Freeman Mathis & Gary, LLP, is pleased to announce that H. Eric Hilton and Jeffrey A. Kershaw have joined the firm as Partners in its Atlanta office.

Mr. Hilton’s practice focuses on construction, labor & employment and general liability, as well as outside general counsel services.  He represents a wide range of clients including construction general contractors, engineering firms, retail companies, property owners, management firms, elder care and assisted living facilities and hospitality industry clients.  His experience in labor and employment law includes handling claims under Title VII, the ADA, the ADEA and various state laws.  He also has negotiated numerous labor agreements with a particular focus on the hospitality industry.

Mr. Hilton serves as outside general counsel for a number of his clients and was recognized in 2012 with the Outstanding General Counsel Award from the Atlanta Business Chronicle and the Association of Corporate Counsel, Georgia Chapter.  He previously served as Senior Vice President, General Counsel and Corporate Secretary for an Atlanta-based national construction, real estate development and property management firm.  In that position he also oversaw the legal affairs of the Company’s affiliates including airport concessions, and its restaurant and hotel interests.  In addition to serving as the Company’s chief legal officer, Eric oversaw the Company’s human resources and risk management functions.

Mr. Hilton also serves on the Board of Directors for Atlanta Habitat for Humanity, Inc. and the Latin American Association, is a member of 100 Black Men of Atlanta, Inc., a 2012 Alumnus of Leadership Atlanta, and also serves on Fernbank Museum’s Corporate Leadership Council.  He received his B.S. degree from Hampton University and his law degree from the George Washington University Law School.

“Construction law has always been one of our firm’s core practice areas and the addition of Eric Hilton is an incredible addition as we expand that presence nationally,” said Ben Mathis, FMG’s managing partner.  “We are also excited about the diversity of Eric’s practice, to include his labor and employment experience, as well as his unique knowledge and background as a former general counsel.  We are extremely glad that he has become part of the FMG team.”

Click here to read more.

Mr. Kershaw’s practice primarily focuses on coverage and bad faith defense, and his litigation practice also includes general liability, professional liability, directors and officers liability, employment practices liability and commercial property. He regularly provides coverage advice to insurers throughout the United States and overseas, drawing upon his experience as outside counsel as well as in-house counsel to one of the largest insurers in the Lloyd’s market.

Mr. Kershaw’s experience also includes commercial litigation, including shareholder litigation, products liability and environmental liability.

“Jeff brings incredible experience that will add greatly to our existing team of attorneys focused on meeting the needs of our insurance clients,” said Managing Partner Ben Mathis. “We are fortunate to have been able to attract someone of his background and caliber to our firm.”

Mr. Kershaw is a graduate of The College of William and Mary and received his law degree from Vanderbilt University Law School.

Click here to read more.

Freeman Mathis & Gary, LLP is pleased to announce the expansion of the firm’s government and regulatory practices with the addition of Dan Lee and Allan Hayes, principals of Piedmont Public Affairs.

Dan Lee, who joins the firm as a Partner, is a former Georgia State Senator who served as Senior Administrative Floor Leader for former Governor Sonny Perdue.  He also served on the transition team of Governor Nathan Deal. Mr. Lee has an extensive background in municipal and county government and has represented more than 30 Georgia counties and cities. He is a graduate of LaGrange College and the Cumberland School of Law in Birmingham, Alabama.

Allan Hayes, who joins the firm as a Managing Director, is a recognized authority on insurance compliance issues. He is a former Deputy Commissioner of Insurance, Deputy Fire Safety Commissioner and Deputy Industrial Loan Commissioner in the office of Georgia Insurance and Safety Fire.   Prior to that, he served as district director for former United States Congressman John Linder. He is a graduate of the University of Georgia and received his Masters in Business Administration from Mercer University.

"Our firm's clients will benefit from Dan and Allan’s experience with the local, state and federal government, as well as their unique perspectives on both legislative and regulatory advocacy issues,” commented Managing Partner, Ben Mathis.  “We are excited about what Dan and Allan bring to our firm, in particular our local government and insurance practice areas. They add legislative advocacy and regulatory capabilities to our existing government litigation team. We are now able to offer our corporate and governmental clients an unparalleled array of legal services in their interaction with all levels of government.

Mr. Lee and Mr. Hayes joined FMG in the Atlanta office effective January 1, 2017.

Freeman Mathis & Gary, LLP (FMG) is pleased to announce that the lawyers of Edgerton & Weaver, LLP (E&W) will be joining the firm effective January 1, 2017. E&W is headquartered in Los Angeles, and focuses on financial services, security brokerage, banking, cyber and professional liability. E&W represents several of the nation’s largest and most respected financial institutions.

Sam Edgerton and Chad Weaver will join the firm as partners and serve as Co-Chairs of FMG's Securities and Financial Securities National Practice Group. E&W has eleven attorneys and two securities consultants, all of whom will be joining FMG. With the E&W additions and FMG's current attorneys in California, the firm will now have over twenty lawyers among its offices in San Francisco, Los Angeles and Orange County.

Ben Mathis, Managing Partner of FMG, stated:  “Sam Edgerton and Chad Weaver, and their entire team, are terrific lawyers with a national reputation.  We have known them for many years, and we are very pleased we are able to join together. Their addition to our existing attorneys gives us a formidable group of experienced financial lawyers and a strong team of litigators in California.”

“We are excited at this opportunity to grow our practice with a national platform," said Sam Edgerton. "Chad and I have worked together for 20 years and had many opportunities to join other firms, but this was a great fit for us.  With FMG’s existing financial practice, we will have coast-to-coast capability to represent clients throughout the country.”

For more information, contact Caitlin Bareis at (770) 818-1425 or [email protected].

Josh Ferguson Joins FMG as Partner

Joshua G. Ferguson has joined the Firm as a Partner in FMG's Philadelphia office and also will work in the Moorestown, NJ, and New York City offices.  Mr. Ferguson has practiced law for over twelve years and adds depth to the firm's Commercial General Liability practice, as well as the Construction and Professional Liability practices. He works primarily in the areas of commercial premises, motor vehicle, contract, insurance coverage and construction defect litigation, and has litigated cases throughout the United States.

Mr. Ferguson serves as general counsel for a wide variety of businesses, including those in the construction, snow removal and landscaping industries. Mr. Ferguson regularly advises clients on pending legislation at the Federal and State levels.  He has drafted legislation on behalf of various industries, and has testified in Washington, D.C. and Harrisburg, Pennsylvania before House Committees.

Mr. Ferguson received his law degree from Widener University School of Law, cum laude, and his undergraduate degree from Old Dominion University. He is a member of the Defense Research Institute, the Accredited Snow Contractors Association, and the National Association of Landscape Professionals.

Please contact Mr. Ferguson at [email protected] or by phone at 267.758.6024.

FMG Adds 5 New Attorneys to Atlanta Office

Also joining Freeman Mathis & Gary recently are the following new associates:

Jake Carroll will practice in the firm’s Construction Law and CGL and Business Liability practice groups, where he focuses on representing contractors, subcontractors, owners, architects, engineers, and sureties, in a variety of disputes. Prior to joining FMG, Mr. Carroll completed a two-year clerkship for the Honorable Charles H. Weigle, United States Magistrate Judge in the Middle District of Georgia. Mr. Carroll received his J.D., magna cum laude, from Mercer University, Walter F. George School of Law, where he was awarded the Faculty Award for Legal Writing, served as the Student Writing Editor of the Mercer Law Review, and interned for the Honorable C. Ashley Royal, United States District Judge in the Middle District of Georgia. Mr. Carroll also received the CALI Award for Excellence in courses on Corporate Issues, Business Drafting, and Social Justice. At graduation, he was inducted into the Brainerd Currie Honor Society in recognition of his outstanding academic performance.

Please contact Mr. Carroll at [email protected] or by phone at 770.818.4243.

Robyn Flegal joins the Commercial and Complex Litigation and Labor and Employment practice groups at Freeman Mathis & Gary, LLP. Prior to joining the firm, Ms. Flegal served as a law clerk to the Honorable Thomas Q. Langstaff, United States Magistrate Judge for the United States District Court for the Middle District of Georgia. Ms. Flegal received her J.D., cum laude, from the University of Georgia School of Law. While in law school, Ms. Flegal served as a notes editor for the Journal of Intellectual Property Law and also served as the President of the Business Law Society. She also spent a semester in residence at the University of Oxford studying international and comparative law. Ms. Flegal earned her undergraduate degree in Management from the Georgia Institute of Technology, where she graduated with highest honors.

Please contact Ms. Flegal at [email protected] or by phone at 770. 818.1429.

Jason Kamp will practice in the firm’s CGL and Business Liability, as well as the Construction and Design Law, practice groups. He received his bachelor’s degree in Government from Georgetown University and his law degree from Vanderbilt University Law School. While in law school, he interned for the Honorable Keith Starrett in the United States District Court for the Southern District of Mississippi. Mr. Kamp was also a Scholastic Excellence Award recipient for Property Law, a Dean’s Scholar, an authorities editor for the Journal of Transnational Law, a member of the Moot Court Board, and Phi Delta Phi.

Please contact Mr. Kamp at [email protected] or by phone at 770.818.1291.

Michael Kouskoutis joins FMG and will practice in the firm’s Professional Liability and Government Law practice groups. Mr. Kouskoutis has experience in land use and zoning, as well as law enforcement litigation both locally and nationally. He received his law degree from the University of Florida Levin College of Law, where he graduated with honors and was a member of the Journal of Technology Law and Policy. He received his undergraduate degrees in History, magna cum laude, and Psychology, magna cum laude, from the University of South Florida.

Please contact Mr. Kouskoutis at [email protected] or by phone at 770.818.4259.

Daniel A. Nicholson practices in the firm's Construction Law and Complex Commercial Litigation practice groups. Mr. Nicholson received his undergraduate degree in Political Science from the State University of New York at Albany and his law degree from Albany Law School.  While studying at Albany Law, Mr. Nicholson was director of the Kinship Care Pro Bono Society, where he assisted attorneys and public interest groups in changing state and national laws to protect and support relative caregivers.  Mr. Nicholson was also a founding member and vice-president of the reestablished Federalist Society, competed in the Donna Jo Morse Negotiation Competition of 2014 and 2015, and is certified under Mediation Training conducted by the New York Unified Court System’s Office of ADR Programs.

Please contact Mr. Nicholson at [email protected] or by phone at 770.818.4254.

By: Amy C. Bender

OSHA has further delayed enforcement of the anti-retaliation provisions of the injury and illness tracking rule (discussed here) until December 1 in light of a pending federal lawsuit in Texas challenging the Final Rule. However, it is likely that some version of the Final Rule will remain since OSHA takes the position that it always has prohibited retaliation for reporting workplace illnesses and injuries, and will continue to do so, and that any personnel policies that run afoul of this will be invalid. Therefore, we encourage clients to continue reviewing their relevant drug testing and illness/injury reporting policies to ensure compliance.

By: Amy C. Bender

Effective November 1, the Occupational Safety and Health Administration (“OSHA”) will begin enforcing provisions of a Final Rule aimed at what it describes as “promotion of complete and accurate reporting of work-related injuries and illnesses.” These provisions will have a significant impact on employers’ personnel policies, particularly regarding employee drug testing.

Indeed, perhaps the most dramatic change in this potentially far-reaching regulatory effort is that OSHA now takes the position that blanket, mandatory drug testing of an employee following a workplace injury – which is common for employers to require – is prohibited. OSHA reasons that such a policy is a “form of adverse action that can discourage reporting” a work-related injury or illness since it often is viewed as “an invasion of privacy.” According to examples cited in the Final Rule, it typically will not be reasonable for an employer to require post-accident drug testing if an employee reports a repetitive strain injury or an injury caused by a tool malfunction. OSHA contends that injuries of this type do not reasonably implicate possible drug use and, therefore, cannot be subject to a mandatory testing requirement.

In this regard, OSHA does not prohibit all post-accident testing. Instead, the Final Rule states such testing should be limited to situations in which employee drug use is “likely to have contributed to the incident and for which the drug test can accurately identify impairment caused by drug use.” Importantly, mandatory post-accident testing also still is permitted under the Final Rule when the testing is conducted pursuant to an applicable state or federal law or regulation, such as Department of Transportation regulations or a state worker’s compensation law. In light of this view, employers are advised to review their employee drug testing policies and narrow any post-accident testing component.

Another significant aspect of the Final Rule concerns stricter requirements for workplace policies regarding employee reports of an occupational illness or injury. OSHA explains in the rule that such policies must be “reasonable,” and in order to be “reasonable,” they must not be too rigid or burdensome and also must account for illnesses and injuries that are not readily apparent, such as musculoskeletal injuries that develop over time. As a result, a policy requiring employees to report an illness or injury “immediately” – which is the type of policy many employers currently have – no longer will pass muster under OSHA. And, employer policies should affirmatively emphasize that employees who make a report will not be subject to retaliation.

The Final Rule also provides for new electronic reporting requirements for certain records of occupational illnesses and injuries for employers of 10 or more employees, as we reported in a previous blog entry here. According to OSHA, this will make data more available to the general public and, as a result, “nudge” employers to provide safer workplaces (since their safety records now will be under greater scrutiny). In order to make this data “more complete and accurate,” OSHA’s Final Rule includes provisions supposedly aimed at eliminating barriers to employees reporting such illnesses and injuries in the first place, such as:

• Requiring employers to inform employees of their right to report work-related injuries and illnesses free from retaliation;
• Incorporating existing statutory prohibitions on retaliating against employees for reporting work-related injuries or illnesses; and
• Clarifying that an employer’s procedure for reporting work-related injuries and illnesses must be reasonable and not deter or discourage employees from reporting.

OSHA has delayed enforcement of the enhanced reporting provisions under the Final Rule until November 1 in order to conduct “additional outreach.” While it is possible that enforcement will be delayed again, given the impending deadline, employers should be prepared to modify their personnel policies regarding drug testing and reporting of workplace illnesses and injuries to ensure they comply with OSHA’s Final Rule and its increased focus on retaliation and reasonableness. FMG’s Labor and Employment Law attorneys are available to assist you in this policy review or answer any questions about OSHA’s Final Rule.

By: Marty Heller and Timothy Holdsworth

On September 20, twenty-one (21) states filed a challenge to the Department of Labor’s (“DOL”) increases to the minimum salary included in the final rules amending the Fair Labor Standard Act’s (“FLSA”) White Collar Exemptions, released in May.

As you may recall, these changes increase the minimum salary for individuals paid under the FLSA’s “white collar” exemptions to $47,474 per year, with an effective date of December 1, 2016.

In the complaint, the states argue that the new overtime rules unconstitutionally infringe on their sovereign power to dictate the pay, hours, and compensation of state employees, and, therefore, how the states allocate their budgets.

The states also argue that the DOL exceeded its Congressional authority under the FLSA by enacting changes to the white collar exemption’s salary level, highly compensated employee minimum salary level, and automatically updating these salary levels without going through notice-and-comment rulemaking.

As we have previously discussed, challenges to the DOL’s final rule were expected. However, it is unclear whether this challenge will substantially change or delay the enforcement date of December 1, 2016. As a result, we strongly encourage our clients to continue reviewing all of their salaried exempt positions to determine what changes may need to be made to be compliant with the final rule. In the meantime, we will keep you updated on any major developments in this case.

For more information, contact:

Marty Heller  Partner Direct: 770.818.1284 [email protected]

Timothy Holdsworth  Associate Dial: 770.818.4249 [email protected]

Cheryl H. Shaw has joined the firm as a Partner in the Atlanta office.  She previously was a partner with the Carlock Copeland firm and has practiced law for over fifteen years.  Ms. Shaw brings a wide array of litigation experience in construction and design law, general liability, and professional liability.  Ms. Shaw has represented clients on both a national and state level, including the Georgia Court of Appeals and the Georgia Supreme Court.

Ms. Shaw’s construction law practice includes the representation of design professionals, contractors, owners, and other clients in all types of construction disputes, including professional malpractice, risk management, and breach of contract.  She has represented clients in claims relating to negligent design, contract administration, and construction management in litigation, arbitration, and mediation proceedings.  A significant part of her practice is also devoted to client consultation regarding professional service agreements. 

Ms. Shaw's professional liability and commercial liability litigation practice includes defending Directors and Officers cases and also includes representing, in addition to architects and engineers, other professionals such as lawyers, real estate agents, and insurance professionals in Errors and Omission cases.  She also has handled cases under the False Claims Act, Fair Debt Collection Practices Act, Telephone Consumer Protection Act, and RICO, in addition to breach of fiduciary duty claims and many other business law and partnership disputes.

Ms. Shaw's general and business liability practice includes all types of personal injury, property damage, tortious interference, and other liability claims.  Her experience includes defending claims such as negligent security, transportation, sexual assault, slip and fall cases, and premises liability.

Ms. Shaw received her undergraduate degree from the University of Maine (B.A., cum laude), and her law degree from Suffolk University Law School (J.D., cum laude) where she was a member of the Moot Court Board.  

Ms. Shaw has been recognized as a “Rising Star,” a designation honoring top lawyers in Georgia under the age of 40.

Cheryl Shaw can be reached at [email protected] or 770.818.1422.

By: Ben Mathis and Amy Bender

The Department of Labor’s new “Persuader Rule,” which is effective July 1, 2016, imposes significant reporting obligations on employers and their consultants (including outside law firms) that engage in activities designed to persuade employees regarding collective bargaining rights, status, and activity. Previously, reporting was required only when firms had direct contact with employees, and “giving advice” was exempt. Under the new regulations, however, the interpretation of “advice” is significantly narrowed, making much more activity that firms typically provide to employers regarding labor relations (which, according to the DOL, is considered “indirect” persuasion) subject to reporting – on both the substance of the work and the compensation paid. These indirect persuader activities include:

1. Planning, directing, or coordinating activities undertaken by supervisors or other employer representatives including meetings and interactions with employees;
2. Providing material or communications for dissemination to employees;
3. Conducting a union avoidance seminar for supervisors or other employer representatives; and
4. Developing or implementing personnel policies, practices or actions for the employer.

The good news is that the DOL recently has clarified that labor relations services provided pursuant to agreements entered into before July 1, even if the services are provided afterward, will be interpreted under the old rule. Thus, in order to avoid application of the new, more stringent rule and its reporting obligations, FMG is advising its clients to sign a labor relations agreement with the firm on or before June 30. To obtain an agreement, please click here. You also may request an agreement or discuss any questions regarding the DOL’s Persuader Rule by contacting one of FMG’s Labor and Employment Law attorneys.

On June 27, in a lawsuit filed by several business organizations and states, a federal court in Texas issued a nationwide injunction of the Persuader Rule, finding that the rule threatened employers’ access to legal services and interfered with their First Amendment rights. Thus, for now, enforcement of the rule is on hold. However, the future of the rule still is uncertain since the decision likely will be appealed. Therefore, out of an abundance of caution, FMG still is advising its clients to sign an agreement in the event the rule later is upheld.

Freeman  Mathis  &  Gary  Presents Local Government  Webinar  Series

These one-hour webinars are free of charge and designed for attorneys, elected officials, insurance claims professionals, risk managers, executive staff, and human resources. CLE and CE credit available.

Law Enforcement Liability Update

Tuesday, July 26, 2016, 2:00 - 3:00 pm 

This webinar will address the front-burner topics of claims of excessive force, the “officer created danger” theory of liability, use of electronic control devices for compliance, implications of the ADA in arrests, and a survey of recent SCOTUS cases regarding law enforcement liability. 

Top Ten Employment Issues Facing Public Employers  

Tuesday, September 27, 2016, 2:00 - 3:00 pm

This webinar will explore the key hot-button employment issues facing public employers. 

Putting Out Fires:  Hot Liability Topics  for Governments and Their Employees

Tuesday, November 8, 2016, 2:00 - 3:00 pm 

Click here for more information on each seminar and how to register.

For  more  info  contact:  Amy Hart, [email protected] 

By: Marty Heller

The Department of Labor will be releasing the much anticipated final rule implementing its changes to the salary basis for the Fair Labor Standard Act’s White Collar Exemptions today.  In a press release issued yesterday night, the Department of Labor outlined the key changes contained in the final rule, which are set to become effective on December 1, 2016. 

The minimum salary payment for the executive, administrative and professional exemptions essentially will be doubled, from the current rate of a minimum of $455 per week ($23,660 per year), up to $913 per week ($47,476 per year).  Employers will be able to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to ten percent of the required salary level, so long as these payments are made at least quarterly. 

The final rule also adopts a standard that updates the minimum salary for the white collar exemptions every three years, with the salary to be increased so that it is “equal to the 40^th percentile of weekly earnings for full-time salaried workers in the lowest-wage Census Region” (which currently is the south). 

Finally, the final rule increased the minimum salary to qualify for the “highly compensated employee exemption” from its current level ($100,000) up to $134,004.00. 

Although the final rule has not yet been published, the Department of Labor has released a chart showing the differences between the current rule, the proposed rule, and the final rule (as it will be published today).  We have copied that chart below for your convenience.   

The final rule may be subject to congressional challenges, however, we strongly encourage our clients to begin the process of reviewing all of their salaried exempt positions to determine what changes may need to be made to be compliant with the final rule.  This can include changing the status of current salaried exempt employees, or increasing their pay to ensure that they remain properly classified. 

Philadelphia (July 21, 2015) - Commercial and Complex Litigation attorney, Jonathan Romvary has joined Freeman Mathis & Gary, LLP as an Associate in the firm's Commercial and Complex Litigation group. Prior to joining Freeman Mathis & Gary, Mr. Romvary was an associate at Goldberg & Wolf, LLC and Ryder, Lu, Mazzeo & Konieczny, LLC, both in the Philadelphia region. 

Mr. Romvary has substantial experience representing a full range of clients involved in commercial and complex litigation matters.  Mr. Romvary frequently represents regional employers and his litigation experience includes contract disputes, breach of fiduciary duty, fraudulent inducement, patent litigation, Lanham Act litigation and the defense of wage and hour claims.  Mr. Romvary has served as legal counsel to both national and regional contracting companies specializing in residential and commercial construction.

“Freeman Mathis & Gary, LLP are one of the leading litigation firms in the county. Their commitment to providing excellent client service and attracting the highest caliber attorneys convinced me to join." offered Jonathan Romvary. "I am excited to join the firm and its growing Philadelphia and New Jersey office.”

“Jonathan is a rising star.  He brings energy and passion to his work, which is a necessary quality for promising young lawyer,” says Jennifer Ward, Managing Partner of the firm's Philadelphia and New Jersey Offices, who works in the firm's Labor and Employment Law, Commercial and Complex Litigation and Business and Professional Liability practice groups.

Mr. Romvary received his undergraduate degree in Computer Science from Saint Joseph’s University in Philadelphia.  Mr. Romvary then received his Juris Doctor from Rutgers University School of Law, where he was the Managing Technical Editor of the Rutgers Journal of Law and Public Policy.  While in law school, Mr. Romvary served as a law clerk for the Hon. Joel H. Slomsky of the United States District Court for the Eastern District of Pennsylvania and the Hon. James J. Fitzpatrick, III, of the Superior Court of Pennsylvania.  Mr. Romvary is an active member of numerous alumni organizations and organizes the Saint Joseph’s Preparatory School’s Professional Networking Group of Philadelphia. Mr. Romvary's first day was May 13. Please join us in welcoming Mr. Romvary to Freeman Mathis & Gary, LLP.

Philadelphia (July 20, 2015) - Labor and Employment attorney, Mark Stephenson has joined Freeman Mathis & Gary, LLP as Of Counsel in the firm's Labor and Employment group. Prior to joining Freeman Mathis & Gary, Mr. Stephenson was a partner at Nelson, Levine, DeLuca & Horst and Margolis Edelstein, and Of Counsel at Cozen & O’Connor. He was corporate counsel to Unisys Corporation, focused on Labor & Employment and large scale corporate structuring.

Mr. Stephenson has significant experience representing companies of all sizes in Employment, ERISA and non-ERISA fiduciary matters. He has litigated a wide array of Employment claims, including whistleblower, sexual harassment, retaliation, race, sex, national origin, FMLA, disability discrimination, wage and hour collective actions and the enforcement of stock options, restrictive covenants and other employment-related agreements.

"I'm excited to be joining the outstanding team at Freeman Mathis & Gary in Philadelphia and New Jersey." offered Mark Stephenson. "I'm very impressed by Jennifer Ward and I look forward to working with her to develop its ERISA and fiduciary practice areas."

"We are fortunate to have Mark join the Philadelphia and New Jersey offices of FMG.  Mark’s breadth of legal and trial experience, particularly ERISA fiduciary litigation,  will serve to deepen our legal team and build our growing ERISA client base," says Jennifer Ward, Managing Partner of the firm's Philadelphia and New Jersey Offices, who works in the firm's Labor and Employment Law, Commercial and Complex Litigation and Business and Professional Liability practice groups.

Mr. Stephenson also defends companies and ERISA fiduciaries in defense of EBSA/DOL investigations and litigation arising from 401(k) management, multi-employer pension liability, breach of fiduciary duty, denied claims for benefits and subrogation. He also defends governmental entities and companies, as well as their fiduciaries, not subject to ERISA regarding claims of breach of fiduciary duty.

Mr. Stephenson counsels employers of all sizes on employment best practices, implementing employee handbooks, policies and procedures that are tailored to maximize managerial flexibility and control. He also works with companies to protect proprietary and confidential information as well as valuable relationships with customers and employees by developing effective restrictive covenants, works for hire, non-disclosure and non-competition agreements. Mr. Stephenson's first day was July 6. Please join us in welcoming Mr. Stephenson to Freeman Mathis & Gary, LLP.

 By: Jacob E. Daly

Earlier this week, the Supreme Court of Georgia issued another decision on the meaning and application of O.C.G.A. § 51-12-33, the oft-litigated statute that governs apportionment of fault to nonparties.  This statute was overhauled in 2005 as part of the tort reform movement embodied in Senate Bill 3, and it now allows nonparties to be included on the verdict form and requires juries to apportion fault for the plaintiff’s injuries to the plaintiff, the defendant(s), and nonparties for whom notice has been provided.  Because nonparties usually do not have significant assets, they are not often sued by the plaintiff despite their fault for causing the plaintiff’s injuries.  The ability to require the jury to apportion fault to a nonparty is a powerful tool for defendants, and that is why attorneys who regularly represent plaintiffs have so vigorously challenged the validity and applicability of this statute over the last 10 years.

The latest challenge to this statute came in Zaldivar v. Prickett, No. S14G1778 (July 6, 2015), which was a routine car wreck case.  Daniel Prickett sued Imelda Zaldivar to recover for injuries he sustained in a collision, and each blamed the other for causing the collision.  At the time of the collision, Prickett was driving a truck provided by his employer, Overhead Door Company.  Claiming that Overhead Door negligently entrusted its truck to Prickett, Zaldivar sought to have it included on the verdict form as a nonparty to whom the jury should apportion fault for contributing to Prickett’s injuries.  Prickett filed a motion for partial summary judgment in which he asked the trial court to disallow such apportionment, and the trial court granted the motion.  The Court of Appeals of Georgia affirmed in a split decision.

On appeal to the supreme court, Prickett argued that the court of appeals was correct because (1) fault can be apportioned to a nonparty only if the nonparty committed a tort that proximately caused his injuries, and (2) negligent entrustment of an instrumentality can never proximately cause an injury to the person to whom it was entrusted.  Prickett relied for this argument on Ridgeway v. Whisman, 210 Ga. App. 169, 435 S.E.2d 624 (1993), which the court of appeals decided long before the General Assembly enacted the 2005 amendment to O.C.G.A. § 51-12-33.  Zaldivar countered by pointing to the new statutory language, which she said contemplates apportionment of fault to a nonparty even if the nonparty did not commit a tort that proximately caused the plaintiff’s injuries.

In a unanimous decision written by Justice Keith Blackwell, the supreme court reversed the court of appeals and held that Zaldivar could have Overhead Door included on the verdict form for apportionment purposes.  In reaching this decision, the supreme court gave something to plaintiffs by agreeing with Prickett’s first argument.  The relevant language comes from O.C.G.A. § 51-12-33(c), which provides that “the trier of fact shall consider the fault of all persons or entities who contributed to the alleged injury or damages.”  The supreme court interpreted this language as follows:  “In context, subsection (c) is most naturally and reasonably understood to require the trier of fact to consider any breach of a legal duty that sounds in tort for the protection of the plaintiff, the breach of which is a proximate cause of the injury about which he complains, whether that breach is attributable to the plaintiff himself, a defendant with liability, or another.”  This is a win for plaintiffs because it means that there are limits to a defendant’s ability to include nonparties on the verdict form.

Zaldivar argued that this interpretation of O.C.G.A. § 51-12-33(c) was incorrect because of the language that follows the language quoted above.  In its entirety, O.C.G.A. § 51-12-33(c) provides as follows:  “In assessing percentages of fault, the trier of fact shall consider the fault of all persons or entities who contributed to the alleged injury or damages, regardless of whether the person or entity was, or could have been, named as a party to the suit.”  According to Zaldivar, if a nonparty’s fault can be considered regardless of whether it could have been sued, then a nonparty’s fault should be considered regardless of whether it committed a tort that proximately caused the plaintiff’s injuries.  But if, as Zaldivar’s argument continued, fault consists of the commission of a tort that proximately caused the plaintiff’s injuries, then the nonparty would be liable to the plaintiff and the “could have been” clause would be rendered meaningless.  In response, the supreme court said, “The answer is simple:  Proof of these essential elements [of a tort claim] is a necessary condition for tort liability, but it does not lead inevitably to liability.”  This is because a tortfeasor may escape liability because of an affirmative defense or an immunity, but that does not mean he is not still a tortfeasor.  “What happened, happened, and affirmative defenses and immunities do not change what happened, only what the consequences will be.”  Thus, O.C.G.A. § 51-12-33(c) permits fault to be apportioned to a nonparty tortfeasor, even though that person or entity may not be liable to the plaintiff because of an affirmative defense or an immunity.

Turning to the specific theory of nonparty fault raised by Zaldivar, the supreme court held that “Ridgeway is simply wrong” to the extent it held that negligent entrustment of an instrumentality can never proximately cause an injury to the person to whom it was entrusted.  Contrary to Prickett’s second argument, the law recognizes first-party negligent entrustment – i.e., where the plaintiff is the person who was negligently entrusted with the instrumentality – as a tort, even though liability usually will be precluded by the plaintiff’s own negligence.  Prickett argued that any fault by Overhead Door in entrusting the truck to him did not contribute to his injuries because his own negligence cut off the causal connection between his injuries and the alleged negligent entrustment, but the supreme court found that this argument improperly conflated proximate cause and comparative negligence.  Prickett could have sued Overhead Door for first-party negligent entrustment, and although Overhead Door may have prevailed on such a claim based on comparative negligence or the worker’s compensation bar, “an affirmative defense or immunity does not eliminate ‘fault’ or cut off proximate cause.”  Instead, affirmative defenses and immunities preclude liability notwithstanding the tortfeasor’s commission of a tort that proximately caused the plaintiff’s injuries.  Thus, Zaldivar was entitled to have the jury consider the fault of Overhead Door based on a theory of negligent entrustment.

Plaintiffs got something out of the supreme court’s decision, but defendants are not left empty-handed.  Confirming that negligent entrustment is a valid theory of nonparty fault is an important win for defendants.  Equally, if not more, important for defendants is the supreme court’s holding that fault can be apportioned to immune nonparties and to nonparties who cannot be liable to the plaintiff because of an affirmative defense.  The ability to include such nonparty tortfeasors on the verdict form is a substantial victory for defendants because it broadens the scope of nonparty apportionment of fault.  The issue of apportionment to an immune nonparty is scheduled to be argued in another case in the supreme court on July 14, 2015, and the supreme court has asked the parties in that case to brief the issue of whether Zaldivar controls their issue.  Regardless of how that case is decided, the importance of nonparty apportionment guarantees that challenges to the statute will not end, so stay tuned for additional developments.

Atlanta (July 8, 2015) - Products Liability attorney, Jaime Davis has joined Freeman Mathis & Gary, LLP as Of Counsel in the firm's Products and Liability group. Prior to joining Freeman Mathis & Gary, Ms. Davis worked at King & Spalding, an international law firm, where she defended clients including several leading pharmaceutical manufacturers, a domestic automotive manufacturer, a provider of dialysis services, and a Fortune 100 transportation company.  She was a member of the team serving as national coordinating counsel and trial counsel in nationwide product liability litigation involving an antidepressant.

"Jaime's experience and expertise in sophisticated Life Sciences litigation will further enhance our ability to protect our clients' interests in this rapidly changing industry," says Michael Bruyere, Partner in the firm's Product and Liability group.

"Freeman Mathis & Gary, LLP has distinguished itself as a litigation firm that provides excellent client service and value." offered Jaime Davis. "I am very excited to join the firm and its growing Life Sciences practice."

Ms. Davis has experience in large scale, multi-district product liability litigation as well as individual actions. She graduated from Vanderbilt University Law School, where she was the Senior Publication Editor of the Journal of Entertainment and Technology Law. Ms. Davis received her undergraduate degree from Washington and Lee University, graduating magna cum laude. Her first day at FMG was July 6.

By: Marty B. Heller

As expected, the Department of Labor has issued proposed regulations dramatically increasing the minimum salary requirement that may qualify for the white collar exemptions under the FLSA.  The current minimum salary is $455 (about $23,000 per year) per week, and the proposed regulations increase the minimum salary to $970 a week (about $50,000 a year).  They also tie this figure to national average income figures so that it will increase over time.  The proposed regulations also propose increasing the level which may qualify for the “highly compensated employees” exemption from $100,000 to $122,000.  Surprisingly, there were no other proposed changes to the white collar exemptions, despite prior announcements that changes would be made to the duties portions of the regulations.  While these rules are not yet final, the dramatic proposed increase to the minimum salary threshold is expected to make 5 million white collar workers who currently are exempt eligible for overtime pay. Once the proposed rule is published in the Federal Register, there will be a period of time for public comment, and several employer groups, and particularly employers in the retail and restaurant industry, are expected to take a strong stance against the changes. 

