Statute of Limitations in Qui Tam actons addressed by Supremes
The Supreme Court has issued its final employment-law related opinion of the term. The majority opinion (authored by Justice Thomas) held that the qui tam retaliation cause of action will not be governed by the six-year statute of limitations for normal qui tam actions. Instead, the Court instructs that lower court's are to utilize the cause of action from the most analogous cause of action for the state in which they sit. I can think of a few different possiblities for Texas (whistle blower statute - 90 days, standard tort SoL - 2 years).
As I am out of town this week for the NELA convention, I have not been able to thoroughly review the decision or give it any more than a cursory treatment here today. Suggest you take a look at Mike Fox's write up at his excellent blog here.
Mmm...Cheesesteak!
I am in Philly this week for the National Employment Lawyers Association annual conference. It promisses to be both fun and informative. For you mobile tech geeks out there [you know who you are], I am traveling sans laptop this week (I feel almost naked). Instead I have loaded my Palm Tungsten C to the hilt and am (so far) loving it. All emails, faxes and voicemails come directly to the palm. In fact, this message is being posted from my palm.
So if you are in Philly this week for the conference, drop me a line at chris(at)mckinneylaw(dot)net. We'll grab a cheesesteak!(Hint: spell out "@" and "." in your email address whenever posting online to keep your address from getting sucked up by roving spambots.)
Kinky Friedman for Governor
Kinky for Gov Originally uploaded by McKinneyLaw. Recently, Kinky Friedman entered the race under the slogan - "How hard can it be?" For those of you outside the Lone Star State, Kinky Friedman is...well...eccentric. Actually, saying Friedman is merely eccentric is like saying President Bush occasionally mispronunsticates the English language. Friedman is, among other things, a cowboy mystery writer and leader of a band called "The Texas Jewboys." He is a frequent magazine contributor and authority on Texas and politics. And now, he is running for governor. While discussing Kinky's run recently, Texas District Judge Charlie Sherrill was asked by his secretary, "What is a Kinky?" In response, Judge Sherrill drafted this letter entitled "Yes Nancy, there is a Kinky Claus."
Judge Sherrill points out that one of the biggest areas of trouble in Texas right now is the complete lack of support for the judicial branch from the legislature or the governor. As the Judge puts it:"Perry and the legislature are damaging the judiciary. Perry at the end of the session vetoed a bill for a pay increase for judges---I believe it has been eleven years since the judges have received a pay increase -- which I will admit does have a bearing on my retirement. Also, as of September lst there will be no funds for Senior Judges. I am already working a full day for a half days pay and in some regions there is just no fund for Senior Judges, which means the dockets are already building up. Even now in the 216th District Court it will more than likely require two years before you can get a civil case tried --all thanks to Governor Perry and the legislature. In the end it will damage business and lot of people may loose everything because they can not get to trial -- surgeries will have to be delayed, etc. To continue like this is no good. Yes, improvements and corrections do need to be made, but let's make those instead of destroying the whole system. By destroying the system jobs will be lost and people will suffer, etc. "So let the games begin kids. As Kinky says: He can't mess things up any more than what is being done at this time.Employers Evading Millions in Unemployment Taxes
This is turning into the corporate fraud week here at the Bulletin. Hey, we just go where the news takes us. Today's story is from the Washington Post: "Unscrupulous employers are continuing to evade millions of dollars in state unemployment taxes despite passage two years ago of a new federal law meant to tighten the rules, witnesses from state governments and private industry told a House panel yesterday."
Workers' Compensation Fraud by Employers Drives Costs Up for All
One of my favorite politically far right employer-side employment law blawgs, George's Employment Blawg (If you don't already have this guy's blawg loaded on your daily reading list, you should.) has a story today that asks the question: "How common and costly is workers comp fraud?"
George correctly points out that with regard to employee-side fraud, "[s]ome say it's a huge problem; others that it is being exaggerated to promote antiworker reforms. I'd submit that the truth is somewhere in between, but that anything that can be cost-effectively done to reduce fraud is certainly worth looking into."I agree with his sentiment for the most part. However, I would recommend that states begin actively pursuing employer-side workers' comp fraud with at least a little of the relish that they appear to have for investigating everyday employees.
An article from the Labor Research Association points out that states reporting such data indicate that employer-side fraud costs states 4 to 5 times more each year than employee-side fraud. In his article "Waste, Fraud and Abuse in Workers' Compensation: The Recent California Experience," Maryland Law Review, Vol. 52 Gary Schwartz reported that few experts believe that claimant fraud is a major cost driver in workers' compensation. But some estimates, including those adopted by California Governor Pete Wilson, suggest that fraud accounted for 25% of all employers' workers' compensation costs and 10% of the claims. In California, a wave of legislation in the late 1980s and early 1990s was fueled by allegations from employers that workers' compensation costs were too high and that fraud was rampant in the system. But between 1979 and 1991, insurance carriers in California reported only 532 cases of alleged fraud. (See Damon Darlin, "The System Was Spinning Out of Control," Forbes, Vol. 155, No. 6, 3/13/95)According to the LRA: "the most common forms of workers' comp fraud include:(1) Underreporting payroll. Employers reduce their premiums by not reporting parts of the work force, paying workers off the books or creating a companion corporation to hide a portion of the employees.(2) Declaring independent contractors. Employers avoid premium payments for employees by classifying them as independent contractors even though they are legally employees.(3) Misclassifying workers. Employers intentionally misrepresent the work employees do to put them in less hazardous occupational categories and reduce their premiums.(4) Misrepresenting claims experience. Employers hide previous claims by classifying employees as independent contractors or leased employees or creating a new company on paper. In addition to premium fraud, employers often fail to purchase workers' compensation insurance, despite state laws mandating that they do so." Employers also sometimes instruct injured workers to seek treatment under group health insurance rather than workers' compensation, and discourage workers from filing workers' compensation claims or fire workers who file claims.
