Written By: Kyla Block

When Plaintiffs are injured at work under circumstances which raise the question of whether the precipitating activity was “in furtherance of” versus “incidental to” the job duties assigned and the employer’s interest, the North Carolina Courts will look closely at the nature of the activity and the behavior immediately prior to the incident to determine whether the injury arose out of and in the course of employment. If the underlying facts prevent a clear determination and application of the relevant law, the Court of Appeals will remand for further clarification. In a recent decision,Weaver v. Dedmon, the Court of Appeals did just that, ultimately remanding the case to the Full Commission for clarity on whether Plaintiff was in the actual performance of a direct job duty or whether he was performing an incidental activity, and whether this incidental activity constituted a reasonable action.

In Weaver, Plaintiff was employed as a fence builder and was required to regularly operate a forklift and move fencing supplies around the outdoor storage yard. Plaintiff testified that on the date of injury, he had just finished unloading supplies with the forklift and was about to return the forklift to the warehouse when he turned the forklift too quickly and it overturned. However, a witness approximately 350 feet from Plaintiff testified he heard the loud noise of equipment “running at a high throttle” and saw Plaintiff doing “donuts” with the forklift just prior to the accident. The witness saw no work materials and “there was no indication that there was any work being done.” Plaintiff sustained a crush injury, closed head injury, multiple fractures, liver and renal lacerations, splenic injury and cardiac arrest. The Defendants denied the claim and asserted that Plaintiff had not sustained an injury by accident or specific traumatic event arising out of and during the course and scope of his employment.

Following a hearing, the deputy commissioner entered an Opinion and Award denying Plaintiff’s claim in its entirety and the Plaintiff appealed to the Full Commission.

The Full Commission affirmed the deputy commissioner’s Opinion and Award, finding the witness’ testimony credible because the witness was an unbiased, disinterested eyewitness of the events immediately preceding the accident. The Commission also found credible testimony by an accident reconstruction expert that photos of the tire impressions at the scene of the accident were consistent with the forklift having been driven in tight circles. The Commission concluded that Plaintiff was “operating the forklift at such a speed to cause it to rollover,” he was “joyriding” or “thrill seeking” when the accident occurred, and this activity bore no relationship to accomplishment of the duty for which Plaintiff was hired. The Commission further concluded that “to the extent Plaintiff may have initially performed some work-related tasks with the forklift, his decision to do donuts . . . was too remote from customary usage and reasonable practice and constituted an extraordinary deviation from his employment.”

Plaintiff appealed to the Court of Appeals.

In remanding the matter back to the Full Commission for reconsideration of whether Plaintiff’s injuries arose out of and in the course of his employment, the Court of Appeals determined the Commission’s conclusions regarding the lack of relationship between Plaintiff’s activity on the forklift to the accomplishment of his employment duties and the proposition that Plaintiff may have initially been performing some work-related tasks with the forklift were findings of fact, not conclusions of law, as these determinations were reached through logical reasoning from the evidentiary facts.  The Court further concluded that the factual findings – one stating Plaintiff’s action of performing “donuts” bore no relation to his job duties and the other stating that Plaintiff may have initially performed some work-related tasks with the forklift – were inconsistent with each other and precluded the Court from determining whether the Commission’s findings supported the legal conclusion that Plaintiff’s operation of the forklift removed him from the scope of employment. Specifically, the Court found the Commission’s finding that Plaintiff “may have initially performed some work-related tasks with the forklift” undermined the Commission’s conclusion that the injury did not arise out of and in the course of employment. On remand for redetermination by the Commission, the Court directed the Commission to reexamine whether it found Plaintiff’s testimony that he was returning the forklift to the warehouse after using it for work purposes credible and what impact that finding would have the conclusion that “Plaintiff operated the forklift preceding his injury [in a manner that] was unreasonable and reckless, in essence joy riding and/or thrill seeking.” The Court specifically sought clarity on whether Plaintiff was operating the forklift in furtherance of – or incidental to – his job duties and his employer’s interest, as that would determine whether the work-related activity would be characterized as “actual performance of the direct duties of the job activities” or as “incidental activities” and would direct the Court to follow evolved precedent for each characterization. 

Judge Tyson dissented and argued that since the Commission found that Plaintiff “may” have been initially engaged in a work-related task at the time of the accident, the majority’s opinion asserting that the Commission’s findings failed to support the conclusion that Plaintiff’s injuries did not arise out of and in the course of his employment “unduly parses the Commission’s findings and conclusions” and fails to apply the plain and ordinary meanings of the Commission’s words. He further argued whether Plaintiff initially performed work-related activities was inconsequential because the employee carried the burden of proving a causal connection between the employment and the injury and in this case, the Commission found that Plaintiff’s joyriding or thrill seeking ultimately broke the causal connection between Plaintiff’s employment and his injuries. Thus, the Commission’s Opinion and Award denying Plaintiff compensation was consistent with precedent, supported by competent evidence, and should have been affirmed.

Given this attention to detail at the Court of Appeals, all parties defending these types of claims need to clearly delineate arguments at the Commission level which demonstrate a succinct break between the actual performance of the direct duties of the job activities and incidental activities which can be shown to be unreasonable. 

