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By Erin L. Kilgore

Last week, the Equal Employment Opportunity Commission (“EEOC”) filed a lawsuit against United Airlines, Inc. and alleged that United violated Title VII of the Civil Rights Act of 1964 (which prohibits employment discrimination based on sex, including sexual harassment) by subjecting a female flight attendant to a hostile work environment.

According to the EEOC, a United pilot frequently posted sexually explicit images and personally identifying information of a United flight attendant (his ex-girlfriend) to various websites, and the posts, which were seen by co-workers, adversely affected her work environment.  The EEOC contends that United failed to prevent and correct the pilot’s behavior, even after the flight attendant made numerous complaints and provided substantial evidence to support her complaints.

As explained by a trial attorney in the EEOC’s San Antonio Field Office: “Employers have an obligation to take steps to stop sexual harassment in the workplace when they learn it is occurring through cyber-bullying via the internet and social media.” According to the EEOC, by failing to take action to stop the harassment in response to the flight attendant’s complaints, United enabled the harassment to continue and created a hostile work environment.  United has stated that it disagrees with the EEOC’s description of the situation.

Additional information about the lawsuit can be found in the EEOC’s press release, and summaries can be found here and here.

By Jaye A. Calhoun, Jason R. Brown and William J. Kolarik, II

On Friday, August 10, 2018, the Louisiana Department of Revenue (the “Department”) released Remote Sellers Information Bulletin No. 18-001 (the “RSIB”).  The RSIB states that the Louisiana Sales and Use Tax Commission for Remote Sellers (the “Commission”) “will not seek to enforce any sales or use tax collection obligation on remote sellers based on United States Supreme Court’s decision in South Dakota v. Wayfair or the provisions of Act 5 [2018 La. Sess. Law Serv. 2nd Ex. Sess. Act 5 (H.B. 17)] as it relates to the expanded definition of “dealer” for any taxable period beginning prior to January 1, 2019.  In addition, the RSIB notes that Uniform Local Sales Tax Board will issue guidance to local sales and use tax collectors advising them not to seek retroactive application of the Wayfair decision.

In Wayfair, the United States Supreme Court held that physical presence in a state is no longer required before a state (or local, by implication) taxing jurisdiction may impose a use tax collection obligation on an out-of-state vendor.  But the Court also noted that a use tax collection obligation could constitute an undue burden on interstate commerce.  In so holding, the Court listed the characteristics of the South Dakota law at issue in Wayfair that may indicate that South Dakota’s law does not impose an undue burden on interstate commerce.  Those factors included: (1) a safe harbor to protect small sellers; (2) the lack of retroactive enforcement; and (3) South Dakota’s adoption of the Streamlined Sales and Use Tax Agreement (which, among other things, requires centralized collection, uniform definitions, simplified rate structures, access to sales tax software paid for by the state, and audit immunity for a seller using the state’s tax software).  The Court remanded the case to the South Dakota Supreme Court for a determination of whether South Dakota’s law created an undue burden on interstate commerce.

Act 274 (H.B. 601) of the 2017 Regular Session of the Louisiana Legislature created a Commission within the Department of Revenue for the administration and collection of the sales and use tax imposed by the state and political subdivisions with respect to remote sales.  The Commission was created to: (1) promote uniformity and simplicity in sales and use tax compliance in Louisiana, (2) serve as the single entity in Louisiana to require remote sellers to collect from customers and remit to the Commission sales and use tax on remote sales sourced to Louisiana, and (3) provide the minimum tax administration, collection, and payment requirements required by federal law with respect to the collection and remittance of sales and use tax imposed on remote sales.[1]  But the Commission was prohibited from acting unless the U.S. Congress enacted a federal law authorizing states to require a remote seller to collect and remit state and local sales and use tax on sales made into the state, which has not occurred.

