Monday, April 1, 2019
In a remarkable case just decided by the Tennessee Supreme Court, Sandoval v. Williamson, the Court concluded that a provision in the Tennessee Workers’ Compensation Act, “which does not allow for additional [partial] benefits . . . for any employee who is not eligible or authorized to work in the United States” is not preempted by federal immigration law.
The facts are straightforward. An acknowledged undocumented worker, Sandoval, suffered an injury while working for his employer, and the parties settled a permanent partial disability claim under Tenn. Code. § 50-6-207(3)(A) (although the details of the settlement are not reported, the scope of indemnity liability is 2/3 of the employee’s pre-injury average weekly wage for the period of compensation [impairment rating times 450 weeks]). However, Sandoval “failed to return to work” at the end of the initial compensation period and under § 50-6-207(3)(B) filed for additional benefits to which he was arguably entitled (under an all-too-familiar but bewildering extended partial benefit formula – a complaint for another time). But, as mentioned above, the benefit “extension” does not apply “to injuries sustained by an employee who is not eligible or authorized to work in the United States under federal immigration laws.” § 50-6-207(3)(F).
There are a couple of odd features to this case/statute. First, it appears that under the statute an undocumented worker is eligible for a partial benefit the statute calls an “original award,” (and maybe for a total benefit, too), but an undocumented worker—even the same worker—is not eligible for “increased benefits.” Now it may be the drafters had in mind a structure in which the original injury (being the product of already unlawfully-performed work that is in effect a fait accompli) should be recognized; but that subsequent benefit eligibility tacitly condones ongoing unlawful presence. The problem from a policy standpoint is that the chosen structure over the long term simply creates cheaper workers’ compensation claims and a corresponding incentive for employers to hire undocumented workers. (Breyer’s dissent in Hoffman Plastic rings just as true to me now as it did when I first read it). I also think the statutory structure sets up an interesting equal protection problem. Imagine two similarly situated injured workers (same injuries & etc.), one lawfully-present and one not. The lawfully-present worker receives an original award and increased benefits. The undocumented worker receives only the original award. As a state, if you want to exclude all undocumented workers from receipt any receipt of benefits, that may or may not be constitutionally permissible (even if demonstrably bad policy—the costs will simply shift somewhere else), but can you really constitutionally provide part of a benefit to one classification of worker without some explanation other than “we’re trying to comply with federal immigration policy”?
Which I imagine is why the claimant was placed in the unusual position of having to argue “offensively” with respect to preemption. Usually, it is insurance carriers and employers arguing that a state’s policy of permitting compensation of undocumented workers is preempted by federal immigration policy. The claimant in such cases is defending the state’s allowance of compensation. Here, the claimant argued that a state’s decision not permitting compensation of undocumented workers was preempted by federal immigration policy. I think Tennessee’s exclusionary policy is—I’ll be nice—ill-advised. And it may even provide some creative plaintiff/claimant with an interesting equal protection argument (personally, I’d file a negligence suit in connection with an employee hurt in the workplace by arguable employer negligence yet denied the “increased benefit”). But I’m ultimately pleased to see the Tennessee Supreme Court join the overwhelming weight of national authority in holding that federal immigration policy does not preempt state workers’ compensation law. In the long run, that view will be (I am convinced and delighted to say) more protective of injured undocumented workers (in the name of simple justice) and of state workers’ compensation autonomy, an autonomy I continue to support in light of the overall reality of federal policy vacuums that I doubt I’ll outlive.
Michael C. Duff
Saturday, March 30, 2019
As the old saying goes, a person is capable of not understanding a great deal when his or her paycheck is caught up in the not understanding. So I fully appreciate why many have difficulty understanding that compulsory arbitration of workers’ compensation claims could be required at any time by any employer in the United States. But it is a fact. An employer could simply say, “as a condition of employment you agree to have any workers’ compensation claim resolved in arbitration.” If you refuse to sign such an agreement, you are not hired. Employment at will principles hold that an employer can refuse to hire anyone for a good reason, a bad reason, or no reason at all. Any law that any state enacted regulating the content of or circumstances surrounding the arbitration agreement is preempted. (See below)
There is good news afoot, however, from the perspective of state-based workers’ compensation systems. A number of states, in the wake of #MeToo, have been enacting laws in opposition to, among other things, secret arbitration awards required by arbitration agreements. (Private employers have been implementing similar restrictions, but I don’t take that especially seriously since private policies can be changed the instant an issue leaves the public spotlight). An obscure portion of the tax code—the so-called “Harvey Weinstein” provision—now prevents employers from taking sexual harassment allegation costs as a tax deduction if they compel nondisclosure as a condition of a sexual harassment settlement. Aside from this kind of “bold” policy move, I’m most interested in state laws that set up a direct challenge to the Federal Arbitration Act. To repeat myself, any state law dictating the content of an arbitration agreement is almost certainly prohibited by the FAA.
I’d like to focus on the just passed New Jersey law. It provides the following:
- A provision in any employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment shall be deemed against public policy and unenforceable
- No right or remedy under the [NJ] “Law Against Discrimination,” or any other statute or case law shall be prospectively waived
- Collective bargaining agreements are exempted
- Any employment contract or settlement agreement concealing details relating to a claim of discrimination, retaliation, or harassment (NDAs) are against public policy and unenforceable against a current or former employee who is a party to the contract or settlement
- But if the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable, then the NDA is also be unenforceable against the employer
- This law is not to be construed to prohibit an employer from requiring an employee to sign a “non-compete” or “proprietary secrets” agreement
- A person attempting to enforce a provision deemed against public policy and unenforceable under this law shall be liable for the employee’s reasonable attorney fees and costs
- No person may take retaliatory action (failure to hire, discharge, suspension, demotion, discrimination) against a person, on grounds that the person does not enter into an agreement that contains a provision deemed against public policy unenforceable under the law
- All state law tort remedies are available to prevailing plaintiffs, who also are entitled to attorneys, fees
What is most interesting about this law is that the heart of it is almost certainly "obstacle preempted" by the FAA. Proponents of the state law will note that the NJ language does not specifically reference arbitration. But those proponents must not (fully) realize that Justice Elena Kagan scuttled such arguments in the Kindred Nursing Centers case:
The FAA thus preempts any state rule discriminating on its face against arbitration—for example, a “law prohibit[ing] outright the arbitration of a particular type of claim.” . . . And not only that: The Act also displaces any rule that covertly accomplishes the same objective by disfavoring contracts that (oh so coincidentally) have the defining features of arbitration agreements.
The first and second bullets of the NJ law are obviously (at least to my eyes) not long for this world, but what about the fourth?—“contracts” requiring NDAs (non-disclosure agreements) are against public policy and unenforceable against a current or former employee. Proponents doubtless say that an NDA prohibition does not touch the substance of the arbitration agreement, but rather the dissemination of its outcome. But what the provision really says is that if the parties’ arbitration agreement contains an NDA it is unenforceable; it is a nullity. The conditions precedent for entering into an arbitration agreement are dictated by a state. Again from Justice Kagan:
[T]he Act cares not only about the ‘enforce[ment]’ of arbitration agreements, but also about their initial ‘valid[ity]’—that is, about what it takes to enter into them. Or said otherwise: A rule selectively finding arbitration contracts invalid because improperly formed fares no better under the Act than a rule selectively refusing to enforce those agreements once properly made.
So why even pass dead-on-arrival laws of this type? I think it is state-level signalling -- it is ultimately a message to Congress. It is all well and good, this signal may be communicating, to pass a #MeToo bill applicable only to Congress (some are confused on the limited scope of this law which is applicable only to federal legislative branch employees), you’d better also get moving on “national fix” legislation (see proposals here, here, and here). But I would also ask why arbitration is unjust (and obviously not voluntary for most employees) only with respect to sexual harassment claims. What about other forms of gender discrimination (both under federal and state law), racial discrimination (both under federal and state law), age discrimination, disability discrimination, wage and hour claims (state and federal), and—oh yeah, workers’ compensation claims—the arbitration frontier we haven’t quite gotten to yet? Will the signal work? I don't know. What I do know is that many billable attorney hours will be racked up drafting motions to hold state law employment cases in abeyance and to compel arbitration.
Michael C. Duff
Friday, March 29, 2019
Walmart and Amazon are the Top Two Employers in the U.S. -- Good News for Injured Workers or More of the Re-Dangerous?
