored to achieve that critical goal.

It can be argued that this statement by the Supreme Court should be read narrowly, applying only to federal statutes that prohibit discrimination based on race.  Presumably, those taking such a position would argue that because race based discrimination is specifically prohibited by the Constitution, federal statutes implementing the Constitutional prohibition are beyond the reach of RFRA.  Arguably, it would then follow that federal statutes prohibiting discrimination on other categories, such as gender or sexual orientation / gender identity would be subject to religious objections under RFRA.  It is unlikely that the Supreme Court meant for its language to be read so narrowly.  However, this language certainly opens the door for future challenges.

Prudent employers, particularly closely held, for-profit entities whose corporate documents and practices express strong religious beliefs, should review this decision and its implications for them.  However, such employers should continue to comply with all federal, state, and local laws prohibiting discrimination, giving consideration to the public relations problems that might be created by openly seeking to defy non-discrimination laws based on religious beliefs, no matter how strongly held they may be.

Legislation has already been introduced in the Congress to reverse the impact of this decision.  Introduced on July 9, 2014, the Protect Women’s Health from Corporate Interference Act of 2014 (H.R. 5051, S. 2578), specifically seeks to overturn the decision in Hobby Lobby.  According to the sponsors of this legislation, the “bill exempts federally mandated health services from RFRA while keeping in place the existing exemption for religious employers (e.g., houses of worship) and accommodation of religious non-profits who do not wish to provide contraceptives.”  The intent of this legislation is to “explicitly prohibit for-profit employers that maintain a group health plan for its employees from using religious beliefs to deny employees coverage of contraception or any other vital health service required by federal law.” 

Thus, employers should continue to monitor developments following Hobby Lobby, both in the courts and in the Congress.  Cors & Bassett will continue to provide updates as developments occur.

EEOC Signals a Continuing Assault on Employer Severance Agreements

 

by Jack B. HarrisonJack B. Harrison

In the past several months, the Equal Employment Opportunity Commission (EEOC) filed two lawsuits confirming the agency’s intent to continue to aggressively challenge severance agreements negotiated between an employer and employee.

The first of these cases, EEOC v. CVS Pharmacy Inc. was filed in February 2014 in the United States District Court for the Northern District of Illinois.  In this first suit, the EEOC alleged that the defendant had violated Title VII by conditioning its offer of severance benefits on the employee signing a severance agreement that, according to the EEOC, “deters the filing of charges and interferes with employees’ ability to communicate voluntarily” with the EEOC.  According to the EEOC’s complaint, the offending provisions in the severance agreement included a requirement that the employee notify the company if he or she became part of an administrative investigation, a non-disparagement clause, a non-disclosure of confidential information clause, a release of all claims by the employee, and a covenant not to sue the company.  As should be obvious to most employers, many of these types of clauses are standard provisions in many severance agreements.

The EEOC filed its second suit challenging the provisions of a severance agreement in April 2014 in the United States District Court for the District of Colorado.  In this suit, EEOC v. CollegeAmerica Denver, the EEOC alleged that the severance agreement used by the defendant, a private college, chilled and interfered with the employee’s rights to pursue age discrimination claims under the Age Discrimination in Employment Act (ADEA).

In CollegeAmerica, the director of the Wyoming campus of CollegeAmerica, Debbi Potts, resigned from her position in July 2012.  In September 2012, Potts signed a separation agreement that included a provision that she would “refrain from personally (or through the use of any third-party) contacting any governmental or regulatory agency with the purpose of filing any complaint or grievance that shall bring harm to CollegeAmerica” and also included a non-disparagement provision.  Potts then filed a charge of discrimination against CollegeAmerica with the EEOC. 

During the course of the EEOC’s investigation of Potts’ claim, CollegeAmerica produced a form severance agreement that it had used for several years.  This form agreement included provisions under which an employee would release all claims alleging discrimination and/or claims arising under Title VII, would agree not to assist in pursuit of claims against the company, unless compelled by law, and would agree that no lawsuit or administrative action had been filed against the company in the employee’s name.  In its complaint filed in this case, the EEOC alleges that the severance agreements used by CollegeAmerica include “provisions that chill and deter the filing of charges of discrimination and may interfere with employees’ ability to communicate voluntarily with the EEOC . . . and interfere with employees’ protected right to file charges or participate in investigations or proceedings conducted by the Commission.”