Act 5 was passed, in part, to fix the Congressional action requirement in Act 274 by amending the definition of “federal law” to include a “final ruling by the United States Supreme Court” (which did not occur in Wayfair).  Act 5 also amended the definition of “dealer” to create a South Dakota-style economic nexus law.  But Act 5’s effective date was contingent on a final ruling by the United States Supreme Court in Wayfair that South Dakota’s law was constitutional, which, as mentioned, did not occur.

Despite the uncertainty of its authority to act, the Commission held its first meeting on June 29, 2018 and has continued to meet monthly.  The RSIB represents the first substantive official guidance issued by the Commission since Wayfair.

As noted above, the RSIB adopts a January 1, 2019, prospective enforcement date and encourages Louisiana localities to refrain from applying Wayfair retroactively.  The Department also notes that any remote seller who is not currently registered with the Department or a local sales and use tax collector can voluntarily register with the Department to begin collecting and remitting sales and use tax in accordance with the direct marketer return provisions in La. R.S. Sec. 47:302(K).  Finally, the RSIB notes that Louisiana’s notice and reporting requirements remain in effect for any remote seller to which those rules apply.

Implications

Louisiana’s decentralized sales and use tax regime does not conform in any measurable way with the factors outlined in the Wayfair opinion as significant in evaluating whether South Dakota’s law imposes an undue burden on interstate commerce.  And numerous Louisiana officials have indicated that Louisiana will not adopt the Streamlined Sales and Use Tax Agreement.  As a result, if Louisiana’s sales and use tax regime were applied to remote sellers as it currently stands it going to be very hard for tax collectors to argue that it does not create an undue burden on interstate commerce.

During its meetings, the Commission has indicated that it views the factors listed in the Wayfair decision as a roadmap and the Commission appears to be attempting to adhere to that roadmap.  For example, the Commission is currently researching software vendors certified by the Streamlined Sales Tax Project (the SSTP”) and the SSPT registration process.  But, as mentioned above, because the Wayfair decision was not a final decision by the Supreme Court, the Commission’s authority to act is simply not clear.  However, it is clear that that the Commission has no direct authority to binds Louisiana local tax collectors.

Nevertheless, it appears the Commission will continue to work towards finding a path that conforms Louisiana’s sales and use tax regime as closely as possible to the factors listed by the Court in Wayfair.  But as the January 1, 2019 date approaches, it is possible that rifts between the localities and the state may be revealed and those rifts may jeopardize the Commission’s mission.

A remote seller that sells goods into Louisiana should be mindful that Louisiana’s notice and reporting requirements remain in effect.  As a result, a remote seller that sells into Louisiana should carefully balance the business concerns related to complying with those requirements with the costs and business concerns of complying with the direct marketer return provisions.

Kean Miller is also aware that some parishes may be sending out post-Wayfair voluntary compliance notices.  Those notices request that the vendor register with the Parish under the Parish’s registration system and begin collecting and remitting tax.  While some vendors may be voluntarily registering with Louisiana localities, it should be noted that there may be a downside to voluntarily registering at this point, before the Commission’s work is complete.  For example, the Commission contemplates a single point of registration and return but if a remote vendor registers voluntarily, it may be stuck with filing individual returns for the foreseeable future in every parish where it has sales (as opposed to filing through the contemplated forthcoming uniform system) and the vendor may not be able to take advantage of any uniform guidance issued by the Commission.  Any taxpayer that receives a voluntary registration notice, or that is considering voluntary registration, should speak with their tax advisor before doing so.

For additional information, please contact: Jaye Calhoun at (504) 293-5936, Jason Brown at (225) 389-3733, or Willie Kolarik at (225) 382-3441.

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[1] La. R.S. Sec. 47:339.

By Michael J. deBarros

Insurers in oilfield legacy lawsuits often argue they are not responsible for their insureds’ settlements with landowners because La. R.S. 30:29 (“Act 312”) requires the settlements to be deposited into the court’s registry for remediation.  On March 7, 2018, the Louisiana Third Circuit Court dealt a significant blow to the insurers’ argument.