According to a new Wall Street 24/7 study, Walmart employs 1.5 million Americans, more than any other employer in the United States. Amazon comes in second at 400,000 employees. Walmart is the largest private sector employer in my home state of Wyoming and, curiously, is exempted from the state workers' compensation system. I note in passing that "Christie Walton, the daughter-in-law of Walmart founder Sam Walton, is a longtime Jackson resident. Her son Lukas Walton also calls Jackson Hole home and is an heir to the family fortune, with an estimated net worth approaching $16 billion." Wyoming is a de facto opt-out state for non-extrahazardous employers (as opportunistically defined by the Wyoming legislature) and, as local claimants' attorneys will attest, this is not good news for injured workers. If you are injured at work in a Walmart warehouse in Wyoming your remedy is limited to an ERISA governed "private" plan of the type that made national news a few years ago in Oklahoma. In short, you recover for a work injury what the company says you will recover (a sum with which you will fictively be said to have "agreed"), unmoored from the state workers' compensation benefit floor. My narrow state concerns aside, Walmart as lead employer brings me little comfort considering the matter from a national perspective.
As for Amazon, consider this excerpt from a December 2018 piece in EHS Today:
Amazon workers suffer injuries – and sometimes lose their lives – in a work environment with a relentless demand to fill orders and close monitoring of employee actions,” National COSH stated.
Since 2013, the following seven workers were killed in Amazon warehouses:
- Jeff Lockhart, 29, a temporary employee, found collapsed and dead from a cardiac event after an overnight shift at an Amazon warehouse in Chester, VA on Jan. 19, 2013.
- Roland Smith, 57, a temporary employee, was killed after being dragged and crushed by a conveyor belt at an Amazon warehouse in Avenel, N.J. on Dec. 4, 2013. OSHA cited five companies for serious violations, including the contractor responsible for operating the facility for Amazon – Genco – and four temporary staffing agencies.
- Jody Rhoads, 52, was crushed and pinned to death by a pallet loader at an Amazon warehouse in Carlisle, Pa., on June 1, 2014. (This is the same facility where Shoemaker was killed in September 2017).
- A worker for a company from whom Amazon was renting forklifts was crushed to death by one at an Amazon warehouse in Fernley, Nev., on Nov. 4, 2014. According to news reports, he was loading the forklift onto a flatbed truck when it began to roll forward. He tried to stop it but the forklift fell on him.
- Devan Michael Shoemaker, age 28, was killed on Sept. 19, 2017 when he was run over by a truck at an Amazon warehouse in Carlisle, Pa.
- Phillip Terry, 59, was killed on Sept. 24, 2017, when his head was crushed by a forklift at an Amazon warehouse in Plainfield, Ind.
- Four weeks later, on October 23, Karla Kay Arnold, 50, died from multiple injuries after she was hit by a sports utility vehicle in the parking lot of an Amazon warehouse in Monee, Ill.
I want to repeat some commentary from my blog entry of March 26, 2017 in response to the argument that work is becoming safer. In short, I argued that although work was becoming safer, it could easily become dangerous again, or "re-dangerous.":
Leaving all that to one side, however, I wanted to say a word about the predictive power of injury models generally. President Trump’s proposed budget calls for a cut of $2.5 billion at the Department of Labor. One need not be a soothsayer to understand that OSHA, SSI, and Medicaid (among other programs) are on the verge of being pared down to virtual non-existence. I am similarly unenthusiastic concerning all federal programs dealing with workplace safety. Let us speak plainly. American manufacturing left the country to avoid regulation and unionized labor costs. As private sector union density approaches 6%, and safety regulations evaporate, it is not so hard to imagine an American workplace that is “re-dangerous.” Cars were no doubt being made dangerously in China, and if their manufacture is re-shored I should not be surprised to rediscover dangerous conditions. No doubt, robots and the like may improve the situation. But as last Friday’s Bloomberg piece—Inside Alabama’s Auto Jobs Boom: Cheap Wages, Little Training, Crushed Limbs—made abundantly clear, models of future injury rates will have to take into account the re-dangerous.
Michael C. Duff
Wednesday, March 27, 2019
As I have been arguing for years, the Gig Economy is not the exception, it is "the plan." From the just-released, very useful National Employment Law Project report:
Ride-hailing giant Uber and aspiring “Uber of home services” Handy, along with other tech-companies-cum-service-providers, have been conspiring with powerful corporate allies and lobbyists on a far-reaching, multi-million-dollar influence campaign to rewrite worker classification standards for their own benefit— and to workers’ detriment. Their goal: to pass policies that lock so-called “gig” workers who find jobs via online platforms into independent contractor status, stripping them of the basic labor rights and protections afforded to employees and allowing the companies to evade payroll taxes and worker lawsuits. This report sketches the policy campaign, the cast of characters involved, when and where they have mounted efforts, what might be driving them, and the tactics they are using to advance their cause. It concludes with some examples of successful resistance to these efforts, from which lessons can be drawn for the fights to come.
The report has very useful timelines and charts showing the steady advance of the Uber/Handy Inc. model. A number of folks argue the recent statistics show the Gig/independent contractor economy is not as large as I think it is (by actually talking to my working class family and friends on the ground). We will see, but I think we are just getting started. In a key part of the report the "nothing to see here" argument is addressed as follows:
According to the latest estimates, gig workers comprise only a small share—about one percent—of the U.S. workforce. In many cities, that share is likely larger—a recent analysis found that if Uber classified its drivers as employees, it would be the single largest private-sector employer in New York City.
Many gig workers, who are disproportionately black and Latino, work in occupations that have long been plagued by industry efforts to erode labor standards—in the form of misclassification and legal carve-outs. In parts of the economy such as the taxi industry and the domestic work sector, the impact of the encroaching gig model reverberates far beyond those engaged by these companies, applying downward pressure on job quality for a much larger set of workers. And gig companies have been joined by more traditional companies to push polices designed to scale up their model across the U.S. economy. Tech-mediated gig work is the latest iteration of a 50year-old pattern of workplace fissuring.
Michael C. Duff
Tuesday, March 19, 2019
With “Medicare for All” likely an entrenched topic of conversation during the upcoming national campaign season, I was pleased to see William Rabb’s piece last month in WorkCompCentral (behind a paywall here) on the role that workers’ compensation might play in a national single-payer system.
The first thing to bear in mind is that the original workers’ compensation statutes—the English Act of 1897 and the first U.S. workers’ compensation statute (N.Y.) upheld by the Supreme court in 1917—contained no provision for ongoing payment of medical benefits. (Most of the early U.S. systems paid for on-site first aid, and perhaps emergency medical care for a few weeks; New York paid for 60 days). The English passed national health care in 1911; and the Germans (who created the second of the great workers’ compensation systems originally considered by the United States) included workers’ compensation benefits as part of a comprehensive national benefit delivery system under Otto von Bismarck’s original 19th century scheme. In Europe, the birthplace of workers’ compensation, payment of medical expense occasioned by workplace injury was divorced from indemnity payments very early on. So whatever else might be said about the feasibility of operating a work-injury system in which a national health entity paid for health care costs, while a state-based workers’ compensation program paid indemnity-only benefits, it would be historically inaccurate to claim such a system would violate the “original intent” of workers’ compensation.
Second, some of the discussants in Mr. Rabb’s piece were concerned that operation of an indemnity-only workers’ compensation system would reduce the premium revenue of insurance carriers, causing them to invest less in workplace safety, presumably because their policies would cover less. In other words, the less a carrier would be required to pay an insured under a policy, the less motivation the carrier would have to assure that high-cost claims would not be filed in the first place by encouraging employers to operate safely. Here, however, I think it must be remembered that insurance follows liability, liability does not follow insurance. Even if insurers find workers’ compensation less profitable—because the insurable risk has been limited to indemnity payments or because workplaces have become safer overall—the employers’ risk will never be zero because employers’ liability will never be zero (no tort reform of which I am aware has ever suggested the possibility that a state could lawfully deny any remedy for physical injury). A number of models were experimented with at the inception of workers’ compensation for exactly this reason. Mandatory workers’ compensation was first applied only to extrahazardous employments, and a number of states experimented with mixes of elective and mandatory systems—originally some states permitted both employers and employees to opt out. Much experimentation can be anticipated during transitional eras, and how to deter unsafe employment practices without simultaneously chilling socially useful activity is the durable problem of all injury law.
The preceding points get to the heart of what the discussion about the interplay between workers’ compensation and “Medicare for All” is really about – federalism. Workers’ compensation was explicitly excluded from ERISA (the federal statute minimally regulating voluntary employee benefit plans), way back in 1974, from federal benefit initiatives since then, and has been excluded from both the Sanders and Jayapal bills, to name the two proposals with which I am somewhat familiar. I would suggest that a large driver of the federal instinct to exclude workers’ compensation from benefit design centers on immunity from tort liability (exclusivity), or more precisely on a recognition of the delicate state-law balance between limitation of tort remedies on the one hand and providing adequate statutory benefits on the other. This has been seen historically as quintessentially a state law question.
