April 2016 HL Quarterly Update

Introduction
Yes, can you believe it? It’s April already. As we are putting this Quarterly together, spring is definitely in the air and opening day at Comerica Park is just around the corner. With our Firm’s mission of helping you manage your employment risks, our legal team has put together a number of articles in this edition that will guide you and your organization to make appropriate risk management decisions. Our article regarding evidence based medicine is just a start to the educational information that our law firm will be presenting to you as the reality of evidence based medicine unfolds. On behalf of the Firm, I thank you for taking the time to review our Quarterly, and as always, we strongly encourage your questions and comments.

Asking the Right Questions
Most employers are aware that certain topics are forbidden during the hiring process. An applicant’s age, health, and religion are a few of the prominent areas that employers would do well to avoid while interviewing a candidate. It is important to remember that the rules surrounding illegal questioning of applicants not only applies during in-person interviews, but during online communication, including emails.

Questions regarding an applicant’s employment history, vocational skills, prior employers, previous job duties and responsibilities, and compensation are topics that remain acceptable as part of the hiring process. However, when asking an applicant about their vocational, academic, and professional training, employers should refrain from seeking exact attendance dates, as this may lead to gathering information about the applicant’s age.

Applicants may be posed questions regarding whether they are legally authorized to work in the U.S. However, further questions regarding an applicant’s country of citizenship and whether they are a naturalized U.S. citizen are likely unlawful questions if posed outside of the applicant’s I9 process.

Physical restrictions are another area in which employers should be very thoughtful about what questions they ask, and how they ask them. Employers can ask applicants if they are able to perform the essential functions of the position they are seeking, with or without reasonable accommodation. It would be wise to provide the applicant a detailed job description, so that the applicant will have in-depth knowledge about what the position requires, while answering such a question.

Perhaps most important to remember in this Digital Age is the fact that employers would do well to avoid performing online research of applicants. While a quick Facebook search of an applicant may be very tempting, it is quite likely that doing so will result in the employer discovering information that they would be prohibited from collecting as part of the interviewing process.

Often, employers believe that if an applicant brings up a topic, it is not a problem to continue the conversation, even if that topic is something the employer is not allowed to ask about. This is not a good idea. Even if an applicant willfully discloses protected information, employers should not further engage the subject or ask questions along those lines. Any such discussion could increase an employer’s potential liability.

Criminal records are another area where employers should pay special attention. It is permissible for an employer not to hire an applicant based upon their criminal record, but such a decision must occur as part of a thoughtful and case-by-case evaluation of each applicant. Many companies have blanket statements which disqualify applicants automatically based on felonies or even misdemeanors in the recent past. Such general rules are likely unlawful. An example of a permissible non-hire occurs when the open position requires the applicant to work as a cashier, but they’ve previously been convicted of theft. This would be a sufficient basis for an employer to disqualify the applicant from that position based on their prior criminal conviction. An example of a wrongful non-hire would be for the same cashier applicant to be denied employment based solely on the fact that they have a DUI conviction.

All of the above suggestions are aimed at helping employers avoid a “failure to hire” complaint being filed by an applicant. These complaints arise when applicants who weren’t in fact hired allege that they were qualified to perform the job they applied for, but the employer did not hire them for some illegal or impermissible reason.

Source: Michigan Lawyers’ Weekly, 3/21/16.
Submitted by Jonathan T. Rea

Rumblings of Reform
Recent events in other parts of the country have attorneys and employers in Michigan taking notice. The Association for Responsible Alternatives to Workers’ Compensation, also known as ARAWC, is a group started by Texas attorney Bill Minick, which is focused on creating nationwide change in the very foundation of the workers’ compensation system. At the heart of ARAWC’s philosophy is the idea that employers should be able to opt-out of state-regulated workers’ compensation plans, and instead, be able to draft and implement their own plans. Although ARAWC doesn’t make the identity of their members public, it does appear that major retailers, including Walmart, are represented within its ranks.

