State News : New Jersey

Shaun Conrath, a Burlington County College employee, was injured at work when he was attacked by a fan while coaching a basketball game.  He filed a claim petition, and Travelers Casualty Insurance Company of America (hereinafter “Travelers”) filed an answer on behalf of the College.  Travelers negotiated a settlement of $35,000 on behalf of the College on a Section 20 basis on February 3, 2012.  Three weeks after the settlement occurred, Travelers first became aware that it did not insure the College. 

            Nine months after the order was entered, Travelers moved to modify the award to reflect that Travelers was not the correct carrier for Burlington County College.  The College opposed the motion and argued that Travelers was bound by the settlement agreement. 

            The Judge of Compensation held that he did not have a statutory basis nor jurisdiction to reopen the settlement. Travelers disagreed and contended that the interests of justice required the Judge of Compensation to reopen the settlement and amend the order to name the correct carrier, which was the New Jersey Community College Insurance Pool as administered by Qual-Lynx.  Travelers appealed the decision of the Judge of Compensation to refuse to amend the order.

            The Appellate Division held that in certain cases of mistake or inadvertence, a record may be reopened.  However, in this case the Court concluded that the Judge of Compensationdid not have jurisdiction to reopen this matter:

Travelers, however, did not present sufficient cause to reopen the settlement to change the identity of the settling entity.  If Travelers is entitled to reimbursement for a settlement it mistakenly entered into, it must seek such reimbursement from the liable entity in another court.  As Travelers acknowledges, petitioner is not at blame nor should petitioner be involved in litigation seeking to modify the settlement.  Workers’ Compensation Court is not the proper forum for litigation between two insurers after a judgment has been entered and payment of that judgment made to petitioner.

The Court went on to say that the Division of Workers’ Compensation is the forum for deciding issues of compensability or appropriate benefits for work-related injuries but not for disputes between employers after a mistaken settlement occurs.  It said that the Division should not be involved in a post-judgment dispute between two insurers.  “The Judge of Compensation correctly determined that he lacked jurisdiction to entertain Travelers’ litigation against BCC to amend the judgment.  This is particularly true in light of the fact that Travelers waited until October 19, 2012 to move to correct the Judge’s February 3, 2012 judgment.  Travelers could have sought to be dismissed from the action prior to paying the judgment.”

            As practitioners know, it is a common problem in New Jersey that the wrong carrier is listed by the claimant on the claim petition.  This case underscores why it is important for carriers and third party administrators to work promptly to amend the pleadings before final orders get entered with incorrect information.

Telecommuting is a trend that is rapidly growing in the United States, and telecommuting requests are also on the rise as a potential reasonable accommodation under the ADA.  A recent Sixth Circuit Court of Appeals case,EEOC v. Ford Motor Company, 2014 U.S. App. LEXIS 7502 (6^th Cir. 2014) illustrates how difficult it can be for an employer to oppose a request for telecommuting.

Jane Harris was hired in 2003 by Ford as a resale buyer, serving as an intermediary between steel suppliers and “stampers,” which are companies that use steel to produce parts for Ford.  Her job was to respond to emergency supply issues to ensure no gap in steel supply to parts manufacturers. The most important part of the job was group problem solving, requiring that a buyer be available to interact with members of the resale team, suppliers and others in the Ford system when problems arose.

Harris suffered from IBS, an illness that caused her fecal incontinence.  Some days she could not drive to work or stand up from her desk without potentially soiling herself.  She took intermittent leave when severe symptoms occurred.  In 2005 her supervisor allowed her to work from home on a flex-time telecommuting schedule on a trial basis.  The company did not view the trial period as a success. She continued to work occasionally from home doing remote work, including on evenings and weekends.  However, Ford did not credit Harris with the time she spent working during non-“core” hours and marked the days she stayed home because of her illness as absences.  The company stressed that core business hours were important because that was the time when employees do team problem solving. 

On occasion Harris submitted a purchase order with incorrect pricing information because she could not immediately access the supplier on a weekend to obtain updated quotations. This caused problems with co-employees and suppliers.  Under Ford’s system of marking absences, Harris was absent in the first seven months of 2009 during core hours more than she was present. 