Taken together, these two suits serve as a signal to employers that the EEOC plans to continue its review of and challenge to severance agreements that include provisions such as those outlined in these two cases.  Given that such provisions are standard in many severance agreements used by employers, it becomes important that prudent employers review their standard severance agreements to determine whether they will withstand a challenge by the EEOC.  The provisions in these agreements should be narrowly tailored to provide the maximum protection possible for the employer, while, at the same time, not intruding on the employee’s rights under Title VII and other discrimination statutes.

Defamation Verdict for Former Ben-Gal Cheerleader | Overturned

 

By Jack B. HarrisonJack B. Harrison

In a decision of importance to both internet website operators and free speech advocates, on June 16, 2014, the United States Court of Appeals issued its opinion in the highly watched case of Jones v. Dirty World Entertainment.  In its decision the Court of Appeals reversed d decision by the lower court that had held that a website and its editor were not entitled to immunity under the Communications Decency Act and were, therefore, potentially liable for defamatory posts submitted by the website’s users.

In 2009, the website TheDirty.com posted a story stating as fact the sexual exploits of Sarah Jones, a high school teacher and Cincinnati Bengals cheerleader, involving Cincinnati Bengals players.  A subsequent post asserted that Jones had engaged in sexual relations with her husband in her classroom and that she had STDs.  Both posts were submitted to the website anonymously by readers of the website.  However, the publisher of TheDirty.com, Nik Richie, added his own comment at the bottom of the second post, stating: “Why are all high school teachers freaks in the sack? – nik.”

Jones then filed a lawsuit against Richie and the site, claiming the two posts alleging she had STDs were defamatory.  However, Jones did not sue the individual who actually wrote the posts.  Rather she sued the website which posted the anonymous comments and the publisher of the website.

The Court of Appeals described the procedure history of the case as follows:

In response to the posts appearing on www.TheDirty.com, Jones brought an action in federal district court alleging state tort claims of defamation, libel per se, false light, and intentional inflection of emotional distress. Richie and Dirty World claimed that § 230(c)(1) [of the Communications Decency Act of 1996] barred these claims. The district court rejected this argument and denied defendants-appellants’ motion to dismiss, motion for summary judgment, motion to revise judgment, and motion for judgment as a matter of law. The district court also denied Richie’s and Dirty World’s motion for leave to file an interlocutory appeal. The case was submitted to a jury, twice. The first trial ended in a mistrial upon a joint motion. The second trial resulted in a verdict in favor of Jones for $38,000 in compensatory damages and $300,000 in punitive damages. On appeal, Richie and Dirty World maintain that § 230(c)(1) barred Jones’s claims.

Thus, the issue before the Court of Appeals was whether or not the lower court was correct in holding that TheDirty.com and its publisher were not immune from suit for the publication of these stories because, according to the lower court, they “encouraged” the publication.

Following extensive briefing by the parties, as well as the filing of a large number of amicus briefs on behalf of website operators and free speech advocates, the Court of Appeals reversed the decision of the lower court and set aside the jury verdict.  In reaching this conclusion, the Court of Appeals adopted the “material contribution” test for determining whether or not a website operator or publisher is immune from suit under the Communications Decency Act for content that appears on its website.  Under this test, a court is to examine whether or not the website operator or publisher materially contributed to the content that is allegedly defamatory.  In applying this test to the facts of this case, the Court of Appeals stated the following:

[T]he [district] court concluded that those comments [by Richie] “effectively ratified and adopted the defamatory third-party post” and thereby developed the defamatory statements, [and] thus rul[ed] that the CDA did not bar Jones’s claims. Jones IV, 965 F. Supp. 2d at 823 (“Defendants are mistaken, for the salient point about Richie’s tagline is not that it was defamatory itself and thus outside CDA immunity, but rather that it effectively ratified and adopted the defamatory third-party post.”). The district court’s adoption or ratification test, however, is inconsistent with the material contribution standard of “development” [under the CDA] and, if established, would undermine the CDA. Therefore, Dirty World and Richie did not develop the statements forming the basis of Jones’s tort claims and accordingly are not information content providers as to them.