Under present law, a plaintiff may not sue in tort an ERISA-governed employee benefit plan, or providers thereunder, as a result of ERISA preemption. And, as we know, employees generally may not sue their employers for work-related injuries arising from employer negligence. The difference is that ERISA tort immunity derives from federal public policy based on employers’ voluntary provision of employee benefits; workers’ compensation immunity derives from a state-based exchange of an ancient common law right and remedy for a putatively adequate statutory substitute.
“Medicare for All” changes the federal law assumptions upon which ERISA is built. The whole point of ERISA is to encourage voluntary provision of benefits by employers by not mandating any specific benefit levels and by sheltering operation of plans from most legal liability. Medicare for All would be the product of a mandatory system of taxation. It remains to be seen what preemption structure would accompany Medicare for All, but it would obviously change the state tort law dynamic. Tort law damages for medical expense might become completely unavailable if an injured plaintiff received free or very low cost medical care as a matter of right. And this has workers’ compensation theoretical implications. Just as the dynamic of the quid pro quo is (or should be) impacted by the replacement in modern negligence law of contributory negligence and assumption of the risk defenses by comparative negligence (theoretically raising the “tort value” of a claimant’s workers’ compensation claim), the severe reduction of employee injury-related medical expense might similarly change the current conception of the quid pro quo. The reduced contours of theoretical employer tort liability would diminish theoretical tort damages for employees. Within the next few years, in other words, the quid pro quo might effectively be stood on its head.
Which brings me back to another discussion featured in the Rabb article—the question of monopolistic systems, where a state itself is the exclusive insurer of workers’ compensation benefits (as in my home state of Wyoming). It strikes me as very plausible that monopolistic systems would be the result of workers’ compensation no longer being profitable for private insurers. Employers’ liability (perhaps solely for indemnity benefits in some brave new world) does not disappear simply because carriers will not insure it. Either states will become insurers of last resort or the policy justifications for exclusivity will vanish.
I suspect that deliberations of this type will intensify in coming months, as they should in my estimation.
Michael C. Duff
Sunday, March 17, 2019
While I generally accept Price Fishback and Shawn Kantor’s narrative holding that workers’ compensation arose in the U.S. as a Grand Bargain between multiple stakeholders, around 1911, the labor law professor/historian in me has doubted organized employee participation in the process. Although individual employees could have voted for workers’ compensation statutes (or not) as individual state citizens, organized employee groups were simply too weak in 1911 to have played more than a symbolic role in the negotiation. Moreover, unions of the progressive period (influenced substantially by Samuel Gompers and the American Federation of Labor) were—given their voluntarist leanings—lukewarm at best about government-run social insurance, generally, and about workers’ compensation in particular. They did not press for workers’ compensation, though they were later to acquiesce in its implementation. So, I have asked myself, where, if anywhere, was the worker side of the Grand Bargain negotiated?
The answer appears to be that the workers in the Anglo-American legal structure pressed their end of the bargain in the United Kingdom during the last quarter of the 19th century. In working through the wonderful book, The Wounded Soldiers of Industry (written by P.W.J. Bartrip and S.B. Burman in 1983 and previously discussed on this blog by my colleague Judge David Torrey here), I have been struck by some powerful facts.
First, the United Kingdom maintained a legal society, from roughly the 11th century, that did not accept that accidental injury should go unrecognized even where “recognition” did not necessarily entail compensation of the accident victim. The institution of the “deodand” (gift to God) was a kind of forfeiture (“noxal surrender”) of a physical item (or its monetary equivalent) that had caused the accidental death of a victim, often, though not necessarily, for distribution to the decedent/victim’s family. (This strikes me as an unusual form of social apology meant to somehow preserve order). Deodands had become kind of a joke by the 18th century. Not much value was involved when the instrument of death was an axe, a large cauldron of water, or even a horse-coach, so why bother (then, as now, there were many ways to die accidentally). But suppose I told you that the instrument of death was a locomotive, a large industrial machine, a transoceanic ship, or land surrounding a coal mine. And suppose I further told you that “coroners’ juries” comprised of the local citizenry decided the value of the deodand; and that they were not infrequently angry about the accident. Small wonder that one of the main motivations behind Lord Campbell’s Act (the Fatal Accidents Act), enacted in 1846, and known by many lawyers as the statutory beginning of wrongful death and survival tort actions, was the elimination of deodands. In fact, another Lord, Lyttelton, was the true progenitor of the bill that could potentially compensate the widows and orphans (even though for other reasons they would quite likely lose their tort cases). For Campbell, victims’ rights may have been an afterthought. For more see Wounded Soldiers, Chapter 4; see also Harry Smith’s, From Deodand to Dependency, 11 American Journal of Legal History 389 (1968).
Second, the British Trade Unions Congress (TUC) was formed in 1868, and increased in membership from 255,000 in 1872, to 750,000 in 1873, to 1,200,000 in in 1874. In 1874, trade unionists began to be elected directly to parliament, and by 1880 the first of the British employer liability statutes was passed in the U.K., in no small measure as a result of constant pressure applied by the TUC. (An employer liability statute made it easier for a plaintiff to prevail in a tort case by eliminating the affirmative defenses of assumption of the risk and the fellow servant rule; employer liability statutes still exist in the United States in the form of the Federal Employers’ Liability Act and the Jones Act). It appears therefore to have been the expanding might of the British labor movement that provided industry with a stark choice between potentially increasing negligence liability and what would become (in 1897) a workers’ compensation statute.
Finally, the British expanded the right to vote in 1867 (doubling the electorate from 1832 levels), and by 1884 the electorate had tripled (including large infusions of industrial and agricultural workers). It was only after 1884 that the majority of U.K. adult males had the right to vote for the first time in British history (women won the right to vote in 1918). Is it really any wonder that exploding democracy, both at the ballot box and within workplaces, led to workers’ compensation acts in 1897 and 1906, and to universal health care in the U.K. by 1911—especially in a society with a deodand legacy evincing social guilt over the fact of accidental injury? By the time American investigators began actively exploring, in about 1908, solutions for the burgeoning industrial work injury crisis their remedial options were quickly understood to be comprised of a choice between two workers’ compensation models. They could select the British Grand Bargain (consisting of a statute that would be entirely recognizable to most modern American workers’ compensation practitioners—despite exclusivity being deemed unnecessary given the enormous time and expense of suing in torts, even where cases had merit). Or investigators could choose German-style workers’ compensation embedded within a broad social insurance regime embracing more aspects of public life than the American constitution seemed (and perhaps still seems) able to accommodate. (I provide an account of the process and developments here).
Michael C. Duff
Wednesday, March 13, 2019
As fate would have it, news of Uber’s recent 20 million dollar settlement with “misclassified” (mal-classified?) drivers has reached my “ears” just as my workers’ compensation class is embarking on the course’s “employment relationship” material. As I see it, the employee-status/definition landscape is beginning to stabilize in the sense that state employment blocks, or zones, are starting to emerge, which should assist in settlement of jurisdiction-specific employee misclassification suits. You’ve got the ABC test (though often not in workers’ compensation contexts) – primarily California, New Jersey, and Massachusetts. You’ve got the default Restatement 2d of Agency, Section 220(2) test, and you have the spreading Handy Inc. zones, mainly in the south and Midwest. Under federal employment law you have either an economic realities test or some expanded variant of a common law-like factor test.
California (always a barometer of future developments and reactions thereto) – will probably codify the ABC test in an array of employment law contexts post Dynamex. Whether that test will migrate to its workers’ compensation regime (still utilizing the Borello/Restatement 2d of Agency 220(2) 10-factor test with an emphasis on the right to control) remains to be seen. An interesting California bill, AB 71, offered by Republican Assemblywoman Melissa Melendez, would retain the 10-factor test, but, in a twist, create a presumption of employee status when the worker is performing work (or working for someone who is performing work) for which a contractor’s license is required under California law. This compromise approach, like the ABC test, would place the burden on the employer/carrier to prove that the individual is not an employee, but would retain the multiple factor scope of analysis beyond what is required under the ABC test (The worker is free from the control and direction of the hirer in relation to the performance of the work, both under the contract and in fact; the worker performs work that is outside the usual course of the hirer’s business; and the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hirer).
The default position, and probably still the dominant test in most of U.S. labor and employment law (and hence my default position as a teacher) is the Restatement 2d analysis itself. Most of my readers know the test well, so I will not discuss it in detail here. From a teaching perspective, one of the difficulties is to distinguish for students the “right” of an employer to control work from the actual exercise by the employer of that right. When a fact-finder marches through indicia of control, it is not always clear whether an ultimate determination is that the exercise of control has been proven or, rather, that sufficient exercise of control was evinced to show that the employer must have had the right to control. The current version of the Restatement of Agency (now 3rd) retains a 10-factor test for distinguishing between employees and independent contractors, at 7.07. I find the Restatement 3rd’s treatment of the distinction between the right to control and exercise of control no better than the Restatement 2d’s. (The 10-factor test is discussed in comment f).