In 2009, Harris requested that she be permitted to telecommute on an as-needed basis as a reasonable accommodation.  Harris felt that she could get most of her work done by computer or telephone.  Ford had a telecommuting policy but not for all jobs. Harris’s supervisors did not feel that her position was suitable to telecommuting and denied the request.  Instead, the company suggested that it could move her cubicle closer to the restroom or she could seek an alternative position within Ford that would be more suitable for telecommuting. 

Harris filed a charge of discrimination with the EEOC.  Eventually Ford terminated Harris for poor performance.  In 2011 the EEOC filed a complaint alleging that Ford violated the ADA by failing to accommodate Harris’s disability. The district court followed precedent that indicated an employer should not second guess the employer’s assessment of the essential functions of the job and ruled against Harris. The Sixth Circuit Court of Appeals  reversed.

The Circuit Court noted that Ford believed physical attendance at the workplace was critical to the group dynamic of the resale-buyer team.  The Court did not defer to Ford’s description of the essential job functions:

While Ford has provided substantial evidence of its business judgment and the experience of other resale buyers, the EEOC has also offered evidence that casts doubt on the importance of face-to-face interactions at Ford.  Harris’s own experience over several years as a resale buyer indicates that in-person interaction may not be as important as Ford describes: Even when Harris was physically present at Ford facilities, the vast majority of communications and interactions with both the internal and external stakeholders were done via conference call.

The Court noted that Ford did allow other resale buyers to telecommute, albeit on a more limited basis than the request Harris was making.  The Court moved away from a previous position in prior cases that telecommuting is not a reasonable accommodation, saying that telecommuting may be reasonable when someone can perform all the essential functions at home. 

Ford also argued that it made two alternative accommodations to Harris, as noted above, but Harris rejected those accommodations.  The Court said that moving her cubicle closer to the restroom would not relieve Harris of the “humiliation of soiling herself on a regular basis in front of her workers, merely because she could use Depends to contain the mess or bring a change of clothes to clean herself up after the fact.”   It said that allowing her to apply for another job was not adequate because there was no guaranty that such a position would be available.

The Court said that because the EEOC provided evidence that Harris was qualified for her position with a reasonable telecommuting accommodation, the burden shifted to Ford to show an undue burden on the company.  “Although setting up a home workstation for Harris might entail some cost, considering Ford’s financial resources and the size of its workforce, this cost is likely to be de minimis. Indeed, Ford has created a written policy in which it pledges to absorb these costs for all employees approved to telecommute.”

The case shows that telecommuting is inevitably going to be viewed as a reasonable accommodation, no matter that earlier cases on the ADA did not find it to be.  Employers that have telecommuting policies will be hard pressed to deny requests for accommodation where there is evidence that the employee can perform the essential job functions at home. 

New Jersey has a strong fraud statute, and it applies both to employees and employers.  Most of the cases that have been highlighted in this blog have concerned employees.  However, in a recent development, a Spring Lake, New Jersey man, was sentenced to 180 days in jail, 150 days of community service, and three years of probation, for workers’ compensation fraud.  He was also ordered to pay full restitution for his participation in third degree insurance fraud.

Charles Kelcy Pegler Sr., 56, was the President of a roofing company called Roof Diagnostics, Inc. (“RDI”), which was located in Wall Township, N.J. As president of the company, which employs nearly 400 people, Pegler indicated in his application for insurance to New Jersey Casualty Insurance Company that RDI was not a roofing company, that RDI did not employ roofers, and that its employees did not engage in the repair or maintenance of roofs.  The facts were otherwise.  Between June 11, 2003 and October 5, 2009, RDI paid $265,044 less in workers’ compensation insurance premiums than the company would have paid had Pegler accurately represented the nature of the business.

Additionally, Pegler falsely represented the nature of RDI’s business to USF Insurance Company, currently named Atain Insurance Company, claiming that all roofing services performed by RDI were carried out by subcontractors. RDI thereby avoided $134,087 in general liability insurance premiums that it legally owed to USF.

Pegler was charged on December 19, 2013 in a State Grand Jury indictment and entered a guilty plea on April 17, 2014 before the Honorable Anthony J. Mellaci of the Superior Court of New Jersey. The Acting Attorney General, John J. Hoffman, made the following comments:

This defendant had a legal and moral obligation to provide full and adequate workers’ compensation insurance coverage for his employees. By failing in this duty, Mr. Pegler defrauded not just his employees and his insurance company, but also honest, hard-working New Jerseyans who are forced to pay increased premiums to cover the costs of the fraud.