Hearing in Vogtle Review Provides New Information on Project’s Cost

 By: Bobby Baker

          At the June 23^rd hearing on the 12^th Vogtle Construction Monitoring Review the Public Service Commission (“PSC”) Staff expert witnesses provided new information regarding the actual financial impact of the current 39 month delay in the construction schedule for Vogtle Units 3 and 4.  While it is hardly newsworthy to report that the Project has fallen further behind schedule and the overall costs have increased, the PSC’s witnesses explained how the cost increases impact each residential ratepayer, quantified the total revenue requirement for the Project and refuted the Company’s claims regarding the alleged benefits of the Project.

          Staff Witness Philip Hayet testified that the current 39 month delay would add $319.00 or $6.26 per month to the average residential ratepayer’s bill beginning in April 2016 and continuing to June 2020 in the form of higher fuel costs and Nuclear Construction Cost Recovery (“NCCR”) tariff payments.  Of the additional $319.00 in costs, 59% of the increase or $187.00 would be through higher NCCR monthly charges.  The cost increase is especially significant to businesses because the $319.00 increase was for the average residential customer who uses 1,000 kilowatt hours per month.  Obviously, electric customers with higher monthly electric usage would be paying significantly more in fuel and NCCR costs.

          During cross examination concerning the current cost projection of $7.5 billion for Georgia Power Company’s share of the Project it was disclosed for the first time that the total revenue requirement just for Georgia Power’s share of the Project would be $30 billion.  Knowing that the total revenue requirement for the project is four times the construction costs gives consumers an ability to evaluate the total Project costs.  The current total revenue requirement for the Project is approximately $65 billion.

          In the past few Vogtle reviews it was revealed that the cost for every day of delay is $2 million.  This calculation was further clarified when it was explained that it did not contain payment of any taxes.  The gross up on the $2 million daily cost with taxes would be approximately $2.92 million.

          Finally, the PSC Staff witness refuted the Company’s claims regarding the alleged ratepayer benefits of the Project by testifying that the remaining $2.7 billion in alleged benefits claimed by the Company had shrunk down to no more than $208 million.  This figure would be further reduced to negative $300 million if 50% of the production tax credits were removed from the calculation.  Based on the Project’s current schedule it is highly unlikely that Unit 4 will be on line by December 31, 2020 to be eligible to receive $522 million in production tax credits.

          While the testimony at the June 23 hearing was not reassuring to ratepayers, it did provide a clearer financial picture regarding the true costs of Vogtle Units 3 and 4, and reaffirmed the fact that the Project would see more construction delays.

United States Supreme Court Opinion Could Render

“Thousands” of Sign Ordinances Unconstitutional

The United States Supreme Court has issued a ruling that several justices acknowledged will render “thousands” of sign ordinances vulnerable to attack under the First Amendment.  The particular provision at issue in Reed v. Town of Gilbert, 2015 WL 2473374, limited the size, location and duration of directional signs for temporary events, which were treated differently from “Political Signs” and “Ideological Signs.”  Although the regulations applied regardless of the event being held, the Supreme Court determined that the provision was based on its content, and therefore subject to the highest level of review under the First Amendment.  Termed “strict scrutiny,” this standard means that provisions are deemed “presumptively unconstitutional,” with the burden on the government to show that the regulation is necessary to meet a compelling governmental interest – a standard that is virtually impossible to meet.

The sign ordinance at issue contained provisions regulating “Political Signs”, “Temporary Directional Signs” and “Ideological Signs” by different standards.  The ordinance defined a “Political Sign” as any “temporary sign designed to influence the outcome of an election called by a public body”, “Ideological Sign” as any “sign communicating a message or ideas for noncommercial purposes that is not” certain other types of noncommercial signs, including a  Temporary Directional Sign Relating to a Qualifying Event, and “Temporary Directional Signs” as any “Temporary Sign intended to direct pedestrians, motorists, and other passersby to a “qualifying event.”  A “qualifying event” was any “assembly, gathering, activity, or meeting sponsored, arranged, or promoted by a religious, charitable, community service, educational, or other similar non-profit organization.”

The petitioners, a church and its pastor, challenged the provisions relating to the Temporary Directional Signs on the ground that these types of signs were subject to more onerous regulations than Political Signs and Ideological Signs, and that these different regulations were content-based and thus violated the First Amendment.  The Ninth Circuit ruled that these regulations were not content-based and were valid content-neutral regulations.  

Reversing the Ninth Circuit, the Supreme Court held that the provisions at issue were content-based on their face because they applied different regulations to different types of signs based on the message conveyed.  The Court also held that, because the provisions were content-based on their face, it did not need to consider the Town’s justifications or purposes for enacting the sign ordinance in order to determine whether the ordinance was subject to strict scrutiny.  The Court then held that the ordinance did not survive strict scrutiny.  

The Court stated that its opinion still left the Town with “ample” content-neutral options for regulating signs to advance its interests in safety and aesthetics, such as regulations based on size, lighting, portability and other factors.  The Court also noted that the Town could “almost entirely prohibit signs on public property if it did so in a content-neutral manner.  In addition, the Court suggested that certain types of safety signs, such as warning signs marking hazards on private property or signs directing traffic, may survive strict scrutiny.

A concurring opinion authored by Justice Alito and joined by Justices Kennedy and Sotomayor (all three of whom joined the majority opinion too), offered “a few words of further explanation” and stated that the Court’s opinion will not leave local governments powerless to enact and enforce reasonable sign regulations.  Justice Alito’s concurring opinion, while disclaiming any attempt to provide a comprehensive list, identified several types of regulations that would not be subject to strict scrutiny.  Proper areas of regulation included: (1) size; (2) location , such as free-standing signs versus those attached to buildings; (3) illumination; (4) animation (electronic vs. static); (5) placement of signs on private and public property; (6) placement of signs on residential or commercial property; (7) on-premises and off-premises signs; (8) number of signs along a roadway; and (9) time limitations on signs advertising a one-time event.  Justice Alito’s concurring opinion also emphasized that local governments could display their own signs to promote safety, such as directional signs and sign pointing out historic sites and scenic spots.

Another concurring opinion, authored by Justice Kagan and joined by Justices Breyer and Ginsburg, agreed that the regulations at issue were invalid under the First Amendment, but on the ground that they failed intermediate scrutiny as a content-neutral time, place and manner regulation.  Justice Kagan warned that, notwithstanding the assurances contained in the majority opinion and Justice Alito’s concurring opinion, “thousands” of sign ordinances around the country could be deemed content-based and subject to strict scrutiny as a result of the Court’s opinion, even though such local sign ordinances do not threaten core First Amendment values.  Justice Kagan also warned that the Court “may soon find itself a veritable Supreme Board of Sign Review” as a result of the Court’s opinion.  Justice Breyer wrote a separate concurring opinion criticizing the majority’s application of strict scrutiny to the sign ordinance at issue.    

So where does that leave local governments?  The best course of action is to adopt a moratorium on the erection of all signs in your jurisdiction while your counsel reviews the sign ordinance.  It is very difficult to predict how lower courts will apply this case as there appear to be inconsistencies within the majority opinion. Additionally, while the majority opinion is joined by six justices, three of the six participated in a concurring opinion that qualified the majority opinion. It appears only a minority of the justices believe “if you have to read it, it is content based and invalid.”  At this point, however, an ordinance that regulates size, height, and location, with limited distinctions between commercial and noncommercial speech appears to be the safest approach. 

FMG’s Governmental Liability practice group has sample ordinances that might be a helpful starting place for cities and counties in drafting a new ordinance.  Please contact Dana Maine, [email protected], (770) 818-1408, for further assistance.

Note:  FMG partner Philip Savrin argued Reed before the United States Supreme Court, with the assistance of Dana Maine and Bill Buechner.

Georgia Power Expects  More Vogtle Construction Delays and Cost Overruns

By: Bobby Baker

            Georgia Power Company filed its testimony in the 12^th Vogtle Construction Monitoring (VCM) review on May 1.  Buried within the Company’s pre-filed testimony was a disconcerting statement about its Contractor’s performance on the Project.  In response to the question, “What is the Company’s assessment of the Contractor’s performance under the revised IPS (Integrated Project Schedule)?” the Company responded by saying, “The Contractor has missed several key milestones since the publication of the revised IPS in January 2015, including several milestones relating to critical-path and near-critical-path activities such as the assembly of CA01, the delivery of shield building panels, and work on concrete outside containment.  The Contractor has also encountered difficulties in ensuring that new vendors produce high-quality, compliant components per the IPS projections.” (Georgia Power 12^th VCM Direct Testimony, p. 15)  Missing key construction milestones means more delays and delays mean more cost overruns.

            In addition to the troubling testimony regarding the ineffectiveness of their Contractor it appears that the Company’s determination of the Project’s value to customers has dramatically fallen since the 11^th VCM Report.  The Company had claimed that, “completing the Facility provides relative savings of $5.1 billion compared to the next economic alternative.” (11^th VCM Direct Testimony, p. 24)  Now the Company’s testimony is, “that completing the Facility provides over $3 billion in value to customers as compared to the next best option of a combined cycle natural gas-fired facility.” (p. 8)  This represents a reduction of $2.1 billion in value in 6 months.

            The hearing on the Georgia Power testimony will be held June 2.

Atlanta Gas Light Company’s (AGLC) Capital Budget for 2015 is $344,824,481

          AGLC’s capital budget for 2015 is primarily focused on new pipeline replacement programs which are being funded through individual riders and not the rate base.  A customer rider allows the Company to recover dollar for dollar any amount spent on a program regardless of the Company’s overall earnings.  AGLC customers are currently paying four riders on their monthly bills: the Social Responsibility Cost Rider, Franchise Recovery Cost, Environmental Recovery Cost and the STRIDE rider.  Listed below are some of the capital projects contained in the $344,824,481 budget:

            Manufactured Gas Plant clean-up                                     $ 28,990,839

            Integrated Vintage Plastic Pipe Replacement (i-VPR)          $ 56,350,000

            Integrated System Reinforcement Program (i-SRP)            $ 70,242,297

            Integrated Customer Growth Program (i-CGP)                   $ 19,965,783

            Business Support Projects                                                $ 66,195,442

Governor Deal Signs Solar Power Free-Market Financing Act of 2015

            Thanks to Governor Deal and our Legislature consumers will now be able to lease solar panels in Georgia.  The Solar Power Free-Market Financing Act of 2015 (H.B. 57) enables Georgia consumers to lease or finance the installation and operation of solar panels for their businesses and homes.  H.B. 57 eliminated an antiquated legal barrier that allowed consumers to only buy, but not lease or finance solar panels in Georgia.

            H.B. 57 allows a residential or commercial customer to lease or finance, through the use of a purchase power agreement, solar panels for their own use, but not for resale to other consumers.  Residential generation capacity is limited to 10 kilowatts per premise and commercial customers may generate up to 125% of their actual or expected maximum annual peak demand.

            Under the legislation there are very few restrictions on financing solar generation.  A retail customer must give 30 days notice to their electric service provider prior to the operation of the solar generation, and the Act prevents an electric utility from interfering with the installation, operation or financing of solar technology.

As of today, May 13, Philadelphia has a new law requiring mandatory paid sick leave for employees.  The Sick Leave law requires employers with ten (10) or more employees to provide eligible employees with at least one (1) hour of paid sick leave for every forty (40) hours worked in Philadelphia, up to a maximum of forty (40) hours or five (5) days in a calendar year.

Employers with less than ten (10) employees must provide the same amount of time off for sick leave- but are not required to pay employees for the time off. The law covers any employee who works more than 40 hours annually in Philadelphia.

Mandatory sick time does not apply to seasonal employees, interns, or companies whose workers have unions. Companies that already have a sick leave policy need only ensure that their policies provide the requested leave. Employers who fail to comply with the law will be subject to liquidated damages of up to $2,000 per employee, as well as back wages, attorney's fees, and other damages suffered from the employer's violation. 

In addition, employers must post a sick leave poster in the workplace of any employee working within the City of Philadelphia.

Please contact Jennifer Ward for more information regarding the Philadelphia’s Sick Leave Law.

By: Bobby Baker

PSC Rejects Georgia Power’s Request to Review Its Construction Costs for Vogtle Units 3 and 4 at This Time

            In Georgia Power Company’s 12^th Vogtle Construction Monitoring (“VCM”) Report filed on February 27 the Company requested the Public Service Commission increase its certified construction costs for the Vogtle project.  On April 7, 2015, the Commission approved the 12^th VCM procedural and scheduling order (“PSO”), but denied the Company’s request to increase its certified costs based on the terms of the Stipulation from the 8^th VCM.  Georgia Power wanted the Commission to conduct a full prudency review of its costs so that it could increase its certified capital costs from $4.418 billion to $5.045 billion.  The current total certified cost of the Vogtle project for Georgia Power Company is $6.113 billion which includes $4.418 billion for capital and $1.695 billion for financing costs.

            The Commission found that the 8^th VCM Stipulation provided for a full review of construction costs when Vogtle Unit 3 is complete around 2019 or 2020.  The Commission Staff argued that maintaining the certified amount at $6.113 billion provided significant ratepayer protections.  “First, the Company will retain the burden to prove that costs in excess of the certified amount were reasonable and prudent.”  Additionally, by not increasing the certified capital costs the financing charges recovered through the Nuclear Construction Cost Recovery (“NCCR”) tariff will be lower.

            In a concession to the Company the Commission included additional language in the 12^th VCM PSO that reaffirms the certified cost of the project is not a cap on what the Company can recover in the future.  Georgia Power will file its testimony on May 1 and a hearing is scheduled for June 2.

Atlanta Gas Light Company Requests Increase to Its Pipeline Replacement Program Monthly Surcharge

            Atlanta Gas Light Company (“AGL”) filed an application to increase its Pipeline Replacement Program (“PRP”) surcharge by an additional $0.58 a year beginning in 2017 through 2020 for a total increase of $2.32 per month.  Residential customers will be paying a total of $6.89 per month beginning in January 2020 and continuing through December 2030.  AGL claims it is under collected by $178 million for its PRP.  AGL customers currently pay a surcharge of $4.57 per month for the AGL pipes system.

Peach State Natural Gas Raises Customer Charges April 1

            Monthly customer charges will be going up for all Peach State Natural Gas customers as of April 1.  In December 2014 the Commission approved the Company’s request for a rate hike of $3,679,700, and a return on equity level of 10.5% pursuant to the Company’s Georgia Rate Adjustment Mechanism (“GRAM”) which has been in place since 2011.

            Residential customers will see their monthly charge increase from $16.39 to $17.38.  Commercial and school customers will both see their monthly charges increasing from $25.88 to $28.58.  Charges for large volume customers on the Rate Schedule 830 will go up almost $100 a month from the current monthly customer charge of $66.35 to $162.66.

Georgia Power 2015 Amended Rate Updates to Be Effective April 1

            Georgia Power customers will see a $9.46 million reduction from $32.2 million to $22.7 million for the Environmental Compliance Cost Recovery (“ECCR”) tariff, and most customer classes will see a reduction of their monthly base charge but an increase to their hourly rates.  Residential customers will see a reduction of their monthly base charge from $11.00 to $10.00, but pay higher charges per kWh for both Winter and Summer rates. [R-21 Schedule filed February 27, 2015]

                        First 650 KWh                     Next 350 kWh                     Over 1,000 kWh

Winter     5.4818 to 5.5747               4.7038 to 4.7817               4.6177 to 4.6941

Summer  5.4818 to 5.5747               9.1098 to 9.2614               9.4149 to 9.5712

            The same will occur for most standard rate classes.  The most common tariff for commercial customers, Power and Light Medium, will see their monthly base charge reduced by $1.00 from $20.00 to $19.00, but see their hourly consumption rates increase. [PLM-10 Schedule filed February 27, 2015]

First 3,000 kWh                  Next 7,000 kWh                 Next 190,000 kWh           

11.1309 to 11.1375          10.1945 to 10.2005          8.7897 to 8.7949

By Josh Lott and Marty Heller

The U.S. Supreme Court has issued a decision that could force employers to accommodate pregnant employees the same way they accommodate injured or disabled employees, or risk liability for pregnancy discrimination.     

In Young v. United Parcel Service, Inc., Peggy Young, a UPS package delivery employee, became pregnant and received a 10 pound lifting restriction from her doctor. At the time, UPS had a policy of accommodating light duty requests only if the employee was injured on the job, qualified as disabled under the Americans with Disabilities Act, or lost his or her federal driver’s certificate.  Young fit into none of these categories.  UPS refused her request for a reassignment to a light duty job, and instead placed her on unpaid leave.  Young sued under the Pregnancy Discrimination Act (“PDA”).  

In a 6-3 decision, the Supreme Court held that a pregnant employee makes a sufficient initial showing of pregnancy discrimination if she has been denied an accommodation given to other employees “similar in the ability or inability to work,” regardless of the reason for those similarities.  According to the Court, even if an employer has a legitimate, non-discriminatory basis for not providing the same accommodations to pregnant employees that it provides to employees (for example, employees who are injured at work), a plaintiff can prove pregnancy discrimination by showing that the employer’s policy imposes a “significant burden” on pregnant employees without a “sufficiently strong” justification for that significant burden.

The Young decision, and the discretion it gives lower courts to determine what is and is not a “significant burden” on pregnant employees, emphasizes the need for employers to reexamine how their policies—even those that appear benign and “pregnancy blind”—could place them at increased risk for litigation.  Although it remains to be seen how this “test” will be interpreted and applied by district and circuit courts, it is clear that this new standard means that policies that previously were lawful now may be the basis for a discrimination claim. 

FMG is pleased to announce Meaghan Petetti Londergan has been elected to Partnership with the Firm.

Meaghan Petetti Londergan represents companies involved in commercial matters.  She has significant experience handling disputes involving shareholders and members of closely held businesses. In addition, Ms. Londergan frequently represents national and regional employers.  Her litigation experience includes the defense of a variety of employment claims, including race, sex, national origin, disability discrimination, wage and hour, harassment, and retaliation claims. 

Ms. Londergan also counsels employers on workplace issues and best practices, developing customized employee handbooks, employment agreements, non-compete covenants, sexual harassment policies, and social networking and electronic privacy policies. 

Prior to joining FMG, Ms. Londergan was an associate at Green, Silverstein & Groff, LLC and Dilworth Paxson, LLP in Philadelphia.  Ms. Londergan also served as the principal legal advisor for two Mid-Atlantic companies that specialize in the sale and distribution of industrial automation components. 

In 2012, 2013, 2014, and 2015 Ms. Londergan was selected as a Pennsylvania Super Lawyer Rising Star.  Ms. Londergan currently serves as the Vice President of the Board of Directors for the Mount Saint Joseph Academy Alumnae Association in Flourtown, Pennsylvania and is the co-founder of the Mount Saint Joseph Academy Professional Network. Ms. Londergan is also an active participant and mentor in the Drexel University Co-Op Program.

By: Bobby Baker

Nuclear Construction Cost Recovery Tariff Increased to 9.4638%

The fourth increase to Georgia Power Company’s Nuclear Construction Cost Recovery (“NCCR”) tariff went into effect on January 1, 2015.  The tariff increased from 9.3141% to 9.4638% which will raise an additional $26.6 million for a total of $394 million collected annually.  The NCCR tariff is applied to the gross amount of a consumer’s electric bill.  The tariff was originally set at 5.8619% in 2011, but has increased every year to the current amount for 2015 of 9.4638%.

The NCCR tariff will collect $1.905 billion for financing and taxes on Vogtle Units 3 and 4.  Financing and tax expenses for a new electric generation plant have normally been collected over the useful life of the plant – in the case of Units 3 and 4 that would be 60 years – but Senate Bill 31 passed in 2010 allowed Georgia Power to accelerate its cost recovery for these expenses rather than depreciating the expenses over the 60 year life of the facility.

 Peach State Natural Gas Rates Rise for Gainesville and Columbus Customers

In December 2014 the Public Service Commission approved a rate increase of $3,679,700 for Peach State Natural Gas customers which will be effective February 1, 2015.  Peach State Natural Gas serves customers in Gainesville and Columbus.  The Commission also approved the Company’s request for a 10.5% return on equity level.

No hearing was held regarding the Company’s rate request because no party or customer intervened in the case.

 PSC Staff Predicts Vogtle Construction Delays to Increase by 12 Months and Georgia Power Chastised for Not Having a Complete Integrated Project Schedule After 6 Years

The current commercial operation dates of December 31, 2017 and 2018 for Units 3 and 4 respectively cannot be achieved according to the Georgia PSC Staff witnesses at the December 16, 2014, hearing in the 11^th Vogtle Construction Monitoring (“VCM”) hearing.  The PSC witnesses stated, “We’ve provided significant evidence to the contrary, that there is an implicit almost additional year delay built into the production or the construction that is currently ongoing on the site.”  Three major critical path activities are 369, 401 and 501 days behind schedule.  According to the PSC Staff testimony when construction schedule delays run over 300 or 400 days the ability to recover or mitigate lost time is dramatically reduced.  Each day of delay adds an average of $2 million in additional costs to the Vogtle Project or approximately $730 million for a year.

The PSC witnesses also leveled some blunt criticism at the Company for not having a complete Integrated Project Schedule (“IPS”) six years after construction started on the Project.  They said the lack of an IPS “runs counter to any prudent project management, nuclear or otherwise, . . .”  The Engineering, Procurement and Construction (“EPC”) Agreement between the Consortium and the Owners requires that an IPS be produced.  The Advocacy Staff stated, “. . .prudent management requires a full IPS that is realistic, understood and agreed upon by all parties.”  The 12^th VCM will be filed in February, 2015.

 Solar Power Free-Market Financing Act Unanimously Approved by House Committee

The House Energy, Utilities and Telecommunications Committee unanimously approved HB 57, the Solar Power Free-Market Financing Act of 2015, on January 28 after a brief hearing.  Rep. Mike Dudgeon (R-25^th), the author of the legislation, reported that after 10 months of discussion and negotiations over 90 parties supported the bill.  A broad coalition of environmental, solar and electric utility companies all endorsed the legislation, including Georgia Power Company, Oglethorpe Power Corporation and the Municipal Electric Association of Georgia.

HB 57 allows homeowners and businesses to finance the installation of solar panels rather than having to pay the entire cost of the solar equipment up front.  The legislation eliminates the legal fiction that an entity financing or leasing solar panels is a regulated utility.  The Georgia Power representative testified that HB 57 is a responsible, cost effective bill which didn’t burden non solar customers.  The House of Representatives is expected to vote on the legislation in early February.

FMG is pleased to announce that Michael Wolak, III, Brian Dempsey and Marty Heller have been named Partners of the Firm and also Lisa Gorman has been named Of Counsel.

 Mike Wolak's practice is concentrated in business and tort litigation on behalf of domestic and international corporations.  Mr. Wolak spent eleven years at one of the world's largest and premier law firms, and has broad experience litigating a full range of complex commercial disputes, business torts and “bet the company” cases in state and federal courts and domestic and international arbitral forums, including Delaware's Chancery Court, the American Arbitration Association, and the International Chamber of Commerce. 

Mike has held prominent, leading roles in some of the nation’s largest product liability matters on behalf of national and international manufacturers, and in financial services litigation on behalf of one of the world’s largest financial institutions.  His broad experience includes trial practice, class action litigation, complex bankruptcy litigation, director and officer liability, restrictive covenants, E-discovery oversight and best practices, and litigation involving application of the Uniform Partnership Act, the Fair Credit Reporting Act, and the False Claims Act.

Brian Dempsey has represented local government and commercial  entities in civil litigation and appeals since 1997. Mr. Dempsey has advised local government clients on the wide range of issues that they face daily, including matters of law enforcement liability, property taxation, employment, land use and civil rights. 

Mr. Dempsey received his undergraduate degree from Hobart College (B.A. with high honors) and his law degree from the University of Georgia School of Law.

Marty Heller practices in the Labor Law and Employment Litigation Section of Freeman Mathis & Gary.  Mr. Heller represents public and private sector employers on a national, regional, and local basis in all aspects of employment litigation, including wage and hour claims, employment discrimination claims, family and medical leave claims and   employment contracts.

He works with employers to develop restrictive covenants and other procedures for their workplaces, and advises employers on issues arising from the employment relationship.  Mr. Heller also assists federal contractor employers with issues arising from adherence to the rules and regulations developed by the Office of Federal Contract Compliance Programs (OFCCP).

Mr. Heller is a member of the American Bar Association, and participates in the labor and employment section. Mr. Heller is also active in the Cobb Young Lawyers Division, and the Cobb Chamber of Commerce.

Mr. Heller received his undergraduate degree in Broadcast News from the University of Georgia, cum laude. Mr. Heller then received his Juris Doctor degree from the University of South Carolina School of Law, where he was an editor for the American Bar Association's Real Property, Probate and Trust Journal.

 Lisa Gorman works in Freeman Mathis & Gary’s San Francisco office, practicing labor and employment litigation.  Ms. Gorman represents employers in a wide range of civil lawsuits and administrative matters, and she is experienced panel counsel for various insurers.

Ms. Gorman has practiced throughout California in both State and Federal Court. She represents all types of companies in employment disputes including tort claims, discrimination, harassment, retaliation, wrongful termination, wage and hour and breach of contract actions. Ms. Gorman also counsels employers and insurers on claims handling, employment handbook policies, employment contracts and terminations, non-compete agreements, and litigation prevention topics such as wage and hour issues, disability law and family and medical leave compliance.

Prior to entering private practice, Ms. Gorman clerked for Magistrate Elizabeth Laporte, United States District Court. She was a member of the Order of the Coif and wrote for the Hastings Law Journal during law school, where she graduated cum laude.

     The National Labor Relations Board (“NLRB”) ruled yesterday that employees can use their company email accounts to organize and form unions in their free time.[1] The decision reversed a 2007 decision prohibiting employees from using their employer’s email server to discuss workplace issues and other union-related activities.

     According to the 3-2 majority, email has become a “natural gathering place” for employees to communicate with each other, and, as such, it is analogous to “water-cooler conversations” between employees during breaks. “Neither the fact that email exists in a virtual (rather than physical) space, nor the fact that it allows conversations to multiply and spread more quickly than face-to-face communication, reduces its centrality to employee discussions,” it stated.   

     The majority’s conflation of the physical and virtual was fiercely rejected by dissenter Harry I. Johnson III, who noted that because email is not fixed in space, location, or time, “there is no ‘easy-to-determine-and-administer’ dividing line between the working area and the nonworking area.”

     Importantly, the board carved out an exception allowing employers to implement a total ban on non-work use of email by demonstrating that “special circumstances make the ban necessary to maintain production or discipline.” Moreover, the ruling only applies to employees who have already been granted access to the employer’s email system in the course of their employment.

     The biggest challenge for employers going forward will be enforcement; employers will need to define what constitutes “free time,” and find ways to protect against union-related use of company email accounts during work time. 

By: Bobby Baker

SNL Financial recently reported that Georgia Power Company received the highest authorized return on equity (ROE) of any electric utility in 2013.  The Company originally asked for an 11.50% ROE in its rate case filing, but was granted a 10.95% ROE.  SNL reported that, “[t]he average authorized ROE for the 38 electric general rate cases (in 2013) was 9.83%.”

In the 2013 rate case decision the Public Service Commission re-authorized the Company to retain excess earnings 100 basis points or 1% above its authorized ROE which effectively gives the Company an ROE of 11.95%.  Pursuant to testimony from the rate case one hundred basis points is approximately $130 million.

The SNL article found that Georgia Power Company had historically exceeded its authorized ROE level.  “Georgia Power earned an ROE of 12.29% in 2013, and has historically earned ROEs in excess of 10%, with 11.57%, 12.7%, and 12.59% ROEs earned in 2010, 2011, and 2012, respectively.”

FMG is pleased that nineteen of their attorneys have been recognized by Super Lawyers®.

Georgia Power Company files rate adjustments effective in 2015

Pursuant to the terms of the 2013 rate case settlement, Georgia Power Company filed on October 3 with the Georgia Public Service Commission its rate adjustments that will go into effect January 1, 2015.Base rates will increase by $106.7 million while the net increase for all riders will be $38.6 million.  This is the second of three annual rate adjustment filings made by the Company pursuant to the terms of the 2013 rate case settlement.

As part of the annual rate adjustment the Environmental Compliance Cost Recovery (ECCR) rider will increase to 11.2342% from 10.4629%.The Demand Side Management (DSM) rider will increase to 1.8276% for residential customers and 2.1288% for commercial customers.  Municipal Franchise Fee (MFF) riders will decrease slightly to 2.9350% for customers inside the city limits and increase slightly to 1.0891% for customers outside the city limits.

The average residential customer (living outside a city) will be paying a total of 23.4650% of their gross monthly bill for the ECCR, DSM, MFF and Nuclear Construction Cost Recovery (NCCR) riders.  Residential base rates will also increase an additional 2.8451% or an average of $2.84 (based on 1,000 kWh per month usage) per month over current base rates.  Commercial and industrial rate increases range from 2.35% to 3.17%.

Georgia Power Company Ratepayer Riders

Atlanta Gas Light Company amends its 2014 Facilities Expansion Plan

Atlanta Gas Light Company (AGLC) filed an amendment to its 2014 Universal Service Fund Facilities Expansion Plan which will increase the current costs of $7,657,675 to $23,716,905. The Company is adding a new project in Appling County to provide service to two agricultural businesses,  Southeastern Gin & Peanut and Fries Farms, near Surrency, Georgia.  The application to amend the plan indicates that the Company will install approximately 12.5 miles of 8” steel pipe for the first phase of the project.  While the Phase 1 cost of the project will be $16,059,230 the Company’s projected revenue calculation over a five-year period is $450,595 or approximately $90,000 per year.

Pipe replacement monthly fees more than double since 2010 for Columbus and Gainesville gas customers

Since 2010 the monthly surcharges Liberty Utilities’ customers pay each month for the Pipeline Replacement Program has increased 100% or more for residential, commercial and industrial customers. The Public Service Commission approved the latest annual rate increases on September 16 which will be effective October 1, 2014.

This is the thirteenth year of the pipe replacement program which was initiated in 2001 to replace all of the cast iron and bare steel natural gas pipeline located in Columbus and Gainesville, Georgia. Residential customers will now pay $7.93 per month, while commercial customers will pay $29.19 and industrial customers will pay $243.28 When the program began in 2001 all customers were charged twenty-five cents per month. A residential customer now pays $95.16 annually.

Cast Iron and Bare Steel Pipeline Replacement Program Monthly Charges

Popular Myths And Misconceptions About Renewable Energy

Renewables are the only form of electric generation which gets government subsidies.  FALSE

             The Federal tax credits for renewable energy developers will end in 2015 and it is unlikely Congress will renew the tax credit program.  With that said, there are many other types of government subsidies which various types of electric generation receive.  Nuclear energy is heavily subsidized at the state and federal levels.  The Nuclear Construction Cost Recovery (NCCR) rider will allow Georgia Power to collect $1.9 billion for financing, taxes and profits that would normally be collected over a 60 year period.  The Vogtle Project also received a taxpayer backed $3.46 billion loan guarantee from the Department of Energy.

Renewables are the only source of electric generation which puts upward pressure on rates.  FALSE

             Every form of electric generation increases or puts “upward pressure” on consumer rates.  Utility companies recover all of their capital investments and operating costs for every type of power generation they own and operate.  The new nuclear Units 3 and 4 at Plant Vogtle aren’t scheduled to start producing one kilowatt of power until 2018 yet Georgia ratepayers are currently paying an additional 9.3% on their utility bills through the NCCR rider and this amount is projected to double by the time the units are operational.

Renewables are the most expensive form of electric generation.  FALSE

             If you look at the total cost of production which includes construction, financing, fuel and operation expenses nuclear power comes out the most expensive form of electric generation per kilowatt hour.  Renewables use no fuel for generation, they don’t need expensive cooling towers to recycle the water they don’t use, there is no need to invest hundreds of millions of dollars for emission control devices and tens of millions of dollars don’t need to be spent storing used nuclear fuel or fly ash from burnt coal.

Renewables will cause utility companies to have excess or surplus generation.  FALSE

             The economy, weather and consumer conservation impact a utility’s level of excess or surplus generation much more than renewable energy generation.  The economic slowdown caused by the Great Recession had a dramatic negative impact on commercial and industrial demand, and more residential consumers are reducing their electric demand by conserving energy because of increasing costs.  Prior to the Great Recession many electric utilities were predicting inadequate generation to meet demand but the Recession slowed or reduced electric demand producing large generation surpluses.  In Georgia Power Company’s 2013 integrated resource planning case the evidence showed the company had a reserve margin (excess generation) of 67% in non-summer months and 29% during the summer months in 2012.  A normal reserve margin is between 10% to 15%.  The use of compact fluorescent or LED light bulbs has more impact on demand than all the solar or wind generation in Georgia.

FMG has added two highly experienced and accomplished attorneys to its Los Angeles, California and Forest Park, Georgia offices.

Joan Stevens Smyth joins FMG from the Thompson Coe law firm and will work in both the Firm’s Los Angeles and Newport Beach offices.  She will practice in the Firm’s Business and Professional Liability practice group. Ms. Smyth has extensive litigation experience in professional liability, land use, government liability, employment law, and Davis Stirling Act claims. In addition, she regularly defends businesses in commercial disputes involving fraud, breach of fiduciary duty, breach of warranty, and violation of consumer protection laws. Ms. Smyth received her bachelor’s degree from UCLA, and she graduated from Pepperdine University School of Law in 1984.