Unsurprisingly, Texas was the first state to allow companies to opt-out of the state-provided system, and Oklahoma quickly followed suit. However, just a few weeks ago, the Oklahoma law was declared unconstitutional by the state Workers’ Compensation Commission, likely non-binding precedent. ARAWC doesn’t appear to have been discouraged by the events in Oklahoma, as their website indicates they have focused their attention to making changes in South Carolina and Tennessee. The activities of ARAWC also seem to have caught the attention of the federal government. National Public Radio and ProPublica have reported that the opt-out provisions in Texas and Oklahoma are being examined by the U.S. Department of Labor to determine whether they are violative of federal law.

Proponents of the changes argue that an opt-out provision can cut an employer’s costs while maintaining desirable outcomes for injured workers. This idea is, at least partially, based on the assumption that a private workers’ compensation system could improve on the current system by increasing efficiency and creating faster resolutions of claims. Of course, there is no universal consensus on the potential of an employer-specific benefit system. Some believe that allowing employers to opt-out will fundamentally affect the basic underpinning of our current system, i.e. that employees give up their right to sue their employers for work-related injuries in exchange for a chance to plead their case within the confines of the state administrative system. This assertion is not without merit. In Texas, the only state currently dealing with these issues, employees do retain the right to sue their employer for negligence. Both sides do seem to agree on one thing, however: if an employer were able to opt-out of the state workers’ compensation system, there would likely be increased contact between the employer and employee after an injury, wherein neither side would likely need legal representation to come to a resolution. Therefore, it appears then that an essential consideration for any state considering an opt-out provision would be how to balance the value of lowering employer costs while not eliminating an employee’s access to the legal system.

Whether Michigan is a target for possible changes appears to be purely speculative at this time. What is certain is that those on both sides of this issue will be monitoring any developments with great interest.

Source: Michigan Lawyers’ Weekly, 3/14/16
Submitted by Jonathan T. Rea

Disciplining Employees for Work Rule Violations While Avoiding Retaliation Claims Under the WDCA
When an injured worker violates a work rule, his employer is placed in a precarious position. Disciplinary action taken against an employee, especially when that employee has filed a claim for workers’ compensation benefits, can raise the specter of retaliation under the WDCA. In these instances, an employer might be less willing to discipline an employee, creating a tenuous precedent. The inconsistent application of work rules and policies can have future legal repercussions. For instance, if an employee is injured because he violated a work rule by not wearing safety goggles, and was not reprimanded by his employer for violating that work rule, that employer has undermined its ability to pursue an intentional misconduct defense implicating the same rule in the future. See e.g. Allen v National Twist Drill and Tool, 324 Mich 660 (1949), compare with Shepard v Brunswick Corp, 36 Mich App 307 (1971). So how can an employer enforce its work rules while minimizing its exposure to retaliation claims?

The Michigan Court of Appeals recently decided McCoy v Laurel Health Care, unpublished opinion per curiam of the Court of Appeals, issued January 21, 2016 (Docket No. 323423). Although this decision is unpublished and holds no precedential value, it signals that the Court of Appeals is still applying the prevailing legal test to retaliation issues.

In McCoy, Plaintiff worked as a CNA. Plaintiff was a good worker, but had repeated attendance issues; he received 37 written warnings for being absent or tardy over the course of 7 years. Plaintiff’s repeated absenteeism and tardiness was a violation of the employer’s attendance policy, and he was eventually placed on a 90-day probation. Plaintiff was warned he would be terminated for a violation within his probation period. Later that same month, Plaintiff injured his knee in the course of his employment, filed a workers’ compensation claim, and later returned to work with restrictions. After an unexcused absence within the probation period, Plaintiff was terminated. Plaintiff brought a claim for unlawful retaliation under the WDCA, essentially arguing that he had been terminated for filing a workers’ compensation claim.

The Court of Appeals, reviewing a motion for summary disposition, cited Cuddington v United Health Servs, 298 Mich App 264, 275 (2012) which sets out the test for retaliation:

To establish a prima facie case of retaliation under the WDCA, an employee who has suffered a work-related injury must present evidence: (1) that the employee asserted a right to obtain necessary medical services or actually exercised that right, (2) that the employer knew that the employee engaged in this protected conduct, (3) that the employer took an employment action adverse to the employee, and (4) that the adverse employment action and the employee’s assertion or exercise of a right afforded under MCL 418.315(1) [establishing an employer’s duties under the WDCA] were causally connected.

