Proactive Policies: Navigating Ethical Challenges and Legal Compliance for Employer
November 17, 2023
Learn More
Ed. Note: Read Part 1 of Heatwaves of Drama Here
Ward and Smith Labor and Employment attorneys presented an interactive case study during their annual Employment Law Symposium to provide insights on how the leaders of a hypothetical manufacturer responded to an A/C malfunction in the middle of July, interrupting the production line and causing worker's health problems, when the team is facing a critical deadline.
The session used the firm’s signature Live-Action Role-Play (LARP) technique to feature insights from Ken Gray, leader of the Labor and Employment Law Group, Amy Fitzhugh, a professional licensing attorney, and Hayley Wells, a labor and employment attorney.
Fitzhugh sparked the discussion by presenting background information on the fictional company called Precision Plastics Molding, which produces everything from medical devices and car parts to smartphone cases and toothpaste caps. In Part 1, the team looked at issues related to managing safety concerns and employee health, pay issues, navigating the Pregnant Worker’s Fairness Act, and minimizing liability.
In Part 2, the attorneys shared practical strategies for handling workers’ compensation claims, and determining whether individuals are employees or independent contractors.
Another Issue Arises: Differences in Independent Contractors and W-2 Employees
Amy Fitzhugh continued explaining how the saga was unfolding at our fictional company on that hot summer day, introducing two new characters.
A hiring freeze has prevented Buster Williams from obtaining full-time employment with Precision Plastics. He started as an independent contractor and had similar job responsibilities to the employees of the company, which provided him with a uniform, tools and training.
Dusty Hill is an employee who started smoking when he was a teenager. He is trying to quit because someone in HR implied his job is in jeopardy due to his breathing issues, which make him a drag on the company’s health insurance. No one at the company knows Dusty is on the transplant list for a new lung.
The A/C malfunction resulted in both Dusty and Buster becoming overheated, necessitating transfer to hospital. Buster has no way to pay his medical bills since he doesn’t have insurance; the outcome for Dusty was more serious.
Dusty experienced a heat stroke from trying to meet the company deadline. Due to his underlying condition, he was written out of work until he could see a pulmonologist, which will take three weeks. Thirteen weeks later, Dusty has been continuously written off work, with a final doctor's appointment expected two weeks later, making it 15 weeks since the July 17 incident.
Now the company is considering replacing Dusty due to his poor performance before the incident and the significant increase in health insurance premiums for everyone.
The Intersection of Worker's Comp, the ADA, and FMLA
“This injury is covered by workers’ compensation as a heat-related injury for Dusty,” noted Gray, “and because he was written out of work until he could see a pulmonologist, it would qualify for FMLA. Every time the doctor extended his out-of-work status through 12 weeks, the leave would be protected under the FMLA.”
After the mandated 12 weeks of FMLA protection, the ADA becomes a factor. Employers should have a policy stating an employee with a work-related injury is required to use workers’ compensation. With a non-work-related injury, the employee would have to use PTO, sick leave and/or vacation time.
“The key is to make them use that leave concurrently, if that is what you want to accomplish,” said Gray. “It’s better to have them use up their paid leave first…do you really want them to have four weeks of paid leave remaining when they get back from FMLA?”
Taking an adverse action against an employee to reduce insurance costs will land the employer in hot water. “The law prohibits interfering with people’s rights in regard to health insurance,” Gray explained.
Documentation is an essential safeguard. “If someone is continually being written out of work, as would be the case with Dusty, since a lung transplant would take at least six months, Precision Plastics could likely take an adverse employment action, so long as there was documentation proving a pattern of engaging with that person in the interactive process,” noted Gray.
When is it Safe for an Employer to Terminate an Employee with a Health Condition?
Employers should consistently send letters to lay the groundwork for termination, if necessary. Each letter should include a history of the events, accommodations and leave time, information about when the applicable protected leave time will expire, and a forecast of future expectations.
“At some point, you can draw the line,” Gray said. “In the final letter, employers should consider stating that, ‘If you are unable to return to work by (a certain date), we will have to consider filling your position, as the function has to be done.’”
In the absence of new information, such as a medical note, the employer would likely be able to safely terminate the employee as long as the paper trail is sufficient.
Rumors spread like wildfire, and employees sometimes hear about upcoming actions. In response, some employees may suddenly come down with a new issue as a tactic for avoiding termination, such as checking into rehab or having a doctor write them out of work for anxiety.
“The paper trail is key. Sending an email to yourself can prove the date and time a decision was made,” added Gray.
Pitfalls of Independent Contractor Misclassification
Buster faced hefty medical bills after his hospital visit. He had been working 50 to 60 hours per week, doing the same work regular employees did, and wearing the same uniform, calling himself a "1099 employee."
Of course, the phrase "1099 employee" does not exist, and this is a solid indicator Buster was misclassified. “Even if you have an independent contractor agreement, if they are actually an employee, they will be entitled to workers’ compensation, and your policy may not cover them,” Gray explained.
Some workers' compensation carriers require a list of independent contractors so they can charge and collect a premium to cover them. Misclassification brings a slew of charges, including retroactive premiums from insurance carriers, unemployment benefits, and additional unemployment tax for all individual independent contractors.
Under the Employee Retirement Income Security Act (ERISA), Buster could likely claim that Precision Plastics interfered with and/or denied his access to benefits. Charges could include health insurance, long-term and short-term disability, payroll taxes, retirement plan contributions, and back taxes, as well as a potential class action lawsuit.
A best practice is to ensure that contractors are classified correctly upon entry into the organization and periodically review their status as job roles and responsibilities evolve.
Do Companies Need to Report Hospitalizations to OSHA?
The requirements for reporting fatalities, treatments during hospitalization, and amputations to OSHA are highly complex. Along with many other regulations, employers should know that fatalities have to be reported within eight hours and overnight hospitalization within 24 hours.
--
© 2024 Ward and Smith, P.A. For further information regarding the issues described above, please contact or .
This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.
We are your established legal network with offices in Asheville, Greenville, New Bern, Raleigh, and Wilmington, NC.
