September 29, 2014

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Prepared by Ted Gentry
September 2014

Kickball Injury Leads to Workers’ Compensation Award.  Wait, What?

Because Wyche at Work enjoys competitive recreational activities and company team-building exercises, including the occasional foray on the co-recreational law league softball fields, a recent decision awarding benefits for an injury incurred a kickball event piqued our attention. In Whigham v. Jackson Dawson Communications, the South Carolina Supreme Court determined that an employee that was injured playing kickball during an event he organized for his employer was eligible for workers’ compensation because his injury arose out of and in the course of his employment.

The determination of whether a recreational or social activity is within the course of employment  — and therefore compensable under the South Carolina Workers’ Compensation Code — involves the following factors: (1) the event occurs on the premises during a lunch or recreation period as a regular incident of the employment; or (2) the employer, by expressly or impliedly requiring participation, or by making the activity part of the services of an employee, brings the activity within the orbit of the employment; or (3) the employer derives substantial direct benefit from the activity beyond the intangible value of improvement in employee health and morale that is common to all kinds of recreation and social life.

Many voluntary recreational events, even if loosely “sponsored” by the employer, may not meet this standard (and if they did, this decision would chill most companies from sponsoring recreational activities). In this case, the participants of the kickball game participated voluntarily at the end of a workday. Whigham, however, had initiated the game (as a morale booster for the company) and organized the outing. The Court found that even though Whigham was a marketing manager, his participation was “expected” rather than “voluntary” and that his participation was distinguishable from that of the other employees. His supervisor concurred, alleging that it would have been derelict for Whigham to organize the event and not participate. Organizing and attending the game thereby became a “part of his employment”. When he suffered a serious injury on the last play of the game (shattering his tibia and fibula, resulting in two surgeries and future knee replacement), the Court determined that he should have gotten workers’ compensation benefits.

The ramifications of this case merit close observation. This case may not open the flood gates for claims by employees who participate in recreational work leagues, but the Court was very clear that if an employer requires and expects employees (or certain categories of employees) to participate in a social or recreational activity as part of their job, then an injury that happens as part of that participation may be covered by workers’ compensation. Employers seeking to avoid workers’ compensation claims should be cautious when organizing and promoting such company outings. Any implication that employees are required to attend may bring their participation in the event within the scope of their employment.

Complaints of Insurance Fraud Continue to Rise

Insurance fraud continues to have an economic impact on South Carolina employers. The Insurance Fraud Division of the Office of the Attorney General recently reported in its 2013 Insurance Fraud Annual Report that it received an “all-time high” of 1,231 complaints regarding insurance fraud last year. More than 25% of the 37 fraud convictions prosecutors secured in 2013 were in response to unemployment fraud complaints.

The Insurance Fraud Division was created in 1994. From 1995-2013, the division has received reports of over $9.5 million in workers’ compensation fraud, and over $3.2 million in unemployment fraud.  The division receives and investigates referrals of possible insurance fraud from various state agencies, insurance companies, private citizens, law enforcement agencies, attorneys and private law firms throughout South Carolina.

OSHA Revises Reporting Requirements for Work-Related Fatalities and Injuries

The Occupational Safety and Health Administration (“OSHA”) recently published a final rule that changes the requirements for reporting workplace fatalities and injuries. The new rule requires all employers covered by the Occupational Safety and Health Act — even if exempt from maintaining injury and illness records — to notify OSHA of work-related fatalities within eight hours. In addition, covered employers are to report work-related in-patient hospitalizations, amputations or losses of an eye within 24 hours. The old rule required employers to report only fatalities and hospitalizations of three or more employees and did not require any reporting of single hospitalizations, amputations or loss of an eye.

According to a news release OSHA issued in conjunction with the new rule, 4,405 workers were killed on the job in 2013. The U.S. Secretary of Labor Thomas E. Perez predicts the new rule “will help OSHA focus its resources and hold employers accountable for preventing [workplace injuries and fatalities]”. OSHA issued a separate statement announcing, among other things, that reports of injuries and illnesses will be publicized on OSHA’s website in an effort to “‘nudge’ employers to take steps to prevent injuries so they are not seen as unsafe places to work.”