Despite the statistical evidence indicating that rogue employers are responsible for far more fraud losses than employee-related fraud, state governments and insurance carriers seem intent on harassing injured workers while turning a blind eye to corporate comp fraud. According to a report conducted by the Texas Oversight Council on Workers' Compensation, insurance carriers spent more money investigating injured worker benefit fraud than any other type of workers' compensation fraud. In 1996, Texas insurance carriers spent an average of $1,257 per claimant fraud investigation, compared with $991 per employer premium fraud investigation and $823 per health care provider fraud investigation. In 1996, the nineteen insurers studied spent over $5.5 million investigating workers' compensation fraud in Texas, yet recovered a total of $1,520,179. Of the 4,077 cases of claimant fraud that the carriers investigated, only 18 were referred for criminal prosecution. The report concluded: "While injured worker benefit fraud is the most often investigated form of workers' compensation fraud, it is far from the most costly. ... It is clear that more resources should be spent fighting the most expensive and overlooked types of workers compensation fraud: employer premium and health care provider fraud." (See Research and Oversight Council on Workers' Compensation, "Fraud in the Texas Workers' Compensation System," Texas Monitor, Vol. 2, No. 4, Winter 1997)My suggestion: Let's start looking into where the real fraud dollars are being lost and work to bring down rates for those employers that play by the rules.
Waffle Hou$e gets tagged for $3.5 million.
Yes it is time once again for the yearly Waffle House million dollar verdict. This time coming from Arlington, TX. A jury awarded a waffle house waitress $3.5 million dollars for ignoring the repeated pleas for assistance from a waitress suffering terrible sexual harassment at the hands of a cook. By now I would think Waffle House must have a line-item in their budget for discrimination jury verdicts. Here's the story.
Wage abuse by employers on the rise.
Here is an interesting article in the Christian Science Monitor reporting that the attorneys general in many states are starting to more actively pursue wage violations by employers. Accoring to the article, enforcement is on the rise because authorities believe the infractions are growing as the economy becomes more service-oriented - and are showing up in new industries.
Not surprisingly, businesses consider the setting of a wage floor nothing more than government meddling that increases their costs, particularly for small businesses."We see it as the government arbitrarily determining a wage issue, and we believe that is better left to market forces," says Marc Freedman, director of labor-law policy at the US Chamber of Commerce. "What we see is that it's routinely used as an introductory or training wage. People who start don't stay there long. They're quickly promoted." Yeah right.That is a gutsy argument for the Chamber to make given the abundant evidence that the gap between the rich and the poor in this country is increasing at an alarming rate. "A recent front-page article in The Los Angeles Times showed that teenagers are faring poorly in a tight job market because of the fierce competition they're getting from older workers and immigrants for entry-level positions.On the same day, in the business section, the paper reported that the chief executives at California's largest 100 companies took home a collective $1.1 billion in 2004, an increase of nearly 20 percent over the previous year. The paper contrasted that with the 2.9 percent raise that the average California worker saw last year." See Full Article
Noncompetes are just plain hard to enforce.
One of the thorniest issues for employment lawyers for many years has been that of non-compete agreements. The courts are openly hostile to them on public policy grounds and review them very strictly. Their disdain for such agreements is only fueled by the fact that some companies use them as a tool to threaten and cajole good employees that have left for greener pastures, with full knowledge that the agreement won't ultimately hold up in court. This makes drafting an enforceable agreement for those companies that have a legitimate interest in protecting truly proprietary material all the more difficult. Unlike nearly any other kind of contract, an non-compete agreement (by statue) cannot stand alone and be enforced on its own merits. It must be attached or "ancillary to" an otherwise enforceable agreement. As the promise of continued at-will employment has been held to be insufficient consideration to support a non-compete agreement, companies more often than not attempt to tie the restriction to a promise on its part to provide the employee with confidential information. Thus, the employer promises to give confidential information, the employee promises to keep it confidential and the parties' non-compete clause is made ancillary to this agreement. In TMC Worldwide, L.P. v. Gray, (Tex.App. - Houston [1st Dist.] 05/26/2005), the Houston Court of Appeals weighs in on an issue that comes up more often than you might expect. What happens if the company promises to deliver confidential information...but never does. Or, as in this case, doesn't do so for many months after the parties enter into the agreement.
In TMC, the employer asserts that its promise to provide the employee with confidential information in return for his promise to keep the information confidential was non-illusory and thus was the basis of an "otherwise enforceable" contract that was ancillary to the covenant not to compete. However, the employee testified that he did not receive this confidential information until one year after he started working for the company. The trial court believed this testimony and made findings of fact consistent with his recollection of the events. Based on these facts, the appeals court held that a promise to provide confidential information is illusory and cannot be the basis of an "otherwise enforceable agreement" unless (1) the employer promises to deliver the confidential information to the employee and (2) the employer actually delivers the confidential information at or near the time the employee makes the promise to keep the information confidential. The court therefore held the non-compete to be unenforceable. Personally, while I agree with the court that it would be inappropriate to enforce a non-compete under such circumstances, I have some difficulty with the concept of how the failure to actually follow through on a promise renders that promise to be illusory in the first place.
