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FMG Law Blog Line

Archive for March, 2019

EEO-1 Pay and Hours Data Requirement In Limbo

Posted on: March 21st, 2019

By: Brent Bean

Whether and when covered businesses have to comply with revised EEO-1 requirements for pay and hours worked data remains uncertain as the reporting period opens. Companies with 100 or more employees, along with federal contractors who employ 50 or more employees, are required to submit to the EEOC annual Employer Information Reports, so-called EEO-1 reports. These reports disclose information concerning the number of employees a company employs broken down by job category, race, sex, and ethnicity. In 2016 the EEOC requested approval from the Office of Management and Budget to begin collecting pay and hours worked data. The ostensible aim of these additions was to generate data from which the Commission could begin to identify pay disparities and potential discriminatory practices.

In August 2017 OMB announced a stay of these new collection requirements due to the burden imposed on businesses when weighed against the perceived utility of the data. In response, the National Women’s Law Center brought suit in the District Court for Washington, D.C., challenging the OMB’s basis for taking that action. On March 4 of this year, that court issued an opinion reinstating the pay and work hours reporting requirement, finding the OMB had acted arbitrarily and capriciously in eliminating the requirement. See National Women’s Law Center v. Office of Management and Budget, 2019 U.S. Dist. LEXIS 33828 (D.D.C. Mar. 4, 2019).

EEO-1 reports for 2018 however, are due between March 18 and May 31. Accordingly, this recent ruling and putative change in reporting requirements raise some significant concerns about the practical ability of employers to comply on such short notice. The EEOC’s portal for EEO-1 reports opened on Monday, March 18 without any reference to pay and hours worked data. The Commission stated that it is working diligently on complying with the court’s order and further information regarding pay and hours worked reporting would follow.

While it is expected that the OMB will appeal the District court’s ruling, it is not clear at all whether that appeal will cause a stay of the reporting requirement for pay and hours information for 2018.

So questions remain: will employers have to provide this information in their 2018 reports and if so, when?

At a status conference on March 19, the District Court Judge issued an order that the Commission must explain by April 3 how it will implement the March 4 Order reinstating the collection of pay data. As such, we can expect some additional information from the Commission by then, as well as perhaps a notice of appeal from OMB.

FMG will keep you updated on activity by the Commission and the Courts. But employers should prepare now with a thorough review of their pay structures in order to identify not only any disparities that may raise red flags and draw increased scrutiny, but also to understand what legitimate, non-discriminatory reasons exist for their present pay practices.

If you have any questions or would like more information, please contact Brent Bean at [email protected].

Watch for the Sucker Punch… Joint and Several Liability for Professional Negligence?

Posted on: March 20th, 2019

By: Jon Tisdale

Litigants are forever looking for new ways to blame their lawyers when their mediocre case goes south. (As an aside, pay close attention to your intake protocol and “just say no” to those mediocre cases, because when they go bad, so will your relationship with your former client.) So, why is this a special problem for lawyers?

Like most states, California draws a bright line between economic and non-economic damages. In an effort to keep underinsured deadbeats from stiffing tort victims, California has enacted a statute with the stated economic impact being to hold “deep pocket” defendants (yes, the statute actually employs that disgraceful terminology) responsible jointly and severally for economic damages so as to not deprive an innocent victim of recovery of their medical bills, without regard to apportionment of fault. Non-economic damages (for “pain and suffering,” the so-called pot o’ gold at the end of the rainbow) remain collectible only to the extent of an actual apportionment of negligence by the trier of fact. This legislative enactment was, at least in California, aimed at the damages recoverable as a result of countless personal injury actions arising from car accidents. But wait… the statute applies to TORT actions… which means that it also applies, apparently unwittingly, to Professional Negligence actions.

California Jury Instructions (CACI) attempt to clearly define economic versus non-economic damages. Economic damages are verifiable, out-of-pocket monetary losses. Non-economic damages are the pie-in-the-sky general damages for physical pain, mental suffering and emotional distress that lead to the “Stella Award” type of verdicts. But that’s typically not the danger of professional negligence actions. CACI clearly instructs jurors that: “you will be asked on the Verdict Form to state the two categories of damages separately” (which is a legislative proclamation that if a trial judge permits a verdict form that does not require segregation of economic and non-economic damages, it will in fact be reversible error).