In Britt v. Riceland Petroleum Co., 2017-941 (La. App. 3 Cir. 3/7/18), 240 So. 3d 986, writ denied, 2018-0551 (La. 5/25/18), the Plaintiffs sued the current and former operators of Plaintiffs’ property for damages to and remediation of their property.  The operators settled all of the Plaintiffs’ claims, and one of the operator’s insurers argued that Act 312 required the trial court to: (1) hold a contradictory hearing; (2) determine if remediation was required; and if so, (3) order the deposit of funds into the court’s registry.  The Third Circuit disagreed and held that no contradictory hearing is required when the settling parties: (1) provide notice of the settlement to the Department of Natural Resources (“LDNR”) and the Attorney General; (2) allow the LDNR thirty days to review the settlement and provide comments to the trial court; and (3) obtain the trial court’s approval of the settlement.

As a practical matter, a contradictory hearing will rarely be required under Britt since LDNR rarely objects to the settlements.  Thus, Britt makes it more difficult for insurers to refuse to pay for settlements.

If your insurer is refusing to cover your business in oilfield legacy lawsuits, Kean Miller’s Insurance Coverage and Recovery team can help.  We have recovered millions for policyholders in connection with environmental and toxic tort actions, legacy lawsuits, professional liability claims, products liability lawsuits, governmental investigations, intellectual property claims, directors’ and officers’ disputes, property losses, and business interruption losses.

By Brian R. Carnie

For those who think the chance of being assessed penalties for non-compliance with the Affordable Care Act are slim to none, think again.  The IRS’ efforts to enforce the ACA’s employer mandate are alive and kicking.  Since late November 2017, the IRS has been sending out proposed penalty notices to companies they believe were not compliant.  For now, the IRS is only assessing proposed penalties for the 2015 calendar year.  The notices are rolling out slowly, and the IRS has only mailed out a fraction of the total number of notices expected for 2015.  Moreover, the IRS has indicated they have enough information to start sending out similar notices for 2016.

Because of unfamiliarity with these notices, we are seeing a trend where companies fail to deal with the notice in a timely manner.  They don’t realize they generally only have 30 days from the date the notice was mailed to respond.  In addition, the notices may not even be addressed to the right person at the company.  Or the person receiving it may set it aside with the intention of figuring out how to deal with later.

This could be very costly for your company.

  • In every instance where Kean Miller has seen one of these notices, the estimated penalties have been grossly overestimated.   The reasons for this are varied.  The company may have filled out the informational forms incorrectly, which happens often because there is a lot of room for confusion and error in the IRS forms (e.g., incorrect or omitted indicator codes on the 1095 forms), or the employees themselves may have mistakenly provided incorrect information when applying for subsidized health care on the ACA marketplace website.
  • If your company receives one of these letters from the IRS and doesn’t dispute the penalty amount before the deadline you will have waived your rights to contest the amount.   There are no second chances.  Same can be said if you don’t timely exercise your appeal rights once you receive the IRS response to your protest.
  • If the company does not respond or appeal, the next thing they can expect from the IRS is a demand for payment letter.  The time to dispute the amount will be over, and the IRS will start collection proceedings for non-payment.

In short, the penalty notice letters are real, there is a deadline, and the IRS is (as always) serious.  Non-compliance with the ACA is a legal matter that demands prompt attention to ensure protection of your company’s rights.

By David M. Whitaker

In May the United States Supreme Court issued a long-awaited decision in a trio of cases that concerned whether employers can lawfully use mandatory arbitration agreements containing provisions that preclude employees from pursuing employment claims on a class action basis – and instead require them to pursue their claims in an individual private arbitration proceeding against the employer.  In a 5-4 decision, the Supreme Court decided that such provisions are legal and do not violate the provisions of the National Labor Relations Act, which provide non-management employees with the right to take collective action (including, but not limited to the formation of a union) with respect the terms and conditions of their employment.  See Epic Systems Corp. v. Lewis, Docket No. 16-285 (decided May 21, 2018).