What I tell students is that there is always going to be dissatisfaction, on all sides, with a test (like the Restatement 2d of Agency test) that cannot produce predictable outcomes. But the very reason factor tests exist is that a clear rule either cannot, or for political reasons has not, been developed. I say “political” because these disputes often mask the uncomfortable truth that there was never overwhelming support for the policies embedded in the statutes under discussion. Although I do not agree with their position, I fully understand and acknowledge that significant interests in our society, though not popular majorities, opposed (and many have never ceased opposing) ideas like workers’ compensation, compulsory wage and hour laws, antidiscrimination laws, the right of employees to organize unions, and so forth, as impinging on fundamental liberty. Battles over employee-status reveal the never-completely-healed fault lines of the original struggles for these statutes and polices.
The way some federal statute drafters escaped from the wet blanket of employee definition was (predictably enough) to develop a statutory employee definition that was more likely to produce findings of employee status, for example the Fair Labor Standards Act’s “economic realities” test. The very first prong of that test will have the tendency to explode the putative existence of many independent contractor relationships: “the extent to which the worker's services are an integral part of the employer's business: ‘Does the worker play an integral role in the business by performing the primary type of work that the employer performs for his customers or clients?’” Think Uber could ever argue its’ drivers are independent contractors if the fact finder was focused on that prong? You will also note that regardless how aggressively a state attempts under its employment laws to facilitate the narrowing of employee definition, the IRS retains its 20-factor test (a net from which relatively few will wriggle free) and ERISA utilizes common law Darden factors to sweep up many employees states might seek to exclude as independent contractors.
The foregoing leads inexorably to the phenomenon of last year’s Handy, Inc. laws (discussed on this blog) many of which applied to workers’ compensation statutes. These laws make it much easier to classify someone as an independent contractor who would almost certainly be classified as an employee in, say, California or under federal law. I ask students to consider such laws as exemplars of frustration, but also as potential agents of deregulation. Injury costs never disappear, they shift (I’m willing to wait for the empirical data some claim to require in order to become assured of this somewhat “Pythagorean” axiom). If a Handy statute cuts off a workers’ compensation claimant’s recovery, the cost will shift somewhere. I also wonder about one of the problems that led to the creation of aggressive ERISA preemption in connection with discretionary employee benefits: races to the bottom can have the effect of creating significant national disuniformity for employers and insurance carriers calculating future labor costs. Unless one envisages a deregulated (dystopian?) Handy Inc. or opt-out future, the disuniformity should be taken seriously. Employers in Handy states remain fully bound to most of the “heaviest” employment law they will encounter, and their HR departments, one imagines, must be pretty confused. My law students certainly did not produce this confusion, but I suspect they may be among its beneficiaries.
Michael C. Duff
Friday, March 8, 2019
I'm cross posting this entry from an entry in the TortsProf Blog last month. Because the allowable constitutional scope of state workers' compensation reform tracks the allowable constitutional scope of state tort reform, it is useful to have sources tracking tort law reform, and the Database of State Tort Law Reforms is a very good one:
Ronen Avraham has posted to SSRN Database of State Tort Law Reforms (6.1). The abstract provides:
This manuscript of the DSTLR (6th) updates the DSTLR (5th) and contains the most detailed, complete and comprehensive legal dataset of the most prevalent tort reforms in the United States between 1980 and 2018. The DSTLR has been downloaded more than 2700 times and has become the standard tool in empirical research of tort reform. The dataset records state laws in all fifty states and the District of Columbia over the last several decades. For each reform we record the effective date, a short description of the reform, whether or not the jury is allowed to know about the reform, whether the reform was upheld or struck down by the states’ courts, as well as whether it was amended by the state legislator. Scholarship studying the empirical effects of tort reforms relies on various datasets, (tort reforms datasets and other legal compilations). Some of the datasets are created and published independently and some of them are created ad-hoc by the researchers. The usefulness of these datasets frequently suffers from various defects. They are often incompatible and do not accurately record judicial invalidation of laws. Additionally, they frequently lack reforms adopted before 1986, amendments adopted after 1986, court-based reforms, and effective dates of legislation. It is possible that some of the persisting variation across empirical studies about the effects of tort reforms might be due to the variations in legal datasets used by the studies. This dataset builds upon and improves existing data sources. It does so through a careful review of original legislation and case law to determine the exact text and effective dates. The fifth draft corrects errors that were found in the fourth draft, focuses only on the most prevalent reforms, and standardizes the descriptions of the reforms. A link to an Excel file which codes ten reforms found in DSTLR (6th) can be found here: http://www.utexas.edu/law/faculty/ravraham/dstlr.html. It is hoped that creating one “canonized” dataset will increase our understanding of tort reform’s impacts on our lives.
Michael C. Duff
Thursday, March 7, 2019
A common problem in workers’ compensation is the partially incapacitated worker who is unable to return to the “injury employment” as a result of an unambiguously work-related injury. For some period of time, the worker may be deemed by all parties to be uncontroversially entitled to temporary total benefits. After some passage of time, however, payment of (frequently voluntarily provided) total benefits may be controverted, often when maximum medical improvement is established. The existence of a substantial, work-related, permanent partial disability may be evident. But the worker is usually required to provide some evidence of the inability to find work within work-caused medical limitations to remain eligible for total benefits. To quote the Larson’s treatise formulations, “If the evidence of degree of obvious physical impairment, coupled with other facts such as claimant’s mental capacity, training, or age, places claimant prima facie in the odd-lot category, the burden should be on the employer to show that some kind of suitable work is regularly and continuously available to the claimant.” If, on the other hand, “the claimant’s medical impairment is so limited or specialized in nature that he or she is not obviously unemployable or relegated to the odd-lot category, it is not unreasonable to place the burden of proof on that claimant to establish unavailability of work to a person in his or her circumstances. This ordinarily would require a showing that the claimant has made reasonable efforts to secure suitable employment.”
Unfortunately, regardless the number of times the word “obvious” is invoked as a modifier, the issue is often not obvious at all: when is an impairment “obvious” and how many “other facts” must be established to place the employee prima facie in odd lot status? When is a worker “not obviously unemployable”? The distinctions are of consequence and not mere verbal antics. To the extent a dispute erupts over the adequacy of a claimant’s work search, one party or the other may effectively be placed in the position of attempting to prove a negative: why is the worker not obtaining work? In my workers’ compensation textbook, I juxtapose two work search cases: one from Wyoming, Moss, and one from Maine, Avramovic. Wyoming formally recognizes the odd lot doctrine. Maine apparently does not: its statute allows for “100% partial” benefits, and Maine courts appear not to have used the phrase “odd lot” for decades (similar ends seem to be achieved through payment of “100 percent partial” benefits). The paradox I pose for students is whether claimants are better off with or without a rigid rule on “odd lot.” In the Wyoming case, decided under a facially strong odd lot rule, the worker performed what I consider an excellent work search, had strong medical evidence in his favor, received the litigation benefit of a state supreme court “calling out” its own administrative fact finder as blatantly unfair, and nevertheless lost the case. In the Maine case, the state supreme court reversed a hearing officer’s finding that a work search was inadequate because the official did not tightly conform to a 9-factor work search test. Perhaps when the stakes are higher (an odd lot permanent award versus a presumably more reviewable partial award) the prospects for claimant litigation success diminish.
Under the Longshore and Harbor Workers’ Act, the rule seems to be that a partially incapacitated employee unable to perform her “usual employment” is prima facie totally disabled. Elliott v. C & P Telephone Co., 16 BRBS 89, 91 (1984). The claimant having satisfied her initial burden, the employer must show that “there exists a reasonable likelihood, given the claimant’s age, education, and background that he would be hired if he diligently sought the job.” Importantly, “the employer must show the precise nature, terms, and availability of the jobs.” If the employer satisfies that burden, the employee can still prevail by showing that she diligently tried and was unable to secure such employment. Obviously, federal systems (typically liberal construction) are different from state systems, and this burden shifting mechanism quite evidently privileges full benefit coverage.
Given the variability of work search systems, It is difficult to explain to students the essence of work search and the odd lot doctrine. Is work search a mitigation doctrine? Is it an attempt to determine whether an employee has voluntarily withdrawn from the workplace? Seen through the eyes of an angry worker (I feel both under compunction and emboldened to speak of such things because I spent 15 years as a blue collar worker before attending law school: 1977-1992), it is hard to explain why, after having been ripped involuntarily from remunerative employment, he or she must jump through hoops to qualify for the princely sum (if lucky) of around the state average weekly wage. As I tell my students, you do not have to agree with this “angry injured worker” perspective, but you do have to understand it in order to be an effective advocate on any side of a workers’ compensation dispute.