Why is this dangerous in professional negligence cases? Because, generally speaking, in cases involving the tort of professional negligence virtually all of the damages are economic! Professional negligence cases have a nominal “emotional distress” element to them, but the meat and potatoes of the tort is WHAT DID YOUR NEGLIGENCE COST ME OUT OF POCKET? It is not so much about how did it make the litigant feel, but how much did it cost them.

Increasingly we see cases in which litigants with less than clearly meritorious cases change lawyers mid-case, sometimes more than once. If it goes south, they are going to sue everyone. This is the danger that you need to be alerted to and cognizant of. You could be defending a lawyer who was just one of several lawyers in the chain of representation and who did seemingly nothing wrong.  But if the economic damages are millions of dollars and your client is found 1% at fault… he/she has joint and several liability for the full amount of the economic damages! More than a little scary…

If you have any questions or would like more information, please contact Jon Tisdale at [email protected].

DOL Guidance Says Employers Cannot Exhaust Paid Leave Prior to Beginning Employee’s FMLA Leave

Posted on: March 18th, 2019

By: Brent Bean

The U.S. Department of Labor issued an opinion letter on March 14, 2019, re-affirming its view that employers must start the clock on an employee’s FMLA leave when the employer first learns the absence qualifies as a serious health condition under the FMLA.

The Opinion Letter specifically addressed the question of whether an employer can delay the designation of FMLA leave until after an employee first uses any paid leave the employee has accrued. Answering this question, the DOL emphasized that, once an employer has enough information to conclude that the leave is covered by the FMLA, it must designate such leave with 5 days. In issuing its answer, the DOL made clear that, even if an employee desires to delay the designation of FMLA leave so it can first use accrued paid leave, the employer is not permitted to do so.

Rather, as the Labor & Employment Group at FMG has long emphasized to our clients, if an employee has accrued paid leave, it should simply count any paid leave against the FMLA 12-week entitlement (in other words, simultaneous exhaustion of paid leave and FMLA leave). For instance, if an employee has 6 weeks of paid sick leave and wants to take 10 weeks of FMLA leave, the first 6 weeks of the FMLA leave will be paid and the remaining 4 weeks will be unpaid. When the employee returns from the 10 weeks of FMLA leave, the employee, having used his/her 6 weeks during FMLA leave, will have no more paid sick leave until the employee begins to accrue new paid sick leave time.

Not only does the DOL’s Opinion Letter reiterate that FMLA leave will always run from the date the employer learns the leave qualifies, it also clarifies the DOL’s position with respect to a 2014 Ninth Circuit opinion that permitted an employer to decline FMLA leave in favor of paid time off.  See Escriba v. Foster Poultry Farms, 743 F.3d 1236 (9th Cir., 2014).

In Escriba, the plaintiff requested leave to help her ill father in Guatemala. And when she asked for leave, she specifically requested that she be allowed to use vacation time instead of FMLA leave time for her trip. She then left for Guatemala but didn’t contact the company again until 16 days after she said she would return. When she returned, her employer notified her that it had terminated her as she had violated its three-day no-call, no-show rule. After she was fired, the plaintiff filed a lawsuit claiming FMLA interference, saying that informing her supervisors about her father’s illness should have triggered FMLA protection. The court held that the employee can delay the use of FMLA leave by opting instead to first use paid leave (even if the leave is related to an FMLA-qualifying condition).

The DOL Guidance provides that the rule in Escriba would no longer apply. Employers must designate FMLA leave once they have enough information to conclude the leave is covered and, if the employee desires to use some other form of paid leave, that leave would run concurrently.

If you have any questions or would like more information, please contact Brent Bean at [email protected].

