Workers’ Compensation Law Prof Blog

Reflections on a Maine Workplace Manslaughter Case

Last summer, well-known podcaster Joe Rogan debated fellow podcaster, and sometimes-libertarian, Dave Rubin about the necessity of having and enforcing building code regulations. (see the 6 minute YouTube video here – salty language alert). Rogan, who is not generally unsympathetic to libertarian positions, reacted with incredulity when Rubin suggested that high-tech apps (Yelp was the particular flavor mentioned), and rapid dissemination of a contractor’s non-compliance with best building practices, would be sufficient (for market-competitive reasons) to deter risky building practices. Why was Rogan incredulous? Because he has had family involved in the construction industry (apparently inter-generationally) and knows better (at a visceral level).

As a Maine lawyer, I was horrified to read last December of the death of 30-year-old Alan Loignon, who fell from the third-story roof of a home in the Munjoy Hill section of Portland, Maine (not far from where I first handled cases as a new workers’ compensation lawyer many years ago). According to the Portland Press Herald, in a story on May 20, the responsible contractor on the job, one Purvis,  

argued that he is not an employer and instead hires independent subcontractors, and while he encourages workers to use the extensive collection of safety gear he provides, he cannot force them to comply. Purvis said he has battled OSHA for a dozen years over this point, and has refused to pay the roughly $44,000 in fines the safety agency has tried to levy against him.

Purvis further lamented,

Every single day, I show up at the job site … and I tell them, please, be safe, everything you need is here . . . I can’t sit there 24/7 and watch subcontractors. It’s either they’re going to wear (the safety gear) or they won’t. It’s like wearing a seat belt, it’s either you do it or you don’t . . .  I can supply everything to be OSHA approved, but I can’t sit there and watch these guys all day long. That’s their job. They’re self-employed.

In addition to being wrong as a matter of both Maine law and OSHA regulation, Purvis’s account runs counter to my experience. Like Rogan, I’ve been around the block a time or two. In a prior life, when my boss required me to put something on, I put it on. But that perhaps was not really the way it happened – when my boss did not really care if I put safety equipment on, I was much less likely to put it on – especially if it took a few minutes to do so. Frankly, fairly or unfairly, I don’t believe Purvis’s account, and it doesn’t sound like anyone else does, either..

For an exercise in frustration, I would again direct the reader to a book I’ve mentioned previously: Bartrip & Burman’s, The Wounded Soldiers of Industry. The first three chapters of the book chronicle all the things we knew by 1830 didn’t work in deterring workplace injury: voluntary compliance, regulation without teeth, inspectors without authority. Oh yes – it was also claimed, back in the day, that it was the workers’ failure to provide for their own safety that was the true cause of workplace injury. One can perhaps sympathize with the decision of my former home state of Maine to conclude that some disregard of workplace safety by contractors is simply beyond the pale and rises to the level of actionable manslaughter (Maine Title 17-A §203).  

Michael C. Duff

Wyoming’s Next Air Ambulance Gambit Falls Outside of the Confines of Workers’ Compensation

Last legislative session the Wyoming legislature decided to fight the air ambulance dispute out on a broader front. It sensibly abandoned the attempt to limit workers’ compensation reimbursement of air ambulance services and began wrestling with air ambulance expense on a universal, state-wide basis by passing a new law. There are a number of interesting features to the effort.  

First, air ambulance matters are to be administered through the state Department of Health (the Department). The Department is authorized to apply to make coverage of air ambulance transport services through Medicaid available to all Wyoming residents, an interesting form of limited Medicaid expansion (Interestingly Wyoming has rejected ACA Medicaid expansion). I do not know enough about CMS regulations to opine whether such a limited expansion is legally possible, though it strikes me as problematic. If the model were approved by the feds, the Department would create an “air ambulance transport services program.” Under the law,

There is created the air ambulance coverage account. Premium assessments collected by the insurance commissioner and state agency reimbursements paid to the department of health under this section shall be deposited into the account and used by the department to cover air ambulance transport services under this section and to implement this section. Other funds used to provide air ambulance coverage, including federal funds, may be deposited into the account. The account may be divided into subaccounts for purposes of administrative management. Funds in the account and any amounts earned from those funds are continuously appropriated and shall not lapse at the end of any fiscal period. For accounting and investing only, subaccounts shall be treated as separate accounts.