Michael C. Duff
Sunday, February 24, 2019
In a new article, published in mid-2018, author Evan Barrett Smith addresses current issues surrounding the federal Black Lung Benefits Act. His focus is principally on legal developments since the year 2000. Evan Barrett Smith, Black Lung in the 21st Century: Disease, Law, and Policy, 120 West Virginia Law Review 797 (2018), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3152733.
Smith initiates his discussion with noting that, to everyone’s surprise, cases of Black Lung by coal miners are on the rise. At one point not long ago, he notes, some researchers believed that the diagnosis was one of the past. Yet, modern coal mining practices and inattention to safety standards restricting coal dust exposure, among other factors, have reversed the trend.
This phenomenon was one known to this writer, as workers’ compensation judges in Virginia (Deputy Commissioners) have reported the last few years a significant uptick in the number of workers’ compensation cases for the condition. It is also one that has been treated in a PBS documentary. See https://www.pbs.org/wgbh/frontline/film/coals-deadly-dust/. (Smith, via Twitter, has endorsed the film.)
The author is generally pessimistic; still, the good news is that, if fidelity is shown to dust exposure limits as established in 2014 by the Department of Labor, the Black Lung incidence rate should be lowered. This is so, however, only with compliance by industry.
The author, while pleased that the Affordable Care Act, via the “Byrd” Amendment, restored a presumption of causation for miners, is highly critical of the adjudication procedures in federal Black Lung cases. Indeed, he characterizes the delays in adjudication of cases as a “disgrace.” Yet, he argues against the advocacy of some, who assert that Black Lung claimants should be able to compromise-settle their claims. He points out that the most important benefit under Black Lung is medical treatment, and that this is an item which should not lightly be thought appropriate for a release. And, because it is medical coverage that mine operators are seeking to avoid, they are not going to want to engage in partial settlements. (That, in fact, is the Pennsylvania experience, where settlement of all aspects of a claim is the default method of settlement, one usually mandated by carriers if a lump sum with release is to conclude a case.)
The Kentucky-based author, who has represented coal mining disease victims, has authored an articulate and superbly edited, educational review of the current landscape of Black Lung. His commentaries, notably, are also at https://twitter.com/evanky?lang=en; and https://twitter.com/BlackLungBlog.
Wednesday, February 20, 2019
Nothing more quickly allows me as a teacher to reveal and explore the fault lines of workers’ compensation theory than the subject of permanent partial disability. I teach—both in my class and in my workers’ compensation textbook—a simplified wage loss model. This reflects my background as a Maine lawyer cutting his teeth on the subject during the period 1995-1997: simply take some percentage of the difference between the pre-injury average weekly wage and post injury wage (e.g., 2/3 of the gross or 80% of the net). Whatever that figure is pay it for the duration of the disability/incapacity for work. The approach is analytically “clean” and helps students to quickly distinguish between total benefits (2/3 of the AWW) and partial benefits (2/3 of the difference, as just explained).
There are all kinds of problems with this model. It seems consistent with the overall quid pro quo of workers’ compensation: a hypothetical worker who would have had a meritorious tort suit could have received damages in excess of this benefit amount plus medical treatment. But imagine the worker who would not have had a meritorious tort suit. Is such a worker receiving a windfall that is more equivalent to a welfare benefit? Some state legislatures seem to think so, though they simultaneously vastly underestimate the impact of successful negligence lawsuits by those who have not suffered injury from a pure “accident.”
Then there are issues with duration. States utilizing wage loss models may set a durational limit (which is also true of total benefits). Leaving issues of morality to one side, are durational limits on the amount of time a worker can receive workers’ compensation benefits for an established work-related injury legally defensible? I would argue not for our hypothetical, successful injured worker-tort plaintiff. But perhaps limits can be legally defended with respect to the injured worker who is a victim of pure accident. And, fair or not, attempting to calculate actual wage loss imposes the administrative burden of monitoring wage losses for many workers on an ongoing basis. Alas, I must, accordingly, at least allude to other, less simple partial benefit models, especially since there is a more-or-less 3-way split of approaches throughout the country (including in Wyoming which expresses partial benefits both in terms of work incapacity and physical impairment).
Basing partial benefits on a loss of an injured worker’s post injury earning capacity, another approach to calculating partial benefits, presents its own difficulties. On what is this earning capacity to be based? One possibility centers on post-injury employment. When I practiced in Maine post injury wages were prima facie the measure of post injury earning capacity. The burden was on the employer-carrier to have it otherwise. But suppose the partially incapacitated employee loses her “injury job” and is thereafter unable to obtain employment. How will post injury earning capacity be measured then (not to mention the problem with supplemental claims that benefits should be paid at a total rate during the period of accompanying unemployment)? Or suppose an employee sustains an injury resulting in physical limitation likely to impact earning capacity in the future, but causing no immediate wage loss. How is that future loss to be accounted for?
Enter the erratic topic of permanent impairment. Permanent impairment, in many states, kinda, sorta acts as a proxy for earning capacity through the vehicle of schedule benefits. But few are those who can explain just how. The analytical basis for specific determinations seem lost in the mists of time. From the very beginning of the American workers' compensation system, in the 1910s (see pages 94-106 here), we have been assured of proclamations such as, a lost arm is worth 312 weeks of compensation, a hand 244 weeks, and so forth. I’m inclined to blame the Europeans because “schedule injuries” were an original feature of 19th century European workers’ compensation laws. Indeed, the West Virginia State compensation commissioner, reputedly early-on, prepared tables “from a combination of the tables used in Germany and Russia for compensation purposes.” (see page 102 here).
In all of this I am leaving out the awkward fact that Massachusetts originally did not connect permanent impairment benefits to work incapacity at all, even by proxy (see here at page 94). And, in my fair home state of bar admission, Maine, the legislature first proxy-connected permanent impairment to wage loss benefits, then reversed itself in 1965 by providing standalone PI benefits, and then reversed course again by providing "alternative" schedule benefits that must be set off against “general” partial benefits. (See the history here, and here).
These are, of course, exceedingly delightful details for law students to encounter. I hope you will forgive me for emphasizing the simplified wage loss model in the interest of Vygotsky’s Zone of Proximal Development.
Michael C. Duff
Sunday, February 17, 2019
"Kiss Your Stupid Lexus Good-bye!": Work-related Death and a Villainous Lawyer in a Young Adult Novel
If I were any kind of step-son, I’d be taking my step-mother shopping at Tysons Corners. But no, we were at our regular visit to the Route 1 Dollar Tree (South Alexandria, VA), when, for the third time, I came across that shopworn copy of the Young Adult novel, My Chemical Mountain (Ember/Random House 2013), by Corina Vacco. The squib on the back cover refers to a work-related death, so I made the investment and purchased it. And indeed, the book delivers on that unfortunate event, a catastrophe which serves as the backdrop of the story. But, as it turns out, there’s another pervasive theme: the villainy of an evil company lawyer who tools around in a silver Lexus.
The story is set in fictional Poxton, NY, a town on Lake Erie, southwest of Buffalo. The “chemical mountain” of the title is a nickname for the large pile of garbage which rises up from the post-industrial wasteland (demolished factories and landfills) which abuts Poxton and dominates its existence.
Our hero, Jason, 14 years old, is haunted by the work-related death, a year before, of his father. Dad, who labored for “Mareno Chem,” was trying to expose the company for illegally manufacturing Phenzorbiflux, an illegal chemical product. The precise manner of death remains a mystery, and only mentioned in the book’s first sentence: “I think about the seventeen tons of Phenzorbiflux that went missing the night Dad died. Green, steamy chemical sludge. Coveralls in a puddle of liquefied human skin. The horrible phone call that woke us in the night. I am hungry for revenge.”
And retribution is merited, as the family, in the wake of the death, is treated shabbily. The Mareno Chem lawyer Dan Benecke has, in the wake of the death, pressured Mom into signing a stack of legal papers. Like the death, however, whatever Mom has signed away and receives in return (a lump sum?) remains a mystery. There’s no mention of workers’ compensation, and certainly no reference to a Section 32 settlement. The family is, in any event, impoverished, Mom breaks down, gains weight, and must herself resort to dangerous factory work.
Of course, the most constructive retributive response would be for Jason and his Mom to retain their own Lexus-driving attorney, seek workers’ compensation, and pursue other legal remedies.