Chuck Reed joins FMG from the DeKalb County Attorney’s office,  and will work in the Forest Park office. He will practice in the Firm’s Government Law group. Mr. Reed has extensive litigation experience in civil rights, land use, contract, and constitutional law.  As a Senior Assistant County Attorney for DeKalb County, he was lead counsel in a number of high profile lawsuits alleging constitutional claims against law enforcement officers and public officials. Mr. Reed served in the United States Marine Corps, where he received multiple honors and awards. He is a 1996 graduate of the Emory School of law.

Ben Mathis, FMG’s Managing Partner, stated, “We are so pleased that Joan and Chuck have joined us. Joan brings an array of trial and counseling experience from her 30 years of practice. Attracting someone of Joan’s caliber is a testament to our commitment to continue building our Southern California practice. Likewise, Chuck is among the most highly respected lawyers in Georgia in the government law field. He adds substantial depth to our Forest Park office and further strengthens our nationally recognized Government Law team. Both Joan and Chuck are wonderful lawyers and people. They are tremendous additions to our law firm, and we are lucky to have them.”

By: Bobby Baker

AP1000 Nuclear Reactor Projects Behind Schedule Worldwide

             While Vogtle Units 3 and 4 are 21 months behind schedule it appears that construction on all the AP1000 units in the U.S. and China are also behind schedule.  It was reported last month that the Sanmen project, the lead project in China, was originally set to start by the end of 2013 has been delayed to the end of 2015 due to safety concerns and problems with some components.  The December 2015 start-up date will extend the construction schedule to six years and nine months for China’s first unit to be completed.  Construction delays have also plagued the two AP1000 units under construction in South Carolina by SCANA Corp.  The Company announced that the original commercial operation date of April 2016 has been moved back to late 2018 or possibly the first half of 2019.

            The construction of both the Georgia and South Carolina projects is being done by Chicago Bridge and Iron Company.  It is expected that any delays in construction or with components will affect both projects.  On August 19, 2014, the Commission approved the latest expenses of $389 million for the Project.

Petition Filed to Open Value of Solar (“VOS”) Docket at PSC

             A coalition of the Georgia Solar Energy Industries Association, Vote Solar and the Interstate Renewable Energy Council, Inc. filed a petition on July 10 at the Georgia PSC to open a new docket to “calculate the full and fair value of solar energy delivered to Georgia Power . . .”  The Petitioners also requested that the “Commission establish a valuation methodology governing the Company’s acquisition of solar energy that may be implemented prospectively and consistently across the Company’s various solar initiatives and programs.”

            Many cost factors are not currently considered when determining the value of solar generation.  While solar generation obviously has no fuel costs it also avoids generation capacity costs, has much lower plant operation and maintenance costs, reduced transmission and distribution capacity costs and no environmental compliance costs as do fossil, gas or nuclear generation.

            On August 19 Georgia Power filed an amendment to Advanced Solar Initiative (“ASI”) for the small and medium scale distributed generation program in which it will be using a reverse auction pricing methodology and set avoided cost levels for long-term contracts.  The amendment to the ASI program is a good indication that the Company is unlikely to support the VOS docket.

 Atlanta Gas Light Coal Tar Clean-Up Costs Total $302,014,813.57

             Atlanta Gas Light Company announced its second quarter expenses for the coal tar remediation program of $658,563.  Legal expenses for both the Georgia and Florida sites currently total $25,647,119.78 with a third of those costs or $8,986,484.76 for the Sanford, Florida site alone.  The most recent quarterly report states that AGL incurred $159,295.25 in legal fees for the Orlando, Florida, site.

            Work is complete on all project sites except for Macon 3 and Orlando.  AGL reported that 98% of the work for Macon 3 and 95% of the work for Orlando are incomplete.  The Company’s total expected long term costs for Macon 3 are $10,731,411.00 and $22,883,417.00 for Orlando.  All of these costs are borne by Georgia ratepayers and no hearing or formal review has occurred for almost a decade.

 Georgia Power Company Announces Plans to Develop King’s Bay Solar Project

             At a special hearing on August 14 Norrie McKenzie, vice president of renewable energy development for Georgia Power Company, disclosed that they were negotiating with the Navy to develop a 30 MW solar project at King’s Bay Naval Base.  This would make the fourth solar generation project that Georgia Power is developing with the military.  The other three projects are with the Army to develop 30 MW projects at Forts Benning, Gordon and Stewart.

            As has been reported here before, the construction of the solar facilities on the military bases allows the military to comply with federal renewable energy mandates without having to consume the output from the solar projects.  Unless there is a national emergency the power output from these solar projects will go directly into the grid and not be consumed on the bases.

FMG is pleased to announce that a number of our attorneys have been recognized in 2013 and 2014 for their experience and expertise by several national legal authorities, including Best Lawyers, Super Lawyers, Chambers and Benchmark Litigation.

Best Lawyers in America:

Ben Mathis - Selected as Atlanta Lawyer of the Year for Employment and Labor Law - Management 2014

Dana Maine - Selected as Atlanta Lawyer of the Year for Municipal Law 2013

• Ted Freeman - Civil Rights and Municipal Litigation
• Ben Mathis - Employment and Labor Law
• Bart Gary - Commercial Litigation and Construction Law
• Dana Maine - Municipal Law and Land Use & Zoning Litigation
• Phil Savrin - Insurance Law - Bad Faith and Coverage, Professional Liability, and Municipal Litigation
• Joyce Mocek - Litigation - Insurance Law

Super Lawyer and Rising Stars:

Selected as Super Lawyers

• Ted Freeman - General Litigation and Civil Rights
• Ben Mathis - Business Litigation, Employment & Labor Litigation, and Municipal Litigation
• Bart Gary - Business Litigation and Construction Litigation
• Phil Savrin - Insurance Coverage and Professional Liability
• Dana Maine - Professional Liability, Land Use & Zoning, and  Civil Rights
• Wayne Melnick - Civil Litigation and Civil Rights

 Selected as a Rising Star

• Neil Wilcove - Business Litigation and Construction Litigation
• Brad Adler - Employment & Labor Litigation
• David Cole - Employment & Labor Litigation‎
• Shira Adler Crittendon - Business Litigation and Medical Malpractice‎
• Katie Dod - Business Litigation and Insurance Coverage‎
• Seth Kirby - Business Litigation, Professional Liability, and  Insurance Coverage
• Meghan Londergan - Business Litigation

Chambers & Partners USA:

• Ben Mathis - Labor & Employment Litigation
• Bart Gary - Construction Law
• Mary Anne Ackourey - Labor & Employment Litigation

 Benchmark Litigation- USA Star Litigators:

• Ted Freeman - General Commercial, Appellate, Professional Liability
• Ben Mathis - Commercial Litigation and  Labor & Employment Law
• Bart Gary - General Commercial, Antitrust, and Construction Law

By: Wayne S. Melnick

FMG is pleased to announce it has compiled Georgia's most comprehensive study of major jury verdict awards over the past five years.  We have collected information on over 450 cases from both federal and state courts throughout Georgia. The FMG summary covers all reported jury verdicts of over $500,000.00. 

Our summary compiles sortable information that includes not only the amount of the verdict, but the type of case, the parties, the attorneys, the judge, a description of the injuries, venue, experts, insurer, and a short summary of the case.  No other survey includes such a comprehensive and searchable summary of Georgia cases.

We also have included information on whether the case was appealed and result.

Copies of this information is available to friends and clients of the firm by contacting Wayne Melnick at [email protected]

The 5 minute rate case: from committee meeting to $3,235,000 rate increase

            The Public Service Commission set a record on May 29, 2014, when it approved a 6% or $3,235,000 rate increase for Liberty Utilities (Peach State Natural Gas).  The rate request was considered at the May 29 Energy Committee at 10:08 and the Commission approved the rate increase at 10:13 in a Special Administrative Hearing immediately following the committee meeting.  Other than a brief presentation by the PSC Staff, there was no discussion or any question raised by anyone about the rate increase for natural gas customers in Columbus and Gainesville.

Delays continue on Vogtle Units 3 and 4 as three new nuclear module builders are brought in to assist with construction

                      At the latest Vogtle construction monitoring hearing the Construction Monitor (CM) confirmed that three new companies had been brought in by the Consortium to assist with the construction of the nuclear modules.  Oregon Iron Works, SMCI and IHI, a subsidiary of Toshiba Industries, were recently retained to complete the construction of the nuclear modules and sub-modules for Units 3 and 4.  CB&I’s Lake Charles facility will continue to operate but only produce mechanical modules.

                     The Construction Monitor and PSC Staff witness testified that the proposed schedule for the construction of the Shield Building was “unsupportable and speculative given the Consortium’s history of delays in fabrication and assembly of sub-modules to full modules, and the Shield Building’s first of a kind design.”  According to the CM the Project is 21 to 22 months behind schedule and the Shield Building construction schedule will add an additional 317 day delay.

                     Concerns about the construction of the nuclear modules were first raised by the CM in the Second Vogtle construction monitoring review and repeated in every review to date.  Delays in construction are estimated to cost $2 million per day which includes the total project cost, replacement power costs and financing.

 PSC reverses its Lifeline rule as part of Federal lawsuit settlement

             At its July 1 Administrative Session the Public Service Commissioners unanimously approved reissuing an amendment to its Rule 515-12-1.35 which completely eliminated subsection 3(f) that imposed a $5.00 minimum monthly charge on all Lifeline customers.  The Commission’s action was part of a settlement agreement between it and the CTIA – The Wireless Association.  A final vote by the Commission will be held at its August 5, 2014, Administrative Session.

            The Federal District Court had previously granted the CTIA’s motion for preliminary injunctive relief against the PSC and it was expected the Court would grant CTIA’s motion for summary judgment which would have permanently prohibited the PSC from any regulation of wireless service.

 Georgia Power report concludes customers are not interested in their hourly energy usage

             Pursuant to the 2013 rate case order the Company agreed to examine the need and costs associated with provided hourly usage information to all metered customers.  The cost of providing hourly usage information was $5.4 million.  Based on its experience with the My Power Usage program an average of 35,287 customers used the My Power Usage service per month which was 1.9% of the 1,897,000 eligible customers.  No information was provided indicating how customers were informed of the new service.

 Update to Georgia Power 90 MW solar project with U.S. Army

             In the May 2014 Georgia Utility Update it was reported that Georgia Power Company and the U.S. Army had entered into an agreement for the development of renewable energy at Forts Benning, Gordon and Stewart.  The three 30 MW projects were expected to provide approximately 18% of the energy the U.S. Army consumes in Georgia.

            While it was assumed the electricity generated from the solar projects would be consumed at the local military bases the power generated will instead go directly into the grid and not to the Army bases.  Construction of the solar facilities on the military bases allow them to comply with federal renewable energy mandates without having to consume the output from the solar projects.

Georgia Power Company received the highest ROE of any electric utility in 2013

             SNL Financial recently reported that Georgia Power Company received the highest authorized return on equity (ROE) of any electric utility in 2013.  The Company originally asked for an 11.50% ROE in its rate case filing, but was granted a 10.95% ROE.  SNL reported that, “[t]he average authorized ROE for the 38 electric general rate cases (in 2013) was 9.83%.”

            In the 2013 rate case decision the Public Service Commission re-authorized the Company to retain excess earnings 100 basis points or 1% above its authorized ROE which effectively gives the Company an ROE of 11.95%.  Pursuant to testimony from the rate case one hundred basis points is approximately $130 million.

            The SNL article found that Georgia Power Company had historically exceeded its authorized ROE level.  “Georgia Power earned an ROE of 12.29% in 2013, and has historically earned ROEs in excess of 10%, with 11.57%, 12.7%, and 12.59% ROEs earned in 2010, 2011, and 2012, respectively.” 

Twenty years and $301,356,250 later AGL’s coal tar cleanup keeps going and going 

            Atlanta Gas Light Company (AGL) recently filed its quarterly report regarding its remediation and cleanup activities at its manufactured gas plant sites in Georgia and Florida.  Fees for the program are collected from customers through the Environmental Response Cost Recovery Rider (ERCRR).

              Since remediation began on the 9 Georgia sites and 3 Florida sites in 1993, AGL has incurred over $301 million in costs including $100 million in carrying costs for the program.  Of particular interest is the $11,078,535 in total expenses for the Sanford, Florida site of which $8,986,134 were legal expenses.  AGL customers have paid over $29 million for remediation activities at the Sanford, St. Augustine and Orlando, Florida sites with no financial contribution from Florida City Gas, an Atlanta Gas Light Resources company.

            The quarterly report indicates that only 2% of the work at the Macon 3 site and 5% of the work at the Orlando site have been completed as of March 31, 2014.  Environmental expenses incurred for this quarter total $684,610 and ratepayers paid $1,281,610 through the ERCRR. 

Georgia Power Company announces 90 MW solar project with U.S. Army 

            Major General Al Aycock, Director of Operations, Office of the Assistant Chief of Staff for Installation Management, informed the Commission at its May 6 Administrative Session that Georgia Power Company and the U.S. Army had entered into an agreement for the development of renewable energy at Forts Benning, Gordon and Stewart.  The three 30 MW projects are expected to provide approximately 18% of the energy the U.S. Army consumes in Georgia.

            On May 15 Georgia Power filed an update to the 2007 Integrated Resource Plan which authorized the development of three renewable energy projects.  According to an Army press release Georgia Power “will finance, design, build, own and operate these projects.”  Construction for the projects is scheduled to begin in late 2014 with commercial operations starting in 2015.   Once completed, the new solar generation will be added to the Company’s rate base either before the next scheduled rate case in 2016 or in the case.

John Goselin joins FMG after being a partner with Duane Morris, LLP. He also is the former Chief Litigation Counsel of a national financial services company and managed litigation for the company’s wholly-owned subsidiary of broker-dealers. 

At FMG, Mr. Goselin will concentrate his practice on securities litigation and the representation of broker-dealers in arbitrations, litigation and regulatory matters before the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA). With his experience both as a private attorney and chief  litigation counsel for one of the nation's largest broker dealer network, Mr. Goselin has defended all types of legal challenges a broker-dealer faces.  

Mr. Goselin's practice is national in scope, and he has represented clients throughout the country in customer suitability claims, complex ponzi schemes, and matters before state and national regulators in investigations and examinations. In addition, Mr. Goselin has substantial experience representing public companies in securities class actions, shareholder and derivative litigation, deal protection litigation, accountant and legal professional liability litigation and general commercial litigation. He is approved counsel for many of the nation's largest providers of insurance coverage for financial institutions and professionals.

Mr. Goselin is a 1994 graduate of the University of Michigan Law School and a cum laude graduate of Duke University.

Vogtle Construction Monitoring Hearing Set for June 3 and 4 

            The Public Service Commission issued the Procedural and Scheduling Order for the 9^th and 10^th Construction Monitoring Hearing for Vogtle Units 3 and 4.  Georgia Power will file their testimony on April 25 and the first round of hearings is set for June 3 and 4.  The second round of hearings for the PSC Staff and Intervenor witnesses is scheduled for July 1 and 2, and a final decision by the Commission is set for August 19.

            In January the Nuclear Construction Cost Recovery rider increased to 9.3141% of a customer’s gross monthly bill up from 7.5821% in 2013.  In its current Report the Company stated that base rates could increase an additional 4.66% to 9.32%. (p. 7)

    Issues such as the increase in the certified cost of $6,113,000,000 to a current forecasted cost of $6,759,000,000 will be examined, along with current construction milestones and whether the new construction completion dates of December 2017 and December 2018 are probable.    

            Several other issues will probably be explored such as the loan guarantee agreement with the Department of Energy, the Company’s applications to the IRS for approximately $800 million in Production Tax Credits and the current status of litigation between the project owners and their contractor.

Natural Gas Marketers and Atlanta Gas Light Company Work Out Problems with New Interruptible Tariffs 

            On January 28, 2014, Atlanta Gas Light Company (“AGLC”) filed a set of new tariffs for interruptible customers.  The new tariffs were filed after AGLC discovered that its current tariffs, that had been in place since 1999, lacked any penalty provisions for noncompliance with curtailment orders.  The new Interruptible tariffs were approved by the Public Service Commission on February 4, 2014.

            The new interruptible tariffs contained several serious problems for customers and natural gas marketers.  AGLC’s interruptible tariff revisions dramatically modified the definition of customer eligibility for interruptible service, empowered the Company to terminate both firm and interruptible gas service to customers with no due process protections, authorized double penalties for non-curtailment and allowed the Company to enter a customer’s property to install new remote shut off equipment at the customer’s expense.

            In response to vociferous objections from both interruptible customers and natural gas marketers the Commission directed representatives to re-examine and amend the new interruptible tariffs.  After a series of meetings and discussions the parties were able to dramatically improve the tariffs while providing reasonable penalty provisions to the Company to ensure compliance with future curtailment orders. 

Public Service Commission Issues Request for Proposals for 495 MWs in New Solar Generation

            At the April 2, 2014, Administrative Session the Commission approved issuing request for proposals (“RFPs”)for 495 megawatts (“MWs”) of new solar generation to go on line in 2015 and 2016.  Projects can range in size from 1 MW to over 30 MWs.  The bid prices cannot exceed more than $120 per MWh.  This is the largest utility scale RFP in Georgia’ history which could result in 800 MWs of solar generation for Georgia Power Company by 2016.  800 MWs of solar panels would cover 8,000 football fields.

            Bids will be accepted by Accoin, Inc.,the independent evaluator.  Interested bidders should apply through Accoin’s website at www.gpasi.accoinpower.com. 

Solar Bill Survives Legislative Session 

            House Bill 874 survived the 2014 Legislative Session by being placed in a study committee by House Energy, Utilities and Telecommunications Committee Chairman Don Parsons.  HB 874 had broad support from property rights organizations to renewable energy supporters.

            The bill was introduced by Rep. Mike Dudgeon (R-Johns Creek) and co-sponsored by several Republican and Democrat representatives.  The legislation will strike down the legislative barriers to permit businesses and home owners to lease or enter into third-party financing arrangements for the installation of solar panels on their property.  Georgia law currently prohibits a consumer from financing the installation of solar panels on their property with a third party.  A hearing was held before the House Energy, Utilities and Telecommunications Committee which referred HB 874 to a study committee chaired by Rep. Harry Geisinger.

FMG has opened new law offices in Philadelphia, Tampa and New Jersey effective April 1, 2014.  The firm will now operate a total of eight offices in Atlanta, Forest Park (GA), San Francisco, Los Angeles, Orange County (CA), Philadelphia, Moorestown (NJ) and Tampa.

FMG’s Philadelphia Office will serve clients in Eastern Pennsylvania, the Moorestown Office will serve clients in all of New Jersey, and the Tampa office will serve clients throughout central Florida.

Jennifer Ward will lead a team of attorneys formerly with the law firm of Spector, Gadon & Rosen, PC.  Ms. Ward is an accomplished trial attorney and has been recognized by the New Jersey Law Journal as one of the “New Leaders of the Bar,” and also has been recognized by Super Lawyers.  Her practice group will concentrate in commercial litigation & professional liability, including employment law, contract disputes, errors & omissions for lawyers, architects, engineers and other professionals, and directors & officers litigation. 

Ms. Ward’s decision to make the move was fueled by her developing practice. She stated, “My practice has grown exponentially over the past few years. This growth has also resulted in a practice that is diverse and complex, covering a broad spectrum of sophisticated legal practice including federal class action litigation as well as transnational disputes. As a result, I recognized the need to join a firm with the broad infrastructure and capabilities necessary to sustain this growth and to meet the needs of my clients. As a national firm with a strong and diverse litigation practice, FMG was a perfect fit.” 

Ben Mathis, Managing Partner of FMG, stated, “We have been looking to open offices in the Northeast and Florida. We have known Jennifer and her team personally and professionally for years and have observed first hand their talents and entrepreneurial drive. This is an excellent opportunity to expand our footprint in the Northeast and Florida, while adding experience, talent and depth.” 

In addition to Jennifer Ward, the attorneys joining FMG will include Barry Brownstein (PA/NJ office), Behnam Salehi (PA/NJ office), and Jeremy Rogers (FL office). Barry Brownstein will be a partner and Jeremy Rogers will be the resident partner in Tampa. Meaghan Londergan also will be joining the group in the Philadelphia office. 

Commissioners Approve Quarterly Audit of AGL Pipeline Replacement Program 

            At its February 18 Administrative Session the Georgia Public Service Commission approved a consulting contract for the audit of Atlanta Gas Light Company’s Pipeline Replacement Program (“PRP”).   The Accoin Group will be retained to assist the PSC Staff with its quarterly prudency audit.  On December 23, 2013, AGL filed a notice that it’s PRP was substantially completed and the program would be closed.  The PRP was begun in 1998 to address safety concerns regarding AGL’s cast iron and bare steel pipes.

            In a letter dated January 23, 2014, the PSC Staff raised serious concerns regarding a newly constructed 24-mile long Eastside Pipeline that is “not completed and is not in operation,” yet the Company is collecting $1.5 million per month from ratepayers.  The Staff also pointed out that an, “8,000 foot section of recently installed pipe was found to be corroded and needs to be re-installed. . .” Construction costs for the Eastside Pipeline are approximately $157.7 million.

            AGL responded to the PSC Staff by saying it would conclude the final cost accounting for the capital investments and expenses related to the PRP by June 30, 2014.  This final accounting will address the projected under recovery of PRP expenses and establish separate financial tracking mechanisms for the Eastside Pipeline Project.  The Company anticipates there will be litigation with their contractors regarding corrosion and construction problems with the project.

House Bill 874 Introduced to Allow Third-Party Financing of Solar Power 

            Representative Mike Dudgeon (R-Johns Creek) introduced HB 874, the Solar Power Free-Market Financing and Property Rights Act of 2014, which will eliminate the legislative barrier to business and residential consumers using third-party financing to install solar power.  Currently Georgia law prohibits consumers from financing solar power through the use of third-party financing options or leasing arrangements.  Currently, Georgia consumers may only purchase and install solar power generation.

            HB 874 only applies to financing of solar technology, and no tax credit or incentives are provided in the legislation.  The legislation updates Georgia law to eliminate anti-competitive legal barriers to allow individual consumers to develop solar energy generation.  A hearing before the House Energy, Utilities and Telecommunications Committee was held February 20 and the bill was committed to a study committee to be chaired by Rep. Harry Geisinger.          

PSC Approves One Year Delay in Next Georgia Power Fuel Case 

            At the Georgia Public Service Commission’s Administrative Session on February 4, 2014, Commissioner Lauren “Bubba” McDonald requested that Georgia Power Company not file a fuel cost case on February 28, 2014.  No reason was given by Commissioner McDonald for his request.  At the February 13 Energy Committee meeting the Company agreed to the delay but acknowledged that it’s most current projections of fuel revenues and expenses are inadequate for the next twelve months and would result in a $100 million or greater under collection.

            While the Interim Fuel Rider (“IFR-1”) will expire on June 1, 2014, the IFR mechanism approved by the Commission in FCR-23 would remain in effect and allow the Company and Commission to adjust fuel rates with no review if the over or under-collected balance was plus or minus $200 million.  The Commission voted unanimously at its February 18 Administrative Session to delay the filing of the fuel cost case to February 2015.

Plant Mitchell Unit 3 Conversion to Biomass Facility To Be Canceled and Plant to be Retired 

            Georgia Power Company has filed a request with the Georgia PSC to cancel its planned conversion of Plant Mitchell Unit 3 from a coal to biomass unit.  A petition to decertify and retire the plant in April 2015 will be filed late this year.    The Company is also seeking permission for cost recovery for the remaining net book value, unusable materials and supplies and biomass conversion costs to regulatory assets which will be kept in rate base.  The Company spent $4,704,000 since 2009 in engineering and permitting expenses on the canceled project.

            In its application the Company said that delays in issuing new federal rules regarding industrial boiler technology and coal ash regulations, and a significantly higher cost estimate of $332 million compared to the original estimate of $130 million for the plant conversion led to the project cancelation.       

By: David Cole

Yesterday afternoon, the IRS announced that it is delaying some aspects of the employer mandate of the Affordable Care Act.  You can download a fact sheet and a copy of the new regulations here.

Under the new regulations, employers with fewer than 100 full-time (and full-time equivalent) employees in 2014 will not have to provide health insurance to their employees in 2015.  However, any employer that reduces the size of its workforce or the overall hours of service of its employees in 2014 in order to fall under this threshold will be disqualified and have to comply with the employer mandate in 2015.  In addition, employers must maintain throughout 2014 the health coverage they currently offer or else they will be disqualified.  Employers that qualify for the postponement will still have to report on their employees and coverage in 2015, but will have until 2016 before any penalties could apply.

Employers with 100 or more full-time (and full-time equivalent) employees will still be required to provide health insurance for their full-time employees (and their dependents) in 2015.  However, the new rules only require them to cover 70% of their full-time employees in 2015.  In 2016, the number goes back to the regular requirement of covering at least 95% of full-time employees. 

In the regulations issued yesterday, the IRS provided additional guidance on staffing firms, adjunct professors, commissioned workers, volunteer workers, and other groups.  More information will be available in the days ahead on our Employment Law Blog, so be sure to subscribe or check it regularly for updates.  We also will provide an update on the Affordable Care Act at our upcoming seminar on February 25, so be sure to register and join us.  In the meantime, please contact David Cole at (770) 818-1287 or [email protected] if you have further questions. 

Georgia Power Rate Case Settles for $466 Million Rate Increase Over 3 Years

The Georgia Public Service Commission unanimously approved the Stipulated Agreement in the Georgia Power rate case at its December 17th Administrative Session.  The Commission’s decision will mean Georgia Power customers will see step rate increases for the next three years.  The initial increase in 2014 will be $110 million followed by increases of $177 million and $167 million in 2015 and 2016 respectively.  From 2014 to 2016 rates will increase by approximately $466 million.

In addition to the rate increases for the next three years the Stipulated Agreement set the Company’s return on equity (“ROE”) level at 10.95% a reduction of 20 basis points from the current 11.15%.  The Interim Cost Recovery (“ICR”) mechanism will continue and should the Company’s retail earnings be lower than a 10.0% ROE it will be permitted to make a tariff filing to increase its earnings back to a 10.0% ROE level.  The next rate case filing by Georgia Power won’t occur until June 2016.

Commission Approves AGL Rate Increases Beginning in 2015

After a one hour hearing on December 12 the Public Service Commission voted unanimously to approve Atlanta Gas Light Company’s (“AGL”) requests to amend its 2013-2017 Integrated System Reinforcement Program (“i-SRP 2.0”) and 2013-2017 Integrated Customer Growth Program (“i-CGP 2.0”).  The i-SRP program develops distribution system capacity and system resources while the i-CGP program develops projects in new strategic corridors.  The i-SRP 2.0 program is estimated to spend $215 million over the next three years.

The average AGL residential customer currently pays approximately $4.58 a month for these and other pipe replacement programs.  AGL rates for the i-SRP program will increase in three phases beginning in 2015 for a total of $1.16 in 2017 and rates for the i-CGP program will also increase in three phases beginning in 2015 for a total of $0.27.  AGL monthly customer surcharges will be approximately $6.01 in 2017.  The use of surcharges for capital improvement programs has meant that AGL has not had to file a rate case since 2010 and is unlikely to file a rate case in the next few years.

PSC Sets Hearings for 250 MWs in Wind Power Contracts for Georgia Power

The Public Service Commission approved a schedule for hearings to review the application of Georgia Power Company regarding two 20 year contracts for 250 MWs of wind power.  The purchase power agreements (“PPAs”) with EDP Renewable North America are for two wind power projects in Oklahoma.  Georgia Power claims in its application that “these resources represent an extraordinary advantage, as that term is used in Commission Rule 515-3-4.04(3)(f)(3), and therefore would be exempt from the Commission’s Request for Proposal (“RFP”) process.”

Both wind projects will deliver firm energy and capacity, and pursuant to the recent Georgia Power rate case Stipulation could increase base rates in 2016 if approved.  Additionally, Georgia Power is requesting an additional sum of $2.30 per kW-year for both facilities.  The additional sum for 250 MWs would be $575,000 per year.
 

Excess Reserve Margins Cost All Customers

In 2012 Georgia Power Company had an average reserve margin of 67% for the non-summer months and a 29% average reserve margin for the summer months according to uncontested testimony in the recent rate case.  Why should anyone care how large a utility company’s reserve margin is?  Because that means ratepayers are paying for unused generation capacity.  A 67% reserve margin means that 67% of a utility’s generation fleet is sitting idle and unused.

Every utility should have a reserve margin between 12% and 15% to ensure reliable service to its customers because accidents happen and plants have to go down for regular maintenance.  But since 2007 Georgia Power’s reserve margin level has steadily increased from 12% to 29% in 2012 for the high demand summer months.

Yes, the Great Recession affected the steady rise of the reserve margin levels, but the excess reserve margin level isn’t reversing any time soon and that means higher costs for all ratepayers.  Excessively high reserve margins also mean that new generation is not needed, and any additional generation will only exacerbate the problem for the long term.

The retirement of more coal plants is likely in the next couple of years due to the excess reserve margin and the construction of the new Vogtle units.  Unfortunately, the recent precedent set by the PSC to allow the company to retire its older coal plants and convert any remaining net book value at retirement to a regulatory asset will provide no rate relief to customers.  While the coal plants may be retired their undepreciated value will remain in rate base as a regulatory asset and continue to be depreciated over time as if the plant was still operational.

Vogtle Surcharge to Increase to 8.87% in January

Georgia Power Company filed its annual rate adjustment to its Nuclear Construction Cost Recovery (NCCR) rider November 1 seeking a 1.3% increase.  The NCCR rider has increased annually since it was first implemented in 2011 at    5.8619% of a customer’s gross bill.  It was 6.4362 in 2012 and 7.5821% in 2013.  The NCCR rider collects financing charges associated with the construction of Vogtle Units 3 and 4. 

PSC Staff Recommends $165 million Rate Reduction for Georgia Power

Expert witnesses for the PSC Staff and Interveners in the Georgia Power rate case presented evidence last week opposing the $273 million traditional base rate increase and return on equity (“ROE”) increase to 11.5% sought by the Company.  Instead the PSC Staff witnesses recommended that rates be reduced by $165 million and the Company’s current 11.15% ROE be reduced to 10.0% in line with the current utility industry average.  The ROE reduction from 11.5% to 10.0% would be a $216 million revenue reduction.

Rather than a traditional base rate increase of $273 million for 2014 the Company is seeking a levelized increase of $333.6 million for 2014 through 2016.  The PSC Staff is recommending that any rate increase adjustment be made annually rather than on a levelized basis.  The Commission Staff also argued that the Company’s budgeted operation and maintenance budgets be reduced by $109 million and depreciation rates be adjusted saving ratepayers an additional $93 million.

Georgia Power is scheduled to file its rebuttal testimony on November 15 but a stipulated agreement between the Company and the PSC Staff is likely to be filed.  A final decision by the Commission is scheduled to be made December 17 with any rates changes going into effect January 1, 2014.

Commission Approves AGLC’s 2014 Facilities Expansion Plan

At its November 5 Administrative Session the Commission unanimously approved Atlanta Gas Light Company’s (“AGLC”) 2014 Facilities Expansion Plan for White, Columbia and Chatham Counties.  The three projects are expected to cost $9,746,974 which will be drawn from the Universal Service Fund (“USF”).  Over $5 million will be spent in White County for line extensions to primarily serve poultry farms.
 

Georgia Power’s Vogtle 8 Testimony Significant for What It Doesn’t Mention

Georgia Power Company filed its testimony in support of its Eighth Semi-Annual Vogtle Construction Monitoring Report on June 28.  The Company increased its capital forecast by $381 million to $4.8 billion for the project which represents an 8.6% increase to the original certified capital cost.  The new estimate of the project costs, including financing, is $6.850 billion, an increase of $737 million from the current certified amount of $6.113 billion.  None of the $425 million in disputed cost increases between the Contractor and Georgia Power are included in the $737 million project cost increases.

No mention is made whether the “paperwork deficiencies” which had stopped fabrication of sub-modules and the assembly of structural modules since April 2012 had been corrected.  This is a major omission.  Additionally, there is no mention whether an Integrated Project Schedule (“IPS”) has been completed.  In the last Vogtle review the Commission’s Independent Construction Monitor said an IPS was critical to the project.

The overall current project cost overrun is approximately $1.6 billion which will mean rate increases for EMC and MEAG customers along with Georgia Power.  It is interesting to note the Company’s mantra has changed from “on time and on budget” to “safe and reliable.”  Hearings begin July 18 for the latest construction monitoring review.

Georgia Power Asking for $482 Million Rate Increase

Georgia Power Company filed its latest rate case on June 28.  The Company is asking for a $482 million or 6.1% increase in rates, a continuation of the return on equity (ROE) range of 10.25% to 12.25% and an increase of its ROE level from 11.15% to 11.50%.  In its filing the Company estimated the monthly bill of a typical residential customer would increase approximately $7.84.

The Company is requesting increases of $333.6 million for base rates, $132.3 million through the ECCR tariff, $11 million for municipal franchise fees, and a $5.3 million increase to the Demand Side Management tariffs.  The Company is basing its revenue deficiency on a retail rate base of $15.7 billion and is using an overall cost of capital of 7.93%.

The first phase of hearings will be October 1-3 and a decision is scheduled for December 17, 2013.