The details are reportedly being hashed out by state officials at the moment, but overall this looks from a distance like a form of state fund that would somehow commingle federal and state monies to provide universal air ambulance coverage for state residents. Air ambulance transport services covered by any program administered by the state (including workers’ compensation) are exclusively covered under the section. Then other agencies (including the Department of Workforce Services that administers workers’ compensation) pay reimbursement to the general air ambulance coverage account. As a component of reimbursement, the Department would require state agencies to pay, on a proportional basis, administrative costs necessary to implement the program.

I think legislators are on the right track here in creating a broader coverage program outside of workers’ compensation, provided it is adequate and comprehensive. But next we run into some familiar trouble. Under the law, residents or air ambulance providers would make claims for payment of air ambulance transport services to the Department. An air ambulance provider shall provide services if the provider otherwise makes air ambulance transport services available to persons in Wyoming who are eligible for Medicaid. Under W.S. 42-4-123(c), an air ambulance provider who provides services shall accept payment under this subsection as full satisfaction of all charges, costs and fees relating to air ambulance transport services, except as provided in 42-4-123(d). That subsection, in turn, states:

An air ambulance provider shall collect a copay or other cost sharing requirement for services covered under this section, as established by the department and consistent with federal requirements, based on the following:

 (i)  For persons who are eligible for Medicaid independent of the coverage provided by this section, any copay or other cost sharing requirement shall be consistent with the copay or cost sharing requirement specified for other services under Medicaid;

 (ii)  For persons who are not eligible for Medicaid independent of the coverage provided by this section, any copay or cost sharing requirement shall be proportionate, based on income and shall not be greater than fifty percent (50%) of the allowable costs for air ambulance transport under this section, as determined by the department. 

On one reading the legislation continues to reference “rates, routes, and services of an air carrier.” Morales v. Trans World Airlines, Inc., 504 U.S. 374, 378 (1992). Indeed, this state law explicitly caps rates to 50% (of whatever—it does not matter to what the cap references). Also, tethering rates to federal reimbursement rates is still accomplished through state legislation, so I really cannot imagine a federal court analyzing preemption issues any differently than they have been doing. Indeed as a Kansas state appellate court stated last summer in EagleMed v. Travelers Ins.,

In the alternative, Travelers contends that the Division of Workers Compensation should apply the Medicare fee schedule for air ambulance providers to EagleMed's bills in order to resolve the fee dispute between the parties. In 1965, Congress enacted the Medicare program as Title XVIII of the Social Security Act to provide health insurance coverage to the elderly. Congress later expanded the Medicare program to provide health insurance coverage to certain disabled persons . . .

Based on our review of the record on appeal, we find nothing to suggest that the four injured workers are eligible for Medicare coverage either because of age or because of disability. We also find that the issue of whether to use the Medicare fee schedule to establish the amount air ambulance services may charge to non-Medicare patients is related to the prices charged by air carriers. Moreover, this appears to be a public policy decision that should not be decided by state agencies or state courts. Thus, we also find this issue to be subject to federal preemption.

Barring Supreme Court re-visitation of ADA preemption, or Congressional modification of the Airline Deregulation Act, I would expect most courts to react in similar fashion to anti-preemption arguments premised on state regulation of rates connected to federal benefit reimbursement rates. My guess is it would not take air ambulance companies’ counsel long to write the brief challenging the Wyoming law if it is implemented and applied to one of their number. It is also possible that the state is merely setting up a kind of sub-monopolistic fund meant merely to partially compensate its residents for the staggering costs of air ambulance transportation. But even if that is so, the balance will have to come from somewhere, and the legislation still references rates. This may be a good lesson to state legislatures on the meaning of reference preemption. See District of Columbia v. Greater Washington Bd. of Trade. Still, I sense progress.