Instead, Jason and his friends Charlie (jock) and Cornpup (nerd), embark on a series of adventures intended to expose Mareno Chem’s illegal polluting and, alarmingly, to gain personal retribution against Benecke. In one scene, the three break into the company’s headquarters and ransack the lawyer’s office: “Anger is ripping through me again,” Jason narrates. “I smash the picture frames on Dan Benecke’s desk. I tear up his photographs. I use a silver letter opener to slash his leather chair. I scribble MONSTER in black ink all over his desk calendar.” In a subsequent encounter, when the three are caught trespassing, Jason slashes Benecke in the face with a ninja “Chinse Star.” In a constructive effort, the boys do attend a public hearing at which the company’s activities are investigated, and Cornpup even testifies about how the toxins in the local environment have disfigured him.
In the end, however, violence spells the end for Benecke and the monstrous company for which he labors. In this regard, just as Jason’s final effort to expose the company commences, Charlie goes rogue and, in a surreal scene, dynamites the Marino Chem plant, perishing during the effort. This disaster, however, reveals the company’s wrongdoing once and for all, so Charlie’s martyrdom is vindicated.
A work-related death thus animates the whole story. And, indeed, concern about injury from industrial labor pervades the book. Cornpup’s disabled grandfather was a steelworker at the now-closed Bethlehem Steel plant who lost two fingers saving another man. Mom must labor in a dangerous factory. Indeed, her co-worker sustains a serious injury which causes Mom to reform her life and vow to eat more healthily:
Mom closes her eyes. “There was a bad accident at the plant. A woman – my friend – was injured. She’s in the hospital.” ….
Mom takes another bite of green leaves. Strange. Very strange. “Fat people are more likely to have a work-related accident. Did you know that?”, she says to me.
“No,” I whisper. I didn’t know that at all.
She starts to cry. “It was horrible. She got caught in a machine. Skinny people can slip out of things. Skinny people almost never get caught in machines.”
I get it. When you’re huge, you’re a huge target. It’s easier to shoot a bear than a sparrow. But Jeannie didn’t die or anything, so I don’t understand what the big deal is.
A blurb on the back cover maintains that My Chemical Mountain is “reminiscent of the Outsiders,” another ostracized-teen adventure story. However, other stories made famous by film came to my mind. For a trio of adventurers, Stand By Me (Will Wheaton, River Phoenix, Jerry O’Connell). For a rogue who goes nuclear, Taps (Tom Cruise). And, for the slashing-with-Ninja weapon episode, Enter the Dragon (Bruce Lee). Indeed, when Jason slashes Benecke, the latter simply strokes his wound philosophically and, like the evil drug lord Han, addresses the teens with a menacing lecture. I was ready for the Fight in the Hall of Mirrors.
Like Han, however, Benecke gets it in the end. After the final, flaming end of Mareno Chem, he’s fully exposed:
Dan Benecke was arrested, charged with felonies. I wish I could’ve been there to see it. I would’ve stood in front of his mansion and shouted, Hope they put you away forever, asshole! No more fancy vacations! And you can kiss your stupid Lexus goodbye!
The implausible scenarios and dialogue of My Chemical Mountain detract from a good story, one with characters with whom the reader gains empathy. I enjoyed, in any event, reading it! Still, if I had a teen I don’t think I would want him or her to be thinking that violence is the answer to adversity, as it was for both Jason and Charlie.
For a video trailer:
Friday, February 15, 2019
I’m fortunate to have had all my workers’ compensation students as torts students in their first year of law school. I’m in a good position to explain to them that references in workers’ compensation statutes and cases to legal phrases like “proximate” causation and “foreseeability” can muddy the distinction between negligence and workers’ compensation causation analyses.
Most students of workers’ compensation quickly become aware of the “no fault” nature of workers’ compensation. What one really means by “no fault” is that workers’ compensation “liability” is not predicated on an employer’s breach of a “reasonably prudent person” standard of care. One of the problems with importing the concept of foreseeability into workers’ compensation is that it suggests that a breach analysis is being carried out: having foreseen a risk of harm did the defendant unreasonably fail to avoid the harm? Such a breach analysis is foreign to compensation law, of course. But foreseeability, in addition to suggesting the existence of a fault-based, breach analysis, also implies that proximate cause is relevant to workers’ compensation analysis.
Leaving to one side the problem that tort lawyers frequently debate the propriety and imprecision of the term “proximate cause”— many preferring in its stead the phrase “legal” cause — proximate cause also is analyzed in terms of foreseeability. In short, it is often concluded that, under principles of proximate cause, a defendant should not be held liable for what she could not have foreseen. In workers’ compensation, on the other hand, liability in most jurisdictions turns either on whether the workplace has increased the risk of the injury suffered (increased risk test); or whether the employee, even if injured by a “neutral” risk, would not have suffered injury but for her presence in the workplace (positional risk test). Notice the complete absence of considerations of foreseeability in the analysis. (Unhelpfully, in Wyoming one of the required factors for compensation of “injuries which occur over a period of time” is that “the injury can fairly be traced to the employment as a proximate cause . . .”)
In a recent class we discussed “Good Samaritan” doctrine. I pointed out that in some jurisdictions whether an employee has left the course of employment to assist a third-party who is in danger (danger invites rescue!), thereby potentially rendering a resulting injury non-compensable, depends on whether the employer could foresee the attempt. It did my heart good to see the entire first row cringe. I dislike the use of the phrases proximate cause and foreseeability in workers' compensation law almost as much as I disapprove of major legal disputes being referred to in leading electronic legal news services as “rows.”
Michael C. Duff
Sunday, February 10, 2019
"Taking One For the Team": Unfortunate Result in a Workers' Compensation Claim via Employer's Safety Incentive Plan
The issue of safety incentive programs in the workplace has been current for a number of years now. A common concern is that safety programs which promise a periodic bonus to all, if no injuries occur, may create anxiety among workers that they should avoid reporting their injuries. A thoughtful new discussion is Patrick Hagge, Safety Incentive Programs: Best Practices and Common Pitfalls, https://news.leavitt.com/business/safety-incentive-programs/.
This anxiety came to life in a March 2018 unreported workers’ compensation opinion here in Pennsylvania. Burch v. WCAB (Graham Packaging), 2018 WL 1102078 (Pa. Commw. 2018). See https://www.courtlistener.com/pdf/2018/03/01/t._burch_v._wcab_graham_packaging.pdf.
In that case, the injured worker struck her head violently on a low-hanging vent. She knew of the rule that injuries were immediately to be reported. She did not do so, however, because a full accident-free year at the plant entitled each employee to a $150.00 bonus, and she “did not want to cause her co-workers to lose the bonus ….” Indeed, she commented furtively to a co-worker that she was “taking one for the team.”
She told her employer, instead, that she hit her head on a branch while gardening or chasing her dog at home. That was the story she also provided to her physician, who submitted the bills to her group health plan. The worker also became entitled to wage-loss benefits under the employer’s STD plan. Soon, however, the private carrier started making inquiries for subrogation purposes and claimant, fearful of insurance fraud accusations – and obliged to have neck surgery – finally reported her injury. Unfortunately, she did so one week after the 120-day notice-of-injury period expired, and the agency adjudicators, and now the appellate court, all denied her claim as time-barred.
The worker had, notably, sought to establish actual knowledge by employer by presenting evidence from a co-worker that her supervisor was making inquires and surely must have known or suspected that the injury occurred at work -- but these speculations had been rejected by the judge who acted as final fact-finder.
The employer, meanwhile, presented its HR manager, who voiced the better thinking about such programs – which had obviously run amuck for the unfortunate worker: “Scarborough testified that the Employer has an incentive program that pays each employee $150 for each year the plant goes without a reportable injury. She stated that the program is meant to encourage workers to report unsafe conditions in order to prevent injuries. It is not intended to discourage employees from reporting injuries. They are required to report injuries.”
Monday, February 4, 2019
The National Academy of Social Insurance convened its 31st Annual Policy Conference last week in Washington, D.C. This year, the theme of the January 31, 2019 all-day session was “Regenerating Social Insurance for Millennials & the Millenium.” It was one of the best conferences I have attended in recent years! The collection of the conference background materials and essays can be found at this link: https://secure.nasi.org/regenerating-social-insurance-for-millennials-and-the-millennium/.
Workers’ compensation and it concerns were not, notably, a feature of the various discussions. However, a repeated area of consideration was the future of caregiving, both of the young and the old. And, of course, all in our field know that those who take care of others are often exerting themselves significantly, and injury often results. The issue of insurance and workers’ compensation coverage then arises.
A top legal scholar in this area, notably, is Professor Peggie Smith of Washington University School of Law in St. Louis. See https://law.wustl.edu/faculty-staff-directory/profile/peggie-r-smith/. She has many of her publications listed at that website, but I have long known of her article, Home Sweet Home? Workplace Casualties of Consumer Directed Home Care for the Elderly, 21 Notre Dame Journal of Law, Ethics & Public Policy 537 (2007).