The Epic Systems decision has paved the way for employers to use of such agreements to bar employees from participating in collective action lawsuit under the federal Fair Labor Standards Act, in which a single employee can file suit on behalf of themselves and other similarly situated employees to recover unpaid overtime or to recover for violation of the law’s minimum wage payment requirements.  In these cases, one employee is often able to certify a collective action, and the employer is then required to provide the names and mailing addresses of all similarly situated current and former employees to facilitate the Plaintiff’s attorney solicitation for these employees to join (opt in) the collective action lawsuit.  FLSA collective actions involving relatively small amounts of unpaid wages can result in significant liability, including liquidated (double) damages and an award of attorney fees to the Plaintiff’s counsel.  FLSA collective actions have grown increasingly popular with the Plaintiff’s bar due to the relative ease of certification of a collective action and the availability of statutory attorney fees, which can often dwarf the amount of the wages actually owed.

With the benefit of the Epic decision, it is now clear that a well-drafted mandatory arbitration agreement can be used to prevent employees from pursuing collective action litigation in this manner.  As the dust settles on this important decision, employers should take the opportunity to revisit whether or not mandatory arbitration agreements are appropriate for use with their workforce.

There are certainly benefits that may result from the use of employment arbitration agreements, including:

  • Avoidance of collective and class action lawsuits brought by employees under the FLSA and other state and federal statutes.
  • The employment dispute will be decided by an arbitrator (likely an attorney) who is well-versed in the law and on the average less likely to render a volatile decision than a jury.
  • Arbitration proceedings are private.
  • Discovery (depositions and document requests) is typically more streamlined in arbitration.
  • Arbitration proceedings can be resolved more quickly than some judicial proceedings.

But employers should also consider certain drawbacks presented by the arbitration process:

  • Arbitration of employment disputes are subject to certain “due process” considerations to make the process fair to employees – including the requirement that the employer pay the arbitrator’s fee (in court litigation neither party pays the judge’s salary).
  • Arbitrators are less likely to consider prehearing motions for summary judgment to dismiss the employee’s claims prior to an arbitration hearing. Although the likelihood for success varies with the judicial forum, employers generally have a good success rate on pretrial motions.
  • Some arbitrators have a propensity to try to reach a “fair” result, rather than the correct legal result. In these cases, an arbitrator may decide to “split the baby” and award something to an employee who was treated “unfairly,” even though the claim has no legal merit.
  • As a general matter, there is no right to appeal a bad arbitration award, even when it is clear that the arbitrator’s decision is factually or legally incorrect.

Also, employers should be aware that arbitration agreements will not be effective in preventing government agencies, such as the Equal Employment Opportunity Commission or the Department of Labor, from pursuing enforcement actions on behalf of its employees on a class-wide basis, as the Supreme Court has previously held that government agencies are not bound by the terms of private arbitration agreements.

The Supreme Court’s recent decision certainly provides another reason (avoidance of employee class action lawsuits) for employer’s to reconsider the benefits of mandatory arbitration agreements.  But employers should carefully weigh the costs and benefits unique to their workforce, employment claims experience, the court system in which employment claims are typically brought against the company and other factors before deciding.  Employers who decide to establish an arbitration program for use with employees should also work closely with counsel to ensure that the agreement is tailored to meet the employer’s needs and to ensure that the agreement is drafted in a manner that will be enforceable.

By Tod J. Everage

Contractual indemnities are important and valuable in the oil patch. When they are enforceable, they have the potential to end litigation completely or at least the financial burden for a particularly well-positioned indemnitee. But, with “anti-indemnity” statutes in play in several jurisdictions (including Louisiana), the enforceability of these indemnity provisions rely (barring exceptions) on the application of general maritime law.

It is a common practice to select general maritime law as the governing law in any oilfield MSA – at least within the Fifth Circuit – but simply saying it applies doesn’t actually make it so. As a result, jurisprudential tests have emerged to determine what law actually applies to torts depending on where the incident occurred, as well as to the contracts themselves. When the services provided under the contract are obviously maritime in nature, such as a contract for vessel support services, there is little to dispute. But, especially when there is a high-dollar potential exposure riding on the enforceability of an indemnity obligation, there have been persuasive arguments made on both sides of the maritime vs. state law debate governing contracts for other, less obvious, oilfield services.