New Jersey’s Acting Insurance Fraud Prosecutor Ronald Chillemi warned. “The jail time imposed upon this defendant should act as a deterrent to anyone who fails to provide adequate and lawful workers’ compensation insurance.”  He added, “Such frauds will not be tolerated and will be investigated and prosecuted to the fullest extent of the law.”

This case serves as a clear reminder to employers that misrepresenting the nature of one’s business to lower workers’ compensation costs constitutes fraud and will be strongly penalized.

Beverly Ballard worked for the Chicago Park District.  Her mother, Sarah, who lived with her daughter, was diagnosed with end-stage congestive heart failure in 2006 and began receiving hospice support.  Beverly acted as the primary caregiver for her mother, cooking her meals, administering insulin and other medications, draining fluids from her heart, and bathing and dressing her.

            Sarah met with a Horizon Hospice social worker in 2007 and discussed Sarah’s end-of-life goals.  Sarah said that she had always wanted to take a family trip to Las Vegas.  Through the Fairy-Godmother’s Foundation, the six-day trip was scheduled.

            Beverly sought unpaid leave from the Chicago Park District to accompany her mother to Las Vegas.  The District ultimately denied the request, but Beverly said she was not informed of the denial prior to the trip. The two women then traveled to Las Vegas and participated in typical tourist activities.  Beverly continued to serve as her mother’s caretaker during the trip.  Once she drove her mother to the hospital when a fire  prevented them from reaching their hotel room.

            The Chicago Park District months later terminated Ballard for unauthorized absences accumulated during her trip to Las Vegas, prompting Ballard to sue under the FMLA for interference with her FMLA rights. 

            In the law suit, the Park District argued that the trip to Las Vegas was not related to a continuing course of medical treatment.  The Park District lost at the District Court level and appealed to the Seventh Circuit Court of Appeals. The issue on appeal was whether “care” in the context of an away-from-home trip is limited to services provided in connection with ongoing medical treatment.

            The Court noted that “the FMLA does note define ‘care,’ so perhaps there is room to disagree about whether Ballard can be said to have cared for her mother in Las Vegas.”  The Court also observed that there are various sections of the FMLA that refer to care in connection with treatment, but one section  2612(a)(1)(C) speaks in terms of “care” not “treatment.”  Additionally, the Court said, “Another problem is that the FMLA’s text does not restrict care to a particular place or geographic location. For instance, it does not say that an employee is entitled to time off ‘to care at home for’ a family member.”

            In attempting to resolve confusion over the legislative intent in defining “care,” the Court examined the Department of Labor’s regulations, which read as follows:

What does it mean that an employee is ‘needed to care for’ a family member?

The medical certification provision that an employee ‘is needed to care for’ a family member encompasses both physical and psychological care. It includes situations where, for example, because of a serious health condition, the family member is unable to care for his or her own basic medical hygienic, or nutritional needs or safety, or is unable to transport himself or herself to the doctor, etc.  The term also includes providing psychological comfort and reassurance which would be beneficial to a child, spouse or parent with a serious health condition who is receiving inpatient or home care.

In the end, the Court was persuaded by the statement in the regulations that care includes psychological assistance and that there is no specific geographic limitation. “Sarah’s basic medical, hygienic, and nutritional needs did not change while she wasin Las Vegas, and Beverly continued to assist her with those needs during the trip.”  The Court rejected the argument of the Park District that care must be connected to medical treatment because the regulations never use the word “treatment” in their definition of care.

The Seventh Circuit acknowledged that its decision was counter to decisions in the Ninth and First Circuit Courts of Appeal.  The Court was impressed by an inherent inconsistency within the FMLA:  “If Beverly had sought leave to care for her mother in Chicago, her request would have fallen within the scope of the FMLA. So too if Sarah had lived in Las Vegas instead of with her daughter, and Beverly had requested leave to care for her mother there.”

            The case may be found at Ballard v. Chicago Park District, 741F.3d 838 (7^th Cir. 2014).  Employers need to reflect on the judicial philosophy in their own circuit and should always try to obtain medical certifications from the physician treating the family member to see what care the physician thinks is necessary. 

The State of New Mexico has a Compassionate Care Act which provides for medical marijuana when a patient is certified for the program by his or her health care provider.  In the case ofGregory Vialpando v. Ben’s Automotive Services and Redwood Fire & Casualty, the New Mexico Court of Appeals affirmed a decision of a Judge of Compensation requiring the worker’s employer to reimburse him for the cost of medical marijuana.