The Court of Appeals explained that a temporal relationship, by itself, does not demonstrate a causal connection between Plaintiff’s termination and his receiving workers’ compensation benefits. The Plaintiff in McCoy, and in any retaliation case, has a burden to overcome the presumption created by an employer’s neutral explanation for disciplining an employee. In this case, Plaintiff failed to rebut that presumption. Other than occurring contemporaneously, no connection was drawn between Plaintiff’s termination and his claim for workers’ compensation benefits.

Therefore, to prevail on a claim for retaliation, an employee must show a causal connection between his discipline and his workers’ compensation claim. If an employer documents work rule violations, and enforces it work rules consistently and on a good faith basis, employees will have a difficult time meeting their burden of proof and convincing the fact-finder that the discipline rendered was causally related to the employee’s exercise of his rights. Employers should feel comfortable administering their work rules on a good faith basis, without the fear of being liable under a retaliation claim. Proper record-keeping and consistent enforcement of work rules are essential to avoiding legal liability in this area.

Submitted by Brian A. Zielinski

Evidence-Based Medicine and its Application to Workers’ Compensation
Evidence Based Medicine (EBM), first proposed by physicians and medical educators in the 1980s, is a uniform method of addressing questions of medical treatment. Although widely relied on by physicians, EBM is just beginning to emerge in workers’ compensation systems. EBM seeks to create treatment guidelines, informed by medical research, for treating specific medical conditions.

Applied to California’s workers’ compensation system for example, EBM has been used create presumptive treatment guidelines that can only be rebutted by a “preponderance of the evidence establishing that a variance from the guidelines reasonably is required to cure and relieve the employee from the effects of his or her injury. Cal Lab Code § 4604.5. These guidelines were designed “to assist providers by offering an analytical framework for the evaluation and treatment of injured workers . . . for all injured workers diagnosed with industrial conditions. Id.

Proponents of EBM argue that it supports treatment based on objective knowledge arising from high-quality evidence produced in randomized; double-blind; peer-reviewed medical studies, rather than based on a doctor’s own intuition or inference. Opponents of EMB argue that such a system interferes with the doctor-patient relationship, and restricts physicians that treat patients with unique conditions, medical histories, and circumstances.

Multiple studies have shown that workers’ compensation claims following evidence-based guidelines have shorter durations and lower medical costs. In fact, California’s adoption of EBM was a response to the rising cost of medical treatment.

At this point, it is clear the application of EBM to workers’ compensation systems can have a significant impact on the cost of medical treatment and value of workers’ compensation claims. Hanba & Lazar is currently preparing a seminar on this topic that we plan to conduct later this year.

Submitted by Brian A. Zielinski

A Cautionary Tale for Careful Drafting of Non-Competes
The Michigan Court of Appeals issued an unpublished decision on February 16, 2016 in the case of Mid Michigan Medical Billing Service, Inc. v Lindsey A. Williams.

This case involved the language used in Mid Michigan’s employment handbook and agreement. Mid Michigan provides medical billing services in Flint. Williams was the office manager for over a decade and oversaw client relations. In May 2013, Williams voluntarily left her employment with Mid Michigan to start her own medical billing business from her home. One of Williams’s clients was a former client of Mid Michigan. Mid Michigan had an employee handbook and agreement that prevented employees during employment, and for 12 months following, from directly or indirectly being involved with or engaging in, or contributing his/her knowledge to any work which is competitive with a service provided by Mid Michigan. The non-compete agreement was limited to a geographical boundary of 50 miles from Mid Michigan’s Flint office; and in time for 12 months. Likewise, the agreement provided that employees were prohibited from obtaining employment from any contracted clients or previously contracted clients of Mid Michigan either during or after termination.

Mid Michigan brought suit for a preliminary injunction and Williams admitted that she was providing medical billing services for one of Mid Michigan’s former clients. The trial court found that a temporary injunction was warranted but Williams objected and asked the court to determine the reasonableness of the ban against soliciting Mid Michigan’s past and present clients. The trial court failed to rule on the merits and issued a permanent injunction, ordering Williams to pay damages and enjoining her from 1) engaging in any conduct competitive with a service provided by Mid Michigan within 50 miles of Mid Michigan’s principal place of business for a period of one year; and 2) from obtaining employment, either directly or indirectly, from any current or previously contracted client of Mid Michigan regardless of geographical scope or duration.