On May 19, 2017, the Alabama Supreme Court released its opinion in SSC Selma Operating Company, LLC, d/b/a Warren Manor Health & Rehabilitation Center and SavaSeniorCare Administrative Services, LLC v. Jackie Fikes in which it reversed the trial judge’s order denying the employer’s motion to compel arbitration of a retaliatory discharge claim brought pursuant to §25-5-11.1.

On appeal the Court noted that there was no question as to whether or not the employment dispute resolution program (hereinafter EDR Program), was valid and that the parties had agreed to be bound by it. However, the issue on appeal was whether or not the language in the EDR Program that stated disputes not covered under the EDR Program include claims that relate to workers’ compensation...would also exclude a retaliatory discharge claim filed pursuant to §25-5-11.1 of the Alabama Workers’ Compensation Act. §25-5-11.1 specifically states that an employee cannot be terminated solely for bringing a workers’ compensation claim. On appeal the employer stated that the EDR Program specifically stated that it covered employment matters related to termination, discrimination, retaliation and harassment and other legally protected rights. The employer acknowledged that the EDR Program specifically stated that disputes not covered under the program are ones that relate to workers’ compensation, unemployment benefits, health, welfare and retirement benefits and claims by companies for injunctive relief to protect trade secrets and confidential information.

On appeal, the employee relied solely on the provision that stated claims related to workers’ compensation are not covered under the EDR Program and argued that the language was plain and unambiguous and, therefore, the discharge claim pursuant to §25-5-11.1 should be excluded from the EDR Program. However, the employer argued that, while the Alabama Workers’ Compensation Act gives rise to the discharge claim, that the retaliatory discharge claim pursuant to §25-5-11.1 is not a claim in the nature of a workers’ compensation claim and is actually a tort claim that was clearly intended to be included in the EDR Program requiring arbitration. In its opinion, the Supreme Court stated that it was apparent from the language in the EDR Program that the intent of the program was to submit to arbitration those employment related disputes where the plaintiff would ordinarily be entitled to have resolved by a jury, specifically noting claims arising from tort law and not claims governed by specific statues such as the Workers’ Compensation Act. The Court specifically stated that while a discharge claim pursuant to §25-5-11.1 arises out of the workers’ compensation factual setting, the claim is never the less a tort action and governed by general tort law. This includes the ability to recover damages for mental anguish and lost wages. The Court noted that while there are claims that relate to workers’ compensation laws, that those claims are generally for occupational disease and accident injuries as opposed to claims alleging retaliatory discharge. They also pointed out that the two claims, a workers’ compensation claim and tort claim (retaliatory discharge claim), are mutually exclusive.

In conclusion, the Supreme Court stated that the trial court erred in denying the employer’s Motion to Compel Arbitration of the employee’s retaliatory discharge claim since it was the clear intent of the EDR Program to have employment related disputes such as a retaliatory discharge claim brought pursuant §25-5-11.1, resolved by arbitration as opposed to a jury trial. Therefore, the Court held that the employee’s retaliatory discharge claim was not “related to” disputes concerning workers’ compensation laws, which are governed by the Workers’ Compensation Act, and are instead governed by the general rules of tort law.

ABOUT THE AUTHOR                

This article was written by Joshua G. Holden, Esq., a member of Fish, Nelson & Holden, LLC, a law firm dedicated to representing employers, self-insured employers and insurance carriers in worker’s compensation and related liability matters. Mr. Holden is AV rated by Martindale-Hubbell, which is the highest rating an attorney can receive. Holden and his firm are members of the National Worker’s Compensation Defense Network (NWCDN). The NWCDN is a national network of reputable law firms organized to provide employers and insurers access to the highest quality of representation in workers’ compensation and related employer liability fields. If you have any questions about this submission or Alabama workers’ compensation in general, please contact Mr. Holden by emailing him at jholden@fishnelson.com or calling him directly at 205-332-1428.

By: Courtney Britt

In recent years, attendant care provided under North Carolina’s Workers’ Compensation Act has gotten quite a bit of attention in the appellate courts and at the General Assembly.  In particular, the Court of Appeals’ 2011 decision inShackleton v. Southern Flooring & Acoustical Company presented a challenge for employers.  Reversing the Commission’s denial of an attendant care claim by the injured worker’s spouse,Shackleton adopted a “flexible case-by-case approach,” which allowed the Commission to consider a wide variety of evidence, including: “a prescription or report of a healthcare provider; the testimony or a statement of a physician, nurse, or life care planner; the testimony of the claimant or the claimant’s family member; or the very nature of the injury.”

Shackleton was seen as a departure from existing case law because attendant care claims could be proven with only the testimony of the claimant or the claimant’s family, or the nature of the injury itself.  The decision also suggested that there was no time limit on when attendant care services could be requested, causing concern for significant retroactive attendant care awards.  Partly in response toShackleton, the General Assembly revised N.C.G.S. § 97-2 (19) in 2011 to require that attendant care be, “prescribed by a health care provider authorized by the employer or subsequently by the Commission[.]” This revision was intended to put more parameters on when attendant care is provided, by requiring a prescription.

Recent decisions by the Court of Appeals, in Thompson v. International Paper Co. andReed v. Carolina Holdings, Wolseley Mgmt., reveal how the courts may treat attendant care going forward, but leave many questions for employers. 

