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Monthly Archives

July 2010

WILL YOUR CGL POLICY COVER YOUR LIABILITY FOR SOMEONE ELSE’S INJURY?

By Construction Insurance Bulletin | No Comments

Two work crews building a new home are taking a break. One of the employees of the plumbing contractor and a carpenter get into a little verbal sparring. It starts out good-natured but turns heated, and the plumber picks up a metal nut and flips it in the other man’s direction. At that moment, the carpenter stands up directly in the nut’s path. It strikes him in the eye; the ensuing injury is so severe that he loses part of the sight in that eye. He sues the plumbing contractor and the employee who threw the object. Employer and employee both look for coverage and defense under the plumber’s Commercial General Liability (CGL) insurance policy. Although the policy will likely cover the employer, coverage for the employee is not certain.

A CGL policy normally does not cover a person (an “insured”) for liability for injuries or damages “expected or intended from the standpoint of the insured.” If the insurance company concludes that the plumber’s employee either expected or intended to injure the carpenter with the thrown nut, it will not cover either his liability or defense costs. As R. Steven Rawls and Rebecca C. Appelbaum explained in a recent article, when courts have interpreted this policy language, they tend to agree on the meaning of the word “intended” but differ on the meaning of “expected.” Courts in various states have approached the meaning of “expected” in different ways.

  • Expected and intended mean the same thing. Some courts have ruled that the two words have the same meaning within the insurance policy’s context. If the plumber expected the carpenter to get hurt, he must have intended it, and vice versa.
  • What did the insured think was more likely to occur? A Texas court ruled that a result, such as an injury, is expected if the insured considered its occurrence to be more likely to happen than not to happen. The same court said that a finding that the insured intended an injury requires more proof than does a finding that an injury was expected.
  • If the insured committed a reckless act, does that automatically mean he expected an injury? Another Texas court did not believe so. It raised the possibility that someone, while aware of the risks of a particular action, might believe that the chances of something going wrong are low. An Indiana court also said that recklessness alone is not enough to prove that an insured expected an injury. However, an Illinois court said that some actions are so inherently dangerous (such as firing a gun) that the only possible conclusion is that the insured expected the injury.
  • Two-part tests. Some courts have used a two-part test to determine expectation. A Michigan court used a test that asked, first, did the insured foresee the injury that occurred? If not, was the likelihood of the injury so overwhelming and obvious as to make unbelievable the insured’s claim that he didn’t foresee it? A Delaware court said that, where the insured clearly did not intend to injure the other person and where he should not necessarily have known that an injury would occur, the policy would cover him.

Construction sites are dangerous places; injuries can occur either through horseplay or in the normal course of work. Contractors cannot emphasize too strongly to their employees the necessity of common sense and care on the job site. If an employee injures someone else on the site, his financial well-being could depend on a court deciding whether he should have expected the injury. That’s a chance no one should want to take.

FORM OF THE MONTH:

By Your Employee Matters | No Comments

EDUCATION REIMBURSEMENT AGREEMENT
(PDF)

Training is the lifeblood of many companies today; everything from extensive on-boarding to paying for expensive MBA programs. To protect from an employee getting educated and then immediately leaving, many companies use a Reimbursement Agreement such as this one. One caveat: Make sure that your state law and contract allows you to offset any monies owed from a final paycheck. Some states, such as California, do not allow a “self-help” remedy. You would have to go to court to enforce the terms of the contract.

FMLA CLARIFICATION ENSURES ALL CAREGIVERS THE RIGHT TO FAMILY LEAVE

By Your Employee Matters | No Comments

All families, no matter what they look like, are protected by the Family and Medical Leave Act (FMLA). “Workplaces have changed over the last ten years and how we view families has evolved as well,” said DOL Secretary Solis. That message was solidified when the department announced this week that an employee who assumes the role of caregiving for a child is entitled family leave regardless of their legal or biological relationship to the child. This clarification of the law is a victory for many non-traditional families, including families in the lesbian, gay, bisexual, and transgender community, who have often been denied family leave. The FMLA allows workers to take up to 12 weeks of unpaid leave during any 12-month period to care for loved ones or themselves.
Read the News Release here.

Read the Administrator’s Interpretation here.