If the Academy follows its usual procedure, videos of the Millennials Conference sessions will also soon be posted. A definite recommendation!
Sunday, January 27, 2019
The world of workers' compensation is always well-served to keep abreast of labor & employment law developments outside of its ordinary confines. One of the most essential threshold questions in all of labor and employment law is who qualifies as an "employee." From Dynamex, to state "gig" laws, to various areas of federal law, the question will not evaporate anytime soon. It is axiomatic that one of the easiest ways to reduce labor costs is not to employee "employees." And just as there may be "50 Ways to Leave Your Lover," there may be an equal number of ways not to employ employees. Here I'm cross-posting an excellent blog analysis over on our sister Workplace Law Prof blog authored by my friend, colleague, and labor law casebook co-author Jeff Hirsch, Professor and Associate Dean at University of North Carolina School of Law -UNC Chapel Hill. From the post:
Yesterday, the NLRB issued a decision in the SuperShuttle DFW case, providing yet another analysis to determine whether an individual is an employee or independent contractor under the NLRA. The Board's new approach is basically just to adopt the D.C. Circuit's test from the 2011 FedEx case, which I've examined (and criticized) eleswhere. That test relies most heavily on whether the worker has "entrepreneurial opportunity."
As a preliminary matter, it is important to remember that the Supreme Court has held multiple times that when a statute lacks a meaningful definition of "employee," the common-law "right-to-control" test for determining whether someone is an employee or independent contractor should apply. The Court, in Roadway Systems, explicitly held that the NLRA is one of those statutes. So the question for the NLRB is to determine what the common-law test requires.
Note that the analysis is not referred to as the "common-law 'entrepreneurial opportunity'" test. That's because, for its long history, that test has stressed that the most important factor is the purported employer's right to control the manner and means of work of the purported employees. Entrepreneurial opportunity may be relevant, along are numerous other factors, but the right to control is the focal point of the test (I'm actually being generous here because entrepreneurial opportunity isn't explicitly a factor in the common-law test, although other factors hint at a similar concern). In fact, in an ironic twist, the D.C. Circuit just last month stressed this exact point with regard to the NLRB's joint-employer test. In that case, the D.C. Circuit gave a pretty strong warning that the Board needs to be careful not to stray too far from the common-law's focus on right-to-control.
Despite all of this, in SuperShuttle, the NLRB adopted a D.C. Circuit test that makes entrepreneurial opportunity the overriding concern in the analysis. The NLRB downplayed that that's what the D.C. Circuit did, but that interpretation is just wrong. The court held, among other things, that it was "shift[ing the] emphasis’ away from the unwieldy control inquiry in favor of a more accurate proxy: whether the ‘putative independent contractors have significant entrepreneurial opportunity for gain or loss.’" And that shift, to my mind, is indefensible.
The link for the rest of this excellent analysis is here.
Michael C. Duff
Wednesday, January 9, 2019
Empty Preemption of Workers’ Compensation: Parallels Between the Hanford Nuclear Facility and Air Ambulance Disputes
I am interested in conflicts between federal and state law in the context of workers’ compensation. And I am especially interested in a phenomenon I have called “empty preemption”: when federal law with little or no substance displaces state law possessing substance. Empty preemption was at the heart of the Oklahoma opt-out drama and is playing a role in the recent Hanford and Air Ambulance disputes – though in reality the overall Hanford controversy is far from “recent.”
The federal government’s newly-filed complaint against the State of Washington alleges that state law impermissibly discriminates “against the Federal Government and its contractors and [its] purported direct regulation of the Federal Government violate[s] the Supremacy Clause.” The law in question, Washington statute 51.32.187, states that “[f]or United States department of energy Hanford site workers, as defined in this section, who are covered under this title, there exists a prima facie presumption that the diseases and conditions listed in [another part of] this section are occupational diseases [within the meaning of Washington law].” As with all disease presumption laws (such as, for example, firefighters’ presumption laws), the effect is to make it easier to establish compensability in a very difficult area of disease causation: but for the relaxation of typical causation standards, a significant number of employees will not be compensated in circumstances where work “probably” caused incapacitating disease. But—and this is the important part—what does the federal government propose in lieu of the Washington approach to this obvious disease causation problem? For that matter, what does the Airline Deregulation Act provide substantively in exchange for stripping states of the right to regulate air ambulances? What does ERISA provide substantively in exchange for stripping states of the ability to regulate employee benefits? The answer is essentially “nothing.”
In many fields of law the purpose of federal preemption seems to have been to prevent states from lowering regulatory floors (although it is also certainly true that disuniformity has been a powerful factor as well). Traditional labor law, which I also teach, ushered in the era of especially aggressive federal preemption under Section 301 of the Labor Management Relations Act (the NLRA, as amended). But the (probably antiquated) theory of that preemption is that labor and management, as co-equal antagonists, may rely on their potent, lawful economic weapons, as determined exclusively by federal labor law, to produce acceptable/reasonable compromises – and states should not be allowed to interfere for their own narrower policy reasons.
Empty preemption, on the other hand, provides no mechanism of pushback to prevent descent beneath reasonable regulatory floors. It has the effect of removing regulatory floors altogether. (This has a great deal to do with why we cannot achieve state-level health care reform – ERISA preemption is always getting in the way because two-thirds of health care is provided through employee benefit plans). This is why I am so leery of the prospect of federal involvement in state workers’ compensation systems. Do you really want an environment in which states have no say with respect to air ambulance reimbursement or disease causation standards (to name only the most recent issues)? My ten years as a federal lawyer coupled with almost as many years as a federal administrative law professor have done nothing to raise my confidence in federal white knights. All of this is in tension, of course, with the notion that federal constitutional rights have a role to play in protecting baseline injury rights, but I nevertheless think they do.
The federal government’s suit in Hanford—which I, for one, ascribe to structural ticking timebombs rather than to naked political partisanship—is especially hard to swallow. The federal government (through excruciatingly convoluted mechanisms) cedes its sovereign immunity to allow for state workers’ compensation regulation, but apparently only on its terms. I would imagine some thought is being given in Washington legislative circles to crafting a more neutral occupational disease provision that does not expressly apply only to Hanford employees. Then we can expect arguments that the nominal general applicability of that law is a pretext and/or has the effect, if not the purpose, of directly regulating the federal government. At that juncture, of course, the bloom will be off the rose: it will become baldly apparent that the federal government simply does not want to pay.
One lesson both Washington and Wyoming legislators have no doubt learned is that it is unwise to explicitly reference in state legislation a federal law one is trying to work around. That provides some pretty low hanging fruit for federal lawyers (or other parties invoking federal policies) to pluck. It is also interesting to note that both Washington and Wyoming are monopolistic states, so the dormant federalism problems existing in workers’ compensation generally appear amplified.
Michael C. Duff
Tuesday, January 8, 2019
The major issue in judicial review of workers’ compensation and tort reform laws is the level of “scrutiny” judges are to apply when considering constitutional challenges to the statutes. Generally, a challenger has the heavy burden of demonstrating that a law is “irrational” before it will be set aside or modified by a court. There are very few laws—even laws that are fundamentally unfair, lopsided, or just plain mean—that can be affirmatively shown to be “irrational.” As it is often articulated in the equal protection context (due process analyses are very similar in most states), a state law must be upheld if it is rationally related to any legitimate interest of the state. Additionally, the legitimate interest of the state need not be one that actually motivated legislators to enact the legislation. It is enough if the interest is now advanced and that it is “conceivable.” If attorneys for the state fail to advance a conceivable interest, appellate court judges often seem willing to help them. The bottom lines is that, in the hierarchy of rights, injury rights (whether workers’ compensation or tort) are not deemed sufficiently important to warrant heightened judicial scrutiny of legislative acts impinging them.
But if state law tort rights are so unimportant, why are Article I federal bankruptcy judges without authority to hear them? In Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., a 1982 case in which a company petitioning for reorganization made a claim against another company for breaches of contract and warranty—purely state law claims—the U.S. Supreme Court, in an opinion authored by Justice Brennan, held that the conferral of jurisdiction upon Article I (of the U.S. constitution) judges to hear state law claims involving traditional actions at common law such as existed at the time of the drafting of the Constitution was unconstitutional. Quoting much earlier law, the Court reaffirmed the principle that, Congress cannot “withdraw from [Art. III] judicial cognizance any matter which, from its nature, is the subject of a suit at the common law. . .” Because the judge in Northern Pipeline was, therefore, effectively not constitutionally authorized to hear such state law claims, the Court not only reversed and remanded the case, but scuttled the entire bankruptcy system, requiring convoluted and heroic measures to temporarily resuscitate and place on life support the entire system, the nature of which are beyond the scope of this post.