Because (1) the defendants are interactive service providers, (2) the statements at issue were provided by another information content provider, and (3) Jones’s claim seeks to treat the defendants as a publisher or speaker of those statements, the CDA bars Jones’s claims. See Universal Commc’n Sys., 478 F.3d at 418. Given the role that the CDA plays in an open and robust internet by preventing the speech-chilling threat of the heckler’s veto, we point out that determinations of immunity under the CDA should be resolved at an earlier stage of litigation.  See Nemet, 591 F.3d at 254 (“[I]mmunity is an immunity from suit rather than a mere defense to liability [and] is effectively lost if a case is erroneously permitted to go to trial.”).

In its opinion, the Court of Appeals affirms the basic value user-submitted speech to internet websites, even where such speech is critical and, arguably, defamatory.  As the Court of Appeals states in its opinion:

Some of this content will be unwelcome to others—e.g., unfavorable reviews of consumer products and services, allegations of price gouging, complaints of fraud on consumers, reports of bed bugs, collections of cease-and-desist notices relating to online speech….Under an encouragement test of development, these websites would lose the immunity under the CDA and be subject to hecklers’ suits aimed at the publisher.

The Court of Appeals does not conclude, of course, that there could be no liability for allegedly defamatory speech that appears on such a website.  Rather, the appropriate target of such a lawsuit, under the opinion issued by the Court of Appeals, would appear to be the actual author of the statements.

UPDATE | Ohio Employers Are Entitled to Worker's Compensation Premium Reimbursement

 

by David J. SchmittDavid J. Schmitt

Early last year, I blogged about the trial court’s decision in the San Allen v. Ohio Bureau of Workers’ Compensation case.  An update is now clearly in order.

Pursuant to the trial court ruling, employers who paid Ohio Worker’s Compensation premiums between 2001 – 2008, and which were not group-rated, are entitled to reimbursement for a portion of their premiums.

In the case of San Allen, Inc., et al, v. Stephen Buehrer, Administrator of the Ohio BWC, Cuyahoga County Court of Common Pleas, Case No. CV-07-644950, the plaintiffs consist of Ohio employers who paid workers compensation premiums during the indicated period, and which did not receive group-rated premium discounts. The lawsuit contended that the BWC’s premium discounts for group-rated employers were too steep and that the BWC overcharged other employers to make up the difference.

The case was granted class-action status meaning that any employer that paid premiums to the BWC on a nongroup-rated basis during any one or more of the policy years in question is automatically part of the class unless it affirmatively opted-out.

The plaintiffs initially requested close to $1.3 Billion in reimbursement for class members. In a decision issued December 28, 2012, Judge Richard McMonagle determined that the BWC did indeed overcharge the plaintiff employers and that the class is entitled to reimbursement in the amount of $860 Million Dollars.

Unsurprisingly, the Ohio BWC appealed the decision to the Cuyahoga County Court of Appeals.  After several months of waiting, the Court has upheld the lower court’s decision, meaning that the BWC is still on the hook for $860 Million Dollars. The court’s written opinion was particularly harsh. In the very first sentence, the Court stated, “Reduced to its irreducible essence, this appeal is about a cabal of Ohio Bureau of Workers’ Compensation bureaucrats and lobbyists for group sponsors who rigged workers’ compensation premium rates so that for employers who participated in the BWC’s group-rating plan, it was “heads we win” and for employers who did not participate in the group-rating plan, it was “tails you lose”.

The Court of Appeals also returned the case to the trial court for a recalculation of damages, including the over $2Million Dollars per month in interest on the original verdict that has been piling up during the pendency of the appeal.

The BWC stated that it is disappointed in the decision and is reviewing its options. These may include appealing the case to the Ohio Supreme Court. If that were to occur, it will  likely be another year at least before any distribution would be made to class members.

On the other hand, the State may decide that it is time to settle. The BWC can afford it. The agency has over $8 Billion in its surplus fund, and has had the judgment amount in escrow for many months.

Regardless of whether it is a class member, all Ohio employers should continue to follow this case. Class members will naturally be interested in how much reimbursement they may be entitled to. Non-class members may still be impacted because if the BWC’s appeal fails and it has to pay this judgment, it may have to raise premiums in order to recoup some or all of its losses.

As developments continue to arise in this case, Cors & Bassett will provide further information and guidance to assist you. Please contact David Schmitt  at djs@corsbassett.com or by phone at 513-852-2587 if you would like to discuss this matter further.

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