Williams appealed the order arguing that the trial court must first determine the reasonableness of a noncompetition agreement before enforcing it; and that the handbook provision, which prohibited her from performing any work for any of Mid Michigan’s past or current clients is unreasonable to the extent that its duration and geographic reach are unlimited. The Court of Appeals agreed that the provision was unreasonable.

The Court of Appeals determined that a court must assess the reasonableness of a noncompetition clause if a party has challenged enforceability. Likewise, the issue in interpreting noncompetition provisions is whether the provisions protect the employer’s “reasonable competitive business interests.” The Court acknowledged that noncompetition agreements are disfavored as restraints on commerce and are only enforceable to the extent that they are reasonable. MCL 445.774a(1) codifies this rationale and provides that these agreements must be reasonable in their duration, geographical area, and type of employment or line of business. The court is empowered, by statute, to limit an agreement to render it reasonable in light of the circumstances in which it was made.

While the company had a legitimate interest in protecting itself from an employee who, by virtue of her position, had the access and ability to appropriate client list data, it was unreasonable to permanently prohibit Williams from pursuing employment opportunities, directly or indirectly, from any current or previously contracted client of Mid Michigan. The Court found that the restraint was much broader than necessary to protect Mid Michigan and functioned as a restraint on Mid Michigan’s current and former clients to choose a service provider. The Court noted that a provision like this that prohibits a former employee from acquiring employment with a former or current client encompasses an ever-growing number of clients and could extend indefinitely. As a result, that clause was patently unreasonable and unenforceable as written.

This case illustrates that seemingly careful drafting may indeed violate the basic rule of non-competition agreements: reasonableness. By drafting the provision to include all previous and current clients and not giving a definite time duration, the provision became unreasonable on its face. Remember, that these agreements must be reasonable in time, geographical scope, and line or type of employment/business.

Submitted by Stephen A. Cooley

Social Media Policies – Get on Board!
There is no question that social media has become an important part of our daily lives and that includes the workplace. Its use as a marketing tool to improve the reach, frequency, and impact of a marketing strategy is well-documented. However, problems do frequently arise with this new medium and these problems result in potential employer liability exposure. Some typical examples of potential issues involve business defamation, leaks of confidential information, and harassment of co-workers.

However, drafting a social media policy must be a carefully-considered task. Any attempts to ban or infringe upon the ability of employees to engage in “concerted activity” related to collective bargaining, wages, and working conditions is likely to increase the company’s risk exposure under the National Labor Relations Act.

Likewise, employers should be cognizant that Michigan has passed legislation known as the “Internet Privacy Protection Act,” MCL 37.271 et seq. which prohibits an employer from requesting an employee or job applicant to grant access to, allow observation of, or disclose information that allows access to or observation of the employee’s or applicant’s personal internet account; and prohibits the employer from discharging, disciplining, failing to hire, or otherwise penalizing an employee or applicant for failure to grant access to, allow observation of, or disclose information that allows access to or observation of the employee’s or applicant’s personal internet account. There are some exceptions to this prohibition as well, including conducting an investigation to ensure compliance with applicable laws or prohibitions against work-related employee misconduct.

Social media may also facilitate harassment amongst co-workers. This phenomenon is known as “cyberbullying.” This harassment may be based on a protected class status, or may be sexual in nature. In an age where employees often “friend” or “follow” one another, some seemingly benign conversations can quickly escalate into harassment claims. The great danger, of course, with these communications is that they effectively memorialize the content and the commenter, complete with date stamps, and make proving such claims vastly easier.

Social media policies should also prohibit the dissemination of confidential information. Whether the disclosure is a short YouTube video of a new product, a Snapchat of a new facility, or a Facebook post referencing a new big client, these breaches can have disastrous effects upon the company. Best practices caution to include this type of dissemination in the company’s social media policy, along with potential social media infringements of copyright and trademark owners’ rights.

Submitted by Stephen A. Cooley

Please leave us comments/questions. If there is a topic that you would like to see discussed in this Quarterly, please let us know. Comments and questions can be directed to Stephen A. Cooley at scooley@hanbalazar.com.