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Posts Tagged ‘negligent conduct’

California Court Rules That Payroll Companies Are Not Liable For Employer’s Wage And Hour Violations

Posted on: April 25th, 2019

By: Michael Shepherd

The California Supreme Court recently provided clarity to payroll companies in Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817. In Goonewardene, Plaintiff alleged claims of negligence and negligent misrepresentation against a payroll company based on wages due that the plaintiff claimed were not paid. The Court refused to impose a tort duty upon payroll companies, and emphasized five reasons for its decision:

First, the Court reasoned that California law already provides employees with a full and complete remedy for any wage loss an employee sustains as a result of the payroll company’s negligent conduct; an employee is entitled to recover in a civil action against the employer the full wages and other significant remedies authorized under the labor statutes.

Second, the Court reasoned that imposing tort liability on a payroll company is not necessary to deter negligent conduct because the payroll company is already obligated under its contract with an employer to comply with labor statutes and wage orders. Consequently, a payroll company would already be subject to liability for breach of its contract with the employer and tort liability would not appreciably increase the incentive for payroll companies to refrain from negligent behavior.

Third, payroll companies have no special relationship with an employer’s employees that would warrant the imposition of a duty of care.

Fourth, the Court reasoned that imposing a duty of care on payroll companies could distort the payroll company’s performance of its contractual obligations. The Court expressed the concern that where the meaning or scope of a labor statute or wage order is ambiguous or uncertain, a tort duty of care to an employee could adversely affect the payroll company’s fulfillment of its contractual obligations to the employer. The potential of greater tort liability may induce the payroll company to place the employee’s interest above those of the employer, to whom the payroll company has a contractual obligation.

Finally, the Court reasoned that imposing a tort duty of care on payroll companies would add an unnecessary and potentially burdensome complication to California’s increasing volume of wage and hour litigation. If a tort duty were imposed, then payroll companies would likely be joined as an additional party in every wage and hour lawsuit. The Court did not find such an increased burden was justified given that an employee can obtain a full recovery for his or her economic loss in a wage and hour action against an employer alone.

Thus, while the Court made clear that payroll companies can be liable to employers if they breach their contractual obligations, they cannot be sued by employees in tort for an employer’s obligations under California’s wage and hour laws.

For any questions, please contact Michael Shepherd at [email protected].

Murphy’s Law and The Exception to Georgia’s Impact Rule

Posted on: September 17th, 2018

By: Jason Kamp

Claims for negligent infliction of emotional distress are limited by the Impact Rule in Georgia.  In a recent attempt to keep the sole exception from swallowing the Impact Rule, the Supreme Court of Georgia may have done exactly what it sought to prevent.

The Impact Rule states: “In a claim concerning negligent conduct, a recovery for emotional distress is allowed only where there is some impact on the plaintiff, and that impact must be a physical injury.”  Lee v. State Farm Mut. Ins. Co. et al., 272 Ga. 583, 584 (2000).

The Impact Rule has one exception for the death of a child:

When, as here, a parent and child sustain a direct physical impact and physical injuries through the negligence of another, and the child dies as the result of such negligence, the parent may attempt to recover for serious emotional distress from witnessing the child’s suffering and death without regard to whether the emotional trauma arises out of the physical injury to the parent.

Lee v. State Farm Mut. Ins. Co. et al., 272 Ga. 583, 588 (2000).

The Supreme Court of Georgia recently decided a case concerning the exception to the Impact Rule for the death of a child.  In Coon v. Med. Ctr., Inc., the plaintiff learned during a routine prenatal examination that her unborn baby no longer had a heartbeat. Coon v. Med. Ctr., Inc., 300 Ga. 722, 723 (2017). After labor was induced, the plaintiff’s stillborn child was mixed up with another stillborn at the hospital.  Id. at 724.  The hospital then released the wrong remains to the plaintiff and her family, who unknowingly held services and buried the wrong remains as a result.  Id.  The hospital later realized its mistake and informed the plaintiff.  Id. at 725.  A claim for negligent infliction of emotional harm under the exception followed.

The Supreme Court of Georgia declined to extend the exception, reasoning, “[the plaintiff] did not suffer any physical impact that resulted in physical injury from the hospital’s negligent mishandling of her stillborn child’s remains, nor did the child suffer any physical impact or injury.” Id. at 734-735.

By focusing on the impact element, the Supreme Court implicitly assumed the answer to a threshold question: whether an unborn child is a child capable of dying under the exception.  The court’s reasoning appears to open the exception to all tort cases with a physical impact that results in a failed pregnancy.  This could result in a growth in negligent infliction of emotional distress claims in bodily injury and medical malpractice cases.

Before Coon, the exception to the impact rule assumed the dead child had already been born.  After Coon, that assumption is either gone or open to question.  In its attempt to limit the exception, the Supreme Court of Georgia incidentally expanded it to include a debate on when life begins.  At the end of the Coon opinion, the court remarked, “If we do not insist on a workable limiting principle as a prerequisite to recognition of new exceptions to the physical impact rule, the exceptions will soon will soon swallow the rule.”  Id. at 735.  Unfortunately, Murphy’s Law knows no exceptions.

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