CLAMPING DOWN ON CREDIT HISTORIES

By Your Employee Matters | No Comments

For many years, we’ve recommended that employers conduct credit histories on all job applicants and post-hire in specific categories. The fact is, someone with a poor credit history is a greater risk than someone who has a good record. However, to protect workers impacted by the recession, Oregon, Washington, and other states have begun passing laws that narrow the scope of these inquiries. The EEOC is also raising numerous concerns in this area. The Oregon statute limits the inquiry to cases in which a person’s credit is “substantially job-related,” which is defined as:

  • An essential function of the position at issue requires access to financial information
    not customarily provided in a retail transaction that is not a loan or extension of credit. Financial information customarily provided in a retail transaction includes information related to the exchange of cash, checks, and credit or debit card numbers.
  • The position at issue is one for which an employer is required to obtain credit history
    as a condition of obtaining insurance or a surety or fidelity bond.

Click here to see the Oregon statute.

Here’s what the EEOC says:

“Pre-Employment Inquiries and Credit Rating or Economic Status
“Inquiry into an applicant’s current or past assets, liabilities, or credit rating, including bankruptcy or garnishment, refusal or cancellation of bonding, car ownership, rental or ownership of a house, length of residence at an address, charge accounts, furniture ownership, or bank accounts generally should be avoided because they tend to impact more adversely on minorities and females. Exceptions exist if the employer can show that such information is essential to the particular job in question.”

Here’s some data gathered in an effort to encourage these regulations.
Here’s a suit filed by the EEOC. Since at least 2001, the EEOC said, Freeman has rejected job applicants based on their credit history and if they have had one or more of various types of criminal charges or convictions. The EEOC lawsuit charged that this practice has an unlawful discriminatory impact because of race, national origin, and sex, and is neither job-related nor justified by business necessity.
Click here to see the FTC site on credit rating.

The Bottom Line: Asking for credit backgrounds poses risks for employee and employer alike. Make sure that you work with a company such as www.globalhrresearch.com that helps keep you abreast of the rapidly changing legal requirements in this area.

FAILURE TO INVESTIGATE DOES NOT GIVE RISE TO STAND-ALONE RETALIATION CLAIM

By Your Employee Matters | No Comments

The U.S. Court of Appeals for the Second Circuit (covering Connecticut, New York, and Vermont) has ruled that an employer’s deliberate failure to investigate a complaint of discrimination does not constitute a stand-alone act of retaliation. In Fincher v. Depository Trust and Cleaning Corp., the plaintiff alleged that she complained to a human resources manager about what she believed was racially biased treatment toward black employees in her department. The plaintiff claimed that the human resources manager told her that he was not going to open up an investigation of her claim of race discrimination. The plaintiff resigned and filed claims under federal, state, and local laws for retaliation.

The Court of Appeals affirmed summary judgment in favor of the employer, finding that the employer’s alleged failure to investigate discrimination was not in itself a “materially adverse action” which could subject the employer to retaliation liability. The court noted that under the seminal case Burlington N. & Santa Fe Ry. Co. v. White, “a plaintiff must show that a reasonable employee would have found the challenged action materially adverse, which in this context means it well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.” The court held that an employee’s knowledge that her employer has declined to investigate her complaint does not ordinarily constitute a threat of further harm.

Above articles courtesy of Worklaw® Network firm Shawe Rosenthal.

THE NLRA AND FEDERAL CONTRACTORS

By Your Employee Matters | No Comments

The U.S. Department of Labor (DOL) has issued a final rule that requires federal contractors and subcontractors to post a notice advising employees of their rights under the National Labor Relations Act (NLRA), the primary law governing relations between unions and employers in the private sector. This notice advises employees of their rights under the NLRA to form, join and assist a union, and to bargain collectively with their employer. It also lists examples of illegal conduct by employers and unions, and provides contact information to the National Labor Relations Board. Federal contractors and subcontractors must post the prescribed notice conspicuously in plants and offices where employees covered by the NLRA perform contract-related activity, including all places where notices to employees are customarily posted, both physically and electronically. Employers that fail to comply with these notice requirements may be subject to sanctions, including suspension or cancellation of the contract and debarring them from future federal contracts. For more information and to obtain copies of the prescribed notice, visit the DOL Web site.