Georgia PSC Approves Integrated Resource and Demand Side Management Plans That Includes Development of 525 MWs of New Solar Power

After a very contentious session in which the debate focused on whether to include more solar generation in Georgia Power’s resource mix, the Georgia Public Service Commission approved the stipulated agreement between Georgia Power Company and the PSC Staff at its July 11 Special Administrative Session by a vote of 4 to 1.  Georgia Power will close 16 coal-fired electric generation units totaling 2,093 MWs, add scrubbers and bag houses to thirteen coal plants to comply with EPA Mercury and Air Toxic Standards (MATS) emission standards, and expand its demand side management program by 10%.  Residential and commercial consumers will pay $1.3 billion over the next three years in higher rates to cover the costs of the environmental remediation projects.

The Commission’s decision in this case received a great deal of media attention due to the debate about including 525 MWs of new solar generation in the Integrated Resource Plan (IRP).  The Commission directed the Company to include in its IRP 260 MWs of new solar generation for 2015 and 265 MWs by 2016.  After Georgia Power retires the 2,093 MWs of older coal plants it will have a reserve margin of 25%.  A 14% reserve margin is considered a generous reserve.  The new solar generation will be competitively bid with details to be announced later.

For more information, contact Bobby Baker at 770.818.4240 or [email protected].

By David Cole

In a surprise memo released yesterday afternoon entitled “Continuing to Implement the ACA in a Careful, Thoughtful Manner,” the Treasury Department announced that it is delaying for one year its enforcement of the employer mandate provision of the Patient Protection and Affordable Care Act (“ACA”), commonly referred to as Obamacare.  This part of the ACA requires employers with an average of 50 or more full time and full time equivalent employees in the preceding calendar year to offer affordable health insurance coverage to their full time employees or else pay steep penalties.  It was supposed to go into effect on January 1, 2014, but now the Treasury Department says it will not enforce the penalties until 2015.

According to the memo, the delay of the employer mandate is really a secondary effect of the Treasury Department’s delay of two other reporting provisions of the ACA.  Specifically, section 6055 of the ACA requires entities that provide health coverage to individuals to report information to the IRS that is needed to track compliance with the individual mandate (the part of the law that requires all individuals to buy health insurance or else pay a tax).  In addition, section 6056 of the ACA requires employers covered by the employer mandate to report information to the IRS about their health insurance plans offered to full time employees in order to ensure their compliance with the employer mandate.  The Treasury Department still has not issued regulations explaining how these reporting requirements will work, and many businesses and health insurance providers have complained that they are too burdensome and complex.

The Treasury Department says in its memo that "we have heard concerns about the complexity of the requirements” and that “we have listened to your feedback.”  In this regard, it says it will issue regulations this summer and, in that process, work with stakeholders on developing ways to minimize and simplify the reporting requirements.  Once these regulations are issued, the Treasury Department says it will “strongly encourage” employers and other covered entities to voluntarily report information in 2014, but that actual reporting will not be required until 2015.

In the absence of these reporting requirements in 2014, the Treasury Department says it will be “impractical to determine which employers” are covered by the employer mandate of the ACA for the purpose of assessing penalties.  As a result, the Treasury Department will not enforce penalties against employers in 2014 for not offering affordable health insurance to full time employees.  Instead, the penalties will not apply until January 1, 2015.  This means employers have an extra year to determine if they are covered by the employer mandate and, if so, how to structure their insurance offerings to employees.  This will no doubt come as welcome news to many employers teetering close to the 50-employee threshold or considering various measures to comply with the law while at the same time maintaining costs.

It is important for employers to understand that there are other requirements of the ACA that are not delayed by this announcement.  As we wrote in a prior blog post, employers still have to provide employees with written notice of the health exchange in their state by October 1, 2013.  In addition, employers that provide health insurance to employees must report the cost of both the employer’s and employee’s share of the premium on W2s at the end of the year.  Further, employees are still protected by the whistleblower provisions of the ACA, which prohibit retaliation by an employer because, among other things, an employee obtains health insurance through an exchange or refuses to participate in any activity that he reasonably believes is a violation of the ACA.

For more information, contact David Cole at (770) 818-1287 or [email protected].

FMG is pleased to announce that Michael Bruyere, who has over 20 years experience in insurance coverage and medical device litigation, and Wayne Melnick, a well-known and respected trial attorney concentrating in local government and business liability litigation, have joined the Firm as Partners in the Atlanta office.

Mr. Bruyere will practice in the Firm’s insurance law group. He  has a broad based practice with a focus on defending insurers and manufacturers in complex litigation.  He has significant experience in representing insurers in bad faith, coverage and declaratory judgment cases. He also represents drug and medical device manufacturers and health care organizations throughout the country in liability litigation and regulatory and compliance matters, including all aspects of life science litigation.

Wayne Melnick will practice in the Firm’s government law and  business liability practice group. He has nearly 20 years experience and has tried over 50 jury cases to verdict. His practice includes all aspects of local government defense, including excessive force, jail conditions, search and seizure and general liability. He also represents insurers and companies in an array of commercial litigation matters.

Freeman Mathis & Gary, LLP is pleased to announce that the lawyers of the California law firm of Strazulo Fitzgerald, LLC have joined our firm effective June 1.  FMG will now operate offices in both San Francisco and Southern California as well as Atlanta. 

Dennis Strazulo will be FMG's California Offices Managing Partner.  Mr. Strazulo is an accomplished trial attorney with nearly 30 years of experience in all aspects of commercial litigation including employment, directors and officers and professional liability.  Mr Strazulo, a founding partner of Strazulo Fitzgerald, LLC, believes the move to FMG will further advance his attorneys’ California practice, stating, "We gave a lot of consideration to which firm we would join and were courted by many.  FMG's national reputation as a premier specialty litigation firm is reflected in their amazing growth in recent years.  Their philosophy of putting clients first and their positive employee culture are a perfect fit for the values of our attorneys." 

Ben Mathis, Managing Partner of FMG, stated, "We have worked with and known the Strazulo Fitzgerald attorneys for a number of years.  Some time ago, our partners made the decision to begin a national expansion.  We couldn't have found attorneys who are more committed to our core values for treating clients and employees.  In addition, the reputation of Dennis and the other Strazulo Fitzgerald attorneys is second to none. We could not be more pleased that they chose to join us."

Atlanta Office

100 Galleria Parkway
Suite 1600
Atlanta, Georgia 30339-5948
T: (770) 818-0000
F: (770) 937-9960

Forest Park Office

661 Forest Parkway
Suite E
Forest Park, Georgia 30297
T: (404) 366-1000
F: (404) 361-3223

San Francisco Office

Three Embarcadero Center
8th Floor
San Francisco, CA 94111
T: (415) 394-9500
F: (415) 394-9501

Southern California Office

2615 Pacific Coast Highway
Suite 327
Hermosa Beach, CA 90254
T: (949) 333-0883
F: (949) 748-6146

By Dana Maine and William Ezzell

Following last month’s unanimous opinion from the Georgia Supreme Court that legal malpractice claims were not per se unassignable, the State Bar of Georgia successfully implemented a counterstrike aimed at barring the assignment of all legal malpractice claims. The case, Villanueva v. First American Title Insurance Company, involved a legal practice claim against a closing attorney in a mortgage refinance transaction. [E-Alert: Stranger Danger: Georgia Joins Minority View and Allows Assignability of Legal Malpractice Claims]. The Georgia Supreme Court held, but for actions in personal injury, all claims, including those for legal malpractice, were assignable.

The aggressive, albeit quiet, lobbying efforts of the State Bar resulted in the passage of House Bills 160 and 359, relating to foreclosed property registries and the disposition of unclaimed property, respectively. In Georgia, lawmakers are permitted to add unrelated provisions to legislation so long as the provision applies to the same code section the legislation addresses. Thus, in an apparent attempt to maximize the chances of the provision’s passage, each Act included identical provisions amending O.C.G.A. § 44-12-24, governing the assignability of legal claims involving property.

House Bills 160 and 359 provide:

Except for those situations governed by Code Sections 11-20-210 and 11-9-406, a right of action is assignable if it involves, directly or indirectly, a right of property. A right of action for personal torts, for legal malpractice, or for injuries from fraud to the assignor may not be assigned.

The Georgia Legislature passed both measures almost unanimously, and the bills are currently awaiting Governor Deal’s signature. Georgia requires the Governor sign any legislation into law within 40 days from March 28, 2013, and while the Governor has yet to publicly comment on the bills, it is widely expected that the Governor – an attorney - will sign the legislation into law. Once signed, the legal malpractice provisions will become effective immediately. Copies of each bill are available here http://www.legis.ga.gov/legislation/en-US/display/20132014/HB/359 and here http://www.legis.ga.gov/legislation/en-US/display/20132014/HB/160.

Final passage of the laws should curb the concerns of insurers and Georgia lawyers alike. Most pressing are the malpractice policies currently necessitating implementation or renewal. Assignable legal malpractice claims would have required insurers to raise premiums significantly, perhaps as high as 25 percent. From a more strategic vantage point, insurance carriers’ fears of the creation of a secondary market for LPL claims should be assuaged. The Georgia Legislature recognized the danger for all interested parties from the holding in Villanueva – an increase in the pool of risk for insurers – and acted decisively without any ambiguity, due in no small part to the State Bar.

While this legislation solves the problem for Georgia lawyers, LPL carriers must recognize that there may be unwelcome impacts from Villanueva. The decision of the Georgia Supreme Court fell within a clearly defined minority of jurisdictions that concluded legal malpractice claims are assignable. In reaching the decision, the court provided a comprehensive survey and analysis of courts nationwide regarding the policy implications of majority and minority stances on assignability. Although the court explicitly refrained from incorporating any public policy in the holding, the case has already garnered national attention and will undoubtedly be used by claimants arguing for assignable LPL claims in future appellate litigation in other jurisdictions.

For more information, contact Dana Maine at 770.818.1408 or [email protected] or William Ezzell at 770.818.4259 or [email protected].

By Dana Maine

Legal malpractice carriers be aware that you will now be on the hook for defending your insureds in actions brought by strangers to any attorney-client relationship. The Georgia Supreme Court just answered the question on the minds of Georgia attorneys and legal malpractice practitioners across the country – legal malpractice claims are assignable in Georgia, as long as they are not presented in the nature of a personal injury. Villanueva v. First American Title Insurance Company, 2013 WL 1092589 (March 18, 2013). A unanimous Georgia Supreme Court, with seemingly little difficulty, determined that Georgia’s assignability statute (O.C.G.A. § 44-12-24) unequivocally directed the outcome of this case.  

The facts of the case are not unusual. The defendant-attorney, Derick Villanueva, began working with the Moss Firm in January 2007. Three months later, he opened a new firm, Moss & Villanueva, with his boss George Moss. Shortly thereafter, in May 2007, Villanueva acted as the closing attorney and settlement agent for a mortgage refinance. As part of that transaction, Villanueva signed closing instructions issued by Homecomings Financial, LLC, which was replacing two prior mortgages on the property, totaling almost $1.2 million. As part of the closing instructions, Villanueva acknowledged that he was to pay off the earlier mortgages.

As part of the closing activities, Homecomings wired the refinance funds to an escrow account used by Villanueva’s old firm, because the account for the new firm had not been established at the time of the closing. Unfortunately, a non-lawyer who had access to the escrow account withdrew funds from the account and the previous mortgages were not paid in full.

Homecomings’ title insurer, First American Title Insurance Company, paid off the balances on the previous mortgages. Thereafter, First American filed suit against Villaneuva accusing him of committing malpractice by failing to pay off the mortgages. First American based its malpractice claim on its right as assignee from Homecomings, which was included in the closing protection letter First American issued to Homecomings.

In reaching its decision, the Georgia Supreme Court cited to the general rule that permits assignment of a right of action “if it involves, directly or indirectly, a right of property,” while “[a] right of action for personal torts or for injuries arising from fraud to the assignor may not be assigned.” O.C.G.A. § 44-12-24. The Court held that the damage involved in the case involved financial loss which is akin to injury to property; therefore, the malpractice claims are assignable. Discounting the public policy concerns relied upon by the majority of state courts to bar the assignment of legal malpractice claims, the Georgia Court said the legislature has not seen fit to amend the Georgia statute to prohibit the assignment of these claims. Therefore, the Court saw no reason to read the prohibition into the statute.

The vast majority of legal malpractice claims involve financial loss and will now be assignable in Georgia. The pool of potential plaintiffs for legal malpractice claims has just expanded exponentially. Insurers can be expected to cover the increased risk with a corresponding increase in premiums. As a practical matter, in these difficult economic times, malpractice insurance now represents an additional source of funds from which a disgruntled litigant can seek recompense.

For more information, contact Dana Maine at 770.818.1408 or [email protected].

By Amy Bender

The Department of Labor ("DOL") has issued a revised Family and Medical Leave Act (“FMLA”) notice poster that all covered employers are required post by March 8, 2013. This poster summarizes the major provisions of the FMLA and instructs employees how to file a complaint. It also references some of the recent changes to the FMLA regulations regarding military family leave and airline flight crews (see “DOL Issues Final Rule Implementing FMLA Expansions for Military Caregivers and Airline Flight Crew Employees,” February 6, 2013 post on FMG’s BlogLine for Employment Law). The poster must be displayed in a conspicuous place where employees and applicants can see it and must be displayed at all locations, even if there are no eligible employees.

In addition, the DOL has issued updated model forms. Although use of these forms is optional for covered employers, those who do use them should begin using the revised forms immediately. The forms expire on February 28, 2015. These forms do not contain any substantive changes, despite the recent military and airline crew revisions to the regulations. 

Links to the revised poster and forms are below:

The Family and Medical Leave Act Poster

WH-380-E Certification of Health Care Provider for Employee’s Serious Health Condition

WH-380-F Certification of Health Care Provider for Family Member’s Serious Health Condition

WH-381 Notice of Eligibility and Rights & Responsibilities WH-382 Designation Notice

WH-384 Certification of Qualifying Exigency For Military Family Leave

WH-385 Certification for Serious Injury or Illness of Covered Servicemember -- for Military Family Leave

WH-385-V Certification for Serious Injury or Illness of a Veteran for Military Caregiver Leave

For more information, contact Amy Bender at 770.818.1421 or [email protected].

By Bobby Baker

Plant Vogtle Project $1.6 billion Over Budget and Climbing

The construction cost of Plant Vogtle Units 3 and 4 (“Project”) has increased from $14 billion to $15.6 billion and more cost increases are coming. Georgia Power Company (“Company” or “GPC”) filed its Eighth Semi-Annual Construction Monitoring Report (“8th CMR”) last week with the Georgia Public Service Commission (“PSC”), and there were several major disclosures buried in the report.

Tucked away in the 8th CMR were several significant facts that the Company didn’t emphasize. First, Georgia Power lowered by $1 billion its “value to customers” projection from its last report filed 6 months ago. Second, while the Company is asking the PSC to increase the certified capital cost of the Project by $381 million, its own numbers scattered throughout the 8th CMR, indicate their share of the total Project costs have increased by $737 million. Third, the Company recognizes the Project is 18 months behind schedule. Finally, what isn’t mentioned, but is very important, is any claim or assertion that module fabrication has begun again at the Project site. Ratepayers should be very concerned considering all of these factors.

The newspaper reports last week focused on the Vogtle construction project being over budget and behind schedule, yet they didn’t report on some other major disclosures that were less obvious to detect. Georgia Power has consistently touted the long-term benefits of building the new nuclear units and asserted that customers would receive $5 billion worth of benefits over the life of the project. The $5 billion number itself isn’t important, because it is based on regulatory and accounting smoke and mirrors. What environmental and climate change regulations might be passed in the next 60 years? Who knows. How much will fuel cost in 2057 and what will demand be in 2069? (See p. 45) But what is important in the 8th CMR is the reduction of the $5 billion figure to $4 billion, because the Company recognizes the cost overruns and delays have eroded their estimate of value by $1 billion. (p. 7)

The “official” cost of the Vogtle Units 3 and 4 construction project is $14 billion, and Georgia Power’s share of the project costs is currently $6.113 billion. The certified capital construction cost and the total facility investments are two different, but very important numbers. Georgia Power Company is asking the PSC to officially increase their share of the certified capital construction cost of the Vogtle Project by $381 million, which would increase the total facility investment cost from $6.113 billion to $6.494 billion (p. 4), yet the most important number is the total amount spent, not just a portion of the investment. The Company repeatedly states that the total facility investment cost of the Project has increased by $737 million (p. 35, see also Tables 1.1, 1.1a and 8.1), which means the total cost of Georgia Power’s share of the project is $6.850 billion not $6.494 billion, and the total project cost has increased from $14 billion to $15.6 billion.

As of January 2013, the Company’s official position regarding the commercial operation dates for Units 3 and 4 were April 2016 and April 2017 for the respective units, although they did concede in the 7th CMR they were moving their unofficial estimates to November 2016 and November 2017. The Company now assumes the approximate commercial operation dates for Units 3 and 4 are the fourth quarter of 2017 and 2018 respectively. (p. 30) Technically, they aren’t asking for a change in the official commercial operation dates for the units, but in reality they are acknowledging the April 2016 and April 2017 dates can’t be met. Construction delays translate into higher costs that are passed along to ratepayers: the longer the delays, the higher the costs. Construction delays must be addressed now.

One of the greatest problems plaguing the Vogtle construction project has been the fabrication of the sub-modules and modules.  All fabrication work stopped in August 2012, and there is no indication in the 8th CMR that work has resumed. Dr. William R. Jacobs, the Project Independent Monitor testified in the last review proceeding that a critical sub-module had been completed in April 2012, but had “not been shipped to the Vogtle site due to paperwork deficiencies.” That eight month delay is now an 11 month delay. When asked how long the paperwork problem had existed Dr. Jacobs said, “since day one.”

Paperwork problems with module fabrication should not take 11 months or even eight or four months to resolve, especially now almost three years into the construction schedule. Allowing this type of construction problem to fester for so long is inexcusable and means higher costs to all Georgia Power, EMC and municipal customers.

The $14 billion project is now a $15.6 billion project, and probably will end up being an $18 billion project. Several more years of heavy construction remain before the new units are completed in 2018 or 2019. Unless consumers hold the utility company owners accountable now for construction delays and budget overruns, they are guaranteed to get an $18 billion bill when the project is complete.

For more information, contact Bobby Baker at 770.818.4240 or [email protected].

By Bobby Baker

Georgia Consumers Paying for Environmental Clean-Up in Florida

For almost 15 years, Atlanta Gas Light (“AGL”) customers have been paying for the environmental clean-up of manufactured gas plant (“MGP”) sites in Orlando, Sanford, and St. Augustine, Florida. Georgia ratepayers have paid $27,908,821 for the on-going remediation of the three MGP sites in Florida with $12,242,270 of the total going for legal expenses.

In the latest quarterly report filed with the Commission, AGL reported expenditures of $493,280 with the vast majority of expenses being for the Sanford site of $405,425 to develop maps in support of restrictive covenants for various properties near the clean-up site in order to put the properties up for sale. The actual remediation or clean-up of the Orlando site has not begun, even though a plan was approved in 2004.

Florida City Gas, an Atlanta Gas Light Resources affiliate, customers pay nothing in support of the remediation and clean-up efforts, which will continue for several more years.

Georgia Power Files Integrated Resource and Demand Side Management Plans

On January 31, 2013, Georgia Power Company filed its 2013 Integrated Resource Plan (“IRP”), decertification of certain generating units and certification of its amended Demand Side Management (“DSM”) Plan. The Commission is scheduled to decide the IRP case by July 17, 2013, and the DSM case by September 15, 2013.

In its filing, the Company is asking the Commission to approve the decertification of 2,093 MWs of generation capacity consisting of Plant Branch Units 3 and 4, Plant Yates Units 1-5, Plant McManus Units 1 and 2, Plant Kraft Units 1-4, Plant Boulevard Units 2 and 3 and Plant Bowen Unit 6. Plant Boulevard Units 2 and 3 are completely out of service because of recent compressor failures that caused substantial damage to the units. Additionally, the Company is requesting approval of expenses for installation of environmental controls at Plant Bowen Units 1-4, Plant Wansley Units 1 and 2, Plant Scherer Units 1-3 and Plant Hammond Units 1-4.

The installation of environmental controls, reclassification of remaining net book values to regulatory assets for retired plants, fuel conversion for plants and reclassification of any unusable material and supplies inventory to regulatory assets will add hundreds of millions, if not billions, of dollars in additional costs to the Environmental Compliance Cost Recovery (“ECCR”) rider. Residential and commercial customers currently pay 10.0131 percent of their monthly bill for the ECCR rider. The Company will file its pre-filed direct testimony in both cases on March 19, 2013.

Public Service Commission Approves Seventh Construction Monitoring Report for Vogtle Units 3 and 4

With no comment or discussion, the Commission unanimously approved Georgia Power’s requests contained in the Company’s Seventh Construction Monitoring Report (“CMR”) at its February 19 Administrative Session. No action was taken regarding the budget overruns and schedule delays for the Project. In the hearing, the Commission’s Independent Monitor testified that the Project was at least 14 months behind schedule and all indications are that it would be longer. The Staff’s expert witness also testified that construction delays had reduced the benefits of the Project by more than $1 billion and further delays would lower benefits more.

The Staff’s Independent Monitor warned the Commission for the sixth time about his concerns regarding the fabrication of modules and sub-modules for the Project. Continued problems with sub-module fabrication have resulted in module assembly activities being halted since August 2012.

In the Seventh CMR, the Company raised for the first time the appropriateness of a construction contingency between 20 and 25 percent to cover cost pressures on a project of this size and magnitude. A 20 to 25 percent contingency on this $14 billion project could mean a cost increase between $2.8 and $3.5 billion, but a more realistic scenario is the Company asking for an increase to its current certified amount of $6.1 billion of less than $1.5 billion in the Eighth CMR.

Utility Bills Filed in the 2013 Legislative Session

House Bill 176 – The Mobile Broadband Infrastructure Leads to Development (BILD) Act prohibits counties and municipalities from unnecessarily delaying applications for modifying or collocating wireless facilities and requires decisions within 90 days.

House Bill 267 – Prevents Georgia Power Company from collecting its return on equity on any cost overruns for the new Vogtle project, but allows the company to recover its actual cost of debt.

House Bill 282 – The Municipal Broadband Investment Act allows public providers of broadband service to only offer service in unserved areas and private companies may file complaints with the Public Service Commission.

House Bill 348 – Provides a tax credit for the purchase of alternative fuel vehicles. The bill does not apply to hybrid electric cars with a gross weight of less than 6,001 pounds. (Sorry Prius owners.)

Senate Bill 51 – This is an improved version of a bill introduce last session which removes legal restrictions on third-parties financing renewable or solar power generation equipment on a customer’s property. The legislation also prevents utility companies from imposing any fees, charges or requirements that don’t apply to similarly situated customers. 

For more information, contact Bobby Baker at 770.818.4240 or [email protected].

By David Cole

This is a critical time for employers to be aware of their obligations under the healthcare law and begin taking steps needed for compliance. As just a brief reminder, some of the law’s key provisions for employers are:

• Mandatory reporting of health benefit information on employee W2s;
• Notice of exchanges due to employees by March 1, 2013;
• Automatic enrollment of employees in employer-sponsored health plans; and
• Required health benefits to employees by January 1, 2014, for employers with 50 or more full-time and full-time equivalent employees.

Although some of these requirements do not go into effect until 2014, each employer’s coverage by the statute will be determined based on its number of employees during the 2013 calendar year. In addition, employers should not wait until the last minute to determine their coverage by the statute and what they need to do to comply. Employers face stiff penalties for non-compliance, and we expect the Obama administration and the IRS to enforce the law strictly as it goes into effect.

Please contact David Cole at 770.818.1287 or [email protected] if you have any questions about your organization and the healthcare law. You also can hear Mr. Cole discuss the healthcare law live on the show Prime Time Lawmakers at 7:00 p.m. tonight, January 16th, on Georgia Public Broadcasting.

By Kamy Molavi

On July 11, 2012, the Georgia Court of Appeals issued an opinion in the case of 182 Tenth, LLC v. Manhattan Construction Company (2012 WL 2819414).  The Court ruled that “items of general conditions costs described in the payment applications were not lienable because they were not labor, services, or materials which actually went into and became a part of the property.”  The Court based its decision on an interpretation of prior case law to the effect that liens apply only to “work and material or machinery [which] have increased the value of the realty by becoming a part thereof.” 

Further, the Court found that “interest due on the unpaid payment applications was not a lienable item.”  Previously, the Court had held that interest may be recoverable. 

The case related to a contract for the construction of a condominium complex.  The parties to the contract were Manhattan Construction Company and 182 Tenth, LLC, which was not the owner of the property.  Manhattan received some payment for its work under the contract, but apparently it stopped work after seven (7) of its applications for payment, in the combined amount of $2,126,148, were unpaid.  Manhattan obtained a default judgment against 182 Tenth, LLC for $4,886,606, which included $2,126,148 for unpaid amounts due under the contract.

The Court of Appeals ruled that the amount of the default judgment merely provided a maximum amount for the lien, and shifted the burden to the owner to prove that the default judgment included an amount that was not lienable.  Surprisingly, the Court nonetheless held that, “[e]ven though the amount of Manhattan's judgment against [the property owner] was proved and not contested, this was not conclusive or prima facie proof of Manhattan's right to a lien in the full amount of the judgment. The burden remained on Manhattan to prove the lien amount to which it was entitled by producing evidence of lienable items included in the judgment against [the property owner].”  Presumably, at the end of that sentence the Court intended to refer to the judgment against 182 Tenth, LLC.  The Court went on to exclude from the claim of lien those amounts it attributed to general conditions costs.

This case has significant implications.  If it is not challenged and overturned, a general contractor will not be able to rely on the agreed amount of its contract to file a mechanics lien in Georgia.  It will be required to parse the amount owed under the contract to exclude general conditions costs and possibly other amounts.  Moreover, there is no apparent basis to exclude subcontractors from this outcome.  The implications for construction managers could be monumental.

Although the Court did not address certain other costs, the logic upon which the opinion was founded could suggest there is no lien for the contractor’s profit or for other costs such as testing, safety, engineering services, preparation of shop drawings, and the like.  Items such as freight and vendor discounts may be questioned.  This is because those costs, although traditionally included in the contract price, may not constitute “work and material or machinery [that] increased the value of the realty by becoming a part thereof,” according to the Court.

For more information, contact Kamy Molavi at 770.818.1416 or [email protected].

By Sun Choy and Jake Daly

Yesterday the Georgia Supreme Court issued its much-anticipated opinion in Couch v. Red Roof Inns, Inc., which involved a challenge to the validity and constitutionality of Georgia’s apportionment statute, O.C.G.A. § 51-12-33.  The case arose out of a third-party criminal attack on a guest of a motel, who subsequently sued the owner and manager of the motel for their alleged negligent failure to maintain the premises in a safe condition.  The plaintiff did not sue the unknown criminals who attacked him (even as John Doe defendants), and so the defendants identified them as at-fault non-parties to whom fault should be allocated pursuant to the apportionment statute.  Upon the plaintiff’s challenge to the statute via a motion in limine, Judge Steve C. Jones of the United States District Court for the Northern District of Georgia certified the following two questions to the Georgia Supreme Court:

1. In a premises liability case in which the jury determines a defendant property owner negligently failed to prevent a foreseeable criminal attack, is the jury allowed to consider the “fault” of the criminal assailant and apportion its award of damages among the property owner and the criminal assailant, pursuant to O.C.G.A. § 51-12-33?
2. In a premises liability case in which the jury determines a defendant property owner negligently failed to prevent a foreseeable criminal attack, would jury instructions or a special verdict form requiring the jury to apportion its award of damages among the property owner and the criminal assailant, pursuant to O.C.G.A. § 51-12-33, result in a violation of the plaintiff’s constitutional rights to a jury trial, due process or equal protection?

The Georgia Supreme Court answered the first question in the affirmative and the second question in the negative.  Sun Choy and Jake Daly of FMG authored an amicus curiae brief on behalf of the Georgia Defense Lawyers Association in support of the validity and constitutionality of the statute.

Justice Harold Melton, writing for a five-justice majority, focused almost exclusively on the plaintiff’s argument that the statute does not permit a jury to apportion fault between negligent and intentional tortfeasors.  The statute provides that a jury shall consider the “negligence or fault” of a non-party when the plaintiff settles with the non-party or when the defendant gives the prescribed notice.  Looking to the ordinary meaning of the word “fault,” as well as the plain language and context of the statute, Justice Melton concluded that fault includes intentional conduct.  Because the statute “is designed to apportion damages among ‘all persons or entities who contributed to the alleged injury or damages,’” it would “make[] no sense if persons whose intentional acts that contributed to the damages are excluded.”  Moreover, had the General Assembly intended to exclude intentional acts from the scope of the statute, it could have done so explicitly as it did in the statute governing the right of contribution, and as other state legislatures have done in their apportionment statutes.

Turning briefly to the plaintiff’s constitutional arguments, Justice Melton wrote that the plaintiff had not shown that the statute violates his constitutional rights to a jury trial, due process, or equal protection.  The statute does not violate the right to a jury trial because it does not infringe on a jury’s ability to assess liability, calculate damages, and identify the tortfeasors who are responsible.  The right to due process is not violated because the statute is clear, provides adequate guidance to juries, and preserves a plaintiff’s right to pursue a judgment against all tortfeasors.  And with respect to equal protection, the statute is supported by a rational basis of apportioning damages among all tortfeasors, not just those whom a plaintiff elects to sue.

The significance of Couch to property owners and their insurers cannot be overstated since, as the defense bar has already seen, some jurors will apportion almost all of the fault to the non-party criminal who attacked the plaintiff.  Indeed, in one case the jury apportioned 95% of the fault to the non-party criminals.  Most immediately, Couch likely renders moot at least some of the other appeals currently pending in the Georgia Supreme Court and the Georgia Court of Appeals.  The long-term implications, however, remain to be seen.  It would be natural to assume that fewer cases like Couch will be filed, and while there may well be a decrease, it would be premature to think that these cases will go away completely.  As Justice Melton observed, a property owner still owes a duty and still will be liable for its proportional share of damages, and it is not inconceivable that any given jury could apportion a large percentage of fault to the property owner and a small percentage of fault to the non-party criminal.

For more information, contact Sun Choy at 770.818.1412 or [email protected] or Jake Daly at 770.818.1431 or [email protected].

By Ben Mathis

In a 5-4 opinion authored by Chief Justice John Roberts, the Supreme Court upheld the key "individual mandate" provision of the Patient Protection and Affordable Care Act.

Contrary to early media reports, however, a divided and more complicated part of the decision gives individual States the right to avoid participating in the expansion of medicaid eligibility, which is a core component of the Act.

I.  Insurance Mandate

The rationale of the mandate portion of the decision and the composition of the majority was surprising to most court observers. The Chief Justice joined the four justices most commonly viewed as the "liberal" wing of the court while Justice Anthony Kennedy was in dissent with the three most conservative justices.

Chief Justice Roberts, writing for the majority, found that the Act was unconstitutional under both the commerce clause and the necessary and proper clause of the Constitution. However, the Chief Justice concluded that the "penalty" for not having insurance could reasonably be construed as a "tax," and therefore, it was a proper exercise of the taxing power of the federal government. Interestingly, the Chief Justice was the only justice who concluded the mandate was constitutional because it actually was a tax. The other justices were divided 4-4, with four finding the mandate unconstitutional in any form and four finding it a proper exercise of constitutional power even if it was not a tax.

Notably, the issue of whether the mandate was a "penalty" and not a "tax" was not the focus of the lengthy Supreme Court arguments. This was primarily because the President and those sponsoring the legislation insisted the mandate was not a tax. Nonetheless, in the court cases that followed, the Administration argued as an alternative ground that the mandate requirement was actually a tax. Still, the emphasis in all of the arguments and briefing by the Administration was that the mandate was a constitutional exercise of commerce clause regulation.

As has so often been the case in the past, the Supreme Court surprised most everyone, not so much with the outcome of their ruling on the individual mandate, but with their rationale. For those favoring the mandate to purchase insurance, they can celebrate that it will go forward barring legislative efforts to repeal or reform it. For those opposing the law, there is still much in the decision to embrace. Most of the opposition to the law was based on the view that there would be no limits to the ability of government to regulate an individual's daily life if the Act withstood constitutional scrutiny. On that point, however, the Supreme Court was clear that the Act was an unconstitutional overreach by the President and the Congress. This portion of the decision likely will be relied upon in future cases where the legislative power to regulate by the federal government is challenged.

In the end, this part of the case, as decided by Chief Justice Roberts, was illustrative of the old adage, "if it walks like a duck and quacks like a duck, it must be a duck." Here, despite the attempt to call the insurance requirement a "mandate" that would be enforced by a "penalty," the Chief Justice begged to differ. He found that it was simply a "tax." (Estimates are the mandate penalties will total approximately $500 billion). And, as most Americans know, the government has the right to tax. As another old adage says, the only two things certain in life are death and taxes. That is one thing we all can agree on.

II.  Medicaid Expansion

While early media reports focused on the individual mandate issue, a significant part of the decision addressed the right of the federal government to compel states to pay for increased medicaid coverage by threatening to cut off all medicaid funding from the federal government.

On this issue, the decision was very complicated as shifting majorities formed to first rule a portion of the Act was unconstitutional and then to decide what States may do in the future regarding medicaid.

Less well known than the individual mandate is that a major part of the health care legislation was to increase medicaid eligibility by forcing States to participate in the expansion or have all their medicaid funding cut off. The Court, in a very splintered opinion, essentially held this was an unconstitutional "coercion" by the federal government under the Spending Clause. 

As a consequence, a majority of the Court held that States can refuse to participate in the medicaid expansion without losing all of their medicaid funds. In other words, States can continue with their current, unexpanded medicaid programs and reject future medicaid expansions mandated by the federal government.