Michael C. Duff

More Federal "Guidance" on Gig Economy Workers - Stale and Not Illuminating

As a professor of traditional labor relations law in addition to workers' compensation law (and as co-author of a labor law textbook), I took notice when people started messaging me that the law of employee status in labor law had changed. It hasn't. The National Labor Relations Board (NLRB) applied the traditional Restatement Second of Agency 10-factor test to conclude in an Advice memorandum that the particular workers analyzed in the memorandum--three separate "units" of Uber drivers were independent contractors.  The cases were consolidated in Region 20 of the NLRB (San Francisco) and the charges were filed in 2015 and 2016. The fact that it took well-nigh three years to get a "recommendation" out the door telling regional offices whether they may even pursue such cases says quite a lot. The cases were slow to coordinate (personnel shortages at the agency?) and no doubt there was a good deal of internal debate and dissension. The fact that the cases were not instantly dismissed suggests they were placed in process on the watch of the "Obama board" and difficult to perfunctorily shake.

I worked in two separate regional offices during my career with the NLRB from 1997-2006. As I tell my labor law students, to death and taxes as among life's certainties, one could perhaps add competing, irreconcilable NLRB "Advice" memoranda. (There is nothing "advisory" about Advice memos - NLRB regional offices must follow them). What are these memos? When a new political party takes power, the new General Counsel (a political appointee) and his/her coterie issue various directives to NLRB regional offices saying, in effect, to pursue/not pursue issues of interest to the new politically-motivated (elections, regardless who wins, have consequences) cast of analysts. The selected issues have usually been contested for years and the internal vacillation is anticipated by career folks (making labor law kind of a nightmare to teach in law school). Are inflatable rats protected labor speech or secondary boycott activity? Are graduate students employees? Are college football players employees? Is McDonald's headquarters a joint employer with its franchisees? The statute (in this writer's opinion, intentionally) provides no guidance.   

What then is the impact of the Uber Advice memo? Agencies' decisions not to issue complaints alleging violations of law are nearly unreviewable by the courts. So anyone alleging at the NLRB that an Uber driver was fired for engaging in union activity will not receive the benefit of the awesome remedial arsenal of the NLRB (insert wry smile here--no mitigated back pay or notice posting? A tragedy!). Similarly, anyone trying to gain governmental certification of a bargaining unit of Uber drivers may be out of luck (though there is an interesting question as to whether categorical exclusion of Gig workers under federal law would give states labor relations jurisdiction they would not otherwise possess -- maybe the drivers can be union-certified under California law: the rule of unintended consequences).  I also suppose in passing that if the NLRB takes the position the drivers are not employees it will not be able to pursue in federal court secondary boycott injunctions against the organizations representing the drivers when those organizations show up at the doorsteps of neutral employers.

In terms of black letter law the only thing worth noting is that the NLRB is predictably following the D.C. Circuit Court of Appeals and, I think, is even hyper-emphasizing “entrepreneurial” opportunity as a factor in determining employee status, a development that I and others have previously derided at some length.  

Michael C. Duff

Why Federal Equal Protection Challenges to Workers’ Compensation Statutes Don’t Work

I do not believe that interference with workers’ compensation rights are subject to vindication under the equal protection clause of the United States Constitution (even when the interference is vicious or unfair) because the obstruction does not disadvantage a suspect class or impermissibly interfere with fundamental rights as currently conceived in American law. Thus, for anyone seeking to challenge a workers’ compensation law because it singles out workers’ compensation claimants for unfair treatment, I recommend either selection of a different federal theory (I’ll be discussing federal due process analysis and expanding upon 9th Amendment theory in upcoming posts) or mounting a challenge under state constitutional provisions. (I think there may be some room to argue for intermediate scrutiny, but such approaches have not yet been successful – I write about them here.) Every couple of years I feel it necessary to go through this exercise for the benefit of those healthy individuals whose hobby is not federal constitutional law.