On February 23, 2012, Darrell Thompson suffered severe burns at work, required three major skin graft surgeries and received treatment at the UNC Burn Center.  Mr. Thompson’s doctor testified following a hearing that Mr. Thompson would require some level of attendant care the rest of his life, but confirmed that he had never written a prescription for attendant care.  Instead, the doctor testified that he left these decisions to the hospital social worker who wrote that Ms. Thompson would provide Mr. Thompson’s “attendant and wound care.” 

Ms. Thompson was awarded attendant care services by the Deputy Commissioner, and the Full Commission affirmed, but terminated attendant care services in 2012.  On January 17, 2017, inThompson v. International Paper Co., the Court of Appeals reversed the termination of attendant care, holding that a written prescription for attendant care services is not required under N.C.G.S. § 97-2(19) and a verbal prescription can suffice.  The Court acknowledged the Commission cannot rely solely on lay testimony to award for attendant care, but concluded that Mr. Thompson’s social worker’s letter was a “written expression” of his physician’s verbal directive for attendant care. 

Christopher Reed sustained a traumatic brain injury in 1998, which Defendants accepted as compensable.  On March 18, 2011, Mr. Reed filed a hearing request seeking attendant care.  Based on lay and medical testimony, the Deputy Commissioner awarded attendant care reimbursement to Mr. Reed’s mother from the date of injury to present and ongoing. 

The Full Commission denied Mr. Reed’s request for attendant care before the hearing request, because he did not seek approval of attendant care services or provide defendants with notice of this request until the hearing request.  Attendant care was awarded from March 18, 2011, and ongoing. 

On February 7, 2017, in Reed v. Carolina Holdings, Wolseley Mgmt., the Court of Appeals affirmed, relying on hearing testimony by Mr. Reed’s mother and post-hearing deposition testimony by Mr. Reed’s doctor.  The Court citedShackleton, stating the Commission can rely on, “a prescription or report of a healthcare provider; the testimony or a statement of a physician, nurse, or life care planner; the testimony of the claimant or the claimant’s family member; or the very nature of the injury[,]” when awarding attendant care.”

Thompson and Reed demonstrate the tension between the 2011 reforms to § 97-2 (19) and the Court of Appeals’ prior decision inShackleton.  Thompson acknowledges that § 97-2 (19) rejects the flexible case-by-case approach announced inShackleton. However, in Reed, the Court did not discuss and it does not appear the parties argued that § 97-2 (19) changes the law.  Also, both cases suggest that a written prescription is not necessary for attendant care and that the Commission may rely on lay and physician testimony to establish that ongoing attendant care is necessary. 

Until the appellate courts clarify the application of § 97-2 (19), employers and insurers will continue to face uncertainty.  Where attendant care issues arise, or are anticipated, employers should consult with defense counsel to proactively develop strategies to reasonably resolve these issues.   

A few days ago, we reported on the recent case of Nora Clower v. CVS Caremark, in which the Circuit Court of Jefferson County entered an order declaring The Alabama Workers’ Compensation Act unconstitutional. My initial knee-jerk reaction, like the reaction of many others, was that it would have state-wide implications on workers’ compensation law in Alabama. The sky was falling, and the workers’ compensation system as we know it just came to a screeching halt. However, spending a lot of time pouring over the order, the background of the case, and applicable Alabama law, I now have amuch different take on it.

For starters, I think it’s important to give a little more of the relevant background of the case. Clower filed her Complaint on November 20, 2013. In her Complaint, she alleged only a workers’ compensation claim arising out of an alleged accident occurring in and arising out of her employment with CVS on June 30, 2013. Clower did not allege any tort claims against CVS in her original Complaint, and she did not subsequently amend her Complaint to add any other claims against CVS. This is significant, because, ostensibly, if The Alabama Workers’ Compensation Act were to be struck down, the exclusivity provisions of the Act would go down with it.

Next, it’s important to understand that the Court’s May 8, 2017 order declaring the Act unconstitutional did not just come out of the clear blue sky. That order was the Court’s ruling on Clower’s "Motion for Relief: Constitutional Challenge to Two Statutes". Clower filed that motion on January 31, 2017, and CVS filed its response to that motion on February 10, 2017. When Clower filed her motion, she directed it to be served upon Alabama Attorney General Luther Strange, who was at that time serving his final days as the A.G. The Alabama Declaratory Judgment Act requires, among other things, that when the constitutionality of a statute is challenged, the Attorney General must be served with the pleading which raises the challenge, so that he has an opportunity to defend the statute in question.

As you may recall, then-Senator Jeff Sessions was nominated for the position of United States Attorney General by President-elect Donald Trump shortly after the November election. Senate Judiciary Committee hearings on Sessions’ nomination began on January 10, 2017, and Sessions was confirmed on February 8, 2017. Of course Sessions had to immediately resign his Senate seat, and none other than Attorney General Luther Strange was then appointed to take Sessions’ place, on February 9, 2017, thus leaving the Alabama Attorney General position temporarily vacant. Three days later, Steve Marshall was sworn in as the new Alabama Attorney General. Needless to say, there wasjust a little bit of chaos at the Alabama Attorney General’s office between the time Clower filed her motion on January 31 and April 25, when Marshall was finally served with Clower’s motion.