In Stern v. Marshall, the Court held that a counterclaim of tortious interference with a gift, although made during a bankruptcy proceeding and statutorily deemed a “core proceeding,” was a state common law claim that did not fall under certain exceptions justifying exercise of federal jurisdiction. Stern was a notorious (and highly entertaining) case involving the struggles of the late Anna Nicole Smith with the son of 90+ year old decedent, J. Howard Marshall. Smith alleged J. Howard orally promised her half of his estate, which primarily consisted of a 16% interest in Koch Industries, then worth $1.6 billion. Son disagreed. Arguments were advanced in both state probate and federal bankruptcy courts (naturally, the courts disagreed). Without wading into arcane questions about the history of the “tortious interference with a gift” cause of action, it is enough to say that Stern (2011) underscores the general “traditional common law actions” rationale of Northern Pipeline (1982). How do tort claims get caught up in bankruptcy law? By arguably becoming part of the bankruptcy estate. Their validity and valuation are often placed at issue in determining what “property” the bankruptcy trustee acquires and how the property will be distributed to unsecured creditors.
I am struck by the facility with which the Supreme Court deemed adjudication of common law (including) tort rights to implicate separation of power issues in bankruptcy law. Tort claims, after all, intersect with bankruptcy cases only occasionally. Is it really such a big deal that an Article I bankruptcy judge may occasionally adjudicate a common law tort right? The Court, in an opinion authored by Chief Justice Roberts, said “yes”:
A statute . . . may no more lawfully chip away at the authority of the Judicial Branch than it may eliminate it entirely. “Slight encroachments create new boundaries from which legions of power can seek new territory to capture.” . . . Although “[i]t may be that it is the obnoxious thing in its mildest and least repulsive form,” we cannot overlook the intrusion: “illegitimate and unconstitutional practices get their first footing in that way, namely, by silent approaches and slight deviations from legal modes of procedure.” . . . We cannot compromise the integrity of the system of separated powers and the role of the Judiciary in that system, even with respect to challenges that may seem innocuous at first blush . . . Article III of the Constitution provides that the judicial power of the United States may be vested only in courts whose judges enjoy the protections set forth in that Article. We conclude today that Congress, in one isolated respect, exceeded that limitation in the Bankruptcy Act of 1984.
I am not, of course, contending that workers’ compensation cases may not lawfully be heard by state administrative law judges whose decisions are ultimately subject to judicial review. The bankruptcy cases under discussion are about the limits of legislative power in restricting judicial review. The Supreme Court has said that Congress may not authorize in bankruptcy (except in some cautiously limited instances) Article I judges to hear tort law claims (ultimately deciding them if the cases are not appealed). Tort law is sufficiently important to require its adjudication by Article III federal judges holding their offices for life during good behavior and receiving for their services compensation that shall not be diminished during their tenure. The purpose of these protections is to diminish the potential for the executive and legislative branches interfering with traditional rights. How, then, may tort law (and derivatively workers’ compensation law) simultaneously be sufficiently unimportant to allow state legislatures to chip away at injury remedies policed only by under-protective rational basis review? I suppose the answer will be said to hinge on principles of federalism. But I find that answer unsatisfying. I wish that state judiciaries would uphold values concerning state common law rights (or rights flowing from these rights) with the same level of vigor.
Michael C. Duff
Saturday, January 5, 2019
Sometimes lost in Wyoming air ambulance discussion is the realization that Wyoming possesses a monopolistic workers’ compensation system. Accordingly, when an air ambulance company may charge what it likes, given distorted market conditions, that “economic rent” is extracted directly from the state treasury. Compare this situation to a state with a private insurance market in which losses are ultimately passed on to consumers (admittedly subject to some form of state regulation) rather than directly to taxpayers. It is no wonder that Wyoming (which has no state income tax) sometimes seems to become confused about what workers’ compensation benefits really are – an historical substitute for tort damages. The state “experiences” payment of workers’ compensation benefits as it would payment of discretionary “welfare” benefits.
And in Wyoming’s defense, and in the defense of other states trying to ward off the “empty preemption” of the Airline Deregulation Act (“empty” in the sense that the ADA occupies a regulatory field without providing any substantive regulatory exchange from the federal scheme), the preemption determinations being made in the Airline Deregulation Act/ERISA context (the federal courts have drawn the ERISA analogy, not I) are hardly consistent. So, in EagleMed, for example, the 10th Circuit said:
when a statute contains an express preemption clause, “we do not invoke any presumption against pre-emption but instead focus on the plain wording of the clause, which necessarily contains the best evidence of Congress’ pre-emptive intent.”
But compare this statement with the Supreme Court’s ERISA opinion in New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., probably the lead case pushing back against the aggressive express preemption outlined in Shaw v. Delta Airlines (an ERISA case routinely invoked by the ADA preemption cases). In Travelers, Justice Souter stated, in considering preemption language identical to the ADA preemption language:
. . . we have never assumed lightly that Congress has derogated state regulation, but instead have addressed claims of pre-emption with the starting presumption that Congress does not intend to supplant state law . . . Indeed, in cases like this one, where federal law is said to bar state action in fields of traditional state regulation . . . we have worked on the “assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.”
Discerning Congressional intent is seldom a simple matter; but one can understand in this context an argument that Congress did not clearly and manifestly express a purpose in the ADA to bar state action in workers’ compensation, surely an area of traditional state regulation. It is worth repeating that the Supreme Court’s opinion in Morales v. Trans World Airlines, Inc., upon which every subsequent Supreme Court ADA preemption case has relied, was decided in 1992, while Travelers was decided in 1995. I sense that the same “pushback” analytical considerations at play in Travelers will need to be brought to bear by the Supreme Court to adequately address the scope of ADA preemption as applied to state workers’ compensation systems. Of course, a federal Congressional fix would be desirable, but you will excuse me if I doubt its emergence. In the meantime states will probably have to consider reinsurance structures to contend with the problem if they want to avoid the Wyoming gambit of attempting to reopen the quid pro quo.
Michael C. Duff
Sunday, December 30, 2018
That didn’t take long! Back on November 27, I predicted that, in light of the Wyoming Supreme Court’s opinion in the Air Methods/Rocky Mountain Holdings case, see the recap here, states would begin taking the position that they would simply not fully cover air ambulance expense. Just about a month later, Wyoming legislators have now introduced a bill that “controls all payments for air ambulance services.” I argue in this post that the bill is (a) probably preempted on its face under the Airline Deregulation Act and (b) violates the Wyoming Constitution. It also, in my opinion, represents the dangerous precedent of a state simply refusing to pay for necessary medical first aid in a way that fundamentally breaches the workers’ compensation quid pro quo. (This is not a close question).
According to the bill:
Payments under this section will be according to a schedule established by the director taking into account the miles traveled and the type of aircraft used. The director shall attempt to approximate twice what Medicare would pay for air ambulance services in determining the payment schedule.
The bill would also require an air ambulance provider to take the double-Medicare rate or leave it:
Any provider of air ambulance services may voluntarily submit a claim for payment to the division within forty‑five (45) days of providing the services. If a provider submits a claim for payment to the division, the division shall review the claim, and if the services are determined compensable, the division shall offer to pay the claim in accordance with [the limitations set out previously]. Payment shall be conditioned on the provider's timely voluntary agreement to accept this payment in full and final satisfaction for all services provided and that the provider will not bill the injured worker. Failure of any provider to accept the division's conditional offer of payment within thirty (30) days may, in the division's discretion, be considered a rejection of the payment offer . . .
If the requirements for payment of services under [the preceding] paragraph . . . are not met, the division shall make no payment to the provider of air ambulance services.
Under the bill, in the event the air ambulance carrier won’t accept the double-Medicare rate that the director of the agency “will attempt” to pay, the injured worker can apply to the administrative agency for direct payment of that same amount and “may, but is not required to, use any payment received under this section for payment of air ambulance services.” And, just so everyone knows where they stand, none of the administrative determinations as to the (non) compensability of air ambulance services would be subject to further review of any kind:
The division's decision as to whether to make payment under [the applicable provisions] shall not be subject to further administrative or judicial review, and the division's payment under [the provisions] shall fully satisfy any payment obligation of the division in regard to air ambulance services.
Finally, the air ambulance companies are expressly authorized under the bill to sue injured workers directly for the “balance” – the difference between the workers’ compensation regulatory scheduled maximum and the full charge for the air ambulance service:
The limitation in [an earlier portion of the section] requiring that fees or portions of fees for injury related services or products will not be billed to or collected from the injured employee shall not apply to fees for air ambulance services controlled by the federal Airline Deregulation Act of 1978.