The rule also updates the list of industries that are partially exempt from the requirement to routinely keep injury and illness records due to relatively low incident rates. As a result of the update, several new industries are now required to comply with OSHA’s recordkeeping requirements.

OSHA’s final rule takes effect on January 1, 2015.

You Snooze You Lose:  Fourth Circuit Addresses a Late Plaintiff

In Hentosh v. Old Dominion University, the U.S. Court of Appeals for the Fourth Circuit upheld a decision disposing of the plaintiff’s reverse race discrimination claims against the university employer based on the plaintiff’s failure to exhaust administrative remedies. Prior to filing a claim of discrimination or retaliation under Title VII, a plaintiff must exhaust her administrative remedies by filing a charge of discrimination with the EEOC. A plaintiff’s discrimination claims may be dismissed if she fails to file a charge with the EEOC within 300 days. Further, the allegations contained in the charge “generally limit the scope of any subsequent judicial complaint.”

In Hentosh, a white professor brought a suit against the university alleging that the university had a practice of discriminating against white employees and in favor of racial minorities. After she filed a charge of discrimination with the EEOC, the university denied her application for tenure. After the EEOC dismissed her charge and issued a “right to sue letter,” the plaintiff filed a lawsuit in federal court. The university ultimately prevailed, primarily on procedural grounds. The Fourth Circuit upheld the trial court’s decision that (1) dismissed the plaintiff’s race discrimination claims because the plaintiff (a) failed to file a charge with the EEOC within 300 days after the alleged discrete discriminatory acts, and (b) failed to file a new, separate charge with the EEOC when the university denied her application for tenure, which was after she had filed the original charge unrelated to the tenure-based claim, and (2) disposed of the plaintiff’s claim that the university retaliated against her for engaging in protected activities (filing an EEOC charge) because the plaintiff failed to establish that the university’s desire to retaliate was the cause of its adverse employment acts (the decision to deny the plaintiff’s application for tenure). In short, the Fourth Circuit required the Plaintiff to meet procedural deadlines and provide some evidence that her retaliation claim had merit. It was not enough just to assert that she suffered from an adverse employment act.

Though the Fourth Circuit did not reach the merits of the plaintiff’s claims, cases like this remind employers to take care to make employment decisions based on legitimate, non-discriminatory reasons unrelated to protected categories such as race, sex, national origin, or age. Should your organization face a discrimination or retaliation claim, our employment attorneys are intricately familiar with state and federal procedural hurdles and defenses. We are able to help you protect your organization in responding to an informal or formal employee complaint, an EEOC charge, or a lawsuit.

Federal Contractor Updates

Federal contractors will want to note these recent developments that will affect bidding, reporting requirements and employment practices:

  • President Obama signed a new executive order, Fair Pay and Safe Workplaces, that requires federal contractors bidding on contracts valued at more than $500,000 to disclose and correct labor violations that occurred in the past three years. The violations relate to 14 federal wage and hour, labor, anti-discrimination and other laws, as well as equivalent state laws. According to a Fact Sheet, the new Executive Order will be implemented on new contracts in stages, on a prioritized basis, in 2016.
  • The Office of Federal Contract Compliance Programs (“OFCCP”) published a proposed rule that would require that certain federal contractors supplement their Employer Information Report (EEO-1 Report) with summary information on compensation paid to employees by sex, race, ethnicity, and specified job categories, as well as hours worked and the number of employees. The deadline for comments on the proposed rule is November 6, 2014.
  • The OFCCP also issued a directive to clarify that existing agency guidance on discrimination on the basis of sex includes discrimination on the bases of gender identity and transgender status. The directive is a guidance document only and does not establish legally enforceable rights or obligations.

If you have any questions about these or other workplace law topics, please contact Ted Gentry.

This update is provided by Wyche for educational and informational purposes only and is not intended and should not be construed as legal advice.