            Mr. Vialpando was seriously injured on June 9, 2000.  He underwent multiple back procedures leading to a 99% permanent partial disability.  One doctor described his pain as “high intensity multiple-site” chronic pain.  Vialpando had been taking multiple narcotic-based pain relievers and multiple anti-depressant medications.

            On April 8, 2013, Vialpando filed an application for approval of medical treatment for medical marijuana. nbsp; He had been certified for the program by two physicians.  The Judge of Compensation found that the worker was “entitled to ongoing and reasonable medical care,” including medical marijuana, and ordered the employer to pay for the care.

            The employer appealed and made several interesting arguments.  First, the employer argued that the New Mexico Workers’ Compensation Act did not authorize reimbursement for the costs of medical marijuana.  The court noted that an employer is required to provide an injured worker with “reasonable necessary health care services from a health care provider.”  However, the court conceded that the list of health care providers does not include a dispenser of medical marijuana under the State’s Compassionate Care Act.  Nor has the Director of the Division of Workers’ Compensation approved a dispenser of medical marijuana as a health care provider. 

On the other hand, the Act does define “services” as “health care services, . . . procedures, drugs, products or items provided to a worker by an health care provider, pharmacy, supplier, caregiver, or freestanding ambulatory surgical center which are reasonable and necessary for the evaluation and treatment of a worker with an injury or occupational disease. . . “ Based on this definition, the court found that medical marijuana is a product from a supplier that may be reasonable and necessary for an employee’s treatment. 

By defining ‘services’ as including a product from a supplier that is reasonable and necessary for a worker’s treatment, the regulations do not contemplate that every aspect of a worker’s reasonable and necessary treatment be directly received from a health care provider.  Such a requirement would be unworkable. A worker’s treatment may well require services that are not available from a health care provider. The most obvious of such services may be medical supplies or equipment.

As for the distinction that a doctor does not “prescribe” medical marijuana, but rather the employee gets certified to the New Mexico program, the court said it is unnecessary that each and every service must be provided by a health care provider.

            The employer also argued that medical marijuana should be viewed as a prescription drug, and since a doctor may not order medical marijuana, it should not be reimbursable under workers’ compensation.  The court rejected this argument as well. “A doctor may not order medical marijuana but may certify a patient to enroll in the medical cannabis program.” The court said that the definition of “services” is broader than the definition of a “prescription drug.”  Services include non-prescription drugs and products not necessarily prescribed by licensed pharmacists.  The court did concede that medical marijuana is a controlled substance and a drug but it reasoned that it makes no difference whether a pharmacist can prescribe it because the program authorized by the Department of Health is itself licensed. 

            Lastly, the employer contended that the court order requires the employer to violate federal law because marijuana is classified as a Schedule I Controlled Substance and is generally illegal to use or possess.  The court first observed that the employer was not specifically challenging the New Mexico Compassionate Care Act.  Rather, the employer was arguing that it was committing a crime in complying with the court order. 
“However, Employer does not cite to any federal statute it would be forced to violate, and we will not search for such a statute.”

            This case is one of the first to deal with the employer’s obligation to pay for medical marijuana through workers’ compensation, and it will not be the last.  The analysis in the New Mexico case raises complex state and federal issues. Readers are invited to give your thoughts on this decision and its implications to employers in connection with the New Jersey Compassionate Use Medical Marijuana Act.

New Jersey has a powerful provision allowing employers to terminate temporary disability benefits on an offer of light duty, provided that the offer is made.  If it is made, the employee must return to the light duty job or temp benefits will be terminated. 

            But what happens if the light duty offer involves fewer hours than the employee normally worked and less pay than the rate of temporary disability benefits?  There is no published case on this issue but there is a helpful decision in the Division of Workers’ Compensation entitled Soto v. Herr’s Foods, Inc., 2012 NJ Wrk. Comp. LEXIS 4 (September 7, 2012).

            Mr. Soto was injured at work on January 29, 2011 and underwent two authorized surgical procedures involving his left knee.  In January 2012 the authorized treating physician wrote a report stating petitioner could return to work light duty. “I would like to start light duty and see if we can get him back to work, sedentary, four hours a day, and progress to eight hours.”