Most recently, the US Fifth Circuit addressed this dispute over plugging and abandoning services (“P&A work”) on three wells in coastal Louisiana waters in In re: Crescent Energy Services, No. 16-31214 (5th Cir. July 13, 2018). Crescent agreed, amongst other things, to provide three vessels to perform the work and to indemnify Carrizo against any claims for bodily injury, death, or damage to property. One of Crescent’s employees was injured on one of Carrizo’s fixed platforms during the P&A work, and unsurprisingly, Carrizo’s indemnity demand from the resulting claim was denied by Crescent under the Louisiana Oilfield Indemnity Act. The district court, applying the former Davis & Sons test, found the contract between Carrizo and Crescent to be a maritime contract and granted summary judgment in favor of Carrizo on its indemnity claim.

In January, the US Fifth Circuit pared down its maritime contract test (from Davis & Sons) to focus on only two factors: (1) “is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters?” and (2) “does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract?” In re Larry Doiron, Inc., 879 F.3d 568, 576 (5th Cir. 2018). Both factors must be affirmed before maritime law may be applied to the contract.

On the first factor, Carrizo asserted a creative and ultimately successful argument that P&A work is “part of the total life cycle of oil and gas drilling.” Because plugging and abandoning a drilled well is part of the agreement with the State of Louisiana to get an initial permit to drill, the US Fifth Circuit was persuaded that the contract for P&A work involved “the drilling and production of oil and gas.” The Court then re-iterated its departure from Davis & Sons and its concern about where the incident occurred. In Doiron, the US Fifth Circuit stated: “The facts surrounding the accident are relevant to whether the worker was injured in a maritime tort, but they are immaterial in determining whether the workers’ employer entered into a maritime contract.” Doiron, 879 F.3d at 573-74. The US Fifth Circuit is “no longer concerned about whether the worker was on a platform or vessel.” Rather, the question is whether the contract concerned the drilling and production of oil and gas on navigable waters.

On this point, Crescent’s insurers argued that Doiron’s analysis on the P&A work resulted in inconsistencies with other Fifth Circuit precedents finding that torts occurring on and during the construction of fixed, offshore production platforms on the OCS are generally not governed by maritime law. Also, wireline work – which comprises much of the P&A work – had also traditionally been found to not be a maritime activity. The Court declined the invitation to review those OCSLA cases: “We are not concerned here with those OCSLA issues of whether to borrow state law as surrogate federal law, which leads to analyzing whether maritime law applies of its own force, which requires determining the historical treatment of certain contracts. We do need to analyze, though, whether this is a maritime contract. Doiron now controls that endeavor.” But these statements do not make clear whether the rejection of the OCSLA cases was because Crescent Energy Services is not an OCSLA case itself, or whether that distinction no longer has a difference in oil and gas contract review.

The Fifth Circuit then quoted commentary from Professor David W. Robertson discussing contract disputes on the OCS: “If the contract is a maritime contract, federal maritime law applies of its own force, and state law does not apply. If the contract calling for indemnity is not a maritime contract, the governing law will be adjacent-state law made surrogate federal law by OCSLA § 1333(a)(2)(A).” Why bring this up if the Court is ignoring OCSLA cases on the grounds of distinction? The Court doesn’t directly clarify. Instead, it said the reference was “to show that Davis previously and Doiron now are performing the task of determining how to classify contracts.” It further stated that Davis (a Louisiana waters case) did not offend OCSLA cases, so neither does Doiron.