The most important factor in the ultimate implications of the Circuit Court’s decision, however, lies in Alabama Code § 6-6-227. That section, which is part of the Alabama Declaratory Judgment Act, provides in its pertinent part:

"All persons shall be made parties who have, or claim, any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceeding..."

In other words, when a party is seeking a declaration of law, such as a declaration by the court that a particular statute is unconstitutional, everyone whose interests would be affected by the declaration must be made a party. In the event that doesn’t happen, the declaration shall not prejudice the rights of anyone who is not a party to the action. InGuy v. Southwest Alabama Council on Alcoholism, 475 So.2d 1190 (Ala.Civ.App. 1985), the Alabama Court of Appeals held that when a party challenges the constitutionality of any provision of The Alabama Workers’ Compensation Act, the provisions of The Alabama Declaratory Judgment Act are triggered. That means that Clower’s motion triggered § 6-6-227. Yet, the only parties to the action are Clower and CVS Caremark. Yes, Steve Marshall was served with the motion, and yes Marshall declined to defend the Act (whether that was due to the curious timing of the motion, or some other reason). However, that does not change the fact that the only parties that would be affected by the Circuit Court’s recent ruling are Clower and CVS Caremark. In any other court, in any other county, involving any other parties, The Alabama Workers’ Compensation Act is still constitutional. The only way that would ever change isif CVS appeals the Circuit Court’s ruling, and the appellate court(s) affirm the Circuit Court.

It may seem like a foregone conclusion that CVS will appeal. I mean, surely CVS Caremark will appeal to avoid the possibility of facing tort liability, right? They may not. Since Clower only alleged a workers’ compensation claim, she would have to amend her Complaint in order to sue CVS in tort. The problem for Clower though, is that every conceivable statute of limitations for any tort claims against CVS have long since expired. If she ever had a viable tort claim against CVS, she can no longer bring such a claim, because it would be time-barred. Additionally, it is possible that Clower could now be judicially estopped from arguing that she is entitled to workers’ compensation benefits. In other words, if the Circuit Court’s order becomes final and is never overturned by the Court of Appeals or Supreme Court, Clower could conceivably recovernothing from CVS.

Whether you believe CVS will appeal or not appeal, it should be interesting to see how this plays out in the next 4 months.

About the Author

This article was written by Charley M. Drummond, Esq. of Fish Nelson & Holden, LLC. Fish Nelson & Holden is a law firm located in Birmingham, Alabama dedicated to representing employers, self-insured employers, and insurance carriers in workers’ compensation cases and related liability matters. Drummond and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields. If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at cdrummond@fishnelson.com or (205) 332-3414.

TO MISCLASSIFY OR NOT TO?

By Jeffrey D. Snyder, Esquire

The Commonwealth Court’s Decision in Department of Labor and Industry, Uninsured Employers Guaranty Fund v. WCAB(Lin and Eastern Taste), decided on February 17, 2017, involved a questionable case at first impression, as to whether an individual who was remodeling a restaurant, was considered to be a misclassified independent contractor under the Construction Workplace Misclassification Act (Act 72) (CWMA), or was as alleged by the Claimant, an Employee of a restaurant that was undergoing remodeling.

The Commonwealth Court ultimately affirmed the initial Decision of the Workers’ Compensation Judge that the Claimant was not an Employee when injured, and that the CWMA did not apply to the facts of the case, as the Claimant was not working in the “construction industry”, as that term is not accurately defined under the CWMA.

A few facts always help.

The Claimant was injured while he was remodeling the Eastern Taste restaurant, which had yet to open for business.

Following his injury, he filed a Claim Petition against Eastern Taste, as well as later filing a Claim Petition against the Uninsured Employer Guaranty Fund (Fund).

Initially, before the Workers’ Compensation Judge, the Judge bifurcated the employment issue from the medical issues.

Following the bifurcation, the Claimant testified, with testimony being presented by the restaurant Owner, as well as another individual who was also working on remodeling the restaurant.

Based upon the fact testimony heard by the Workers’ Compensation Judge, the Judge found that certain facts were undisputed, to include:

• The restaurant was, just a restaurant, and was not in the construction business or industry;

• The Claimant had been hired to do remodeling, before the restaurant was even opened;

   

• The most experienced person on the job, in terms of construction experience, was the Claimant;

   

• The restaurant Owner’s husband, presuming the restaurant to be owned by a woman, had been in charge of what needed to be done in the course of the remodeling being undertaken;

   

• The Claimant was paid on a per diem basis, as were three other individuals also involved in the remodeling; and,

   

• The Claimant used his own tools, and his own van, with the restaurant Owner’s husband also having his own tools and materials.

   

Based upon the witness testimony that the WCJ heard, the WCJ determined that:

• The Claimant was not an Employee of the restaurant;

• The Claimant’s work was not in the regular course of the restaurant’s business;

   

• The Claimant’s employment was casual in nature;

   

• That the Claimant failed to sustain his burden of proving that he was an Employee of the restaurant; and,

   

• That the Claimant was not considered to be an Employee under the CWMA, as the WCJ reasoned that the CWMA did not apply to the restaurant, as it was not in the construction industry.