            The employer made a light duty offer for four hours a day.  Petitioner had been earning $976.15 per week at the time of his injury, entitling him to a temp rate of $683.31 per week.  However, his light duty wage was much lower since he was only working four hours per day.  While on light duty petitioner was receiving a net payment of $329.43 per week.  That was $353.88 less per week than petitioner was receiving on temp benefits.

            Petitioner returned to the light duty job but also contested in the Division of Workers’ Compensation the right of the employer to pay him less than the amount he was receiving on temporary disability benefits.  The Honorable Emille Cox, Supervising Judge of Compensation, ruled in favor of petitioner, holding that a temporarily disabled worker is entitled to  temporary disability benefits of 70% of his or her wage subject to the maximum and minimum limits in effect for the year in question. The Judge reasoned:

It seems rather obvious to this Court that if Respondent is responsible for the payment of temporary disability benefits, and, in this case, the amount to which Petitioner is entitled is $683.31 per week, to allow Respondent to provide minimum light duty and only pay the Petitioner an amount less than the $683.31 to which he is entitled defeats the purpose of both the temporary disability and the light duty provisions of the workers’ compensation statute.

The decision of Judge Cox was not appealed, and had it been, the decision would no doubt have been affirmed.  The reasoning is sound, that one is still temporarily disabled while on light duty and therefore an employee must receive at least as much as his or her temp rate while working light duty until the employee reaches maximal medical improvement or returns to work full duty. Light duty cannot be used to reduce an employee’s wage below the rate of temporary disability benefits.

            There are many instances in which an injured worker argues that he was not employed so as to be able to bring a negligence action.  The case ofHernandez v. Port Logistics, A-3558-12T3 (App. Div. 2014) illustrates this situation.

            Daniel Hernandez was placing a box onto a load of pallets on August 23, 2011, when a wood splinter broke off and struck him in the eye, causing total loss of vision in the left eye.  Hernandez was employed by Staff Management, which had entered into a “Service Agreement” with Distribution Solutions, Inc. doing business as Port Logistics Inc. Hernandez sought workers’ compensation benefits from Staff Management.  Then he sued Port Logistics Inc. contending that the company was negligent in not providing him with eye protection.

            Port Logistics Inc. argued that Hernandez was its employee and could not sue the company because his exclusive remedy was workers’ compensation.  In his deposition, Hernandez acknowledged that he was doing work for Port Logistics in loading and unloading trucks.  He worked under the direct supervision of Port’s managers, who provided him with his assignments and directed his work at the loading docks.  Port controlled his work hours and lunch time.  Port Managers could send Hernandez home early if work was lacking. 

            For his part, Hernandez argued that the Service Agreement said he was an employee only of Staff Management and that Staff Management was exclusively responsible for payroll, taxes and workers’ compensation.  The trial judge rejected this argument that only Staff Management was Hernandez’s employer.  The judge found that  Hernandez was a special employee of Port Logistics.  Hernandez appealed.

            The Appellate Division noted that it is quite common for an employee to have two employers.  The court said that the language of the Service Agreement alone did not control the outcome of the litigation.  Instead, the court reviewed all the factors noted above showing that Port Logistics exercised tremendous control over the day-to-day activities of Hernandez. “In short, under the precedent cited, defendant (Port) was a special employer of plaintiff, despite any contract language to the contrary.  As a result, plaintiff’s tort claim against defendant was barred by N.J.S.A. 34:15-8.”

            The lesson in this case is that sometimes an employer wants coverage under workers’ compensation because the exclusive remedy provision offers powerful protection for an employer faced with a potentially large negligence law suit. 

Frank Ascione worked for U.S. Airways at Newark Liberty International Airport as a fleet service agent since 1981.  He handled baggage and drove equipment to push back planes.  He would work in the “bag room” transporting baggage to and from the plane.  He assisted in de-icing of planes about 20 times in his career and worked with a chemical named glycol.  He said the diesel tugs he drove released smoke that would enter the cab of the tug, leaving a heavy soot on the floor of the vehicle.  It was often hard to breathe, and sometimes he would have to stick his head out the window for fresh air.  Sometimes the baggage conveyor belt would jam, requiring him to crawl into the system to remove baggage.  When that would happen, dirt, dust and asbestos would fall on him.  He also was exposed on occasion to clouds of smoke emanating from the engine while unloading the plane.