Who Did What for Whom? Construction Lien Rights in Georgia Depend on the Contractor, Not the Cost

Posted on: March 18th, 2019

By: Jason Kamp

In 2013, the Georgia General Assembly expanded the scope of items covered under its construction lien statute, O.C.G.A. § 44-14-361, by amending subsections (c) and (d). The statute now allows contractors to claim liens for contract expenditures for general conditions or other costs that are not strictly for labor, services, or materials that become part of the property as traditionally required. For example, a general contractor can now claim a lien for insurance, security, or cleaning costs or interest owed on the principal amount due under its construction contract.

Importantly, the expansion of the type of costs entitled to lien rights does not translate into an expansion of the type of contractors entitled to lien rights. The expanded lien rights still depend on whether the contractor at issue fits into one of the nine categories laid out under subsection (a) of the statute. To illustrate, a general contractor can now claim a lien on costs for providing security services on site under its contract, because it furnishes other materials and services for the improvement of real estate under (a). However, a security services contractor is not entitled to a lien on the costs for providing security services on a construction site, because it does not fit within any of the (a) categories.

It is easy to see how Georgia’s expansion of lien rights to non-traditional costs may blur the distinction between actor and act in practice. Additional attention to “who did what for whom” may be warranted when undertaking lien waivers, organizing contractor relationships, or other activities touching on lien rights as a result.

If you have any questions or would like more information, please contact Jason Kamp at [email protected].

Georgia Supreme Court Clarifies the Essential Elements of a Failure to Settle Claim within Policy Limits

Posted on: March 18th, 2019

By: Phil Savrin

In recent years, Georgia has become fertile ground for setting up insurance companies for extra-contractual damages based on the failure to settle a liability claim within policy limits. Partly, the reason for this reputation is that the “ordinary negligence” standard governs these types of claims and there is broad language in the cases that a jury must generally resolve the reasonableness of the insurer’s decision not to settle the claim at issue. Of course, by the time the claim even exists there will have been a judgment entered in the liability case in excess of the limits of the policy, making it difficult to tease through the chronology of the case without the benefit of 20-20 hindsight. The challenge in defending these types of claims is often reconstructing the “lay of the land’ at the time the decision was made without the judge or jury focusing on what occurred or developed thereafter.

In 2003, the Supreme Court issued its decision in Cotton States Insurance Company v. Brightman, whose main holding is that an insurer can avoid a “failure to settle” claim altogether by tendering its limits even if the demand is conditioned on payments by other insurers over whom it has no control. A lesser known holding of Brightman, however, is its rejection of the intermediate appellate court’s holding that an insurer has an “affirmative duty” to engage in negotiations to determine whether the case can be settled within limits. Although implicit in this reasoning is that a demand for limits needs to have been made, subsequent case law has muddied the waters by suggesting that all that needs to be shown is that there was a “reasonable opportunity” for settlement within limits to state a claim for failure to settle within limits.  And because an ordinary negligence standard applies, insurers have had to defend against assertions – often backed up by expert witnesses – as to whether the insurer knew or should have known that the case could settle within the limits of coverage even in the absence of a demand.

The Supreme Court put an end to that uncertainty in First Acceptance Insurance Company of Georgia, Inc. v. Hughes, decided March 11, 2019. In a very powerful decision, the justices stated succinctly that “an insurer’s duty to settle arises when the injured party presents a valid offer to settle within the insured’s policy limits.” From that short holding it was relatively simple to find that First Acceptance could not be liable for the $5.3 million judgment because there had not been a valid time-limited demand for the policy limits of only $25,000.

Essentially, the holding of the case is that the burden is squarely on the injured party to make clear to the insurer that the liability claim against the insured can be resolved within the coverage of the policy. Although not stated expressly in the opinion, this holding makes sense given that the injured party is the only one (as opposed to the insurer or the insured) who knows at the time whether the case will settle within limits. Likewise, the effect of the decision is that the injured party must put its cards on the table in terms of its willingness to settle and not be allowed to reap rewards from keeping the insurance company in the dark as to the ability to settle within limits. In that manner, the decision restores a degree of sanity to the adjudication of these disputes by restricting the exposure to instances in which the insurance company has rejected a clear demand for settlement within its limits, with the remaining issue being whether the insurer acted reasonably considering all the circumstances that existed at that time.

If you have any questions or would like more information, please contact Phil Savrin at [email protected].