   

Based upon the above conclusions, the WCJ denied the Claimant’s Claim Petitions, both against the restaurant, as well as against the Fund.

The Claimant appealed to the Appeal Board, which then issued an Opinion concluding that the Claimant was an Employee of the restaurant, and that the Claimant’s employment was not casual in nature.

Reversing the WCJ’s Decision, the Appeal Board remanded the case back to the WCJ for Findings and Conclusions that would support an Award of compensation.

In a not so subtle genuflection to the remand, the WCJ granted the Claimant’s Claim Petition, resulting in benefits being awarded to the Claimant.

The Fund then appealed to the Appeal Board, requesting that the Board’s Opinion be made final, for purpose of appealing to the Commonwealth Court.  So holding, the case ascended to the Commonwealth Court under the Fund’s Appeal.

Before the Commonwealth Court, the Fund argued that the Board had engaged in impermissible fact-finding, an argument that resonated with the Commonwealth Court, which rebuked the Appeal Board’s conclusion that all of the Claimant’s construction experience had been in the role of an Employee, and that the Claimant had not been engaged in his own construction business, notwithstanding that, before the Workers’ Compensation Judge, there had been no evidence that the Claimant had established a business in which he held a proprietary interest.

Finding that the WCJ’s Findings and Conclusions that the Claimant was hired to do remodeling was supported by substantial evidence, the Commonwealth Court held that those Findings and Conclusions were binding on the Board and that the Board had erred by disregarding the Judge’s findings, thereby substituting its own findings that the Claimant was not hired to do anything specific from which it then inferred, erroneously, that the Claimant was working as a general laborer.

Following that the Board exceeded its authority by making its own findings, beyond those made by the WCJ, the Commonwealth Court did hold that the Board had engaged in impermissible fact-finding, relying on its own facts, to support its conclusion that the Claimant was an Employee, an erroneous conclusion in the opinion of the Commonwealth Court.

Concluding that the WCJ’s original findings were supported by substantial competent evidence and reasonable inferences deduced from substantial evidence, the Commonwealth Court held that the determination as to the existence of an Employer/Employee relationship is a question of law, and that the Court’s scope of review was plenary and the standard review isde novo.

Holding that Section 104 of the WC Act defines an Employee to be “synonymous with servant, and includes all natural persons who perform services for another for a valuable consideration, exclusive of… persons whose employment is casual in character and not in the regular course of the business of the Employer…” the Court noted that there is nobright line rule for determining whether a particular relationship is that of an Employer/Employee or Owner/Independent Contractor, although the Supreme Court inUniversal Am-Cam, Ltd. v. WCAB (Minteer), 762 A.2d 382 (Pa. 2000) had established several factors that have to be considered when making such a determination:

• Control of manner of work is to be done;

• Responsibility of result only;

   

• Terms of agreement between the Parties;

   

• The nature of the work or occupation;

   

• Skilled required for performance;

   

• Whether one is engaged in a distinct occupation of business;

   

• Which Party supplied the tools;

   

• Whether payment is by the time or by the job; and,

   

• Whether work is part of the regular business of the Employer, and also the right to terminate the employment at any time.

   

The controlling takeaway from those factors is that “control over the work to be completed in the manner in which it is to be performed are the primary factors in determining Employee status,” and “…it is the existence of the right to control that is significant, irrespective of whether the control is actually exercised.”

Since the WCJ had originally found that the relationship between the Claimant and the restaurant was similar to that of the relationship between a Property Owner and Painters, Plumbers, Electricians, Carpenters, and other remodelers, it was reasonable for the Workers’ Compensation Judge to conclude that the restaurant Owner’s husband did not control the manner in which work was being completed and performed by the Claimant, as the restaurant Owner’s husband did not reserve control over the means of performing the contract, merely reserving control as to the result of the remodel.

The Commonwealth Court also considered that the Claimant had been hired to perform remodeling, with no expectation of working in the restaurant after the remodeling.

Keeping in mind that the Claimant bore the burden of proving an Employer/Employee relationship, and that all evidence has to be viewed in the light most favorable to the prevailing Party, the Commonwealth Court, in an Opinion authored by Judge Hearthway, held that the WCJ’s conclusion that the Claimant was not an Employee was reasonable, and that it could not, therefore, be construed to be in error as a matter of law.

Not finished, the Commonwealth Court also held, this being the issue of first impression, that the CWMA concerns the construction industry, effecting the determinations of whether someone is an independent contractor versus an Employee under the WC Act.  Having already determined that the Claimant was not an Employee of the restaurant, the Commonwealth Court noted that an individual who performed services in the construction industry for remuneration will be deemed to be an independent contractor for purposes of workers’ compensation, with the converse being, that if a worker falls within the purview of the CWMA, and does not meet the requirements to be considered to be an independent contractor, then that individual is deemed to be an Employee for purpose of workers’ compensation.

Finding that the CWMA was not applicable, as the Workers’ Compensation Judge had concluded, the Commonwealth Court held that the restaurant was in the restaurant business and not in the construction business, and that the CWMA did not, therefore, apply to the facts of this case.