This part of the decision is potentially a very significant victory by the States and may well undermine the Act's goal of expanding insurance coverage. It could lead to many States refusing to participate in the Act's requirement to expand medicaid eligibility and provide insurance coverage to those not covered by employer plans. As a result of the decision, States now have the option of simply refusing to expand coverage eligibility and not face the prospect of losing their existing medicaid funding.

The full implications of this part of the decision are far from clear at this time. The impact will depend on how many States effectively "opt-out" of the increased medicaid expansion. That remains to be seen, but given the estimated costs of the medicaid expansion, many States, including those not opposing the Act, have expressed concern at the ultimate expense. Clearly, the battle over a major aspect of the Act will now move to individual state legislatures as they confront the decision as to whether to follow the federal government's lead in expanding medicaid coverage.

To read the full opinion, click here.

For more information, contact Ben Mathis at 770.818.1402 or [email protected].

By Philip W. Savrin

Last week, the Supreme Court of Georgia issued its decision in Hoover v. Maxum Indemnity Company finding that an insurer had not preserved its right to disclaim on defenses that were not asserted adequately in the disclaimer letter.  To briefly review the facts, Hoover sued his employer (EWES) for injuries sustained while climbing from a roof on a house where he had been sent by his employer.  Maxum received its first notice from EWES two years later and disclaimed based on an exclusion for injuries to employees.  The disclaimer letter reserved the right to disclaim on other bases, including the extent to which EWES had not complied with the notice provision.  A demand for policy limits of $1 million was rejected.  After the liability case went forward to judgment of $16.4 million, EWES assigned its insurance claims to Hoover who then sued Maxum for coverage and for failing to settle.

The trial court granted summary judgment to Maxum on the delayed notice issue, and that decision was affirmed by the Court of Appeals.  The Supreme Court then granted certiorari review on two issues:  (1) whether the Court of Appeals properly evaluated Maxum’s preservation of the notice defense; and (2) whether timely notice is a condition precedent to a duty to defend. 

In the opinion issued last week, Justice Hunstein, writing for a majority of 4, found that an insurer cannot both disclaim on one ground and reserve its rights on another.  She ruled that a reservation of rights is intended to preserve defenses where the insurer is defending its insured.  Because Maxum did not defend EWES, she found it had not reserved its rights properly, with the consequence that the defense was waived.  Even then, she found that Maxum had waived the defense as a matter of law by relying on the substantive defense in the coverage litigation and not fairly informing EWES of the notice defense.  Finally, she ruled that the employer’s exclusion did not apply, based on her factual finding that Hoover was injured while complying with the directions of the contractor on the premises to which he had been sent by his employer, which was outside his job duties as an employee of EWES.  The opinion is silent on whether there was a duty to indemnify but says only that Maxum breached its duty to defend.

Justice Melton dissented from the ruling that an insurer cannot disclaim on one ground and reserve its rights on another.  He pointed out that the facts supporting a late notice defense are not known at the time that the claim is tendered and there is no inconsistency between the positions.  He noted it is common practice for parties in contract litigation to assert defenses that are later sorted out during discovery.  Justice Hines and Nahmias joined Justice Melton’s opinion, which does not state whether Maxum owed a duty to defend on the merits. 

This opinion changes the standards for preserving coverage defenses in several respects.  Most importantly, it will encourage if not outright require that insurers state all bases for denial to avoid waiving defenses by stating that additional defenses “may” apply.  Insurers should no longer feel comfortable in reserving rights on grounds that are not part of the disclaimer decision.  In addition, the holding that an injury is not related to employment if it is not part of the employee’s regular job duties narrows the employer’s liability exclusion measurably and could have an unintended consequence in depriving employees of workers compensation coverage. 

Given the exposure presented and the impact of the decision on claims handling procedures, Maxum will be moving for reconsideration and may be joined by amicus briefs filed by other insurers or trade organizations.  Reconsideration motions are rarely granted but this is one instance that may get noticed by the justices given the far-reaching implications of the rulings. 

For more information, contact Philip W. Savrin at 770.818.1405 or [email protected].

By Ben Mathis and Kelly Morrison

In a decision that left both sides claiming victory, the Supreme Court struck down several portions of immigration legislation by the State of Arizona, but also upheld a key part of the law that may further the trend of State legislation attempting to restrict undocumented individuals.

The Supreme Court, splitting 5-3, struck three out of four portions of the Arizona immigration reform bill, SB 1070.  The Court held that attempts by the State to impose new criminal sanctions on unauthorized individuals, such as the imposition of a criminal misdemeanor when such an individual applied for a job without citizenship or a visa, were unconstitutional.  The Court found that the majority of the statute improperly usurped the role of the federal government in regulating immigration, and agreed that Arizona’s attempt to limit immigration by creating new criminal penalties to deter undocumented immigrants was preempted.  

Justice Anthony Kennedy authored the majority opinion and emphasized that the authority to enforce immigration laws rests squarely with the federal government.  He was joined by Chief Justice Roberts and the Justices Ginsburg, Breyer and Sotomayor.  Justice Kagan had a conflict and did not participate in the decision.  Justices Thomas, Scalia and Alito dissented.

Still, in perhaps the most significant part of the decision, the Court found that a provision requiring local police to investigate the legal status of suspected undocumented immigrants was not preempted on its face.  This provision has been the source of much of the controversy over the Arizona law as opponents claimed it gave local law enforcement the opportunity to harass suspected unauthorized individuals with little justification.

On this issue, the proponents of the law claimed victory as it opens the door for States to take a greater role in determining the legal status of individuals who have interaction with law enforcement.  The Court was unanimous on this point and held that a State may verify the legal status of people who come in contact with law enforcement.  The Court did read this provision very narrowly, however, leaving open the door to future lawsuits based on racial profiling and other legal violations if bias is shown in enforcing the provision.  Interestingly, the decision is silent on what a local government can do with individuals it finds are undocumented and apparently are residing in the United States illegally.

As a practical matter, this ruling does limit States’ power to enact do-it-yourself, comprehensive immigration reform.  In that regard, the decision will no doubt lead to further legal challenges to States like Georgia and Alabama that have enacted laws similar to Arizona.

As is often typical of cases of this type, there is support in the High Court’s Arizona decision for the position of both sides.  Foes of the Georgia law will doubtless target attempts to restrict employment of undocumented workers.  On the other hand, proponents of State regulation may try to broaden the role of local government to verify eligibility for retirement, health and disability benefits.  The Supreme Court’s decision arguably leaves open such avenues for States to continue enacting measures designed to deter illegal immigration.

Certainly, the controversial issue of immigration reform will continue as a source of litigation.  States desiring immigration reform are likely to use this decision as a roadmap to tailor legislation that they believe will survive legal scrutiny.  No doubt, opponents will continue to challenge such efforts in the courts unless the President and the Congress settle the matter through comprehensive reform legislation.

Click here to read the full opinion.

For more information, contact Ben Mathis at 770.818.1402 or [email protected] or Kelly Morrison at 770.818.1298 or [email protected].

By Ben Mathis and Bill Buechner

     The Eleventh Circuit has issued an unpublished decision holding that a Georgia sheriff is not entitled to Eleventh Amendment immunity with respect to 42 U.S.C. § 1983 claims arising out of his termination decisions.  In Keene v. Prine, Docket No. 11-13274 (11^th Cir. May 15, 2012), the court held that the sheriff was not acting as an “arm of the state” when he terminated three employees. 

     1.    Analysis by Court

     Applying the test set forth in Manders v. Lee, 338 F.3d 1304, 1309 (11^th Cir. 2003) (en banc), the court weighed the following factors: (1) how state law defines a sheriff’s office; (2) what degree of control the state maintains over a sheriff’s office in making personnel decisions; (3) where a sheriff’s office derives its personnel funding; and (4) who is responsible for covering judgments entered against a sheriff’s office. 

     Concerning the first factor, the court determined that state law defines a sheriff’s office as primarily a state entity that performs primarily state functions.  Regarding the second factor, the court noted that, although the governor has the statutory authority to investigate and suspend sheriffs for misconduct in the performance of his duties, the sheriffs are largely independent from the state when making personnel decisions.  Concerning the third factor, the court concluded that a sheriff’s office is primarily funded by the county in which it is located rather than by the state. 

     Regarding the fourth factor, which is typically regarded as the most important factor, the court noted that the state is not obligated to pay judgments entered against a sheriff’s office.  The court observed that any such judgment would have to be paid out of the sheriff’s office’s own general budget, which is primarily funded by the county in which it is located.  The court explained that, although state funds might also be implicated in a budgetary shortfall caused by an adverse judgment, it would be the responsibility of the county commission to provide additional funds and the responsibility of the county’s voters to replace the sheriff.  Thus, weighing these four factors together, the court concluded that the sheriff was not entitled to Eleventh Amendment immunity with respect to his termination decisions. 

     2.    Significance of Decision and Uncertainty Following Decision

     The Keene decision is important because it clearly precludes a county from automatically being dismissed from a § 1983 claim based upon Eleventh Amendment immunity.  However, the decision does not address the issue of whether a county is automatically considered a joint employer with a sheriff for purposes of a Title VII claim or even a joint employer for purposes of a § 1983 claim.  Arguably, the Keene decision stands only for the proposition that a county may not be dismissed solely on the basis of Eleventh Amendment immunity but still may be a proper party because it is an “employer” or “joint employer” in an employment claim.  The decision does not squarely address this issue, although its language provides some support for the proposition that a county may be sued as the employer of someone who works in a sheriff’s office.  Whether or not the Eleventh Circuit will extend the Keene rationale to a county that exercises so little control over a sheriff’s office that it should not be considered an “employer” remains to be seen.

     The Keene decision may not yet be final as the County could ask for en banc review by the full Eleventh Circuit.  In the meantime, because the Keene decision is unpublished, it is not binding authority. 

     It still may be cited as persuasive authority and may signal how the Eleventh Circuit would assess a Georgia sheriff’s assertion of Eleventh Amendment immunity arising out of a termination decision in future cases.  Furthermore, if the analysis set forth in Keene is adopted in future cases, Georgia sheriffs likely would not be able to assert Eleventh Amendment immunity with respect to other personnel decisions, such as hiring, promotion and demotion decisions.

For more information, contact Ben Mathis at 770.818.1402 or [email protected] or Bill Buechner at 770.818.1420 or [email protected].

By Martin B. Heller    

     DC District Court Judge James Boasberg struck down the NLRB’s final rule amending the procedures for election rules, colloquially known as the “Ambush Election” rules.  The widely publicized rules shorten the time period for union elections, and are considered very union-friendly.

     Judge Boasberg did not address the merits of the rule itself, but instead invalidated the rule because the NLRB did not have a quorum when voting to implement the rule.  Judge Boasberg quoted Woody Allen, noting that “eighty percent of life is just showing up.”

     The vote to implement the new election rules, which occurred on December 22, 2011, was passed 2-0, with member Brian Hayes absent from the vote.  Mr. Hayes apparently did not attend the meeting, nor was he asked to cast a vote (as is the NLRB’s usual practice.)  Because Mr. Hayes previously voted against the rulemaking and drafting of the final rule, the remaining members of the NLRB considered that Mr. Hayes “effectively indicated his opposition.”  

     Shortly after the final rule was implemented, the Chamber of Commerce for the United States of America and the Coalition for a Democratic workforce challenged the rule.  Yesterday, Judge Boasberg considered only the quorum argument, and ruled that the final rule was adopted without the statutorily-required quorum.  The Court reasoned that, without Member Hayes, the other two members had no authority to act, and therefore, “the Board lacked the authority to issue it.” 

     The Plaintiff’s in this case also challenged the final rule’s constitutionality under the First and Fifth Amendment of the Constitution of the United States, as well as its legality under the Administrative Procedures Act and the Regulatory Flexibility Act.  The court stated that it expressed no opinion on these challenges.

     While this is a victory for employers, it could be a short-lived victory.  The rule temporarily is invalidated, however, a vote with the proper quorum (or at least with Mr. Hayes present) will moot the DC Court’s invalidation.  At that point, it is likely that the remaining challenges will be taken up by either the DC Court or another court where the law is being challenged. 

For more information, contact Martin B. Heller at 770.818.1284 or [email protected].

By Robert Baker

Governor Nathan Deal signed HB 397 this week after two years of intensive negotiations and debate regarding Attorney General Sam Olen’s efforts to reform Georgia’s Open Meetings and Open Records Acts.  The dramatic changes contained in HB 397 will clarify and enhance public access to government meetings and records, and create new obligations for state and local governments.

The significant changes to the Open Meetings Act provisions are:

- The definition of a “meeting” subject to the act is clarified to require that the members of the governing body of an agency must be engaging in “any official business, policy, or public matter of the agency is formulated, presented, discussed, or voted upon;...” Section 50-14-1(a)(3)(A)

- “All votes at any meeting shall be taken in public after due notice of the meeting and compliance with the posting and agenda requirements...” Section 50-14-1 (b)(1)

- Notices must be posted of a regular meeting of an agency “at least one week in advance” and also contained on the agencies website. Section 50-14-1 (d)(1)

- Minutes of executive sessions must be recorded but will not be publicly available unless required in a court proceeding. Section 50-14-1 (e)(2)(C)

- Votes taken in executive session “to acquire, dispose of, or lease real estate, or to settle litigation, claims, or administrative proceedings” will not be binding until a public vote is taken. Section 50-14-3 (b)(1)

- Misdemeanor penalties for willful violations are increased from $500 to $1,000, and civil penalties may be imposed by the courts for negligent violations.  Civil and criminal fines are increased to $2,500 for each additional violation.

The preamble to the new provisions of the Open Records Act declares that “the strong public policy of this state is in favor of open government ... and that public access to public records should be encouraged to foster confidence in government.”   The extensive revision of the Open Records Act now provides:

- An agency may now provide copies of a record instead of providing access to the record.  Section 50-18-71 (b)(1)(B)

- Requests may be made by e-mail or facsimile. Section 50-18-71 (b)(2)

- Reasonable charges may be made for “search, retrieval, redaction, and production or copying costs” and the per page copying fee has been reduced to $0.10.  Section 50-18-71 (c)(1-2)

- An agency must provide an estimate if costs exceed $25 and may insist on payment prior to beginning any work if costs exceed $500.  Section 50-18-71 (d)

- Agencies must produce electronic copies or printouts of electronic records, and the “requester may request that electronic records, data, or data fields be produced in the format in which such data or electronic records are kept by the agency...” Section 50-18-71(f)

- An agency which contracts with a private vendor to collect and maintain public records must make those records available. Section 50-18-71 (h)

- Public employee records are protected except for salary information (Section 50-50-18-72 (a)(21)) as well as trade secret information obtained from a person or business that is required by law to be filed. Section 50-18-72 (a)(34)

For more information, contact Robert Baker at 770.818.4240 or [email protected].

By Robert Baker

Georgia Power Files Fuel Case

Georgia Power Company filed a fuel cost case which will reduce fuel costs to all consumers.  The average residential consumer’s bill will decrease by 6% or $8.00 a month.  In its filing the Company stated that it expects the under recovered balance to be fully recovered by March 31, 2012.  In August 2006 the under recovered fuel balance peaked at $995 million.  According to the Company’s pre-filed testimony, “[t]he Company’s fuel costs have declined significantly, primarily driven by decreases in the cost of natural gas and decreases in demand for electricity, coupled with recent mild weather.” [The Recession and natural gas fracking]

In addition to the rate reduction Georgia Power is asking the Commission to include in the fuel cost recovery $41.9 million in natural gas pipeline costs for Plant McDonough and to allow the company to change the Interim Fuel Rider (“IFR”) so that it can implement an automatic increase if the under collected balance is greater than $200 million.  The current IFR permits the company to automatically raise rates without a hearing if the balance is over $75 million but below $100 million.  A decision by the Commission is expected by June 21, 2012.

 Proposed New Fuel Rates

                          Average Rate        Transmission       Primary      Secondary

Winter                  3.2385                  3.1778                  3.2244        3.2484
(Oct – May)

Summer                3.9082                  3.8349                  3.8912        3.9323
(June – Sept)

Sixth Vogtle Construction Monitoring Report Filed – Project Over Budget

Georgia Power Company filed its sixth semi-annual construction monitoring report covering the period of July 1, 2011 through December 31, 2011.  In its filing the Company stated that it may exceed its $6.113 billion certified amount and “seek an amendment to the EPC (Engineering Procurement and Construction) Agreement and the Certificate, . . .”  According to the company’s filing, “[t]here are three broad categories of possible cost increases resulting from submitted and potential change orders.”  Pending change orders from Westinghouse and Stone & Webster, design changes made by the Consortium during the Design Certification Document review process and costs associated with the delays in the commercial operation date are identified as the areas for the potential cost increases. 

What does this mean for all Georgia Power customers?  It means the project construction costs are over budget and the construction phase of the project has just begun.  Hearings in the case begin May 9, 2012.

Renewable Energy Bills Fail in 2012 Legislative Session

Senate Bill 401 and House Bill 520 never got to see the light of day during the 2012 Legislative Session.  Both of these bills would have eliminated regulatory barriers to developing renewable energy resources in Georgia and provided businesses with the opportunity to develop renewable energy options.

Senate Bill 401 would have allowed consumers to develop distributed generation facilities, such as solar photovoltaic systems, by purchasing, leasing or entering into a power purchase agreement.  Forty-three states allow consumers to lease or use power purchase agreements.

House Bill 520 would have increased the amount of customer generated renewable energy that electric service providers would have to purchase from 0.2% of the utilities annual peak demand to 2.5%.  This amendment to O.C.G.A. Section 46-3-56 would have allowed customers to sell their excess generation to their electric service provider.

For more information, contact Robert Baker at 770.818.4240 or [email protected].

By Robert Baker

Commission Approves 3.2% Increase in Georgia Power Base Rates

At its March 20, 2012, Administrative Session the Georgia Public Service Commission approved Georgia Power Company’s base rate increase for all customers.  The average tariff increase is 3.2% and will be included in the April billing.  The base rate increase was due to the Company bringing Plant McDonough Units 4 and 5 on line.  An average residential customer will see an increase of $2.46 per month on their bill.  Base rates will increase again in early 2013 when Plant McDonough Unit 6 goes on line.

Georgia Power Amended Integrated Resource Plan Approved

The Public Service Commission approved Georgia Power’s amended integrated resource plan (“IRP”), which will mean significant rate increases for residential and commercial customers due mainly to the multi-billion dollar construction program to build emission control bag houses at several coal generation plants.  The Commission Advocacy Staff estimated ratepayers would see a “ten to twenty percent rate increase for environmental upgrades,...“ (Advocacy Brief, p. 15)

The Commission’s multi-billion dollar decision authorized the Company to: (1) begin construction of bag houses at Plant Bowen Units 1-4, Plant Wansley Units 1 and 2, and Plant Hammond Units 1-4; (2) retire Plant Branch Units 1 and 2 and Plant Mitchell Unit 4C; (3) certify three purchase power agreements (“PPAs”)  and authorize the Company to collect an additional sum of $2.30 per kilowatt; and (4) convert “unusable material and supplies” to regulatory assets to be included in rate base and earn a return on equity.  

The Company is planning to file its next IRP case in January 2013.  It is expected Georgia Power will be retiring several more coal plants and seeking rate recovery for the nondepreciated net book value of the plants along with conversion of any unusable material and supplies to regulatory assets.

Georgia Power to File Fuel Cost Case

A procedural and scheduling order has been issued by the PSC directing Georgia Power Company to file a fuel cost case by the end of the month.  Fuel costs are recovered separately from base rates and special cost recovery riders.  It is anticipated the current rate will be rolled back.   

Georgia House Passes HB 386

The Senate overwhelmingly passed HB 386 on March 22.  This followed the vote of 155 to 9 in the House of Representatives on March 20.  A key provision of the legislation removes the sales tax on energy used for manufacturing, farming and mining over four years.  HB 386 contained other significant tax changes which clarified Georgia’s current on-line sales tax laws, created a one percent sales tax exemption for commercial aviation and phased out the ad valorem tax on cars.

Update on Other Utility Related Bills

Senate Bill 313 – The Broadband Investment Equity Act died in committee.  Private telephone and cable companies supported this legislation, which would have limited government owned communications service providers from being subsidized with public funds against private companies.

Senate Bill 459 – The “Smart Meter” bill allows customers the option to replace their digital meters with a mechanical meter, and is still alive in the House.  A surcharge could be collected to cover the cost of reading the meter.

House Bill 401 – Never made it out of committee in the House due to very strong utility opposition.  There may be an attempt to attach it to another utility bill, such as the “Smart Meter” bill.

House Bill 520 – Is alive in the Senate and encourages the development of renewable energy by individuals and businesses.  The bill directs electric service providers to purchase up to 2.5% of renewable energy at a price above avoided energy cost.

House Bill 855 – Didn’t make it out of the House, but was intended to reign in the out of control growth of the Universal Access Fund (UAF).  Since 2009 the USF had grown from $9 to $16 million with no end in sight.  HB 855 would have phased out the USF over 3 years.

For more information, contact Robert Baker at 770.818.4240 or [email protected].

By Matt Stone

The Georgia appellate courts handed down two important decisions last week.  On March 20, 2012, the Court of Appeals issued an opinion holding that an insurer can create a “safe harbor” where a plaintiff who sends a time-limited settlement demand trying to set-up a bad faith claim unreasonably refuses to assure satisfaction of hospital liens.  Southern Gen. Ins. Co. v. Wellstar Health Sys., Inc., No. A11A2065, 2012 WL 917604 (Ga. Ct. App., Mar. 20, 2012).  On March 23, 2012, the Supreme Court issued an opinion upholding the Tort Reform Act of 2005’s amendment of O.C.G.A. § 51-12-33, requiring apportionment among multiple tortfeasors, even where a plaintiff bears no fault, and eliminating a co-defendant’s right of contribution or set-off.  McReynolds v. Krebs, No. S11G0638 (Ga. Sup. Ct., Mar. 23, 2012).

Time-Limited Demands and Hospital Liens - Southern Gen. Ins. Co. v. Wellstar Health Sys., Inc.

Southern General issued an automobile liability policy with an applicable limit of $25,000.  In September 2007, its insured struck and injured Gray, who treated at Wellstar Hospital and incurred $22,000 in medical expenses.  In October 2007, Wellstar notified Gray and Southern General of its intent to file liens; a month later, it filed liens for the total charges.

After receiving notice but before Wellstar filed its liens, Southern General wrote to Gray’s attorney, offering to settle for its policy limits and to send a check and general release once Gray confirmed that the liens would be satisfied or that he would indemnify Southern General’s insured.  On October 24, Gray’s attorney sent a letter to Southern General demanding payment of its policy limits within five days, citing Frickey v. Jones, 280 Ga. 573 (2006) (no binding settlement where insurer’s response to settlement demand contained an additional term requiring resolution of liens). 

Southern General responded the next day, offering to send the $25,000 settlement check upon receipt of a signed release that included a representation that no liens existed and an agreement to indemnify.  On October 26, Gray’s attorney responded that Gray would sign a general release without an agreement to indemnify.  On October 29, Southern General tendered its $25,000 policy limits to Gray and, on October 31, Gray returned a signed release that did not include an indemnity provision.

Thereafter, Wellstar sued Southern General, alleging that it had ignored Wellstar’s liens and paid Gray in violation of Georgia’s hospital lien statutes, O.C.G.A. §§ 44–14–470, et seq.  Southern General filed a motion for summary judgment, arguing that it had no choice but to accept Gray’s time-limited demand in order to avoid a bad faith claim under Frickey and Southern General Insurance Co. v. Holt, 262 Ga. 267 (1992) (insurer may be found to have acted in bad faith for failing to settle where liability is clear and the claimant’s special damages exceed the policy limits).  The trial court denied the motion and Southern General appealed.

In affirming, the Court of Appeals rejected Southern General’s argument that Frickey and Holt, when coupled with the hospital lien statutes, set-up an insurer to pay in excess of its policy limits because it cannot unconditionally accept a claimant’s time-limited demand and satisfy the hospital liens.  The court first noted the settled principle that an insurer faced with a time-limited demand must accord its insured “the same faithful consideration it gives its own interest” and that the issue is whether the insurer acted unreasonably in rejecting a time-limited settlement demand.  Wellstar, 2012 WL 917604 at *3 (quoting Holt, 262 Ga. at 269).  After noting that an insurer cannot ignore a properly-filed hospital lien, the court went on to hold that:

[I]t is possible for an insurance company to create a “safe harbor” from liability under Holt and its progeny when (1) the insurer promptly acts to settle a case involving clear liability and special damages in excess of the applicable policy limits, and (2) the sole reason for the parties’ inability to reach a settlement is the plaintiff’s unreasonable refusal to assure the satisfaction of any outstanding hospital liens.

Id. at *4.

The court stated that an insurer faced with a claim of clear liability and special damages in excess of the policy limits can invoke the safe harbor by timely offering to tender its policy limits, “subject to a reasonably and narrowly tailored provision assuring that the plaintiff will satisfy any hospital liens from the proceeds of such settlement payment.”  Id.  The court then suggested that:

[T]he insurance company could request that plaintiff’s counsel or a third party hold a portion of the settlement proceeds (in an amount equal to that of the hospital lien) in escrow to allow the plaintiff an opportunity to investigate the validity of the liens and to negotiate with the hospital. And once the relevant lien-resolving documents have been executed by the parties, the held-back settlement funds could then be disbursed to the plaintiff. But if the insurer made such an offer or counteroffer (in a timely and reasonable fashion) and the plaintiff unreasonably refused to give the requested assurance, the insurer is (at that point) under no obligation to tender policy limits directly to the plaintiff. Indeed, a plaintiff who unreasonably refuses to give such an assurance does so at his or her own peril because the insurance company would thereafter have no obligation to negotiate with the hospital or otherwise advocate on the plaintiff’s behalf. Instead, the insurer would be free (at that point) to simply verify the validity of any liens, make payment directly to the hospital, and then disburse any remaining funds to the plaintiff.

Id. at *4-5.  The court, however, warned that making payment directly to a hospital before engaging in good faith settlement negotiations with a plaintiff could expose an insurer to liability under Holt and its progeny.  Id. at *4 n.21.  Finally, the court held that:

[W]hen the failure to settle a Holt-scenario claim is based solely on the plaintiff’s unreasonable refusal to agree to a reasonably and narrowly tailored provision assuring that any hospital liens will be satisfied from the settlement proceeds, that cannot, as a matter of law, constitute a bad faith failure to settle when the insurer is merely attempting to comply with its legal obligations.

Id. at *5 (emphasis in original).

We should expect that the Wellstar decision is not the end of the line for this issue, as the Georgia Supreme Court has regularly weighed-in on post-Holt and Frickey cases.

Apportionment Upheld - McReynolds v. Krebs

Krebs sustained injuries in a motor vehicle accident and sued the other driver, McReynolds, and General Motors, the manufacturer of the vehicle in which Krebs was riding as a passenger, contending that the vehicle’s design contributed to her injuries.  McReynolds filed a cross-claim against GM for contribution and set-off.  After Krebs settled with GM, the trial court dismissed McReynolds’ cross-claims based on the Tort Reform Act’s amendments to O.C.G.A. § 51-12-33.  McReynolds appealed a jury verdict in favor of Krebs, arguing that O.C.G.A. § 51-12-33(b) requires apportionment of damages only where the plaintiff is partially at fault.  The Court of Appeals rejected that argument and affirmed (McReynolds v. Krebs, 307 Ga. App. 330 (2010)), as did the Supreme Court.

Noting that the previous version of the apportionment statute (before the Tort Reform Act of 2005) applied only where a plaintiff was to some degree at fault, the Supreme Court held that the amendment to O.C.G.A. § 51-12-33(b) requires apportionment of damages where an action is brought against more than one person for injury, even where the plaintiff bears no fault.  McReynolds, No. S11G0638, slip op. at 6.  Accordingly, the court held there was no error in dismissing McReynolds’ cross-claims for contribution and set-off against GM because the statute “flatly states that apportioned damages ‘shall not be subject to any right of contribution.’”  Id.

For more information, contact Matt Stone at 770.818.1411 or [email protected].

By Ben Mathis and La’Vonda McLean

After several postponements, the National Labor Relations Board (“NLRB”) was moving forward with its posting requirements (“Notification of Employee Rights Under the National Labor Relations Act”), regarding employee union rights with a compliance date of April 30, 2012.

On March 2, 2012, a federal judge in the District of Columbia upheld the right of the NLRB to require notice posting. Importantly, however, the Court struck down the provisions of the regulation making it an Unfair Labor Practice not to post the notice and tolling the six-month statute of limitations for an employer's failure to post the notice. 

The Court Holds the NLRB is Authorized to Require Employers Post The Notice

The National Association of Manufacturers (“NAM”) argued that the NLRB’s notice posting requirement exceeded its authority to order a mandatory posting by all employers. Nonetheless, the Court held the NLRB was granted by Congress the rulemaking authority to require employers to post a notice informing employees of their rights, including union organizing rights.

The Failure to Post the Notice is Not an Automatic Unfair Labor Practice

The NAM also challenged the NLRB’s authority to deem an employer's failure to post the notice to be an Unfair Labor Practice under the Act. The NLRB provision explaining the consequences of failing to post the notice states “Failure to post the employee notice may be found to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed by NLRA Section 7..."

The Court agreed with the NAM that failure to post the notice could not automatically constitute an Unfair Labor Practice. In this regard, the Court found that the NLRB exceeded its regulatory authority, stating “the Board must make a specific finding based on the facts and circumstances in the individual case before it that the failure to post interfered with the employee’s exercise of his or her rights.”

The Tolling of the Six-Month Statute of Limitations Violates the NLRA

NAM also challenged the NLRB’s rule to toll the NLRA’s six-month statute of limitations for failing to post the notice. The NLRB provision states:

When an employee files an unfair labor practice charge, the Board may find it appropriate to excuse the employee from the requirement that charges be filed within six months after the occurrence of the allegedly unlawful conduct if the employer has failed to post the required employee notice unless the employee has received actual or constructive notice that the conduct complained of is unlawful.

The Court deemed this improper. Specifically, the Court noted that the Act authorizes the NLRB to toll the statute of limitations, but that such tolling is not automatic and must be supported by proof on a case by case basis.

Implications of the Court's Ruling

The NLRB's posting requirement has been a lightning rod for criticism by employers that the posting notice is an improper intrusion on employer rights and an implied endorsement by the federal government that unions are encouraged. Most certainly, the decision by the District of Columbia lower court will be appealed, and the outcome remains to be seen. However, if the rationale of the NAM decision stands, it may well be that the posting notice turns out to be the proverbial "toothless tiger." Without the sanction of an automatic finding of an Unfair Labor Practice, most employers likely will face little in the way of an effective penalty if they don't post the new notice. 

For more information, contact Ben Mathis at 770.818.1402 or [email protected] or La’Vonda McLean at 770.818.4247 or [email protected].

By Brad Adler and Anthony Del Rio

On January 6, 2012, the National Labor Relations Board (NLRB) released a decision holding that employers cannot require employees to sign arbitration agreements that bar employees from bringing class (including collective) claims before a judicial body.  D.R. Horton, Case 12-CA-25764 (NLRB Jan. 3, 2012).  The ruling came down 2-0, supported by both Democrat members Chairman Mark Pearce and Member Craig Becker (notably on the final day of his appointment).  Republican Member Brian Hayes recused himself from the case.  The decision applies to all employers/employees covered under the NLRA.  

The NLRB reasoned that, by restricting collective actions, the company was preventing the employees from engaging in concerted activity protected under Section 7 of the NLRA.  The agreement at issue in the decision required both the employee and the employer to agree to bring all claims to an arbitrator on an individual basis.  In addition, the agreement prohibited the arbitrator from consolidating claims, creating a collective action, or awarding relief to a group or class.  The NLRB’s ruling requires the company to rescind the agreement or revise it to permit employees to pursue a class of collective action in a judicial forum.  The Board expressly permitted restricting arbitration to an individual basis, but employees must then be permitted to bring a class or collective action in court. 

The NLRB's decision will certainly be appealed.  Given that the United States Supreme Court recently held that similar arbitration clauses in the consumer setting were lawful (AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011)), there is a reasonable basis to believe that the courts may eventually reverse the NLRB’s decision.  Also, many believe that, while an appeal of the NLRB's decision is pending, courts may be reluctant to strike down or limit arbitration agreements with class claim bars.

Still, until the D.R. Horton decision is decided on appeal, an arbitration clause that bars class actions is subject to judicial attack.  Therefore, many employers are asking whether they should delete the bar against class claims in their arbitration agreements or if they do not, what are the implications for failing to do so.

Most likely, the greatest risk to employers who maintain an arbitration agreement with a class claim bar is that a court would strike down the entire arbitration agreement. In such a case, the employee could bring his individual claim in court.  That risk, however, does not seem great in most jurisdictions given the general judicial policy favoring arbitration agreements.  Also, the risk of the entire arbitration agreement being found unenforceable further can be reduced by including a severability clause providing that, if a court finds any part of the agreement unlawful, the rest still survives. In addition, a provision allowing the arbitrator to reform the agreement as needed to make it lawful further increases the probability that the rest of the agreement would survive even if the agreement had a class claim bar that was found to be unlawful.  FMG's model arbitration agreement contains these provisions.

The downside to deleting provisions barring class claims until the NLRB's decision is definitively decided by the courts is that an employer doing so would once again be subject to class or collective action claims.  For many employers, that is a risk that is too great and eliminates one of the major advantages of arbitration agreements.

Ultimately, many employers, based on their own circumstances, may reach different decisions on what is the best course until the NLRB's controversial decision is fully and finally resolved. The reality is that any employer with arbitration agreements containing class claim bars will need to carefully consider the benefits, risks and practical implications of modifying or not modifying their agreements until the outcome of the class claim issue is settled.