The appropriate standard of review outside of the categories I have mentioned above is whether the difference in treatment between classifications (workers' comp/non-workers' comp) rationally furthers a legitimate state interest. In general, the Equal Protection Clause is satisfied so long as there is a plausible policy reason for the classification, see United States Railroad Retirement Bd. v. Fritz, 449 U.S. 166, 174, 179 (1980). But states are not required to convince the courts of the correctness of their legislative judgments. Rather, “those challenging the legislative judgment must convince the court that the legislative facts on which the classification is apparently based could not reasonably be conceived to be true by the governmental decisionmaker.” Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 464 (1981); Nordlinger v. Hahn, 505 U.S. 1, 11 (1992); Armour v. City of Indianapolis, 566 U.S. 673, 685 (2012). A legislature need not “actually articulate at any time the purpose or rationale supporting its classification.” Nordlinger at 15. Rather, the “burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it.” Madden v. Commonwealth of Kentucky, 309 U.S. 83, 88 (1940); Armour at 681. A law is constitutionally valid if “there is a plausible policy reason for the classification, the legislative facts on which the classification is apparently based rationally may have been considered to be true by the governmental decisionmaker, and the relationship of the classification to its goal is not so attenuated as to render the distinction arbitrary or irrational.” Nordlinger at 11. And there is such a plausible reason if “there is any reasonably conceivable state of facts that could provide a rational basis for the classification.” FCC v. Beach Communications, Inc., 508 U.S. 307, 313 (1993). A classification is generally valid as long as a rational basis is plausible, even if the legislature did not expressly endorse it. See Beach Commc’ns at 313–15; Indiana Petroleum Marketers & Convenience Store Ass’n v. Cook, 808 F.3d 318, 322 (7th Cir. 2015). Rational-basis review tolerates overinclusive classifications, underinclusive ones, and other imperfect means-ends fits. Heller v. Doe, 509 U.S. 312, 319–320 (1993); Gregory v. Ashcroft, 501 U.S. 452, 473 (1991); Vance v. Bradley, 440 U.S. 93, 107–09 (1979). The standard also imputes “a strong presumption of validity” on the contested classification. Beach Commc’ns at 314–15. To over-come that presumption, a challenger must negate “every conceivable basis which might support” the classification. St. Joan Antida High School, Inc. v. Milwaukee Public School District, 919 F.3d 1003, 1010 (7^th Cir. 2019).

My advice: Pick another theory.

Michael C. Duff

DOL’s FLSA “Gig” Economy Letter Ignores History and is Dwarfed by 9th Circuit’s Jan-Pro Case

I have been asked a couple of times this week to comment on the apparent narrowing of the FLSA employee standard in a recent Wage and Hour Opinion letter. In a nutshell, the letter tells me nothing I did not already know. “Virtual Marketplace Companies” badly want advance governmental imprimatur for the argument that, although they employ labor, they are not employers. The letter is not really worth analyzing because it is cautiously cabined and advisory: the facts underlying the analysis were spoon-fed to the Wage and Hour analysts in a manner most likely to lead to the foreordained conclusion that the workers in question are independent contractors. It is however telling that the anonymous solicitor of the opinion frames the questions in terms of all “virtual” companies connecting “service providers to end-market consumers to provide a wide variety of services, such as transportation, delivery, shopping, moving, cleaning, plumbing, painting, and household services.” The bloom is off the rose with respect to the hegemonic designs of this deregulatory project. Silicon Valley Gig work is a quaint anachronism. And it should be remembered that is some states these marketplace contractor laws have been applied to workers' compensation.

Anyone wanting to read the actual employee-status intent of Congress in enacting the Fair Labor Standards Act (the statute at the center of the current Wage and Hour letter) would do much better reading David Weil’s Administrator’s interpretation (Weil was a former Democratic Wage and Hour administrator). While Weil’s analysis is also a political document, it contains a far more comprehensive account of the FLSA employee question, including this nugget from the Congressional history as quoted in footnote three of the Supreme Court’s opinion in U.S. v. Rosenwasser:

Sen. Rep. No. 884 (75th Cong., 1st Sess.) p. 6, states that the term “employee’ is defined to include all employees. * * *’ Senator Black said on the floor of the Senate that the term ‘employee’ had been given ‘the broadest definition that has ever been included in any one act.’ 81 Cong.Rec. 7657. (emphasis supplied)

Also from Rosenwasser,

The term ‘employee’ is defined in Section 3(e) to include ‘any individual employed by an employer,’ with certain exceptions not here pertinent being specified in Section 13, and the term ‘employ’ is defined in Section 3(g) to include ‘to suffer or permit to work.’ A broader or more comprehensive coverage of employees within the stated categories would be difficult to frame. (emphasis supplied)

All I can say is that I would feel pretty confident litigating an FLSA “virtual marketplace” employee case, even if Chevron deference were applied by the courts to the DOL interpretation. Unless the worker in question is in fact a computer (or perhaps a robot), I’d like my chances under current law.