The dispositive question for determining whether one falls within the purview of the CWMA is whether the individual performed services for remuneration “in the construction industry,” a question that the Commonwealth Court held was one of first impression.  Although the CWMA defines the term “construction,” it does not define the term “industry,” requiring the Commonwealth Court to construe that term according to its common and approved usage in accordance with the Statutory Construction Act of 1972, with “industry” being commonly defined as “skilled employment involving skill” and “a department or branch of a craft, art, business or manufacturer.”

Further noting that the CWMA was intended to limit those who would be deemed to be independent contractors, as opposed to Employees, it was intended to address concerns that Employers were, shockingly, misclassifying workers as independent contractors, rather than Employees, in order to avoid the payment of unemployment taxes, workers’ compensation premiums, and payroll.

The Court also noted that to apply the CWMA to any remodeling project would have the effect of potentially turning every individual that took on a remodeling project into becoming an Employer “in the construction industry,” significantly expanding the scope of what the Commonwealth Court interpreted the purpose of the CWMA to be.

The Takeaway

This one is kind of a head-scratcher, as there are many Workers’ Compensation Judges who probably would have found the Claimant to be an Employee, simply to plug the hole in the dyke with insurance, whether against the restaurant or, alternatively, against the Fund.

Presumably, the restaurant had workers’ compensation insurance for its operations as a restaurant, employing restaurant workers in whatever capacities it would have required to continue operations as a restaurant.

Here, the restaurant was not actually open, and was not in operation, and was not, therefore, actually acting as a restaurant, although it would have done so after the remodeling project was complete.

Left unanswered by the Court’s Decision is the status of the Claimant, and the three other individuals who are doing the remodeling work, as there is no reference in the Opinion that they were working for a company, or a business, nor is it entirely clear how those individuals became associated with the remodeling project.

There is also no reference in the Opinion to any discussion, at any of the levels that this case ascended through, from a WCJ through Appeal Board to the Commonwealth Court, as to whether there was a contract in place for the work that was being performed for the remodeling project, as contracts usually require evidence of insurance, if even limited to general liability insurance for any work being performed by the remodelers, including the Claimant.

Post-injury, everyone scrambled for cover.

Better to make sure that contracts are in place, and that insurance is incorporated into the contracts, for the protection of all involved, both in terms of general liability insurance and workers’ compensation insurance.

ConnorsO’Dell LLP

Trust us, we just get it!  It is trust well spent!

We defend Employers, Self-Insureds, Insurance Carriers, and Third Party Administrators in Workers’ Compensation matters throughout  Pennsylvania.  We have over 100 years of cumulative experience defending our clients against compensation-related liabilities, with no attorney in our firm having less than ten (10) years of specialized experience, empowering our Workers’ Compensation practice group attorneys to be more than mere claim denials, enabling us to create the factual and legal leverage to expeditiously resolve claims, in the course of limiting/reducing/extinguishing our clients’ liabilities under the Pennsylvania Workers’ Compensation Act.

Every member of our Workers’ Compensation practice group is AV rated.  Our partnership with the NWCDN magnifies the lens for which our professional expertise imperiously demands that we always be dynamic and exacting advocates for our clients, navigating the frustrating and form-intensive minefield pervasive throughout Pennsylvania Workers’ Compensation practice and procedure.

By: Elizabeth Ligon

In Holmes v. Associate Pipe Line Contractors, Inc., the Court of Appeals determined that post-offer contingencies, such as background checks and drug testing, constitute the “last act” necessary to create a contract of employment.

On October 29, 2013, Plaintiff, who was living in North Carolina, was contacted via telephone by a union representative and offered an assignment in Texas. Plaintiff traveled to Texas, where she was required to submit to a drug test and complete various forms, including an authorization for a Department of Transportation background check, before she could begin working. Two hours after taking the drug test, Plaintiff began working in Texas. She sustained two injuries on the jobsite in Texas in January 2014, and sought workers’ compensation benefits in North Carolina. Defendants denied the claims, citing lack of jurisdiction.

At hearing, witnesses for the defense testified that when workers arrive at the jobsite, they are required to take a drug test and consent to a background check. If they did not submit to either the drug test or the background check, they would not be hired. However, because it takes several days to receive the results, the worker begins work immediately after taking the drug test and signing the consent form. If the drug test or background check did not “come back clean,” the worker would be terminated and paid a per-day rate for the time worked versus the full hourly rate under the union agreement.

The Deputy Commissioner issued an Opinion and Award, dismissing Plaintiff’s claims based on lack of jurisdiction. Plaintiff appealed to the Full Commission, who upheld the Deputy Commissioner’s Opinion and Award. The Full Commission concluded that the submission to the drug test and consent to a background check outside of North Carolina were conditions precedent to Plaintiff’s hire, and were more than administrative paperwork. Consequently, the “last act” necessary to create an employment contract occurred in Texas. Because the contract of employment was not made in North Carolina, Defendant-Employer’s principal place of business was not in North Carolina, and Plaintiff’s principal place of employment was not in North Carolina, the Industrial Commission did not have subject matter jurisdiction.