For more information, contact Brad Adler at 770.818.1413 or [email protected] or Anthony Del Rio at 770.818.1436 or [email protected].

By Matt Stone

In a further effort to reduce distracted driving, the Federal Motor Carrier Safety Administration (FMCSA) has issued rules restricting the use of mobile telephones while driving a commercial motor vehicle (CMV).  The new rules apply to drivers and motor carriers, as well as to school bus operations and vehicles carrying 9-15 passengers not for direct compensation, which are exempt from other FMCSA rules.

Effective January 3, 2012, no driver shall use – and no motor carrier shall allow or require a driver to use – a hand-held mobile telephone while driving a CMV.  To comply with the new rules, it’s important to understand two key points:

• First, use of a hand-held mobile telephone means using at least one hand to hold it to conduct a voice communication, dialing or answering it by pressing more than a single button, or reaching for it in a manner that requires a driver to maneuver so that he is no longer in a seated driving position with his seat belt fastened.
• Second, driving means operating a CMV on a highway, including while temporarily stationary because of traffic, a traffic control device, or other momentary delays.

The only exception is for emergencies:  drivers may use a hand-held mobile telephone (or text) while driving when it’s necessary to communicate with law enforcement officials or other emergency services.  Otherwise, drivers may only use a hand-held mobile telephone (or text) when the vehicle has been moved to the side of, or off, the roadway and stopped in a location where the vehicle can safely remain stationary. 

Drivers may still use a mobile telephone while driving, but they must use a speakerphone or hands-free device and be able to make or receive a call without having to press more than a single button and without having to reach for the phone.

While CB radios are excluded from the new rules, push-to-talk devices are included.  Likewise, the ban includes using a mobile telephone to enter odometer readings, to synchronize electronic technology and to perform text-to-voice or voice-to-text functions requiring more than a single button touch.

Failure to comply can have substantial consequences.  A driver may be fined up to $2,750 per violation and disqualified.  Employers may be fined up to $11,000 per violation. 

Inasmuch as employers are held accountable for the actions of their drivers, the FMCSA advised motor carriers to have a policy or practice in place, making it clear they require compliance with the FMCSA rules.  Therefore, prudent motor carriers will have a policy covering the use of mobile telephones by their drivers (and other company employees).  Such a policy should (a) prohibit the use of a mobile telephone for improper purposes or in a manner that violates federal, state, or local law and (b) establish guidelines for the acceptable use of such equipment.  It’s also a good idea to have drivers sign an authorization, allowing the company to get a copy of their personal mobile telephone records from the service provider in the event of a crash.

If you have questions or would like more information or to discuss drafting a policy that’s right for your company, please contact Matt Stone at 770.818.1411 or [email protected].

Update: New NLRA Posting Requirements Postponed

On December 5, we published a LawLine Alert informing our readers of new rules regarding employee rights posting requirements.  The National Labor Relations Board (“NLRB”) codified regulations that would require all employers subject to its jurisdiction to post information informing employees of their rights under the National Labor Relations Act.  The previous deadline set to post the information was January 31, 2012.  However, due to challenges to the legality of the regulations, the federal court requested the NLRB delay the enactment of the regulations to allow time for the court to rule on the matter.  The NLRB acquiesced and has postponed the enactment of the rules.  The new implementation date is April 30, 2012.  This marks the second delay for the enactment of these regulations. 

The news release regarding the delay and the required posting are available on the NLRB's website.

The regulations are available at 29 C.F.R. § 104.202.

The original LawLine Alert is available on our website.

By David Cole

As the end of the year approaches, it is important for all Georgia employers to be aware of new requirements under the Georgia Illegal Immigration Reform and Enforcement Act of 2011.  For cities and counties, their first annual E-Verify reports are due by December 31st, and their SAVE reports are due by January 1st.  Beginning January 1st, private businesses with 500 or more employees must use E-Verify.  Employers with fewer employees will have to start using E-Verify later in the year or next year.

Contracts for Public Works

Every city and county in Georgia already is required to use E-Verify to verify the employment eligibility of newly hired employees.  Once registered, every city and county has to post its E-Verify number and date of authorization on its website.  If the city or county does not have a website, it must submit the information to the Carl Vinson Institute of Government for it to post on a centralized website.

A city or county also cannot enter into a contract for the “physical performance of services” unless the contractor signs an affidavit swearing that it, too, uses E-Verify for its employees, and that it will only subcontract with parties that do the same.  (There is an exception that allows contractors with no employees to show a state driver’s license if it was issued by a state that verifies immigration status before issuing the license.)  The Attorney General has stated that “physical performance of services” only includes contracts for public works or for the maintenance, operation, and repair of buildings or structures.  The Department of Audits and Accounts also has created form affidavits that can be downloaded here.

Now, under the new law, cities and counties are required to submit a report to the Department of Audits and Accounts certifying compliance with these requirements by December 31st of each year.  This means the first reports are due in just over two weeks on December 31, 2011.  The report must identify the city or county’s E-Verify number and date of authorization and the legal name, address, and E-Verify number of every contractor from the past year, as well as the date of the contract between the contractor and the city or county.  For this year’s report, cities and counties must include contracts entered into between July 1, 2011, and November 30, 2011.  Contracts for December 2011 will need to be included in next year’s report.  The Department of Audits and Accounts has created a form report with instructions that can be downloaded here and submitted by e-mail or mail. 

Private Employers Must Use E-Verify

The new law also requires that, before a city or county can issue an occupational tax certificate or business license, or any other licenses that may be required to operate a business, it obtain an affidavit from the business stating that it uses E-Verify for all of its new hires or that it is not required to use E-Verify.  The Attorney General has created a form affidavit that can be downloaded here.

This means that, eventually, every employer in Georgia with more than 10 employees will have to start using E-Verify.  For employers with 500 or more employees, the requirement goes into effect in approximately two weeks on January 1, 2012.  For employers with between 100 and 500 employees, it goes into effect on July 1, 2012.  For employers with between 10 and 100 employees, it goes into effect on July 1, 2013.  The E-verify requirement will not apply to employers with 10 or fewer employees, but when applying for a business license, they will have to sign an affidavit stating they are exempt from the statute.

Beginning on December 31, 2012, every city and county will have to submit a report to the Department of Audits and Accounts demonstrating its compliance with these requirements.  The report will have to identify every license or certificate issued in the past year and include the name of each business and its corresponding E-Verify number.

SAVE – Public Benefits

Cities and counties also must be sure they are continuing to use the Systematic Alien Verification of Entitlement (SAVE) program.  For every “public benefit” a city or county administers to a person or entity, it must receive an affidavit verifying the person’s lawful presence in the United States.  A form affidavit from the Department of Audits and Accounts can be downloaded here, and a list of “public benefits” published by the Attorney General’s office is available here.  If the applicant states in the affidavit that he is an alien lawfully present in the United States, the city or county must then verify his eligibility through the online SAVE system.

Every year, cities and counties that administer any public benefit must submit an annual report to the Department of Community Affairs that lists each public benefit it administers and identifies whether there are any recipients of such benefits for whom SAVE verification has not been received.  This report must be submitted by January 1, 2012, and can be accomplished by clicking here.

Secure and Verifiable Documentation

Beginning on January 1, 2012, cities and counties must require any person seeking a public benefit, or anything else for which identification is required, to show a “secure and verifiable document.”  A “secure and verifiable document” is defined as one issued by a state or federal jurisdiction, or recognized by the United States government, and which is verifiable by federal or state law enforcement, intelligence, or homeland security agencies.  For ease of reference, the Attorney General has published a list of “secure and verifiable” documents here.

Supreme Court Review

The U.S. Supreme Court agreed this week to rule on Arizona’s immigration law, which could have implications for Georgia and other states that have enacted similar laws.  However, the Supreme Court will only rule on four parts of the Arizona law that require state law enforcement officials to communicate with federal immigration officials and which impose state law penalties for violating federal immigration requirements.  These provisions are separate from the parts of Georgia’s law discussed above, so it appears that the Supreme Court’s decision will not affect these parts of the law and that they will go into effect as planned.  Only time will tell, however, whether the Supreme Court’s ruling will have broader implications.

For more information, contact David Cole at 770.818.1287 or [email protected].

By Ben Mathis and Jonathan Kandel

After several postponements, the National Labor Relations Board (“NLRB”) recently announced that it is going forward with a new rule requiring most private employers to post notices regarding employee rights under the National Labor Relations Act (“NLRA”).  The posting requirement will be effective January 31, 2012.  Codified at 29 C.F.R. § 104.202, the posting requirement applies to all private employers subject to the NLRB’s jurisdiction.  A common misconception is that only unionized employers are subject to the NLRB’s jurisdiction.  In fact, all private employers except agricultural, railroad, and airline employers are covered by the NLRB. 

The notice must be posted in conspicuous places where it can be readily seen by employees.  This includes all places where notices to employees concerning personnel rules or policies are “customarily posted,” which means any location where other required notices (such as “Equal Employment is the Law” posters) are posted.  In addition, employers that customarily communicate with employees about rules or policies using an intranet or internet site must also post the notice electronically.  The rule provides two ways to post the notice electronically: (1) place an exact copy of the NLRB’s poster on the site; or (2) create a link to the NLRB’s website; the link must read, “Employee Rights under the National Labor Relations Act.”  Either method will comply with the rule as long as the notice is displayed “no less prominently than other notices to employees.” 

The rule also requires the notice to be posted in languages other than English if 20 percent or more of an employer’s employees are not proficient in English and speak another language.  If an employer’s workforce includes two or more groups constituting at least 20 percent of the workforce who speak different languages, the employer must either post the notice in each of the languages or, at the employer’s option, post the notice in the language spoken by the largest group of employees and provide each employee in each of the other language groups a copy of the notice in the appropriate language.

Failure to post the required notice could subject employers to unfair labor practice charges, which are brought by any employee (unionized or non-unionized) to the NLRB.  Possible consequences include tolling of the six month statute of limitations for unfair labor practice charges against the employer and, where the motive for a personnel action is at issue, an inference that the employer took the action for unlawful reasons. 

A poster that includes all of the required information is available for free on the NLRB’s website: www.nlrb.gov/poster.  The poster can be downloaded or ordered from the website and currently is available in 24 languages other than English.  If an employer needs the notice in a language that is not currently available, the employer should request the notice in the particular language from the NLRB.  As long as the request is made, an employer will not be liable for failing to post the notice in a particular language until the notice is available in that language.

For more information, contact Ben Mathis at 770.818.1402 or [email protected] or Jonathan Kandel at 770.818.1427 or [email protected].

By Leanne Prybylski

Yesterday, June 27, 2011, United States District Court Judge Thomas W. Thrash, Jr. signed an Order enjoining enforcement of portions of HB87 that were set to go into effect on July 1, 2011.  The ruling applies to Sections 7 and 8 of the law, which would have allowed state and local law enforcement officers to check the immigration status of persons under certain circumstances involving suspected criminal activity.  As long as the injunction remains in effect, “[s]tate and local law enforcement officers and officials have no authorization to arrest, detain, or prosecute anyone based upon Sections 7 and 8 of HB87.”  See page 45 of the Order.

Judge Thrash’s ruling does not affect portions of the new immigration law requiring businesses to register with and use E-Verify.  Section 3 of HB87, which goes into effect on July 1, 2011, revises and clarifies a current Georgia law, O.C.G.A § 13-10-91, requiring contractors of public employers to register with and use E-Verify prior to entering into a contract to perform physical services.  Section 3 also clarifies the flow down of the E-Verify requirement to all subcontractors and sub-subcontractors on such public projects.  From January 1, 2012 through July 1, 2013, Section 12 of HB87 phases in the requirement for private employers with more than ten employees to register with and begin using E-Verify prior to being issued a business license in Georgia.  It is important to note that employers using E-Verify pursuant to HB87 are only allowed to use E-Verify for verifying the employment eligibility of new employees hired on or after the date the employer registers with E-Verify.

For more information, please contact Leanne Prybylski at 770.818.1404 or [email protected].

Dear Friends,

We are pleased to announce that the attorneys of the Atlanta litigation firm of Flint & Adler, LLP have merged with our law firm.

Founding attorneys Mike Flint and Shira Adler Crittendon have become FMG partners. Scott Rees has joined us as of counsel and Laura Broome as an associate.

Flint & Adler is well known for their outstanding litigation capabilities. They have successfully tried many cases to verdict and have a reputation for being practical and innovative lawyers.  Mike Flint and Shira Adler are among the brightest litigation stars in our area, and we were fortunate to convince them and their firm's lawyers to join the FMG team.

Our newest attorneys have a wide ranging commercial litigation practice. They also have one of the most substantial medical malpractice and allied health defense practices in our region. The addition of these excellent attorneys further strengthens FMG's significant trial expertise and adds to the depth of our business litigation and professional liability practice groups.

We hope you will have the opportunity soon to meet Mike, Shira, Scott and Laura (and their very capable support staff who have joined us as well). They are valuable additions to the FMG family and you will be glad to have them on your team, too.

Regards,

Ben Mathis
Managing Partner

By Ben Mathis and Marty Heller

The OFCCP has issued a notice of proposed rulemaking recommending proposed regulations regarding the affirmative action obligations and non-discrimination rules for protected veterans.  These regulations, if finalized, would affect all employers with a single government contract valued at $100,000 or more and 50 or more employees. 

Initially, the regulations contain new definitions for veterans, and the OFCCP has stated that it will update the VETS 100 form for contractors to use the new definitions. 

The new regulations also contain a new required notice to employees and applicants of the contractor’s affirmative action obligations covering veterans, and this notice must be available in formats understandable to disabled individuals, including Braille.  Contractors also must post an EEO policy statement on bulletin boards in a form that is accessible and understandable to disabled veterans, and this statement must include the contractor CEO’s support for the affirmative action program, and other required language.  In addition to these notices, the regulations also include strict requirements for internal dissemination of the affirmative action obligations. 

The proposed regulations also include onerous job vacancy posting requirements, which require that employers register with each state as a federal contractor interested in receiving veteran referrals, and post jobs according to those requirements.  Contractors also must undertake new outreach efforts, including establishing “linkage agreements” with local veteran employment representatives. 

The proposed regulations require employers to invite applicants to self-identify themselves as a protected veteran prior to an offer of employment.  The OFCCP will then use this information to track pre-offer effectiveness of recruiting efforts and affirmative action requirements.

Perhaps most importantly, contractors must implement tracking procedures for veterans similar to the tracking procedures already in place for minorities and females, including (1) for each protected veteran applicant, the vacancy and training program for which the applicant was considered; (2) for each protected veteran employee, the promotion and training program for which the employee was considered; (3) for each protected veteran rejected for employment, promotion or training (applicant and/or employee), the reason for rejection and a description of accommodations considered if the veteran is disabled; and (4) any accommodation which would make it possible to place the disabled veteran in a job. The rules would change the accommodation requirements, so that when an accommodation would cause an undue burden, the contractor must allow the veteran an opportunity to provide their own accommodation, or pay for the accommodation themselves.

The rules similarly contain new requirements for maintaining applicant and hire data on veterans.  Contractors must document and review referral data, applicant data and total hiring data, including: (1) the number of priority referrals of veterans, the total referrals received from employment services systems, and the ratio of priority referrals of veterans to total referrals; (2) the number of self-identified veteran applicants, the total number of applicants for all jobs, and the ratio of protected applicants to total applicants; and  (3) the number of protected veterans hired, the total number of hires, and the ratio of protected veteran hires to total hires.  Additionally, employers must track the total number of job openings, the number of jobs filled and the ratio of job openings to jobs filled.  This data must be documented annually and must be maintained for five years (as opposed to the two year requirement for gender and minority data).   

Finally, the proposed regulations require that an employer set a benchmark for the number of protected veterans to be hired over the next 12 months.  The standards for setting this benchmark are vague and poorly defined. 

Of course, these are only highlights of the proposed changes.  For federal contractors, these are significant changes that will require updates to your affirmative action plans and to your applicant tracking systems.  These proposed rules demonstrate the OFCCP’s new focus on protecting veterans, and the information likely will be used by the OFCCP during compliance audits as another source of shortfalls in hiring and alleged discrimination.  Importantly, these changes are not presently final, and contractors may submit comments to the OFCCP on or before June 27, 2011.

For more information, contact Ben Mathis at 770.818.1402 or [email protected] or Marty Heller at 770.818.1284 or [email protected] of the Labor & Employment Law Practice Group.

By Ben Mathis & Kelly Morrison

On April 14, the Georgia state legislature passed immigrant legislation (HB87) on April 14, the final day of its 2011 session.  Governor Nathan Deal announced that he approves of and will sign the bill.  HB87 is strict, mandating that, effective July 1, 2013, any private company with more than 10 full-time employees, along with every public employer, regardless of its size, must register with the federal E-Verify program to check the legal status of new hires.  Larger companies will have to implement the bill’s measures even sooner—January 1, 2012 for companies with 500 or more employees, and July 1, 2012 for companies with 100 or more employees. 

According to the bill’s measures, an employee will be counted if he or she: (1) works at least 35 hours per week; and (2) receives a W-2 from the company, as opposed to a 1099 or other tax form.

The bill will be enforced through each municipalities’ business licensing division.  After the applicable dates, any company applying for or renewing a business license must provide proof of enrollment in E-Verify in order to receive or renew their business license.  Municipalities must provide the state with an annual report, confirming that licenses are only being issued to companies who are enrolled in E-Verify.  Audits are to be conducted by the Department of Labor, although funding for these initiatives has been an issue in the past, and it is unclear whether this mandate will be funded in the future.

Additionally, the bill makes “aggravated identity theft” a crime, punishing illegal immigrants for the use of false documentation.  Repeat offenders can receive up to fifteen years of jail time and/or $250,000 in fines.  Additionally, it allows the police to question individuals about their immigration status and mandates sanctions for those who harbor or transport undocumented workers.

Despite the controversial nature of the bill, the measure passed overwhelmingly in both chambers, with a vote of 112-59 in the House and 39-17 in the Senate.  Although a contingent of the Senate attempted to block the portion of the bill mandating use of the federal E-Verify system to ascertain the immigration status of employees, they were unsuccessful, and the bill was passed in its original form.

To read the full text of the bill, please visit: http://www.legis.ga.gov/legislation/en-US/displaybill.aspx?BillType=HB&billNum=87.

For more information, contact Ben Mathis at 770.818.1402 or [email protected] or Kelly Morrison at 770.818.1298 or [email protected] of the Labor & Employment Law Practice Group.

By Ben Mathis and Jonathan Kandel

The U.S. Supreme Court has issued a decision that could leave employers liable for discrimination even if the ultimate decisionmaker has no discriminatory animus.  The Court held that an employer can be liable based on the discriminatory animus of an employee who influences, but does not make, the ultimate employment decision. 

The Court’s decision endorses the “cat’s paw” theory of discrimination, which is used to hold an employer liable for the animus of a supervisor who is not charged with making the ultimate decision.  The theory is named after a 17th century fable in which a monkey convinces a cat to take chestnuts out of a fire and then makes off with the chestnuts, leaving the cat with nothing but burnt paws.  

In Staub v. Proctor Hospital, an army reservist sued his employer under the Uniform Services Employment and Reemployment Rights Act (USERRA), claiming that his discharge was motivated by hostility to his military status.  USERRA prohibits employers from discriminating against a member of the uniformed services on the basis of the membership or an obligation thereof.  38 U.S.C. § 4311.  Under USERRA, discrimination occurs when the membership in, or an obligation to, a uniformed service “is a motivating factor” for an adverse employment action. 

While the case only involved USERRA, the Court noted that USERRA’s “motivating factor” language is very similar to Title VII’s and many other anti-discrimination statutes.   

Evidence in the Staub case demonstrated that the plaintiff’s immediate supervisor and the supervisor’s supervisor were hostile to the plaintiff’s military status and wanted him terminated.  The plaintiff’s supervisor issued a written warning when the plaintiff supposedly violated a work rule.  The warning directed the plaintiff to stay in his work area unless he had permission from his supervisor or the supervisor’s supervisor. 

A few weeks later, the supervisor’s supervisor informed the vice president of human resources that the plaintiff violated the warning’s directive.  After reviewing the plaintiff’s personnel file, including the written warning, the vice president fired the plaintiff for ignoring his supervisor’s directive in the warning. 

The plaintiff challenged his termination through his employer’s grievance process, claiming the written warning was false and motivated by his military status.  Without looking into the plaintiff’s claim of discrimination, the vice president denied the plaintiff’s grievance.  
   
The Court found that the employer could be liable because the supervisors committed discriminatory acts (issuing the written warning and accusing the plaintiff of violating the warning) that were “intended” to cause, and did in fact cause, the plaintiff’s termination.  In so holding, the Supreme Court rejected the employer’s contention that it could not be liable because the ultimate decisionmaker (the vice president) was not motivated by anti-military animus. 

The Court explained that, while the vice president was not motivated by the plaintiff’s military status, the vice president relied upon the supervisor’s discriminatory conduct in deciding to terminate the plaintiff.  

Significantly, the Court refused to adopt a bright-line “independent review” defense. This defense often has been used by employers to insulate discipline decisions approved by higher level managers where employees claim immediate supervisors were biased. Previously, employers could avoid liability by showing that the higher-level manager conducted an "independent review" of the issue and, therefore, the lower-level manager’s alleged discriminatory animus was immaterial. 

The Staub decision seemingly rejects the "independent review" defense. The Court, however, did leave employers with some ability to avoid liability where they can establish that a decisionmaker's investigation resulted in the discharge for reasons unrelated to the supervisor's original biased action.  The Court explained that such a showing could be made if the decisionmaker determines (separate and apart from the supervisor’s recommendation) that the supervisor’s action was “entirely justified.”   

The Staub decision again emphasizes the importance of employers enacting comprehensive complaint procedures for all forms of discrimination (not just harassment) as well as internal grievance procedures.  While the Supreme Court did not provide employers guidance for conducting an adequate “independent investigation,” these procedures likely will enhance an employer's ability to contend that decisions were thoroughly investigated (not just "reviewed"), and a decision rendered without relying upon a particular supervisor's view of a situation.  Similarly, the Staub decision highlights the need for exit interviews.  By conducting such post-employment interviews, employers can ascertain whether an employee believes discrimination was involved and investigate any claims.  Investigating the facts (not just the personnel file) will increase the likelihood of prevailing against a “cat’s paw” discrimination claim. 

For more information, contact Ben Mathis at 770.818.1402 or [email protected] or Jonathan Kandel at 770.818.1427 or [email protected] of the Labor & Employment Law Practice Group.

By Bradley Adler and Marty Heller

In an opinion released on January 24, 2011, the Supreme Court held that third parties may have a cause of action for retaliation under Title VII if they suffer an adverse employment action due to their connection with a person who has filed an EEOC Charge.  Thompson v. N. Am. Stainless, LP, 09-291, 2011 WL 197638 (U.S. Jan. 24, 2011).

In this case, an employee, Miriam Regaldo, filed a charge of discrimination against her employer alleging sex discrimination.  Less than a month later, Ms. Regaldo’s fiancé, Eric Thompson, was terminated.  Mr. Thompson filed an EEOC Charge alleging that he was fired in order to retaliate against Ms. Regaldo for filing her EEOC Charge.  The Sixth Circuit Court of Appeals dismissed the case because Mr. Thompson did not himself “engage in any statutorily protected activity” and sought protection under Title VII solely based on his close association with his fiancé.

The Supreme Court of the United States, in an opinion authored by Justice Scalia, disagreed with the Sixth Circuit and found that Thompson was protected from retaliation based on his association with someone who had engaged in protected activity.  The Court, relying upon its increasingly broad interpretation of the retaliation provisions of Title VII under Burlington Northern v. White, concluded that taking an adverse employment action against a close relative of someone who had engaged in protected activity would have the effect of dissuading reasonable workers from engaging in protected activity.  In this case, for instance, the Court noted it had “little difficulty” in concluding that a reasonable worker would be dissuaded from filing an EEOC Charge if he or she knew that their fiancé would be fired. 

In ruling, the Supreme Court addressed the main concern with affording a fiancé protection under Title VII.  The company argued that allowing a fiancé to sue would open the floodgates to retaliation lawsuits from everyone with any connection to a complaining employee.  The Court stated, however, that “we do not think [this concern] justifies a categorical rule that third-party reprisals do not violate Title VII.”

Interestingly, the Court declined to identify a fixed class of relationships for which third-party retaliatory acts are unlawful.  Instead, the Court stated that it will “depend on the particular circumstances” and further elaborated that “firing a close family member will almost always meet the standard, and inflicting a milder reprisal on a mere acquaintance will almost never do so.”

While this ruling is not particularly surprising, the Supreme Court’s refusal to define a class of third parties who may sue under this theory is curious.  The Court’s ambiguous comment about the level of relationship and the type of employment action required to create a cause of action leaves employers in a realm of unknown.  While it seems clear that typical low-level disciplinary actions (such as a written warning) of a friend probably will not be enough to support a retaliation claim, it is uncertain how courts will rule if, for instance, a mere acquaintance is terminated.  This void will have to be filled by Court decisions in the future. 

In any event, this case serves as a good reminder that employers must remain cognizant of the actions they take once an employee has engaged in protected activity.  As with any other disciplinary decision, employers should carefully evaluate whether the action they are going to take, whether against an employee who has filed an EEOC Charge or a close relative of that person, is consistent with their typical disciplinary protocol. 

By: Ben Mathis and Jonathan Kandel

The Equal Employment Opportunity Commission recently issued final rules related to the Genetic Information Nondiscrimination Act of 2008 (“GINA”).  Title II of GINA, which became effective on November 21, 2009, makes it unlawful for covered employers to discriminate on the basis of “genetic information.”  In addition, covered employers are prohibited from requesting, requiring, or purchasing “genetic information.”  Title II applies to private and public employers with 15 or more employees.

The regulations address several issues, such as defining “genetic information,” adopting standards for violations of Title II, explaining the applicable record keeping requirements, and clarifying permissible practices.  The new regulations are likely to impact multiple policies and practices, including record retention procedures, wellness programs, work-related medical examinations, and Equal Employment Opportunity Policies.  Employers subject to Title II should review their policies and procedures immediately to ensure compliance as the regulations went into effect on January 10, 2011.    

“Genetic information” is broadly defined to include:

• Information about an individual’s genetic tests;
• Information about the genetic tests of a family member;
• Family medical history;
• Requests for or receipt of genetic services or participation in research that includes genetic services by an individual or a family member; and
• Genetic information about a fetus or embryo carried by an individual or a pregnant family member. 

Explicitly excluded from the definition of genetic information is information about age, sex, race, or ethnicity that is not derived from a genetic test.  “Genetic tests” are tests, such as an analysis of DNA or chromosomes, used to determine whether an individual has genes related to a specific disease or condition.  The regulations include examples of tests that are and are not “genetic tests.”  For instance, HIV tests, cholesterol tests, and drug and/or alcohol screenings are not genetic tests.  

Prohibitions

As stated, Title II prohibits covered employers from discriminating on the basis of “genetic information” and from requesting, requiring, or purchasing “genetic information.”  As for discrimination, the final regulations explain that Title II prohibits the same actions as other federal employment laws (i.e. Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act (ADEA), and the Americans with Disabilities Act (ADA)).  The regulations specifically adopt Title VII’s standards for “adverse employment actions,” harassment, and retaliation. 

In regards to requesting, requiring, or purchasing “genetic information,” the regulations provide that a “request” includes not only a “deliberate” request, but also actions that are likely to result in obtaining such information, such as conducting an internet search directed to uncovering genetic information or examining an individual’s personal effects for the purpose of obtaining genetic information.  As discussed below, medical inquires and wellness programs may also implicate the prohibition on requesting and/or requiring “genetic information.”

Record Retention

Title II of GINA requires employers to keep “genetic information” confidential.  As such, employers are required to keep “genetic information” in a confidential medical file separate from an employee’s general personnel file.  Moreover, Title II generally prohibits employers from disclosing “genetic information.” 

The regulations provide practical guidance on two related issues.  First, “genetic information” may be kept in the same file as medical information subject to the Americans with Disabilities Act (ADA).  Second, “genetic information” that was acquired before November 21, 2009 does not have to be removed from an employee’s personnel file.  However, removing such information would be best practice as removal would likely prevent inadvertent disclosure. 

Wellness Programs

Wellness programs raise three potential issues with Title II’s prohibition on requesting or requiring “genetic information.”  First, the regulations make clear that employers may offer monetary incentives to employees for participating in wellness programs, but not for providing “genetic information.”  As a result, employers may offer incentives to employees for completing health risk assessments, even those that contain questions about “genetic information,” as long as those questions are clearly identified and the employer alerts the employee that they do not have to answer such questions to receive the incentive.

Second, employers also may offer financial incentives to employees for participating in disease management programs or other programs that encourage healthy lifestyles.  To avoid violating Title II, those programs and incentives must be made available to employees whose current health conditions or lifestyle risk factors put them at risk of acquiring a condition, not just those employees that voluntarily provide “genetic information.”   

Third, an employer that offers a wellness program is prohibited from receiving individualized “genetic information.”  As such, an employer may only receive “genetic information” in aggregate form.  The final regulations, however, clarify that an employer does not violate Title II if identification of specific individuals’ “genetic information” is possible due to the small number of participants, as long as the “genetic information” is provided in aggregate form.  Therefore, employers should notify any wellness program administrators that “genetic information” should only be provided, if at all, in aggregate form. 

Medical Inquiries

Medical inquiries of all types increase the likelihood that an employer may receive “genetic information.”  The most common uses of medical inquiries are post-offer or fitness-for-duty examinations, processing requests for an accommodation under the ADA or for sick leave, and processing requests for leave under the Family Medical Leave Act (FMLA).  The regulations provide that, any time an employer makes a request for health-related information, it should specifically warn the employee and/or the health care provider from whom the information is requested that it is not seeking “genetic information” and that such information should not be provided.  The regulations even provide a model warning, which if used will protect an employer if “genetic information” is provided.  See 75 Fed. Reg. 68912, 68934 (Nov. 9, 2010) (to be codified at 29 C.F.R. § 1635.8(b)(1)(i)(B)), available at http://www.gpo.gov/fdsys/pkg/FR-2010-11-09/pdf/2010-28011.pdf (p.23).

The regulations also provide guidance in relation to post-offer medical examinations/inquiries and fitness-for-duty examinations.  While an employer may conduct such examinations and/or inquiries – consistent with the Americans with Disabilities Act (ADA) – the employer may not request “genetic information,” which includes family medical history.  As a result, all covered employers should review their post-offer medical inquiries and remove any questions that may solicit “genetic information.  In addition, all covered employers should notify all health care providers, which are used for such examinations, that they are not to collect “genetic information” during the examinations.  

Finally, the regulations specifically address medical inquiries in connection with requests for leave under the Family Medical Leave Act (FMLA).  In this regard, an employer explicitly is permitted to obtain “genetic information” in the form of family medical history when an employee requests leave to care for a family member with a serious health condition.  The regulations make clear that the exception also applies to any policy that an employer may have regardless of FMLA or state or local law. 
     
EEO Policies

As stated above, Title II prohibits discrimination, harassment, and retaliation on the basis of “genetic information.”  Accordingly, EEO policies should be updated so that “genetic information” is listed as an additional basis for which discrimination, harassment, and retaliation is prohibited. Related to EEO policies, the regulations also reiterate that GINA, like other federal employment laws, includes a posting of notices requirement.  The EEOC’s most recent update to the “Equal Employment is the Law” poster, which was released late in 2009, includes information about GINA.  Now is a good time for covered employers to confirm that they have the most recent poster.  Poster information: http://www1.eeoc.gov/employers/poster.cfm.  Final Regulations effective Jan. 10, 2011 at http://www.gpo.gov/fdsys/pkg/FR-2010-11-09/pdf/2010-28011.pdf.

By Ben Mathis & Marty Heller

The Federal Register has posted the final rule regarding Executive Order 13496. This Executive Order requires that, beginning on June 21, all contractors and subcontractors who work on a contract with a federal agency must post a notice to employees of their rights under the National Labor Relations Act (NLRA). In addition, all contracts and subcontracts on projects with federal agencies must include a clause in their contract regarding Executive Order 13496.

The regulation applies only to contracts resulting from solicitations issued after the effective date of the final rule and federally funded grants and loans are not covered; only contracts with federal agencies, or subcontracts under a contract with a federal agency are covered by the rule.

The rule itself requires that all private employers post a 11" by 17" poster which explains in detail employee rights under the NLRA. This poster must be posted conspicuously throughout the workplace in all areas where employee notices are usually posted, and in areas where employees may perform work which will contribute to the covered contract. If a significant portion of the employer’s workforce does not speak English, the poster must also be translated into another language. A translation for Spanish and Mandarin language speakers will be available soon on the Office of Labor Management Standards (OLMS) website. If employers need posters in other languages, upon request, the OLMS will provide translated posters in other languages.

In addition, all employers must post the notice on their website or other online posting forum by posting a link to the poster. This link must be posted in the same manner as all other links on the page, and cannot be smaller than other links or somehow given less importance. The electronic posting requirement is in addition to the poster requirement.

The OFCCP will handle compliance evaluation, which will include investigation of employee complaints, and random compliance reviews. If the OFCCP finds a violation, employers may seek conciliation, however, violations may lead to serious sanctions, including suspension or termination of current and future federal contracting privileges.

The rule will not apply to prime contracts worth less than $100,000 or subcontracts worth less than $10,000.

Information about the contract clauses that must be included in contracts and subcontracts, and a copy of the poster are available at: http://www.dol.gov/olms/regs/compliance/EO13496.htm.