            Petitioner brought a claim for pulmonary injuries against U.S. Airways.  At trial he testified that he had a lack of energy, although he still worked for the company and took overtime.  He complained of a cough and shortness of breath which prevented him from exercising or playing sports.  He admitted to a history of heart problems and had a cardiac catheterization in 2009. 

            Dr. Malcolm Hermele testified for petitioner as an expert in internal medicine, although he admitted he is not board certified in pulmonology.  He testified that x-rays of petitioner’s chest showed damaged alveoli which could be caused by exposure to fumes, dust and pulmonary irritants.  He did concede that petitioner’s excessive weight could be an independent cause of fatigue and shortness of breath.  Losing weight, he admitted, would help petitioner reduce his symptoms.  Dr. Hermele said petitioner suffered from chronic bronchitis and probably restrictive pulmonary disease caused or aggravated by work exposures.  He estimated 35% permanent partial disability. 

            Dr. Benjamin Safirstein, a board certified pulmonologist, testified that petitioner’s physical exam was “pretty normal.”  He said that the first set of pulmonary functions studies were entirely normal.  He had no obstruction, restriction or impairment in diffusion.  One of the key factors in this case was that Dr. Safirstein did more extensive pulmonary function testing than Dr. Hermele did.  Dr. Safirstein performed spirometry, lung capacity and diffusion testing, while Dr. Hermele only did spirometry.  According to Dr. Safirstein, spriometry alone is only preliminary and cannot be used to diagnose pulmonary diseases.  Another point of contention between the experts was the x-rays, which were completely normal according to Dr. Safirstein. 

            Dr. Safirstein performed a second pulmonary function test in late 2012 which showed a mild decline in the vital capacity parameter of petitioner’s lung volumes.  He attributed this decline to lack of effort on the part of petitioner in performing the test and his excessive weight, or cardiac enlargement.  He did admit petitioner would qualify as having bronchitis but did not believe that this condition was due to work.  As for petitioner’s shortness of breath, that could be caused by any number of conditions, including morbid obesity and an enlarged cardiac silhouette suggestive of cardiac disease.

            The Judge of Compensation ruled for petitioner and awarded 7.5%.  U.S. Airways appealed.  It argued that the Judge of Compensation failed to make critical findings concerning the conflicting testimony of the medical experts in this case.  The court said, “A workers’ compensation judge should ‘carefully explain why he or she considered certain medical conclusions more persuasive than others.’”Smith v. Montgomery nursing Home, 327 N.J. Super. 575, 579 (App. Div. 2000).  The court said the judge failed to articulate her reasons for making discretionary decisions.  In a key statement the court said: “This court has reversed decisions from judges of compensation when a decision merely recounts the highlights of the expert testimony without making any conclusions.” What the court meant is that it was not enough for the judge to simply discuss the testimony of the experts:  since their testimony conflicted, she needed to make credibility findings. 

            The court observed that Dr. Safirstein’s testing was superior to that of Dr. Hermele.  All Dr. Hermele measured is air flow but not lung volumes.  More testing was needed to confirm an abnormality, according to Dr. Safirstein. “As noted, the judge failed to fully explain why she rejected the findings and conclusions of Dr. Safirstein, and credited those of Dr. Hermele.” The court remanded the case for the judge to make specific and detailed findings as to expert witness credibility and determine whether petitioner has proven “by suitable medical evidence that the employment exposure did indeed cause or contribute to the disease . . . [and] that the employment exposure substantially contributed to the development of the disease.”

            This case can be found at Ascione v. U.S. Airways, A-5049-12T1 (App. Div. April 10, 2014). 

Readers should be aware of a potential landmark decision from the National Labor Relations Board on Wednesday, March 26, 2014, in which the NLRB found that the Division I football players receiving scholarships at Northwestern University are employees of the university under the National Labor Relations Act.  It is anticipated that the decision will be appealed by Northwestern University to the full National Labor Relations Board in Washington D.C. and possibly end up in front of the Supreme Court of the United States.  The Board’s decision is limited to the football players at Northwestern University, but could pave the way for athletes at similar private universities.  The Board’s decision was based on several specific factors listed below.