Plaintiff appealed to the Court of Appeals, who agreed with the Full Commission. Plaintiff argued that the last act necessary to form her employment contract occurred in North Carolina, when she accepted the job from her home via telephone. The Court of Appeals rejected Plaintiff’s argument, noting that it was undisputed that Plaintiff’s submission to a drug test was a prerequisite to her employment. If Plaintiff had refused to submit to the drug test, she would not have been permitted to start working. Therefore, the drug test constituted the last act necessary to form a binding employment relationship. Because this act occurred in Texas rather than North Carolina, the Commission lacked jurisdiction.

RISK HANDLING HINT: Under N.C. Gen. Stat. § 97-36, jurisdiction is created (i) if the contract of employment is made in North Carolina, (ii) if the employer’s principal place of business is in North Carolina, or (iii) if the employee’s principal place of employment is in North Carolina. Holmes solidifies that post-offer requirements drug testing and background checks constitute the “last act” necessary to create an employment contract under prong (i). As part of their initial investigation of a claim, employers and their carriers should determine whether a claimant was required to meet any additional requirements after a job offer was extended, and where they took place.  

Perhaps you have already heard as news travels fast but on May 8, 2017, a Jefferson County Circuit Court Judge issued an Order declaring the Alabama Workers’ Compensation Act to be unconstitutional.  That’s right… the entire Act.  I am sure that you have many questions.  Here are a few answers.

QUESTION:        Is the judge stating that the entire Act is unconstitutional?  If not, why does he not just strike down the parts that are and leave the remainder intact?

ANSWER:           The Judge is not saying that the entire Act is unconstitutional.  However, he is of the opinion that (1) the statute which places a $220 weekly cap on permanent partial disability awards and (2) the statute that places a 15% contingency fee cap on legal fees are both unconstitutional.  Since the Judge has found those 2 statutes to be unconstitutional, it has the effect of declaring the entire Act unconstitutional due to a non-severability (all or none) statute.

QUESTION:        Can he do that?

ANSWER:           Yes.  A Circuit Court Judge is empowered to consider the constitutionality of statutes.  In fact, there is an obligatory duty on courts to do so.  However, it is important to remember that the proverbial buck does not stop there.  In the event that this Order becomes final, then the parties will have the right to appeal the issue to the Alabama Court of Civil Appeals which has original jurisdiction over workers’ compensation matters.  From there the parties can appeal to the Alabama Supreme Court.

QUESTION:        The Judge gave the Alabama legislature 120 days to fix the parts of the Act that he deems unconstitutional.  Do you think that is enough time and, if so, will amended bills get passed?

ANSWER:           Probably not.  There is not enough time with only 6 meeting days left in the 2017 Regular Session.  Even if there was enough time, the issue has come up many times over the years.  Bills are introduced which include too many controversial provisions.  For the $220 cap or the 15% contingency fee to change, there needs to be a serious conversation between employee and employer interests to figure out the best way to effectuate that change.  Simply introducing a bill and trying to force it down the other side’s throat is not going to work.  Major changes were implemented in 1992 and that was due to a couple of years of meetings between all interested parties until a consensus was formed.

QUESTION:        What happens if the Appellate Courts agree with the Circuit Judge?

ANSWER:           Before I answer that, let me first address why they probably will not agree.  The reason they probably will not agree is because it is a function of the legislature to make this needed change.  The Circuit Judge has put a spot light on the need for the change and that is a good thing.  However, the Appellate Courts are probably not going to send Alabama into the work accident dark ages because of 2 statutes regardless of how unfair they are deemed to be.  The more likely scenario is that the Appellate Courts will either disagree and reverse or agree but reverse on the grounds that it is the legislature’s responsibility.   In that scenario, my guess is that the Courts will encourage employer, employee, and medical interests to get together as they did 25 years ago in order to effectuate change.

QUESTION:        What if you’re wrong?

ANSWER:           Let’s all hope that I’m not!  Workers’ Compensation was created for a couple of reasons.  First, it provided immediate indemnity and medical benefits to injured employees through a system of no fault insurance.  Second, it provided employers with protection from tort liability through the Exclusivity Doctrine.  This was known as the Grand Bargain.  Scrapping this system would result in the following:

1. Employers would no longer have any protection against tort lawsuits since the Exclusivity Doctrine would be gone.

2. Employees would be able to maintain tort lawsuits against employers.

3. Plaintiffs’ attorneys would enjoy much higher percentage contingency fees because there would be no statute placing any restrictions on how much they could take from the award or settlement of an injured employee.

4. In order to prevail against the employer, the employee would have to prove at a bare minimum the elements of negligence.  In other words, they would have to prove that the employer breached a duty of care and said breach caused the accident and injury.

5. In all situations where an employee was injured and it was not the fault of the employer, the employee would have no access to a tort recovery or workers’ compensationbenefits.  In other words, the employee would be receiving nothing.

6. A flurry of motions to dismiss pending workers’ compensation lawsuits will be filed all over the state. 

7. Many employees in the insurance and legal industry would be out of a job.

In a nutshell, employee, employer, insurance, medical, and legal interests will all be adversely affected.  While our system is far from perfect, it is the only one that we have.  The alternative is far worse.  Rather than pursue a final order deeming our current system to be void as unconstitutional, let us use this recent Order as a wakeup call to all concerned and open a dialogue between all interested parties.  In 2019, we will celebrate 100 years of workers’ compensation in Alabama.  Let’s work together to make sure that the system we have in place at that time is improved and fair to all concerned.