The Fifth Circuit seemed concerned about this argument though and the perception of the Court’s abandonment of long-standing precedent. Surely, this will be the continued topic of attack from potential indemnitors. In addressing those criticisms, the Court stuck with its more back-to-basics theme: “We are here classifying a contract for a certain purpose, a juridical activity that has been done consistently with the 1969 Rodrigue decision at least since our 1990 Davis decision. We en banc eliminated most of the factors, narrowing our focus, but we did not fundamentally change the task. Doiron is the law we must apply.” On the one hand, the Court’s statements seem to firmly reiterate that Doiron is the law going forward when analyzing the maritime nature of a contract regardless of the location of the work. But, the Court’s avoidance of the OCSLA issues and the narrowed “certain purpose” of their decision begs for more direct guidance from the Fifth Circuit on Doiron’s geographic reach.

The Fifth Circuit could have unequivocally proclaimed that the breadth of Doiron extended to OCSLA cases, in whatever capacity, if that were its intent; but it did not. So then, what is the expected effect of Doiron on those contract cases involving a controversy on the OCS, where OCSLA statutorily provides its own choice-of-law provision? Does Doiron actually supplant Grand Isle Shipyard, Inc. v. Seacor Marine, LLC, 589 F.3d 778 (5th Cir. 2009), since it called the case “un-useful” to its task? If the situs of the controversy is no longer appropriate, then it seems that Doiron may be the answer.

Grand Isle was a contractual application of test articulated in Union Texas Petroleum Corp. v. PLT Engineering, Inc., 895 F.2d 1043 (5th Cir. 1990) which starts by finding that the dispute arises on the OCS; otherwise, now, Doiron surely is the test. The second PLT factor determines whether the OCSLA choice-of-law provision applies by looking to see if federal maritime law applies of its own force. This is where Crescent’s insurers’ historical argument would come into play. To determine whether federal maritime law applies of its own force, the US Fifth Circuit: (1) identified the historical treatment of contracts such as the one at issue, and (2) applied Davis & Sons. It seems obvious that this factor will likely at least be revised to substitute Doiron for Davis & Sons. The less obvious question is whether the historical treatment factor is relevant at all going forward.

In Doiron, the Fifth Circuit criticized those “historical” opinions that “improperly focus[ed] on whether the services were inherently maritime as opposed to whether a substantial amount of the work was to be performed from a vessel.” Thus, it is possible that the second PLT factor simply becomes the Doiron test. But, if so, then that would effectively eliminate the necessity of the PLT test for OCS contract law disputes, because the Courts have long since acknowledged that the relevant application of Louisiana law to the contract does not conflict with federal law. If this analysis is correct then Doiron should be the standing legal test for the determination of applicable law in an oilfield contract regardless of the location of the work (OCS vs. State waters).

A comment the Fifth Circuit made in its analysis of another earlier issue seems to bolster that conclusion: “If the contract here is maritime, the fact that it was to be performed in the territorial waters of Louisiana does not justify causing the outcome of this lawsuit to be different than if the contract was for work on the high seas. Consistency and predictability are hard enough to come by in maritime jurisprudence, but we at least should not intentionally create distortions.” After lauding the directness of its new test in Doiron (notwithstanding their use of the unpredictably applied term “substantial role”), the Fifth Circuit could have assisted practitioners with a bit more directness in Crescent Energy Services.

Despite the historically non-maritime nature of P&A work in the Fifth Circuit, the outcome of Crescent Energy Services is not surprising given the necessity of the vessels used for the work. In that respect, this decision is consistent with the Fifth Circuit’s continued primacy – now, by way of the Doiron test highlighting its importance – of the “substantial role” that a vessel will play in the work being done under the contract. While the Fifth Circuit may have left a gap in its recent holdings for the next OCSLA-based contract dispute, we see no reason why Doiron would not be at least a part of that new analysis.

By Erin L. Kilgore

On July 17, 2018, the Equal Employment Opportunity Commission (“EEOC”) announced that Estée Lauder Companies will pay $1,100,000 and provide other relief to settle a class sex discrimination lawsuit filed by the EEOC.