First, the Board found that scholarship football players perform services for the benefit of the University for which they receive compensation.  In finding that the University benefits from the scholarship football players, the Board noted that Northwestern University’s “football program generated revenues of approximately $235 million during the nine year period between 2003-2012 through its participation in the NCAA Division I and Big Ten Conference that were generated through ticket sales, television contracts, merchandise sales and licensing agreements.”  The Board found that the scholarships to the players are a transfer of economic value since the University pays for the players’ tuition, fees, room, board, books and a stipend for players living off-campus for up to five years, which can total up to $76,000 per calendar year at Northwestern University.  The Board also found that “The fact that the Employer does not treat these scholarships or stipends as taxable income is not dispositive of whether it is compensation.”

Secondly, the Board found that the scholarship football players are subject to the University’s control in the performance of their duties as football players.  The Board noted that the players who receive scholarships are under strict and exacting control throughout the entire year.  The players are subject to NCAA eligibility guidelines as well as the team rules that are enforced by threat of discipline or loss of scholarship.

Third, the Board found that the scholarship players are employees under the common law definition.  “Under the common law definition, an employee is a person who performs services for another under a contract of hire, subject to the other’s control or right of control, and in return for payment.”  Brown University, 342 NLRB 483, 490, fn. 27 (2004) (citingNLRB v. Town and Country Electric, 516 U.S. at 94).  The Board found that “players receiving scholarships to perform football-related services for the Employer (Northwestern University) under a contract for hire in return for compensation are subject to the Employer’s control and are therefore employees within the meaning of the Act.”  However, the Board found that the walk-on players, those not receiving scholarships, do not meet the definition of “employee.”  Similarly, the Board noted that unpaid interns, even if they are subject to similar terms and conditions of employment, are not employees because they did not receive compensation.

The Board specifically found that the statutory definition of employee articulated in Brown University, 342 NLRB 483 (2004), was not applicable to the football players at Northwestern University.  In Brown University, the Board found that graduate assistants were not employees of the university since the relationship between the graduate assistant and the university was primarily an educational one, rather than an economic one.

The Board found the scholarship football players at Northwestern University were employees under the Act and that the College Athletes Players Association (CAPA) (Petitioner) is a labor organization within the meaning of the Act.  The Board ruled that all football players receiving football grant-in-aid scholarships not having exhausted their playing eligibility that were employed by the Employer were eligible to vote whether or not they desire to be represented for collective bargaining purposes by CAPA.  The Board specifically excluded office clerical employees, professional employees and supervisors from voting.

What are the possible implications of the Board’s Decision for Workers’ Compensation? If the decision is affirmed, the Board’s ruling has the potential to change the landscape of college sports and raises a number of important questions for workers’ compensation practitioners.  Will the decision include Division I scholarship athletes for all sports at private universities?  What kind of benefits will the labor union(s) be bargaining for?  If the athletes are employees within the meaning of the Act, are they entitled to workers’ compensation benefits for injuries that occur while they are working? Should the scholarships received by the athletes be taxed as income and used to establish a wage?  The ultimate impact of the decision remains to be seen and we will keep readers posted as this case moves forward.

Bobbie Kehoe and Scott Sunkimat began cohabiting in their home in Point Pleasant, New Jersey in 1999.  They made a life-long commitment to each other to spend their lives together but declined to marry.  They shared utility bills and bank accounts and both of their names were on the deed to their home.  Bobbie Kehoe was the sole beneficiary of Scott Sunkimat’s retirement plan, but she was not the beneficiary of his life insurance policy.  The two represented themselves as husband and wife in public. 

            In March 2007, the decedent fell from a platform while engaged in the performance of his duties as an employee of Ultralum Enterprises.  The fall arose out of and in the course of employment.

Bobbie Kehoe filed a dependency claim petition asserting that she was the decedent’s surviving spouse.  She argued that during a two-week visit to Texas in 2004, she and decedent established the elements of a common law marriage under Texas law by (1) agreeing that they were then married; and (2) cohabitating as husband and wife; and (3) representing to others that they were husband and wife. A family relative testified that the two did indeed represent themselves as husband and wife while in Texas.

            The Judge of Compensation denied the claim because New Jersey does not recognize common law marriages.  The Court said, “Here, it is undisputed that petitioner and the decedent were never formally married under New Jersey law.  On the facts presented, petitioner is not entitled to benefits under N.J.S.A. 34:15-13(f).  Petitioner’s argument based on the recognition of common law marriages by the State of Texas lacks sufficient merit to warrant discussion in a written opinion.”

            This case can be found at Kehoe v. Ultralum Enterprises, Inc., A-4531-12T4 (App. Div. March 18, 2014).