FAILURE TO PERFORM ELIMINATES RIGHT TO FMLA LEAVE

By Your Employee Matters | No Comments

The U.S. Court of Appeals for the Eleventh Circuit (covering Alabama, Florida, and Georgia) has held that an employee does not have the absolute right to commence FMLA leave. In Krutzig v. Pulte Home Corp., the plaintiff, who at the time was on a performance improvement plan, requested FMLA so that she could have surgery on her foot. On the same day that the plaintiff requested leave, a customer filed a complaint with a company vice-president against the plaintiff. The next day, Pulte Home Corp. terminated the plaintiff, based on her failure to address the issues raised in her performance improvement plan and the complaint made by the customer. The plaintiff sued, claiming that her termination was in retaliation for taking FMLA leave and that her employer interfered with her right to take leave under the FMLA. However, the company vice-president who terminated the plaintiff testified that he was not aware that the plaintiff had requested leave at the time he made his decision. Based on these facts, the trial court granted summary judgment in favor of the employer and dismissed the plaintiff’s lawsuit.

The Court of Appeals affirmed the trial court’s decision, holding that “[a]s with the FMLA right to reinstatement, the FMLA right to non-interference with the commencement of leave is not absolute, and if dismissal would have occurred regardless of the request for FMLA, an employee may be dismissed, preventing her from exercising her right to leave or reinstatement.” The Eleventh Circuit joined the Sixth, Eighth, and Tenth Circuits in holding that “an employee who requests FMLA leave has no greater protection against her employment being terminated for reasons unrelated to an FMLA request than she did before submitting her request.”

PRIVACY RIGHTS IN PERSONAL E-MAIL

By Your Employee Matters | No Comments

In Stengart v. Loving Care, the New Jersey Supreme Court held that an employee had a reasonable expectation of privacy in e-mails she sent to her attorney via a personal, password protected e-mail account on a company computer. As part of her employment, Loving Care issued Ms. Stengart a laptop computer. Loving Care’s electronic communications policy stated that the company had a right to review and access all material kept on its electronic media systems at any time, with or without warning. The policy also allowed employees to use its servers and computers for occasional personal email or other use.

Ms. Stengart used her company-issued laptop computer to access her personal Yahoo! E-mail account and to correspond with an attorney regarding her allegations of harassment and discrimination by Loving Care. She eventually resigned her position and sued Loving Care. The company hired a computer specialist to retrieve files from Ms. Stengart’s laptop. The specialist found her correspondence with her attorney, which the laptop had automatically saved in a “cache” folder of temporary Internet files. Loving Care argued that Ms. Stengart’s e-mails were not privileged or confidential because she had no expectation of privacy in communications on its media systems.

The New Jersey Supreme Court disagreed, holding that Loving Care’s communications policy was too broad to encompass private, password protected e-mail communications, especially where the content was attorney-client communication. Loving Care’s failure to include personal, password protected e-mail in its electronic communications policy specifically, as well as its allowance of occasional personal use created a reasonable expectation of privacy. Although recognizing a company’s ability to enact policies that protect its assets, reputation, and productivity, and to ensure compliance with company policy, the court held that Loving Care had no legitimate purpose in reviewing the content of attorney-client communication.

Employer Tip: Although this is a “narrow” decision that applies only in New Jersey to communication with counsel, it sends a clear warning to all employers about diving too deeply into employee e-mails, etc. Employers should also heed a warning that they “specifically include personal, password protected e-mail in its electronic communications policy,” and beware of any “allowance of occasional personal use creating a reasonable expectation of privacy.”
Article courtesy of Pettit Kohn Ingrassia & Lutz.

HEALTHCARE REFORM CONCERNS

By Your Employee Matters | No Comments

In their recent Webinar on Healthcare Reform, attorneys Doug Seaton and Emily Ruhsam focus on nine key changes that take effect on January 1, 2011 (for calendar year health plans):

  1. Non-grandfathered plans must provide for certain internal appeals procedures (including an external review process).
  2. Non-grandfathered plans must cover certain preventative services (i.e., immunization and infant screenings) without cost sharing.
  3. Non-grandfathered, fully insured plans must undergo non-discrimination testing (currently a requirement for self-insured plans only). This is similar to the top-heavy discrimination testing for 401(k) plans.
  4. Plans that offer dependent coverage must offer coverage until age 26 (grandfathered plans must cover such dependents only if the dependent is not eligible for other employer-sponsored coverage).
  5. Prohibits pre-existing condition limitations for children under 19.
  6. Abolishes lifetime limits on minimum essential benefits.
  7. Prohibits “unreasonable” annual limits on minimum essential benefits.
  8. Prohibits recession (cancellation) of participants.
  9. Prohibits reimbursement of over-the-counter medications (without a physician prescription through a Health Flexible Spending Account, Health Reimbursement Account, Health Savings Account, or Archer Medical Savings Account).

HR That Works members can watch the Webinar and read the complete report on HR That Works.