OSHA recently implemented its new "reporting and anti-retaliation rule", which went into effect January 1, 2017. Under the new rule, certain employers must now submit injury and illness information electronically. Most employers were already required to keep records of work related illnesses and injuries and to report fatalities and other certain serious injuries. However, under the new rule, companies that employ 250 or more employees must electronically submit OSHA Form 300 (Log of Work Related Injuries and Illnesses); OSHA Form 301 (Injury and Illness Incident Report); and OSHA Form 300A (Summary of Work Related Injuries and Illnesses) on a quarterly basis. Companies in the construction, manufacturing, utilities, and agriculture industries, which have historically high rates of occupational injuries and illnesses, must submit OSHA Form 300A annually when they employ between 20 and 249 employees. Additionally, OSHA may provide written notification to any smaller employers requiring them to submit information on a routine basis electronically.

The anti-retaliation rule allows OSHA to cite employers for taking adverse action against employees for reporting a work related injury or illness, even if the employee does not file a retaliation complaint. It also allows OSHA to cite employers who have systems in place that have traditionally been used to create safer workplaces, but OSHA now says discourage injury reporting. In the rule, OSHA specifically address concerns regarding safety incentive programs and post accident drug and alcohol testing.

OSHA states that employers may perform post-accident drug and alcohol testing only where (1) there is a reasonable possibility that the employee’s drug use contributed to the incident and (2) the drug test can accurately identify that the impairment was caused by the drug use. On the other hand, OSHA states that it is unreasonable to drug test an employee when it is clear that drug or alcohol use would not have made it more likely that the injury would occur (such as insect bites and repetitive strains occurring over a long period of time). OSHA’s reasoning is that allowing employers to drug test after every accident/injury discourages employees from reporting injuries. Safety incentive programs such as cash bonuses for departments or employees that remain accident free are also prohibited. OSHA says that employees who are injured may be reluctant to report it because they are afraid their co-workers will be hostile toward them for not getting the incentive.

OSHA can fine employers up to $12,471.00 for a single serious violation and up to $124,709.00 for willful or repeated violations. Therefore, all employers need to review their injury-illness reporting requirements, post accident drug and alcohol testing protocols and safety incentive programs.

My Two Cents

The new reporting requirements should not be a big deal for most employers, since the reporting does not really change - just the method of reporting. On the other hand, the "anti-retaliation" rule presents new issues and problems. While across-the-board drug testing may discourage drug users from reporting injuries, it also discourages drug use.

Did You Know?

If you receive a Notice of Citation from OSHA, you have a right to contest it and have the matter tried before a neutral judge. You also have the right to obtain information that OSHA obtained in its investigation, and to conduct your own investigation into the merits of the alleged violation(s).

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About the Author

This article was written by Charley M. Drummond, Esq. of Fish Nelson & Holden, LLC. Fish Nelson & Holden is a law firm located in Birmingham, Alabama dedicated to representing employers, self-insured employers, and insurance carriers in workers’ compensation cases and related liability matters. Drummond and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields. If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at cdrummond@fishnelson.com or (205) 332-3414.

Bo Liu worked for 4D Security Solutions, Inc. as an engineer.  He was sent to test the company’s hardware and software at an army base in the United Arab Emirates (UAE). He worked alone on the base and after hours he would upload data to 4D in the United States using a company-issued Blackberry.  One of his job requirements was to respond to inquiries from 4D’s employees in the United States.

Not long after his arrival in the UAE, Liu decided to visit a local museum because he had no “field work” to do on Friday, December 2, 2011.  He was “on call” in the event that an employee in the United States might need assistance.  He took his Blackberry with him while touring the museum.  He testified that he visited the museum because he felt he needed to get to know the people and the culture he was working in.  He did not recall getting any messages from the United States while he was there.  After two hours in the museum, he fell and underwent surgery in the UAE.  He filed a claim petition for workers’ compensation benefits.

The Judge of Compensation dismissed the petition because N.J.S.A. 34:15-36 provides that one who is on a special mission is only covered when performing the duties assigned or directed by the employer.  Liu was merely touring a museum when he fell.  On appeal, Liu raised two arguments for the first time: namely that he was “on call” and therefore working while in the museum, and secondly that he was covered because of the “mutual benefit” doctrine.

The Appellate Division noted that the only cases supporting petitioner regarding the “on-call” argument were pre-1979 decisions.  The Court noted that the 1979 Amendments were designed to limit compensation to accidents occurring “when the employee is engaged in the direct performance of duties assigned or directed by the employer.”  The Court observed that there was no evidence that US employees were trying to reach Liu while he was in the museum.

As for the “mutual benefit” doctrine, the Court commented that Liu failed to raise this issue below but even so, the Court said that there is no post-1979 decision that has applied this doctrine.  The Court also said, “More importantly, Liu’s personal belief that a museum visit would help him understand the UAE’s history and culture so he could work better with those around him falls far short of demonstrating 4D would necessarily derive any tangible benefit from the museum visit.”

For these reasons the Appellate Division affirmed the dismissal of this case.  This case can be found at Liu v. 4D Security Solutions, Inc., A-3591-15T1 (App. Div. May 1, 2017).

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com.