By Philip W. Savrin

The Supreme Court of Georgia has answered a lingering question as to whether an insurer can assert coverage defenses when it has defended its insured without a reservation of rights absent a showing of prejudice to the insured.  In World Harvest Church, Inc. v. GuideOne Mutual Insurance Company, Case No. S10Q0341 (Ga. May 3, 2010), the insurer assumed the defense of its insured while telling its insured that coverage was doubtful but would be evaluated.  The insurer continued to defend for almost a year before informing the insured that it would be withdrawing from the defense because there was no coverage.  After the insured retained its own attorneys, the case proceeded to judgment in excess of $1 million.  The insured then sued the insurer in federal court for coverage.

The federal judge found in favor of the insurer because even though the insurer did not issue a reservation of rights, the insured had not shown prejudice as a result of the insurer’s provision of a defense.  The insured appealed to the Eleventh Circuit which found the law uncertain and certified the issue to the Supreme Court of Georgia. 

In its ruling, issued May 3, 2010, the Court first found that although a reservation of rights need not be in writing, it must be unequivocal.  Because the insurer’s statement that it did not believe the claim was equivocal, the defense had been undertaken without a reservation of rights.  To work an estoppel, the Court found that prejudice to the insured is required, citing in part an article authored by Philip W. Savrin and William H. Buechner, Jr.  After reviewing the law, however, the Court expressly adopted the “majority rule” that prejudice results from the defense of the insured without further proof of harm.  In surrendering control of the defense, the Court explained, the insured gives up the ability to decide when and how to assert defenses or seek to settle the case.  Although a previous decision had implied that prejudice must be shown, the Court distinguished that case because counsel retained by the insurer had made an appearance only but had not “defended.”  The Court concluded its analysis with the following holding:

Where, as here, an insurer assumes and conducts an initial defense without effectively notifying the insured that it is doing so with a reservation of rights, the insurer is deemed estopped from asserting the defense of noncoverage regardless of whether the insured can show prejudice.

In the wake of this decision, insurers must take caution to examine each liability claim for coverage at the very outset and issue a reservation of rights whenever coverage is doubtful.  Defending an insured without a reservation of rights can have dire consequences in those cases where coverage does not exist. 

Click here for link to a copy of this important decision.  Click here to send an e-mail to author Philip Savrin.

By Benton J. Mathis, Jr. & Martin B. Heller

The current Administration and Congress continue to make significant changes to employment regulations and laws.  This article summarizes some of the major changes that all employers should be familiar with. 

Health Care Reform

The Patient Protection and Affordable Care Act was signed into law by President Obama on March 23.  There are literally hundreds of changes included in this bill, but a few of the most important changes include: (1) states must create insurance exchanges where citizens may purchase health insurance; (2) nearly every citizen will be required to maintain health insurance or face a fine; (3) companies with 50 or more employees may be subject to large fines if they do not offer health insurance to their employees; (4) employers with 25 or fewer employees may receive a tax credit of up to 35% of their paid premiums if they offer healthcare coverage to their employees; (5) most employers must provide “reasonable” unpaid breaks to new mothers to express breast milk in a private area other than a bathroom.

Hire Act Of 2010

New legislation signed on March 18 provides that any private employer hiring a new employee between the present and January 1, 2011 is exempt from paying the employer’s share of the new employee’s payroll tax effective with the employee's first paycheck.  However, the employee must (1) certify by signed affidavit that he or she has not been employed for more than 40 hours during the previous 60-day period ending on the date the individual begins employment; and (2) must not be hired to replace another employee of the employer unless the prior employee left voluntarily or was terminated cause.  A copy of the form affidavit is available at: http://www.irs.gov/pub/irs-pdf/fw11.pdf.

There is also a business credit granted for the retention of these newly hired employees for 52 weeks.  The employer receives the lesser of $1,000 or 6.2% of the wages paid to the retained worker during the 52-week period of employment if (1) the retained worker remains employed for a period of not less than 52 weeks and (2) the worker's wages earned in the second 6 month period are at least 80% of the first 6 months.

President Obama Extends The Cobra Subsidy And Federal Emergency Unemployment Compensation        

Last week, President Obama signed new legislation extending the deadline to apply for Federal Emergency Unemployment Compensation from April 5 to June 2, and extending the claim period from September 4 until November 6, 2010.  The legislation also included an extension to the Federal COBRA subsidy until May 31, 2010.  Congress is still considering another bill which will provide a longer extension for the federal unemployment and COBRA subsidy benefits.   

Final Rule Released Regarding Project Labor Agreements

One of President Obama’s first acts as president was to implement Executive Order 13502 entitled Use Of Project Labor Agreements for Federal Construction Projects.  This Executive Order declared that the federal government’s policy was to encourage federal agencies to require project labor agreements on all federal construction contracts over $25 million dollars. 

On April 13, the Federal Register published final rules implementing this Executive Order.  The final rule reiterates the federal government’s dedication to requiring Project Labor Agreements on large federal construction contracts, and provides factors for agency planners to consider in making a decision whether to require a project labor agreement.  In addition, the final rule allows agencies to require that bidding parties submit a copy of a project labor agreement along with their bid offers.  A copy of the final rule is available at: http://edocket.access.gpo.gov/2010/2010-8118.htm.

EEOC’s New E-RACE Initiative

The EEOC has increased enforcement of its new E-RACE initiative.  This is a renewed effort by the Commission to focus on race and color discrimination.  Recent handouts published by the Commission, along with lawsuits filed by the EEOC, show that the EEOC may be focusing on background and credit checks.  The EEOC is cracking down on employers whose selection criteria, including background and credit checks, has an impact on the selection rate of a particular race or color of applicant and is not related to the requirements of the job.  You can find more information about the EEOC’s E-RACE initiative at www.eeoc.gov/initiatives/e-race. 

Two Pro-Union Members Are Sworn In To The National Labor Relations Board

Over the Easter break, President Obama appointed Craig Becker and Mark Peirce to the National Labor Relations Board via recess appointments.  Becker was a very controversial pro-union nominee, and Congress was not expected to approve his nomination.  Obama also nominated Republican Brian Hayes to fill the final position on the Board, however, Mr. Hayes did not receive a recess appointment.  This means that three of the four present Board members are considered extremely pro-union. Companies can expect major changes in the coming year from the NLRB. 

DOL Renews Focus On Unpaid Interns

The Department of Labor has publicly stated that it intends to renew its focus on Companies which offer unpaid internships to young workers or students.  The Department of Labor has reminded state agencies that in order for internships to be unpaid, they must meet six criteria: (1) the training must be similar to what would be given in school or at an academic institution; (2) the training must be for the benefit of the trainees; (3) the trainees must not take the place of regular employees, and must work under close observation; (4) the employer may not derive an immediate advantage from the trainees; (5) the trainees should not be entitled to a job at the end of the training; and (6) the trainees are not entitled to wages for the time spent training.  Given the DOL’s renewed focus, employers should ensure they are properly classifying interns, trainees and summer clerks. 

President Issues Memorandum Regarding Hospital Visitation For Same Sex Partners           

On April 15, President Obama ordered the HHS Secretary to issue rules requiring hospitals which participate in Medicare or Medicaid to allow hospital visitation rights to same-sex partners.  This order itself did not create any such rights, however, it is a sign that rules and/or regulations will likely be released in the near future granting greater rights to same sex couples.  

OFCCP Publicly Announces Intention To Be More Aggressive

The Office of Federal Contract Compliance Programs (OFCCP) released its new strategic plan in early April, stating that it intends to become more aggressive with employers.  The OFCCP’s new strategy puts a strong burden on employers to be proactive in evaluating their workforce by gender, race, national origin, religion, ethnicity, disability and veteran status, focusing on hires, promotions and terminations.  Along with this new strategy, the OFCCP has received a 28% increase in its 2010 budget.  With investigations on the rise, federal contractors need to make sure that they are self-auditing their hiring, pay and promotion practices for any potential disparate impact on protected classes.  Contractors should also review their Affirmative Action Plans yearly for compliance. 

ICE Begins Audits Of I-9 Forms

In early March, the United States Immigration and Customs Enforcement (ICE) issued notices of inspection for over 180 businesses in the Southeast.  Within the last year, ICE has audited over 650 businesses for I-9 compliance.  Once an employer receives a notice of an ICE audit, they have only three days to prepare the Company’s Form I-9 records, and violations may result in fines from $110 to $1100 per violation.  Now is a great time to make sure your employees are properly and fully completing their I-9 forms.  

By Philip W. Savrin and Jonathan J. Kandel

Six months after hearing oral arguments in Atlanta Oculoplastic Surgery, P.C. v. Nestlehutt, 2010 WL 1004996 (Ga. Mar. 22, 2010), the Georgia Supreme Court struck down O.C.G.A. § 51-13-1, which had limited damages in medical malpractice cases.  The statute, which was originally enacted in 2005 as part of the Georgia Tort Reform Act, capped a plaintiff’s non-economic damages in a medical malpractice case to $350,000. 

In Nestlehutt, a jury awarded the plaintiff and her husband $1,265,000 after a plastic surgeon negligently performed a laser resurfacing and facelift.  More than 90 percent of the award, $1,150,000, was for non-economic damages, which included pain and suffering and other non-pecuniary losses.  Under the damages cap, the plaintiff’s award would have been reduced by $800,000 to the statutory limit of $350,000.  The trial court refused to reduce the damages, finding O.C.G.A. § 51-13-1 unconstitutional on several grounds.

On appeal, the Supreme Court agreed with the trial court, and held that the statute violated the right to a trial by jury, guaranteed by Article I, Sec. I, Par. XI (a) of the Georgia Constitution. The Court explained that a party has a constitutional right to a jury trial if the right to a jury existed for the cause of action when the Georgia Constitution was originally adopted in 1789.  The Court concluded that medical malpractice suits, albeit not in name, existed in England as early as the Fourteenth Century: a case from 1374 involved a surgeon’s treatment of a wounded hand.  Therefore, the Court concluded, parties in medical malpractice cases have a constitutional right to a jury trial.

In addition, the Court reiterated that the right to a jury trial includes not only fact finding, but also the amount of damages.  The statute’s cap of non-economic damages, the Court explained, “nullifies the jury’s findings of fact regarding damages and thereby undermines the jury’s basic function.”  The Court rejected the defendant’s argument that the caps were constitutional since caps on punitive damages have been deemed constitutional.  Unlike compensatory damages that measure the damages suffered by a plaintiff, punitive damages are awarded “solely to punish, penalize, or deter a defendant.”  The Court distinguished statutes that multiply or add interest to jury awards since those statutes “do not in any way nullify the jury’s damages award” but instead “affirm the integrity of the [jury’s] award.”  The opinion does not appear to leave room for the legislature to enact a new statute to limit non-economic damages for medical malpractice claims.

The Court’s decision stands in contrast to other recent decisions that have upheld provisions of the Tort Reform Act.  For instance, in Smith v. Salon Baptiste, 2010 WL 889557 (Ga. Mar. 15, 2010), the Court upheld O.C.G.A. § 9-11-68, which is commonly known as the Offer of Settlement statute.  Also, in Gliemmo v. Cousineau, 2010 WL 889672 (Ga. Mar. 15, 2010), the Court upheld O.C.G.A. § 51-1-29.5(c), which limits malpractice liability for emergency room doctors to instances of gross negligence.  In none of these cases, however, was a constitutional jury right found to be violated.

By:  Matthew P. Stone and Todd H. Surden

Today, in Smith v. Salon Baptiste, 2010 WL 889557 (Ga. Mar. 15, 2010), the Supreme Court of Georgia upheld O.C.G.A. § 9-11-68, Georgia’s offer of settlement statute.  The statute, which is part of Georgia's Tort Reform Act of 2005, allows a defendant to recover reasonable attorney’s fees and expenses of litigation if he makes an offer of settlement that the plaintiff rejects (expressly or by passage of time), and the final judgment is one of no liability or is less than 75% of the offer.  Likewise, a plaintiff can recover reasonable attorney’s fees if he makes an offer of settlement that the defendant rejects (expressly or by passage of time), and then recovers a final judgment that is more than 125% of the offer. 

In Smith, defendants offered to settle plaintiff’s defamation case for $5,000.  Plaintiffs did not respond, and the offer was deemed rejected.  The trial court subsequently granted defendants’ motion for summary judgment, and then defendants filed a motion to recover their attorney’s fees under O.C.G.A. § 9-11-68.  Plaintiffs argued that the motion should be denied because the statute is unconstitutional, and the trial court agreed.

On appeal, the Supreme Court rejected plaintiffs’ first argument, that the statute violates article I, section 1, paragraph 12 of the Georgia Constitution, holding that this provision does not guarantee a “right of access” to the courts.  Rather, this provision “was intended to provide only a right of choice between self-representation and representation by counsel,” and O.C.G.A. § 9-11-68 does not violate that provision.  The Court went on to say that the statute also does not deprive litigants of access to the courts because it “simply sets forth certain circumstances under which attorney’s fees may be recoverable.”

The Court also rejected plaintiffs’ second argument, that the statute violates the uniformity clause of the Georgia Constitution (Ga. Const. art. III, § 6, ¶ 4(a)) because it applies only to tort claims, not to all civil cases.  Although the Court agreed that O.C.G.A. § 9-11-68 does not apply to all civil actions, it held that the statute “applies uniformly throughout the State to all tort cases.” Therefore, the statute is constitutional and serves “a legitimate legislative purpose, consistent with this State’s strong public policy of encouraging negotiations and settlements.”

It is worth noting that Justice David Nahmias, in his concurring opinion, found that O.C.G.A. § 9-11-68 would also withstand challenges based on due process and equal protection, even though plaintiffs did not raise those arguments in this case.  Justice Nahmais stated that:

The fee-shifting provisions of OCGA § 9-11-68 do not flatly deny anyone access to the courts, as statutes of limitations and repose and other restrictions that have survived judicial scrutiny can be said to do.  Litigants remain free to file and defend tort cases.  There is also little question that § 9-11-68 is rationally related to the State’s legitimate objective of “encourage[ing] litigants in tort cases to make and accept good faith settlement proposals in order to avoid unnecessary litigation.” 

Nor can a credible argument be made, at least on the record of this case, that the statute substantially impedes, or “chills,” litigants from filing and pursuing their claims, in violation of equal protection.

The majority opinion, together with Justice Nahmias’ concurring opinion, will likely impact tort litigation in Georgia because they remove uncertainty about the viability of the offer of settlement statute.

By Dana Maine and William J. Linkous, III

Yesterday, a panel of the Eleventh Circuit Court of Appeals issued a decision providing guidance on the evidentiary support necessary for enacting an adult entertainment ordinance.  The decision supports a government’s reliance on studies and empirical evidence of negative secondary effects when adopting these ordinances, and makes it more difficult for adult entertainment establishments to attack such ordinances with competing evidence.

In RLV Flanigan’s Enterprises, Inc. of Georgia v. Fulton County, Georgia, No. 08-17035, 2010 WL 520542 (11th Cir. 2010), the panel upheld the constitutionality of Fulton County’s Adult Entertainment Ordinance banning the sale, possession, or consumption of alcohol in adult entertainment establishments in the county.  The opinion reversed the decision of the district court, which found the ordinance unconstitutional.  Moreover, the Court came to a different conclusion than a prior Eleventh Circuit panel which found the evidence the county produced to support a previous ordinance insufficient. 

The Eleventh Circuit in Flanigan’s held that the county now had sufficiently supported its ordinance with evidence in the form of studies from foreign (non-Fulton County) jurisdictions, its own study, and live witness testimony from citizens, including the chief of police and the chief judge of the juvenile court.  The Eleventh Circuit noted deficiencies with the adult entertainment club plaintiffs’ evidence that allegedly challenged the negative secondary effects findings.  In particular, it determined that data relating to the low number of 911 calls at various businesses was not convincing because it undercounted “victimless” crimes such as prostitution that are rarely reported. 

The Eleventh Circuit emphasized that the evidentiary foundation upon which a local government relies in enacting an adult entertainment ordinance need not be perfect; it need only be reasonable.  The Court also held that it was not the role of courts to second guess the legislative prerogative of local governments, as long as the government has some reasonable justification for legislation which incidentally suppresses protected speech.

This opinion is critical to defense of adult entertainment ordinances in jurisdictions that have had clubs operating for some period of time.  In these locations, if the government attempts to pass a more restrictive ordinance, plaintiffs often rely on data showing a history of average call volumes to these locations to counteract the negative secondary effects evidence.  The Eleventh Circuit effectively extinguished this route of attack. 

Please contact Dana Maine at Direct Dial: 770.818.1408 or [email protected] or Bill Linkous at Direct Dial: 770.818.1282 or [email protected] for more information on this decision.

Yesterday, the U.S. Department of Transportation (DOT) announced a federal guidance that prohibits commercial motor vehicle drivers from texting while driving. The prohibition is effective immediately and carries civil or criminal penalties of up to $2,750. This guidance is the latest step in the DOT's ongoing effort to address distracted driving. The full text of the DOT's press release appears below:

DOT 14-10
Tuesday, January 26, 2010
Contact: USDOT Public Affairs
Tel: 202-366-4570

U.S Transportation Secretary Ray LaHood announced federal guidance to expressly prohibit texting by drivers of commercial vehicles such as large trucks and buses. The prohibition is effective immediately and is the latest in a series of actions taken by the Department to combat distracted driving since the Secretary convened a national summit on the issue last September.

"We want the drivers of big rigs and buses and those who share the roads with them to be safe," said Secretary LaHood. "This is an important safety step and we will be taking more to eliminate the threat of distracted driving."

The action is the result of the Department's interpretation of standing rules. Truck and bus drivers who text while driving commercial vehicles may be subject to civil or criminal penalties of up to $2,750.

"Our regulations will help prevent unsafe activity within the cab," said Anne Ferro, Administrator for the Federal Motor Carrier Safety Administration (FMCSA). "We want to make it crystal clear to operators and their employers that texting while driving is the type of unsafe activity that these regulations are intended to prohibit."

FMCSA research shows that drivers who send and receive text messages take their eyes off the road for an average of 4.6 seconds out of every 6 seconds while texting. At 55 miles per hour, this means that the driver is traveling the length of a football field, including the end zones, without looking at the road. Drivers who text while driving are more than 20 times more likely to get in an accident than non-distracted drivers. Because of the safety risks associated with the use of electronic devices while driving, FMCSA is also working on additional regulatory measures that will be announced in the coming months.

During the September 2009 Distracted Driving Summit, the Secretary announced the Department's plan to pursue this regulatory action, as well as rulemakings to reduce the risks posed by distracted driving. President Obama also signed an Executive Order directing federal employees not to engage in text messaging while driving government-owned vehicles or with government-owned equipment. Federal employees were required to comply with the ban starting on December 30, 2009.

The regulatory guidance on today's announcement will be on public display in the Federal Register January 26 and will appear in print in the Federal Register on January 27.

The public can follow the progress of the U.S. Department of Transportation in working to combat distracted driving www.distraction.gov.

For more information or to discuss how these regulations may apply to your business, please contact Matt Stone in our Transportation Law Practice Group at 770.818.1411 or [email protected].

By:  Kelly E. Morrison

On Saturday, December 19, President Obama signed H.R. 3326, a defense appropriations bill with a continuation provision that will let involuntarily terminated workers seek the temporary 65% Consolidated Omnibus Budget Reconciliation Act (COBRA) subsidy extension until February 28, 2010.

Congress created the COBRA subsidy program earlier this year, when it included the provision in the American Recovery and Reinvestment Act of 2009 (ARRA).

Under the original extension, the 65% subsidy was slated to last 9 months, with an application cut-off date of December 31.  Now, not only will the application cut-off date be extended to February 28, 2010, but the continuation subsidy will be extended from 9 to 15 months.  

In addition to extending the eligibility period and the duration of COBRA benefits, the H.R. 3326 COBRA subsidy extension provision will make a number of changes in the subsidy program rules.

Specifically, the subsidy extension provision:

- Requires that employers send a special notice (within 90 days of the enactment of the extension) describing the new subsidy provisions to all “assistance eligible individuals” who have been on COBRA on or after November 1, 2009, or whose qualifying event is an “involuntary termination” of employment occurring on or after November 1, 2009;

- Allows for a 60-day period for the retroactive payment of premiums for “assistance eligible individuals” whose subsidy period expired November 30 and who failed to pay their premium for December coverage.

- Allows employees who are involuntarily terminated before February 28, 2010, but receive COBRA coverage that starts after February 28, 2010, to apply for the subsidy.

The U.S. Department of Labor, the U.S. Department of Health and Human Services, and the Internal Revenue Service may issue further guidance concerning the subsidy extension.

If you have any questions, please contact one of our Labor & Employment attorneys.

By Bradley T. Adler and Jonathan J. Kandel

     The Equal Employment Opportunity Commission (“EEOC”) recently updated its “Equal Employment is the Law” poster.  All employers subject to federal antidiscrimination statutes like Title VII of the Civil Rights Act, the Americans with Disabilities Act (“ADA”), the Age Discrimination in Employment Act (“ADEA”), and the Genetic Information Nondiscrimination Act (“GINA”) are now required to post the new poster.  This effectively includes all companies with fifteen or more employees.

     The new poster encompasses the recent amendments to the ADA and the new Genetic Information Nondiscrimination Act.

     On January 1, 2009 the ADA Amendments Act (“ADAAA”) became effective, significantly changing the interpretation of a disability under the Act.  First, while the ADAAA does not change the definition of disability, it mandates that the term “be construed in favor of broad coverage of individuals.”  Second, the ADAAA makes major changes to the interpretation of the Act, prohibiting courts from considering mitigating measures, except eyeglasses and contact lenses and permitting courts to consider impairments that are episodic or in remission.  Third, the law lowers the threshold for “regarded as” claims by only requiring proof that the employer perceived the employee as suffering from an impairment.  Finally, the ADAAA includes major bodily functions, such as functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions, as major life activities.

     On November 21, 2009, the Genetic Information Nondiscrimination Act became effective.  Title II of this Act prohibits discrimination in employment on the basis of “genetic information,” which means “information about such individual’s genetic tests, the genetic tests of family members of such individual, and the manifestation of a disease or disorder in family members of such individual.”  The law also makes it unlawful to retaliate against an employee that has opposed genetic discrimination.  Furthermore, this Act prohibits employers from acquiring genetic information from employees, except in very limited circumstances.

     Employers may want to consider either revising their current EEO policy to include a reference to genetic information, or adding a GINA policy.

     Employers can download a supplemental poster to post alongside the old, 2002 version.  In addition, employers can download a new 2009 version to replace the older one.  Finally, posters can be ordered from the EEOC Clearinghouse.  All three options are available at http://www1.eeoc.gov/employers/poster.cfm. 

     On October 28, 2009, President Obama signed into law the National Defense Authorization Act of 2010.  Section 565 of the Act amends the Family Medical Leave Act (“FMLA”) by expanding the provisions enacted in 2008 for family members of military personnel.  At the beginning of 2008, Congress created two kinds of leave for family members of military personnel: “exigency leave” and “military caregiver leave.”  The new law not only expands the number of employees qualifying for leave, but also expands the circumstances under which employees may take leave. 

     The new law expands the FMLA exigency leave coverage in two ways. 

     First, exigency leave is now available to family members of reservists, retired military personnel, and active duty personnel.  The old law only provided exigency leave to eligible employees whose family member (meaning the employee’s parent, spouse, son, or daughter) was on active duty or had been notified of an impending call or order to active duty either as a member of the Reserves or National Guard, or as a retired member of the Regular Armed Forces.  Now, exigency leave is also available to family members of active duty service members.

     Second, exigency leave is now available to family members of military personnel deployed to a foreign country.  The old law required the military personnel to be deployed “in support of a contingency operation,” which is defined at 10 U.S.C. § 101(a)(13).  The new law does not include the “contingency operation” requirement.

      Furthermore, the FMLA military caregiver leave was expanded to permit leave in additional circumstances.  Under the old law, a family member could take FMLA leave to care for a member of the military, including the National Guard or Reserves, but only for injuries or illnesses incurred while serving on active duty.  The new law permits employees to take caregiver leave for their family member’s injuries or illnesses that existed prior to active duty, if the injury or illness was aggravated by active duty. 

      The Secretary of Labor will likely issue new regulations to carry out the amendments.  Look for additional E-Alerts regarding new regulations. 

      The full text of the FMLA amendments may be found here. The amendments are located at Section 565, on pages 120-124.

By:  Phil Savrin and Darl Champion

     The Georgia Supreme Court has issued an important decision on an insurer’s exposure to extra-contractual damages when rejecting a settlement demand within policy limits.  In Fortner v. Grange Mut. Ins. Co., Case No. 209G0492, 2009 WL 3334632 (Ga. Oct. 19, 2009), the insured was sued for injuries received in a car accident.  The insured had two liability policies:  one with Grange Mutual Casualty Company that had a $50,000 liability limit, and annother with Auto Owners Insurance Company that had a $1 million limit.  The plaintiff made a limits demand to Grange Mutual contingent on Auto Owners paying $750,000.  Grange Mutual agreed to pay its $50,000 limit, but only if plaintiff dismissed the claims against the insured.  The plaintiff regarded Grange Mutual’s offer as a rejection of the demand and proceeded to trial, where he obtained a $7 million judgment against the insured.

     The insured then assigned its claims to plaintiff, who sued Grange Mutual directly for unreasonably rejecting the limits demand.  The claim was brought under case law that holds an insurer liable for the full amount of a judgment if it unreasonably refuses to pay policy limits, thereby placing its own pecuniary interests above those of the insured in forcing the case to trial.  Stated otherwise, the insurer can play with its own money but not with the insured’s.  The bad faith case itself proceeded to trial, where the jury was instructed that an insurer faced with a policy limits demand can avoid liability by tendering its policy limits.  This instruction was based on Cotton States Mut. Ins. Co. v. Brightman, 276 Ga. 683, 580 S.E.2d 519 (2003), where a policy limits demand was conditioned on the acceptance of a demand on another insurer as well.  In that situation, the Supreme Court had reasoned, the insurer could avoid liability by tendering its policy limits and allowing the plaintiff to negotiate with the other insurer.  Even if the case does not settle, the insurer would be doing everything within its control to meet the plaintiff’s demand. 

     Based on the instruction provided, the jury returned a verdict for Grange Mutual, finding its response to the policy limits demand was reasonable.  Plaintiff appealed to the Court of Appeals, which affirmed the verdict.  Fortner v. Grange Mutual Cas. Co., 294 Ga. App. 671, 669 S.E.2d 658 (2008).  The Supreme Court granted certiorari review, however, and reversed.  The Supreme Court focused on the fact that the condition imposed by Grange Mutual of dismissing the insured would have required plaintiff to forego access to the $1 million Auto Owners policy.  The jury instruction was erroneous because it did not account for the conditions imposed by Grange Mutual.  The Supreme Court expressed no opinion on the reasonableness of that condition but simply vacated the judgment in favor of Grange Mutual based on the erroneous instruction.

     Although Grange Mutual’s conditions may have made acceptance impractical, the insurer may have been motivated to put the insured’s interests above its own by agreeing to pay the limit only if the insured was protected as well.  It is unclear from the opinion whether Grange Mutual attempted to obtain a limited release under O.C.G.A. § 33-24-41.1, which allows automobile liability insurers to tender their limits in exchange for a release of the insurer and any personal liability of the insured, leaving other insurers only exposed to liability.  An offer under this statute might have been viewed differently by the Supreme Court.  Nevertheless, insurers should be wary of responding to demands within policy limits with any conditions at all.  As this decision shows, even conditions beneficial to the insured can create grounds for extra-contractual liability if the conditions would have an adverse effect on the plaintiff.

By:  Bradley T. Adler and Elizabeth B. Turner

The Fair Labor Standards Act (FLSA) generally requires employers to pay non-exempt employees at least time and a half for overtime (the time worked in excess of 40 hours per week).  A number of exemptions to this requirement exist, however, including the motor carrier exemption, which, through two complex Acts of Congress, has been recently amended to limit its prior coverage.

The FLSA’s Motor Carrier Exemption

The FLSA’s motor carrier exemption provides that the overtime requirements do not apply to any employee over whom the Secretary of Transportation has power to establish qualifications and maximum hours of service and whose services affect the safety of the operations.  29 U.S.C. § 213(b)(1).  Pursuant to the Motor Carrier Act (MCA), the Secretary of Transportation has the power to prescribe requirements for qualifications and maximum hours of employees of a “motor carrier” and a “motor private carrier.”

Prior to August 2005, the term “motor carrier” was defined as a person “providing motor vehicle transportation for compensation.”  49 U.S.C. § 13502(14).  A “motor vehicle” was then defined as “a vehicle, machine, tractor, trailer, or semitrailer propelled or drawn by mechanical power and used on a highway in transportation . . .”  49 U.S.C. § 13502(16).  These broad definitions exempted from overtime pay many transportation and delivery personnel operating vehicles on public highways.

August 2005 Amendments

On August 10, 2005, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) altered the MCA exemption.  Section 4142 of the Act sought to simplify the process for vehicle inspection at U.S. borders by allowing vehicles not subject to safety regulations to pass without inspection.  In addition, the United States Department of Labor had previously placed emphasis only on larger vehicles, sometimes leaving smaller vehicles without the protection of either the Department of Transportation or the Department of Labor. 

In seeking to remedy these problems, SAFETEA-LU amended the MCA’s definitions of “motor carrier” and “motor private carrier” to cover only commercial motor vehicle transportation rather than motor vehicle transportation in general.  A “commercial motor vehicle” is defined in the Act as “a self-propelled or towed vehicle used on the highways in interstate commerce to transport passengers or property,” if the vehicle: 
 
(A) has a gross vehicle weight rating or gross vehicle weight of at least 10,001 pounds, whichever is greater;

(B) is designed or used to transport more than 8 passengers (including the driver) for compensation;

(C) is designed or used to transport more than 15 passengers, including the driver, and is not used to transport passengers for compensation; or

(D) is used in transporting material found by the Secretary of Transportation to be hazardous under section 5103 of this title and transported in a quantity requiring placarding under regulations prescribed by the Secretary under section 5103.

49 U.S.C. § 31132(1).

Thus, the Act has had the arguably unintended consequence of pushing many drivers of vehicles weighing under 10,000 pounds, such as vans and small trucks, out from under the coverage of the MCA and the control of the Secretary of Transportation.  Those drivers now fall under the Department of Labor’s control and, thus, would be subject to the FLSA’s overtime provisions as of August 19, 2005.

Further Amendments Add Complexity

As it turned out, Congress was not done amending the definition of motor carrier.  On June 6, 2008, Congress passed the SAFETEA-LU Technical Corrections Act (TCA) of 2008.  Notably, the TCA struck “commercial motor vehicle” as defined in section 31132 and inserted “motor vehicle.”  While at first glance this amendment appeared to restore the definition of motor carrier to its pre-SAFETEA-LU state, the TCA re-confirmed that the MCA exemption was inapplicable to employees of motor carriers who drove motor vehicles that weighed 10,000 pounds or less.  110 P.L. 244, § 306.

In addition, the TCA provides for a one-year safe harbor for those employers who were not aware of SAFETEA-LU’s changes to the motor carrier exemption.  To take of advantage of this safe harbor defense, the FLSA violation must have occurred between August 10, 2005 and August 10, 2006, and the employer must not have had actual knowledge that its employees were no longer exempted under the MCA.  Given its end date, this defense has a very limited application.

What these Amendments Mean for Employers

For those employers who primarily use larger vehicles (over 10,000 pounds), the application of the motor carrier exemption remains unchanged.  For those employers who use only vehicles under 10,000 pounds, they can no longer take advantage of the MCA exemption for their drivers, and they must compensate their drivers at a rate of time and one-half pursuant to the FLSA.  For those employers with mixed-fleets, the analysis is more complicated.

Courts have confirmed that the occasional operation of light-weight vehicles does not defeat the MCA exemption.  Conversely, courts have also held that the occasional operation of heavy-weight vehicles by companies that typically operate light-weight vehicles does not rid an employer of the obligation to pay FLSA overtime.  Where a company employs drivers operating both light- and heavy-weight vehicles regularly, courts have offered conflicting answers and consistent law has not emerged. 

To be safe, employers with mixed-fleets should frequently assign drivers to vehicles weighing over 10,000 pounds.  Employers also should document these assignments and maintain records for three years (the longest statute of limitations period under the FLSA).  As always, employers should also maintain accurate time records.

By Benton J. Mathis, Jr. and Kelly E. Morrison

On August 26, 2009, paving the way for full implementation on September 8, 2009, the US District Court for the District of Maryland upheld the Department of Homeland Security’s (DHS) E-Verify federal contractor rule, which requires certain federal contractors and subcontractors to register for and use the federal government’s Internet-based electronic verification system called E-Verify (Chamber of Commerce v Napolitano, No AW-08-3444, 8/26/09).  The Obama administration has backed implementation of the rule following the court’s decision.

Background

The E-Verify federal contractor rule implements Executive Order 12989, as amended by President George W. Bush on June 6, 2008, which directs all federal departments and agencies to require contractors, as a condition of each future federal contract, to agree to use E-Verify for all persons performing work within the United States on that federal contract. 

The final rule is further explained and expanded upon in the Federal Acquisition Regulation (FAR), the principal set of rules that govern the “acquisition process” through which the federal government purchases goods and services.  The final FAR rule inserts a clause into prime federal contracts with a period of performance longer than 120 days and a value above $100,000 requiring the use of E-Verify. For subcontracts that flow from those prime contracts, the rule extends the E-Verify requirement for services or for construction with a value over $3,000.

Opponents of the rule, including a coalition of business groups, filed suit in December 2008, challenging the legality of the Executive Order and related federal regulations. According to the business opponents, the Illegal Immigration Reform and Responsibility Act of 1996 (IIRIRA), which created the E-Verify program, states that “the Secretary of Homeland Security may not require any person or other entity to participate in the pilot program.”  Therefore, business opponents argued, the program should be voluntary, not mandatory.  The district court found that the rule was not mandatory because, “[t]he decision to be a government contractor is voluntary and…no one has a right to be a government contractor.”