Meanwhile, the 9^th Circuit’s opinion in Vazquez et al. v Jan-Pro Franchising brought application of the ABC test to Jan-Pro franchisor-franchisee “arrangements” closer to a day of substantive reckoning. The Jan-Pro structure is an elaborate scheme which, at the end of the day, unsurprisingly classifies janitors as independent contractors who, accordingly, are denied statutory labor protection. After a tortuous procedural journey worthy of study in any first year civil procedure class (there was ancillary litigation in both Massachusetts and Georgia), the 9^th Circuit concluded that none of the prior litigation was entitled to preclusive/res judicata effect (the specific litigation under review in the 9^th Circuit involved California state-law plaintiffs and had been severed from earlier diversity of citizenship rounds of litigation). Accordingly, with the California-based litigation remaining “live,” the substance remaining was whether employee-status questions would be controlled by Dynamex (establishing the ABC employee standard for California wage orders), which had been decided well after the onset of the Jan-Pro litigation. The 9th Circuit answered in the affirmative. The Court first reminded readers that, “[t]he principle that statutes operate only prospectively, while judicial decisions operate retrospectively, is familiar to every law student.” The Court concluded on this point that “[g]iven the strong presumption of retroactivity, the emphasis in Dynamex on its holding as a clarification rather than as a departure from established law, and the lack of any indication that California courts are likely to hold that Dynamex applies only prospectively, we see no basis to do so either.”

The second major issue was whether applying Dynamex (the ABC employee status standard) retroactively would offend due process because, among other reasons, Jan-Pro had relied on the old standard. (An exception to the retroactively rule at times under California law). The Court found that a state court modifying common law was entitled to deference exceeding that afforded during rational basis review of a legislative enactment (that is a lot of deference). The 9^th Circuit further concluded that the California Supreme Court’s reasoning was “neither arbitrary nor irrational,” a predicate finding required to establish a due process violation. The Circuit stated,

By applying Dynamex retroactively, we ensure that the California Supreme Court's concerns are respected. Besides ensuring that Plaintiffs can provide for themselves and their families, retroactivity protects the janitorial industry as a whole, putting Jan-Pro on equal footing with other industry participants who treated those providing services for them as employees for purposes of California's wage order laws prior to Dynamex. And retroactive application ensures that California will not be burdened with supporting Plaintiffs because of the “ill effects” that “result[] from substandard wages.”

Due process was not deemed offended, and the case was remanded for decision on the merits, but with a wrinkle only occasionally seen in federal circuit court cases: the Circuit offered “observations and guidance” to the district court on remand to the district court. The first interesting thing about the “guidance”—from this tort professor’s perspective—is the Court’s caution to separate carefully issues of “control” in the tort vicarious liability context from those in the employer-employee context. As I often tell my students, vicarious liability has historically possessed a “push” dynamic (push servant status away) while statutory coverage has possessed a “pull” dynamic (pull servant status in). For more, see here, and here. The second interesting thing about the “guidance” is that the Court signaled that Jan-Pro, under Prong B of the ABC test (concerning which the employer has the burden), has not under the existing record established that “it was not engaged in the same usual course of business as the putative employee.” I read the opinion as saying to the district court, develop the record more if you like, but you probably do not have to do so under Prong B. Granting MSJ in favor of plaintiffs is supportable right now.    

Given the extent of economic activity encompassed by the 9^th Circuit opinion, and the non-binding nature of the DOL’s Wage and Hour Letter, it is not difficult for this writer to see that the former development has much greater impact on the so-called Gig economy than the latter. All Dynamex pipeline cases (cases currently in process that arose before Dynamex was decided) may have instantly experienced a large increase in value.

Michael C. Duff