In 2017, the EEOC filed suit against Estée Lauder in federal court in Pennsylvania.  The EEOC alleged that Estée Lauder discriminated against a class of 210 male employees in violation of the Equal Pay Act and Title VII of the Civil Rights Act of 1964, by providing them, as new fathers, less paid leave and related benefits for child bonding than it provided to new mothers. (The parental leave at issue was separate from the medical leave female employees received for childbirth and related issues). The EEOC also alleged that the company unlawfully denied new fathers certain return-to-work benefits that it provided to new mothers.

On July 17, the court entered a consent decree resolving the lawsuit.  Pursuant to the consent decree, Estée Lauder agreed: (1) to pay a total of $1,100,000 to the class of male employees who, under Estée Lauder’s parental leave policy, received two (2) weeks of paid parental leave when new mothers received six (6) weeks of paid leave for child-bonding after their medical leave ended; (2) to administer parental leave and related return-to-work benefits in a manner that ensures equal benefits for male and female employees and utilizes sex-neutral criteria, requirements, and processes; and (3) to provide training on unlawful sex discrimination and allow monitoring by the EEOC.

The EEOC’s full press release can be found here.

By David M. Whitaker

Employer compliance with the requirements of the Americans with Disabilities Act (ADA) has been among the EEOC’s top enforcement priorities under the Trump Administration. And a string of recent enforcement actions brought by the EEOC makes clear that the Agency will continue to be aggressive with respect to how employers manage employee return to work issues.  On June 6, 2018 the EEOC announced its entry of a $3.5 million consent decree against Dotty’s, a Las Vegas slot machine tavern operator, because the Agency found its return to work policies, which included a “100% healed” requirement, violated the ADA.

As most employers are aware, the 2008 amendments to the ADA greatly expanded the definition of what is considered a protected “disability.” As a result of this expansion, many injuries (whether suffered on or off the job) and illnesses that result in employee medical leaves of absence are the result of underlying conditions that may arguably qualify as a protected “disability” for ADA purposes – even where the condition is not permanent.

In many cases, an employee on medical leave of absence may be given a release to return to work with some restrictions (such a limits on lifting, maximum number of work hours, or other physical activities, like climbing). A key requirement of the ADA is that employers provide “reasonable accommodation” to an employee with a disability that will allow the employee to perform the essential functions of the job.  That might require the employer to make modifications to the workplace or to re-assign non-essential job duties to other employees.  What is a “reasonable” accommodation will depend upon the facts of each situation, but the ADA makes clear that an employer is required to engage in an interactive dialogue with the employee to determine what is reasonable under the circumstances.

In the return to work context, some employers have taken the position that an employee must be “100%,” or released to return to work “without restriction” before the employer will permit the employee to return to active employment. The reasoning of such employers is often out of concern that an employee who is less than fully recovered from an earlier injury or illness poses an increased threat to the health and safety of the employee and his co-workers. Notwithstanding these concerns, the EEOC’s longstanding position is that these kinds of policies are unlawful because they are inconsistent with the interactive reasonable accommodation dialogue that is at the heart of the ADA.  According to EEOC guidance regarding employer-provided leave, “An employer will violate the ADA if it requires an employee with a disability to have no medical restrictions — that is, be “100%” healed or recovered — if the employee can perform her job with or without reasonable accommodation…” Federal courts, including the Fifth Circuit, have likewise found return to work with “no restrictions” policies to be unlawful.

In addition to requiring the employer to discontinue these practices and assessing $3.5 million in monetary relief for the benefit of the affected employees, the consent decree also requires the employer to coordinate with the EEOC regarding re-employment opportunities for employees, to develop effective workplace disability leave policies, to engage a consultant to monitor its compliance with the terms of the consent decree and to provide ADA training to its employees and supervisors.

The EEOC has sued other employers in a string of cases that have ended with similar consent decrees that included substantial monetary awards to the affected employees: Lowe’s Company ($8.5 million); American Airlines ($9.8 million) and United Parcel Services ($1.7 million).