Implementation

Starting September 8, federal contracts awarded and solicitations with a period of performance longer than 120 days and a value above $100,000 must include a clause requiring federal contractors to use E-Verify. The same clause will also be required in subcontracts over $3,000 for services or construction that flow from those prime contracts. These contractors and subcontractors must confirm that all new hires and existing employees directly performing work under federal contracts are authorized to work in the United States.

To ensure compliance with the new rules, federal contractors and sub-contractors should take the following steps in anticipation of the September 8, 2009 effective date:

• Determine whether you are a federal contractor or sub-contractor required to enroll.  If a contract under FAR (1) includes some work in the United States, (2) has performance terms of 120 days or more, and (3) has a value threshold in excess of $100,000, enrollment in E-Verify is required.  Only sub-contracts for services or construction with values in excess of $3,000 that are necessary to the performance of a prime federal contract that is itself subject to the E-Verify requirements require enrollment.[1]

• If required to enroll, determine whether you are already enrolled in the E-Verify program as a federal contractor – even if already enrolled in E-Verify, an entity may not be enrolled as a federal contractor.  If not enrolled in any respect, you must register and enroll within thirty (30) calendar days of receiving the qualifying federal contract award here.

• If already enrolled in E-Verify but not as a federal contractor, return to the E-Verify online system to modify enrollment to reflect status as a federal contractor.  In addition, the “Memorandum of Understanding” must be signed and completed (completion of the Memorandum will also be required for new enrollees).  A copy of the Memorandum is available here.

• After the effective date of September 8, 2009, if currently performing a federal contract as defined above, a contractor must initiate verification of all new hires within three (3) business days after the date of hire (a grace period of ninety (90) days exists for those contractors who were not already enrolled in E-Verify, however).

It is advisable to work closely with counsel during performance of federal contracts and the periods before and after.  Several restrictions on the use of E-Verify with associated penalties exist.  For example, a company that is not classified as a federal contractor may not use E-Verify on its incumbent employees, but only on new hires.

Additional Resources:

E-Verify Quick Reference Guide, is available here.

Frequently Asked Questions Before Your Company Enrolls in E-Verify, is available here.  

“How Do I Use E-Verify” Guide for Employers, is available here.

     The Secretary of the Department of Homeland Security announced yesterday that the DHS intends to propose a regulation rescinding the Social Security “no-match” rules.  The no-match rules provide steps for employers to take when they receive letters informing them that an employee’s name and social security number do not match the social security administration’s records.  These rules, which were promulgated in 2007, were never implemented due to several legal challenges.  DHS Secretary Janet Napolitano released a statement noting that the no-match notices may take months or even longer to inform employers about a problem, and significantly, most of the problems were simply typographical errors or unreported name changes.   

      In this same press release, Secretary Napolitano announced that the DHS intends to implement the Federal Acquisition Regulation E-Verify amendment which requires that some federal contracts include clauses requiring the use of E-Verify for all employees working under the contract.  E-Verify is a free web based verification system which compares an employee’s employment eligibility information from their Form I-9 against government databases in order to verify that the employee is authorized to work in the United States.  Prior to this press release, it was not clear whether the DHS would continue to support E-Verify and the Federal Acquisition Regulation, which were implemented by an Executive Order by President George W. Bush in October of 2008.  

      The regulation, which is scheduled to go into effect on September 8, 2009, requires some federal contractors and subcontractors to use E-Verify.  The rule applies to federal contracts which contain a term of longer than 120 days and are for an amount of more than $100,000.  The rule also applies to subcontractors working under a federal contract whose contract is for services or construction, if the contract has a value of at least $3,000.  This regulation will encompass all federal contracts fitting within the above requirements, including money provided under the American Recovery and Reinvestment Act (stimulus package).  There are limited exceptions for contracts involving items that are commercially available and considered “off the shelf,” as well as contracts for food and agricultural products shipped in bulk, and contracts for work to be performed outside of the United States. 

      This regulation has already been postponed four times since its originally scheduled implementation date of January 15, 2009.  In addition, there is a pending lawsuit in the District Court of Maryland challenging the constitutionality of the regulation.  Nonetheless, this press release confirms that the DHS is committed to the use of the E-Verify system.  Employers often criticize E-Verify, claiming that its results are inaccurate.  Secretary Napolitano addressed the concern that E-Verify results are often inaccurate, and promised that the DHS will continue to improve E-Verify, stating that new initiatives are underway to improve the Federal database accuracy and enhance E-Verify’s privacy protections. 

      In a related matter, the United States Senate approved an amendment extending the use of the E-Verify program through September 30, 2012.  The E-Verify program was scheduled to expire on September 30 of this year.   

 If you have any questions, please contact one of our Labor & Employment attorneys.

As most insurers and self-insureds are aware, Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 took effect this year and imposes stiff penalties for failure to take certain steps when settling cases where Medicare has paid benefits on behalf of the claimant.  Specifically, every Responsible Reporting Entity (RRE) must register with the Centers for Medicare and Medicaid Services (CMS), which administers the program, and thereafter report on all claims with a Medicare beneficiary (including a decedent) resolved, in whole or in part, by settlement, judgment, award, or other payment.  Failure to comply may result in monetary penalties of $1,000 for each day of non compliance with respect to each claimant.

Freeman Mathis & Gary recently published an article discussing the new law, its requirements, and suggestions for ensuring compliance.  CMS, however, has issued an "ALERT" that changes the implementation dates for RREs to register and report claims.  Previously, RREs were required to complete the registration process by June 30, 2009 and to begin mandatory reporting on July 1, 2009.  RREs now have until September 30, 2009 to complete their registration, and mandatory reporting now begins on April 1, 2010.

On Tuesday, the Employee Free Choice Act (“EFCA”) was reintroduced in Congress. The bill was sponsored by Senator Tom Harkin (D-MA) and Representative George Miller (D-CA), the House Education and Labor Committee Chair.  If passed, EFCA would dramatically change union practices in the United States in several ways, but there are two key issues employers should know about.

No More Secret Ballot Elections.  First, EFCA would change the union election process.  Under current law, union organizers must submit a petition to the National Labor Relations Board (“NLRB”) showing that at least 30 percent of employees have signed valid authorization cards designating the union as their bargaining representative.  The NLRB then conducts a secret-ballot election where employees vote whether or not they want to join the union.  If a majority of employees vote for the union, then the NLRB certifies the union as the bargaining representative for employees.  Under EFCA, this process would change so that the NLRB would be required to certify a union, without a secret-ballot election, if a majority of employees sign valid authorization cards designating the union as their bargaining representative.  This will eliminate the secret ballot process if unions can persuade enough employees to sign authorization cards and likely will result in the certification of more unions.

Mandatory Arbitration If No Agreement Is Reached.  Second, EFCA would change the way employers and unions reach an agreement.    The National Labor Relations Act currently does not require an employer and union to reach an agreement, and also does not allow the government to dictate the terms of a contract between the employer and a union.  Under EFCA, however, an employer and a newly-certified union would be required to begin bargaining within 10 days of the employer’s receipt of a request for bargaining from the union.  If the employer and union are not able to reach an agreement within 90 days, then either party may request mediation.  If the parties still are not able to reach an agreement within 30 days, then EFCA will require that the dispute be referred to an arbitration board, which will render a decision settling the dispute and setting terms of employment that will bind the employer and union for two years.  In other words, if an employer does not give in to union demands within 120 days, an outside, government-mandated arbitrator will determine wages, benefits, and other contract-related matters.  

What Should Employers Do?  Supporters and opponents of EFCA are promising to fight hard over the bill.  Indeed, even before EFCA was reintroduced, Congressional Republicans preemptively introduced a bill named the Secret Ballot Protection Act, which would make it an unfair labor practice for a union to try to force an employer to recognize or bargain with a union if the union has not been selected by a majority of employees in a secret ballot election conducted by the NLRB.  Nonetheless, all indications at this point are that some form of EFCA will be passed.  As such, employers should educate managers now about how to recognize early warning signs of a union card signing drive and how to lawfully communicate with employees about the benefits of a union free workplace.  Employers also should consider publishing a lawful “union free” statement in their employee handbooks or other written policy statements.  Finally, employers also may consider educating employees about the benefits of a union free workplace so they are aware of the issues even before a union card signing drive is started.

     On Friday, February 6, 2009, President Barack Obama issued what may be the most far reaching of the various Executive Orders he has issued affecting federal contractors.   

     The Executive Order, entitled “Use of Project Labor Agreements for Federal Construction Projects,” sets forth an official government policy to recommend that executive agencies begin requiring project labor agreements in all large-scale construction projects.  The order defines “large scale construction project” as any project where the cost to the federal government is $25 million or more.  The order also defines a “project labor agreement” as “a pre-hire collective bargaining agreement with one or more labor unions that establishes the terms and conditions of employment for a specific construction project.”   

     If an executive agency determines that a Project Labor Agreement would promote “economy, efficiency and labor stability while ensuring compliance with federal laws,” the agency may require every contractor or subcontractor to agree to negotiate or become a party to a project labor agreement with “appropriate labor organizations.” 

     The impact of this latest Executive Order could fundamentally change labor relations for federal contractors if mandatory Project Labor Agreements are commonly required by federal agencies in letting construction contracts.  In effect, the required use of Project Labor Agreements would virtually require that all covered contractors for federal construction contracts (defined as work involving construction, rehabilitation, alteration, conversion, extension, repair or improvement of builds, highways or other real property) use union labor. 

     The order is effective immediately and requires the Federal Acquisition Regulatory Council (FAR Council) to amend FAR regulations to implement the order within 120 days.  Within 180 days, the Director of the Office of Management and Budget, along with the Secretary of Labor, shall provide the president with recommendations regarding broader use of project labor agreements.     

     The full text of the executive order can be found here.  

If you have any questions, please contact one of our Labor & Employment attorneys. 

The American Recovery and Reinvestment Act of 2009 (“ARRA” or “the Act”) has been largely publicized in terms of its price tag, roughly $787 billion.  However, the Act also contains several provisions affecting employers’ workplace duties. 

A Retroactive COBRA Subsidy

Initially, ARRA expands employee rights under COBRA, requiring employers to fund continuing health care for the unemployed.  This provision goes into effect on March 1, 2009.  However, as explained below, the bill applies retroactively to employees terminated on or before September 1, 2008.

Under current law, COBRA generally is available for 18 months after a qualifying event, or until an individual becomes eligible for coverage under any other group health plan or Medicare.  Although ARRA shortens that period to 9 months, the new subsidy would be available prospectively for individuals who were involuntarily terminated from employment between September 1, 2008 and December 31, 2009, who made less than $125,000 per year (single) or $250,000 year (couple) and who elect COBRA coverage.

Under the Act, an employee who elects COBRA coverage would pay 35% of any COBRA premiums to the employer or employer’s health plan.  The employer or health plan would pay 65%, the remainder of the premium. Any payments made by employers pursuant to this provision could be deducted from their payroll taxes.  If the COBRA expense is greater than the amount of any payroll taxes, then the employer would be reimbursed by the Secretary of the Treasury.

According to the Act, employees who were involuntarily terminated on or after September 1, 2008, but before the enactment of ARRA and who did not elect COBRA coverage, must receive notices regarding their ability to elect COBRA coverage.  These employees must receive 60 days from the date of this notice to accept or reject COBRA coverage.  Furthermore, if an employee elects COBRA after receiving the notice regarding the subsidy, coverage attaches on February 13, 2009, the date of the signing of the Act, and not the initial qualifying event.  However, the coverage will not extend beyond the period that COBRA would have remained in place had it been initially elected.

Pursuant to current COBRA provisions, a former employee may only continue coverage at the level currently being provided before his separation from employment.  Under ARRA, unemployed persons who are eligible for the COBRA premium subsidy can elect a lower-cost health plan option available under the employer’s plan.

Finally, ARRA provides that terminated employees who lose coverage and who are age 55 or older, or who have completed at least ten years of service with their employer at the time of their separation from employment, can elect to remain on COBRA.  Essentially, ARRA extends the COBRA continuation period for these individuals and their spouses or dependents who are qualified beneficiaries until Medicare entitlement, failure to pay a required premium, or becoming covered under another group health plan.

All plan documentation and notices regarding COBRA must be updated to notify employees of the availability of the COBRA subsidy.  Model notices are due from the DOL on March 12, 2009.

Increased Unemployment Benefits

In addition to retroactive COBRA subsidies, ARRA also gives unemployed workers increased unemployment benefits.  The Unemployment Compensation Act of 2008 temporarily expanded unemployment compensation, but was scheduled to terminate on March 31, 2009.  ARRA extends the termination date to December 31, 2009, with no compensation payable after May 31, 2010.  Instead of funding these benefits through the Federal Unemployment Tax Act (FUTA) levied on business, the proceeds will come from the Treasury.

In addition to extending the length of benefits, ARRA also increases the amount of unemployment benefits by $25 per week for states that agree to abide by the terms proposed by the U.S. Labor Secretary. 

States interested in modernizing their unemployment systems also would be eligible for a portion of the $7 billion ARRA sets aside in an unemployment insurance trust fund.  To receive one-third of its allotted funds, a state must adopt an “alternative base period” allowing workers to meet eligibility requirements by counting their most recent wages.  To receive the remainder of the money, states would need to comply with two of six requirements outlined by ARRA:

• Family Related Needs: providing unemployment compensation for workers who have resigned voluntarily due to illness or disability of an immediate family member, the relocation of a spouse or immediate family member or domestic violence. 
• Job Training: providing training benefits to unemployed workers laid off from a “declining” occupation who enroll in a state-approved training program for entry into a high-demand occupation.
• Part-Time Work: providing unemployment compensation benefits to employees seeking part-time work.
• 26 Week Payouts: raising maximum compensation caps to 26 weeks for all unemployed workers.
• Child Assistance: paying unemployed workers at least $15 more per week for each of the worker’s dependents.

Health Information Technology

Although largely aimed at doctors and hospitals, ARRA includes provisions accelerating the use of electronically transmitted health care information.  The Act establishes a timetable of 2010 to implement standards allowing the secure transfer of health information.  At the same time, ARRA expands federal privacy protection for health information.  Among the key privacy provisions: a ban on the sale of health information, measures aimed at ensuring the security of audit trails, encryption and rights of access, improved enforcement mechanisms, and support for groups who advocate for patient privacy to participate in the regulatory process.

“Making Work Pay”

ARRA also includes a “Making Work Pay” tax credit of $800 for couples making less than $150,000 per year and $400 for individuals earning less than $75,000 per year.  Taxpayers may choose to reduce their withholdings by the amount of the credit or claim the credit on their tax returns.

Work Opportunity Tax Credit

The Work Opportunity Tax Credit currently provides employers with a tax break for hiring employees in one or more of nine groups.  ARRA creates two additional groups, unemployed veterans and “disconnected youth” who begin employment from December 31, 2008-December 31, 2010.

Trade Adjustment Assistance

Employees who lose their jobs due to increased off-shoring of jobs or through increased imports from certain foreign countries will now be eligible for up to two years of government assistance.

Limits on Executive Compensation

Organizations accepting money from the Troubled Asset Relief Program (TARP) are now obliged to limit the pay of their top executives.  The pay ceiling is directly indexed to the amount of TARP aid the organization receives.  Additionally, bonuses are restricted to one-third of the executive’s salary, “golden parachute” provisions are nixed, and there are limits on corporate expenditures such as vacations and office redecorating.  ARRA also forces TARP recipients to hold a shareholder vote approving executive compensation.

Restrictions on H-1B Visas

ARRA also provides that organizations receiving TARP funds may not obtain H-1B visas for 2 years, unless they can submit evidence of a good faith effort to recruit U.S. workers for the job at issue.

     President Barack Obama has executed three executive orders covering contractors who receive money from the federal government.

      In Executive Order 13495, entitled “Notification of Employee Rights Under Federal Labor Laws,” President Obama expressly revoked President Bush’s Beck Order which required federal contractors to inform employees of their right to refuse to pay union dues for non-collective bargaining activities.  In addition, the order requires that all federal contractors and subcontractors post a notice to employees informing the employees of their rights under federal labor laws.  This notice must be posted in a conspicuous place on the worksite where other notices are posted, and if other notices are posted electronically, the new notice must be posted electronically as well.

     Penalties for a violation of this order include cancellation of the federal contract.  Prime contractors will be responsible for ensuring compliance by subcontractors.  Although the order indicates that this mandate is effective immediately, the contents of the notice were not released with the order.  The order directs the Secretary of Labor to issue rules and regulations regarding the notice within 120 days.  A copy of the new order can be found here.

     The second order issued by President Obama is  Executive Order 13496, entitled “Economy in Government Contracting.” Under this order, federal contractors and subcontractors are prohibited from being reimbursed for the costs of activities undertaken to persuade or dissuade employees from exercising or not exercising their rights to organize and bargain collectively.  The executive order explicitly prohibits use of any government funds to (a) prepare and distribute materials; (b) hire or consult an attorney; (c) hold meetings; and (d) plan or conduct activities by managers, supervisors, or union representatives during work hours.  The Federal Acquisition Regulatory Council (FAR Council) has 150 days to adopt rules and regulations appropriate to carry out the Order.  The Order may be found here.

     The third order issued is Executive Order 13497, entitled “Nondisplacement of Qualified Workers Under Service Contracts.” In this order, President Obama mandates that all contracts falling under the Service Contract Act contain a clause which requires contractors and subcontractors to offer the right of first refusal to employees under a predecessor contract if the contractor or subcontractor is awarded a contract that succeeds a contract for the same or similar services at the same location.  This rule will not require the successor contractor or subcontractor to offer the right of first refusal to managerial or supervisory employees, and contractors or subcontractors are free to employ fewer workers than were employed by the previous contractor. 

     The order also requires the predecessor contractor to provide the successor with a list of all service employees working under the contract or subcontract within the last month of performance not less than 10 days prior to the completion of the contract.  The Secretary of Labor has 180 days to issue regulations clarifying compliance with this Order.  The Order may be found here.         

If you have any questions, please contact one of our Labor & Employment attorneys. 

      President Obama signed the Lilly Ledbetter Fair Pay Act (“Fair Pay Act”) into law last Thursday, making it the first bill he signed as President.  The Fair Pay Act overturns the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007), and expands the length of time an employee has to file a claim of pay discrimination.  It also potentially expands the class of individuals with standing to bring a claim of pay discrimination.  As a result, employers may be subject to litigation for pay decisions made many years in the past and also may need to adjust their record keeping policies.

     The impetus for the Fair Pay Act arose from Lilly Ledbetter’s lawsuit against her employer for pay discrimination, claiming that it did not give her the same pay raise it gave to other male employees.  Although Ms. Ledbetter did not file her charge until long after this pay decision was made, she argued that her charge still was timely and not barred by the statute of limitations because each pay check she received from that point forward was lower than it would have been if she had been given the raise, effectively making each pay check an act of discrimination that restarted the filing period for her claim.  The Supreme Court disagreed, however, and held that an employee must file a charge within 180 or 300 days (depending on the state) of the day the initial discriminatory pay decision was made.

     The Supreme Court’s decision was met by strong opposition from those who claimed that, unlike other types of discrimination, pay discrimination is particularly hard to detect because information about co-worker pay usually is confidential.  As a result, opponents argued that employees like Ms. Ledbetter would be unfairly prevented from filing claims of pay discrimination because they often do not know they are subject to discrimination until well beyond the normal time for filing a charge.  Congress responded to the criticism by enacting the Fair Pay Act to overturn the Supreme Court’s decision. 

     The Ledbetter Fair Pay Act amends Title VII, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Rehabilitation Act to state that an independent act of discrimination occurs each time wages are paid to an employee following a discriminatory pay decision.  As a result, an employee who normally would have been time-barred from asserting a claim of pay discrimination based on a decision made years, or perhaps decades, in the past can now make such a claim as long as it is filed within 180 or 300 days (depending on the state) of when the employee last received a pay check.  It also potentially expands the class of individuals with standing to bring a claim of pay discrimination to include those who are “affected by” the alleged discrimination.  Read literally, that could include the families and relatives of the worker who was allegedly discriminated against, and perhaps even more broadly the employee’s survivors (as well as other employees).

     All of this means that employers may need to review their record retention policies and consider preserving records of pay decisions for much longer than they have in the past so they are able to defend themselves in later-filed pay discrimination claims.  These records would include not only decisions about direct pay increases, but also decisions related to promotions, job assignments, layoffs, and other decisions that affect compensation.  Also, it would be prudent for employers to document which managers and supervisors made pay decisions, or decisions that might have affected compensation.  Otherwise, if a pay discrimination charge is filed, there may be no way for the Company to identify who made the pay decisions at issue.

     The Fair Pay Act went into effect immediately upon President Obama’s signature and even applies retroactively to May 28, 2007, the date of the Supreme Court’s decision.  Thus, the new law will apply to all claims of discrimination in compensation under Title VII, the ADEA, ADA, and the Rehabilitation Act pending on or after that date.      

If you have any questions, please contact one of our Labor & Employment attorneys. 

     This week, the United States Supreme Court issued a decision clarifying what conduct constitutes “opposition” for purposes of a retaliation claim under Title VII of the Civil Rights Act of 1964, as amended.  This case expands the protection afforded to employees who provide their employers information regarding conduct they believe to be unlawful and effectively increases the liability exposure for employers who subsequently take adverse action against such employees.

     In Crawford v. Metropolitan Government of Nashville and Davidson County, Tennessee, No. 06-1595 (U.S. Jan. 26, 2009), the employer, Metro, investigated rumors of alleged sexual harassment by its employee relations director, Gene Hughes. Although Vicky Crawford, the plaintiff, did not initiate the complaint, she was questioned during the internal investigation and indicated in response that Hughes had made lewd gestures to her on numerous occasions.  Crawford subsequently was terminated for embezzlement.  She then sued, claiming that the termination was in retaliation for her providing information about Hughes during the internal investigation.

     The federal district court granted Metro’s motion for summary judgment, and the Sixth Circuit Court of Appeals upheld this decision.  The appellate court found that “opposition” to unlawful activity for purposes of a Title VII retaliation claim required “active, consistent” opposing activity, and in this case, Crawford had not initiated the complaint.  The Supreme Court reversed, holding that the protection of Title VII’s anti-retaliation provision extends to an employee who opposes or speaks out about discrimination not on her own initiative, but in response to questioning pursuant to an employer’s internal investigation.

To view the Supreme Court’s decision in its entirety, please go to http://www.supremecourtus.gov/opinions/08pdf/06-1595.pdf.

If you have any questions, please contact one of our Labor & Employment attorneys.

U.S. Citizenship and Immigration Services ("USCIS") has issued an interim rule that makes changes to the Form I-9 employment verification process. The interim rule amends regulations governing the types of documents employers may accept for the I-9 Form and also creates a revised version of the I-9 Form. USCIS currently is accepting comments on the interim rule, which will go into effect on February 2, 2009. USCIS will later issue a final rule to become effective.

Beginning February 2, 2009, however, the interim rule will become effective, meaning that the current version of the I-9 Form (dated 06/05/2007) will no longer be valid, and employers must begin using the revised Form I-9. A final version of the revised I-9 Form is not yet available, but USCIS is expected to make it available by the time the interim rule becomes effective. In the meantime, to download a copy of the interim rule and sample of the revised I-9 Form, please click here.

The following is a summary of the significant changes made by the interim rule:

• Expired documents are no longer acceptable.

  • Under the current regulations, a U.S. Passport and all List B documents are acceptable for the I-9 Form, even if they are expired.

  • Under the interim rule, expired documents are no longer acceptable; all documents must be unexpired for use on the I-9 Form.

• Form I-688, "Temporary Resident Card," and Forms I-688A and I-688B, "Employment Authorization Cards," are removed from the list of acceptable documents.

  • These documents are no longer issued, and USCIS has determined that all of these documents that were previously issued are currently expired. Therefore, the amended regulations remove these documents from the list of acceptable documents on the I-9 Form.

• Form I-94A, "Arrival-Departure Record," is added to the list of acceptable documents.

  • Form I-94A is now listed along with Form I-94 as an acceptable document. Form I-94A and I-94 are arrival/departure records and are nearly identical except that Form I-94A fields are computer-generated rather than being written by hand.

• "Documentation for Citizens of the Federated States of Micronesia and the Republic of the Marshall Islands" are added to the list of acceptable documents.

  • Most citizens of these countries are eligible for admission to the U.S. as non-immigrants, including the privilege of residing and working in the U.S., following a 2003 Compact with their countries.

  • Residents of these countries may present a valid passport and evidence of admission under the Compact to satisfy the I-9 Form requirements.

• U.S. Nationals and U.S. citizens are now separate categories under Section 1.

  • On the current Form I-9, U.S. citizens and U.S. nationals checked the same status box.

  • The revised I-9 Form will provide a separate box for U.S. Nationals, and defines U.S. Nationals to include persons born in American Somoa, children of noncitizens born abroad, and former citizens of the former Trust Territory of the Pacific Islands.
    

If you have any questions, please contact one of our Labor & Employment attorneys.

On November 17, 2008, the Department of Labor (“DOL”) issued new regulations implementing the Family and Medical Leave Act.  These regulations become effective on January 16, 2009.  As these new regulations modify the obligations imposed upon employers and alter the rights of employees, they certainly will affect the manner in which employers manage potential FMLA issues. 

For those employers that currently do not have an FMLA policy, now is the time to develop one.  Even for those employers that currently have an FMLA policy, it will be important to amend it to conform to the new regulations.  It is clear that an employer’s failure to comply with the requirements of the new regulations may expose the employer to significant liability.  Below are some of the more significant changes to the regulations:

• Covered employers now must post a general FMLA notice, even if they do not have any employees eligible for FMLA leave.

• Employers now must provide employees two types of notice when employees request FMLA leave: eligibility notice (either indicating that the employee is eligible for leave or explaining the reason the employee is not eligible) and designation notice (notifying the employee whether the leave will be designated and counted as FMLA leave as well as if paid leave will be required to be substituted for unpaid FMLA leave and if the employer will require a fitness-for-duty certification upon return from leave).

• Each time the eligibility notice is provided, employers now must provide employees a notice of rights and responsibilities detailing the expectations and obligations of the employee and explaining the consequences of a failure to meet these obligations.

• Eligible employees now are provided 12 weeks of unpaid leave for a qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on active duty (or has been notified of an impending call or order to active duty) in support of a contingency operation. 

• Eligible employees now may take unpaid leave, or substitute appropriate paid leave if the employee has earned or accrued it, for up to 26 workweeks in a single 12-month period to care for a covered servicemember with a serious injury or illness.

• Employers have additional time for requesting certification from a health care provider that the employee is suffering from a serious health condition.

• Employers may demand more detailed information from the employee’s health care provider before returning the employee to work.

• Employers may consider FMLA absences in determining bonuses and other incentive awards.

• New forms have been implemented to assist employers in providing FMLA leave, including forms for employee eligibility and rights and responsibilities, designation of leave, certification of qualifying exigency for military family leave, and certification of serious injury or illness of covered servicemember for military family leave. 

• There now are separate medical certification forms for an employee’s serious health condition and for a family member’s serious health condition.

• Employees now explicitly are permitted to settle past FMLA claims.
  

These topics represent only a fraction of the changes arising out of the new FMLA regulations.  For more information on the new FMLA regulations and how they may affect your operations, please contact one of the lawyers in the Labor Law and Employment Litigation Section of Freeman Mathis & Gary, LLP.

Additionally, to view the revised FMLA regulations and forms, please go to http://www.dol.gov/federalregister/pdfDisplay.aspx?docId=21763.

In a previous LawLine article, we reported on the Georgia Court of Appeals' decision in Austin v. Moreland, 288 Ga. App. 270, 653 S.E.2d 347 (2007).  Yesterday, the Supreme Court of Georgia unanimously reversed that decision.

Austin involved a medical malpractice claim where defense counsel had ex parte discussions with prior treating physicians of the plaintiff's deceased husband.  The Court of Appeals held that those discussions did not violate HIPAA because the plaintiff had produced her deceased husband's medical records containing protected health information (PHI), and defense counsel's discussions did not go beyond the content of those records.  Id. at 275, 653 S.E.2d at 351.  The Court of Appeals reasoned that O.C.G.A. § 9-11-34(c)(2), governing requests for production to non-party healthcare providers, afforded greater protection than HIPAA by requiring notice and opportunity for a plaintiff to object to a defendants' written discovery requests.  Id. at 274-75, 653 S.E.2d at 351.

The Supreme Court of Georgia, however, held that this "analysis misses the mark," as it focuses on the discoverability of PHI instead of on the method used to discover it:  "[S]ervice of a request for production of documents is insufficient because, although it gave plaintiff notice and an opportunity to object to the production of written documents, it did not give plaintiff an opportunity to object to the ex parte oral contact and the discovery of the physicians' recollections and mental impressions."  Moreland v. Austin, 2008 WL 4762052, at *2 -3 (Ga. Sup. Ct., Nov. 3, 2008).

Notwithstanding that a plaintiff waives his right to privacy for medical records relating to a medical condition he places in issue, the Supreme Court concluded that "HIPAA preempts Georgia law with regard to ex parte communications between defense counsel and plaintiff's prior treating physicians because HIPAA affords patients more control over their medical records when it comes to informal contacts between litigants and physicians."  Id. at *2-3.  The Supreme Court clarified that defense counsel may continue to have ex parte conversations with a plaintiff's healthcare providers about "benign" matters that do not relate to PHI, such as scheduling testimony.  Id. at *3.  If, however, defense counsel wants to discuss PHI with a plaintiff's healthcare provider, he "must first obtain a valid authorization, or a protective order, or ensure that the patient has been given notice and an opportunity to object to the ex parte contact, all in compliance with the requirements of HIPAA as set forth in 45 CFR § 164.512(e)."  Id.

Because HIPAA does not authorize a remedy or penalty for violating its edicts in the context of a civil lawsuit, the Supreme Court noted that it will be left up to trial courts, in the exercise of their broad discretion under O.C.G.A. § 9-11-37, to fashion an appropriate remedy for HIPAA violations.  Id. at *4.  Those remedies, of course, range in severity from a slap on the wrist to striking a defendant's answer.

The Americans with Disabilities Act (“ADA”) is about to undergo a major change. Last week, Congress passed the ADA Amendments Act of 2008 (“ADAAA”), which will overturn two prior Supreme Court cases and dramatically increase the scope of employees covered by the ADA. President Bush is expected to sign the bill into law this week, and the new legislation will take effect on January 1, 2009. For access to the text of the ADAA, click here.

Generally, to be entitled to protection under the ADA, an individual must show that he has a “physical or mental impairment that substantially limits a major life activity.” In two prior cases, the Supreme Court narrowed the scope of this definition. The ADAA rejects these cases, however, and states that the term “disability” is to be “construed broadly” to cover more physical and mental impairments.

In Sutton v. United Airlines, Inc., 527 U.S. 471 (1999), the Court held that, if a person takes measures to correct or mitigate a physical or mental impairment, the effects of those measures must be considered when determining whether that person is “substantially limited” in a major life activity. Over the past decade, this has limited the number of viable claims under the ADA because, for instance, whether an individual with seizures was disabled depended on his condition while taking medication to control his seizures. The ADAAA overturns this ruling, however, by stating that future decisions of whether an individual has a disability must be made without regard to the effects of corrective devices or medications. The only exception is that the impact of ordinary eye glasses and contacts still may be considered with respect to one’s vision.

In Toyota Motor Manufacturing, Kentucky, Inc. v. Williams, 534 U.S. 184 (2002), the Supreme Court also narrowed the scope of the ADA by holding that, to be substantially limited in performing manual tasks, an individual must have an impairment that “prevents or severely restricts” him from doing activities of “central importance to most people’s daily lives.” The Court also held that the restrictions must be permanent or long-term. Under the ADAAA, this is no longer the case. The statute now says the term “substantially limits” must be construed broadly, and that an individual may disabled even if the effects of his impairment are “episodic, in remission, or latent.”

Other ramifications of the ADAAA include additional examples of major life activities (related to communication, working, and concentration) and the inclusion of bodily functions, such as digestive and reproductive functions, to the list of “major life activities.” The ADAAA also authorizes the EEOC to issue new regulations further explaining the scope of these changes. Although the regulations are not expected until late 2009, it is clear that more physical and mental impairments will be covered by the ADA, meaning that employers can expect increased litigation and greater scrutiny of their obligations to accommodate employees in the workplace.

Under the Fair and Accurate Credit Transactions Act of 2003 (“FACTA”), which amended the Fair Credit Reporting Act and went into full effect in December 2006, retailers are permitted to show only the last five digits of the credit or debit card number on a printed receipt and may not show any portion of the card’s expiration date. 15 U.S.C. § 1681c(g). Recently, plaintiff’s attorneys have brought a wave of devastating litigation against retailers who provide electronic credit card and debit card receipts to consumers without properly truncating the card number or expiration date on the printed receipt in violation of FACTA.

Retailers who fail to comply with FACTA risk a class action lawsuit and potential damages that could cripple almost any business. In this regard, negligent failure to comply with the statute may result in liability for a customer’s actual damages and attorney fees. 15 U.S.C § 1681o. Retailers risk much harsher penalties, however, for willful failure to comply with the statute. Such conduct may result in liability for actual damages, punitive damages, attorney’s fees, and statutory fines of up to $1,000 per violation. 15 U.S.C. § 1681n.

Although some federal courts recently have ruled that FACTA’s truncation requirements are unconstitutional, until the law is settled in this area, retailers should become familiar with these requirements and ensure that they do not provide full credit or debit card numbers or expiration dates on receipts to customers.