In a press release announcing the Dotty’s consent decree, the EEOC said the suit was filed as part of the Commission’s continuing “quest to identify and eradicate systemic disability discrimination.” The message from these EEOC enforcement actions is clear – ADA and return to work issues are a priority enforcement concern for the Agency, and employers should take the time to review their medical leave and return to work policies and practices to ensure they are ADA compliant.

By Michael J. deBarros

In asbestos-related injury claims, some states, including Louisiana, base an insurer’s liability for defense and indemnity on the amount of time an insurer is “on the risk.”  For instance, if a claimant was exposed to asbestos for a ten year period and the insurer issued policies covering five of those ten years, the insurer is “on the risk” for five of the ten years and should bear responsibility for 50% of the defense and indemnity absent additional grounds for denying coverage.

The allocation issue becomes more complex when the period of exposure to asbestos begins before, and ends after, 1986 or 1987.  In that situation, the following additional questions arise:

  1. When did insurance covering asbestos claims become “unavailable”;
  2. Must the insurers “on the risk” when insurance for asbestos claims was “available” bear responsibility for the years of exposure in which the insurance was “unavailable”; and
  3. Is the allocation affected if the insured continues to manufacture or sell asbestos-containing products after insurance for asbestos claims became “unavailable”?

All of the foregoing issues have been decided in New Jersey, and they are ripe for consideration in Louisiana given that the Louisiana Supreme Court relied on Owens–Illinois, Inc. v. United Ins. Co., 650 A. 2d 974 (N.J. 1994), when it held, in Arceneaux v. Amstar Corp., 2015-0588 (La. 9/7/16), 200 So. 3d 277, that insurers may prorate defense expenses in Louisiana asbestos-injury suits.

In Owens–Illinois, the Supreme Court of New Jersey held that insurers can prorate defense and indemnity in asbestos-injury suits based on their time “on the risk” and their policy limits.  The Owens–Illinois Court also held that an insured is not responsible for the years in which insurance covering the risk at issue was not reasonably available for purchase.

In Continental Ins. Co. v. Honeywell Intern., Inc., 2018 WL 3130638 (N.J. June 27, 2018), the Supreme Court of New Jersey recently reaffirmed the Owens–Illinois “unavailability” rule and once again rejected the insurers’ attempt to apportion liability to their insured for exposures occurring during the period of insurance unavailability.  The insurers in Honeywell argued that Honeywell should bear responsibility for asbestos exposures after April 1, 1987 (the date excess insurance for asbestos claims became unavailable) because Honeywell continued to manufacture asbestos-containing products until 2003.  The Court rejected the insurers’ argument and apportioned liability for the years in which insurance was unavailable to the insurers who were “on the risk” when the insurance was available.

Considering the Louisiana Supreme Court’s reliance on  Owens–Illinois in Arceneaux, a Louisiana court may be persuaded to adopt New Jersey’s “unavailability” rule and require all insurers “on the risk” when insurance for asbestos claims was “available” to bear responsibility for the years of exposure in which insurance was “unavailable.”  If your company needs help navigating these issues, Kean Miller’s Insurance Coverage and Recovery team can help.  We have recovered millions for policyholders in environmental and toxic tort actions, legacy lawsuits, products liability lawsuits, professional liability claims, governmental investigations, intellectual property claims, directors’ and officers’ disputes, property losses, and business interruption losses.

By A. Edward Hardin, Jr.

Bloomberg Law and the Tampa Bay Times reported that Florida Senator Marco Rubio announced the he would soon release proposed federal legislation creating paid family leave.  No details regarding the proposed legislation were released.  The Family and Medical Leave Act of 1993 (or as its commonly known – the FMLA) established a federal system for leave under certain circumstances for eligible employees who worked for covered employers.  FMLA leave is unpaid leave, but employees can elect, or employers can require, that certain periods of paid leave be substituted for unpaid FMLA leave.  Unlike the FMLA, Sen. Rubio’s legislation apparently would provide for paid leave.  Stay tuned.  For more click here.