Synopsis: Home Away from Home Now Equals Big Bucks in IL WC. Shouldn’t a Worker Be Working to Get Workers’ Comp Benefits? Costs Are Certain to Again Soar.

Editor’s comment: We sadly announce another unprecedented, gut-wrenching and controversial appellate ruling for Illinois business and the whole defense industry. A problem with the wild expansion of the “traveling employee” concept is we don’t see any true “cure.” We also assure everyone all trades-workers including plumbers, pipefitters, electricians and anyone else who arguably “travels” has complete WC coverage of everything they do on and off work during the pendency of any work assignment. We don’t think that wild expansion of the IL WC Act was warranted or makes any sense in this current economy.

In The Venture-Newberg Perini Stone and Webster v. Illinois Workers' Compensation Commission, 2012 IL App (4th) 110847WC (December 6, 2012), claimant was a pipefitter. If you don’t know it, many pipefitters live something of a vagabond existence, happily traveling to wherever there is highly paid and specialized work. When they get there, they make a lot of money but they usually either take and live in trailers, RV’s or choose to live in low-cost but slightly more expensive motels/hotels during the work. When the work is over, they are laid off and move on to the next job in Illinois or wherever there is similar work.

In this claim, Claimant came from a Springfield union hall. He was provided work on a temporary assignment in beautiful Cordova, IL which has the oldest drag strip in the United States along with its nuclear power plant where we assume claimant was on assignment. For those of you that don’t know, Cordova, IL is near the Quad Cities or about 180 miles north and west of Springfield. Claimant went up there and our research indicates he moved by his own choice and expense into the Lynnwood Lynks & Lodge in Thomson, Illinois, 25 miles northeast of Cordova. For reasons we can’t tell, the Appellate decision calls this facility the Lynwood “Resort.” There is no question claimant moved in and was staying at this location for the duration of his temporary assignment.

Claimant's accident occurred while traveling from this motel to the power plant to work as a pipefitter. He wasn’t on duty and wasn’t being paid a dime while driving or being driven to work. There is no indication claimant was performing any work in the vehicle—he was “going to and coming from” work at the time of injury. The vehicle in which he was riding apparently skidded on ice on a public highway and he suffered injuries. The Commission’s ruling awarded 71+ weeks of TTD so claimant was off all work for over a year following the occurrence. The Springfield Arbitrator assigned denied the claim—while we don’t have access to his written ruling, we feel confident he accurately found claimant wasn’t working at the time of injury, wasn’t on the clock and wasn’t afforded WC benefits for those reasons. We strongly agree with him.

The IWCC reversed in a split decision. The Commission majority implemented what we have told our clients and readers is the magic term “traveling employee” to find any action claimant was performing starting with his trip to the Cordova area until his return to his home near Springfield was globally covered under our IL WC Act. In reversing the Arbitrator, the Commission asserted it was “reasonable and foreseeable” claimant would travel a direct route from his lodging to the plant—we have literally no idea why that finding makes any legal or factual difference of any kind. We are certain it was similarly “reasonable and foreseeable” claimant would eat, sleep, bathe, breathe and comb his hair most days. So he and his compadres drove straight to work that day. Who cares? Take a look for the “hidden meaning” of these words below.

The Circuit Court reversed and reinstated the award of the Arbitrator denying the claim. The matter moved to the IL Appellate Court, Workers’ Comp Division.

In a 3-2 split ruling, the Appellate Court reinstated the decision of the Commission awarding substantial benefits. The Appellate majority did not include the member of the panel from the appellate district in which Springfield sits, Justice John Turner. We assume this is why the majority opinion was written by Justice Thomas Hoffman of Chicago. We assure our readers Justice Hoffman has a great intellect but has authored many controversial rulings both within the WC arena and outside our issues. Justice Hoffman penned the ruling in Metropolitan Water Reclamation District of Greater Chicago v. IWCC where “street risk” first came into our lexicon to award benefits in an unexplained street fall-down for what we feel were risks common to the public.

Please remember like the terms “street risk” and “odd-lot total and permanent,” the word “traveling” doesn’t appear and isn’t defined in the Illinois Workers’ Compensation Act or Rules Governing Practice. Like other extralegislative judicial devices or nomenclature in the IL WC field, once one moves to define terms like “street risk,” “odd-lot” and “traveling employee” outside the Act and Rules, you can literally do whatever you like because there are no rules, law or “stars to guide” your trip. If one court ruling says something outside the legislation and rules, other court rulings can pick up and expand the concepts at their whim because there are no boundaries on what one can conjure up if one becomes inclined to do so.

Therefore, relying on a 2010 ruling he wrote named Cox v. IWCC, Justice Hoffman and this appellate majority ruled a “traveling employee” is any worker “who travels away from the employer’s premises.” Well, folks, that is just about everyone but office and factory workers working at their posts. All trades-workers, lawyers, truck drivers, police officers, firefighters, garbage collectors, home healthcare workers; basically everyone at some point in their work can reach the hallowed status of “traveling employee” because most of us work outside an office or fixed work site. Please also remember 99% of all staffing workers work “away from the employer’s premises.” Actually, a worker working from home is a “traveling employee” by that definition and injuries working in one’s home should be covered.

As we feel the Illinois courts are operating wholly outside the legislation and rules, we don’t know if Justice Hoffman and the majority feel “traveling employee” is a transient or permanent status—by that we mean, are you only a traveling employee when you are on a “travel” or if you ever travel, do you attain and then remain a “traveling employee” as a workers’ comp status for your whole career? Only the shadow knows, folks because we don’t have any definition other than what our courts tell us.

Please note the status of “traveling employee” should provide global coverage of any and every injury from the minute the worker walks out of their door until they get to work, start getting paid, go off work and then walk back into their home. Justice Hoffman and the majority in Coxruled “as a general rule, a traveling employee is held to be in the course of his employment from the time that he leaves home until he returns.” So even though you aren’t being paid and your employer has literally no control over what you are doing before and after being at work until you reach home (if you go home), the employer still “owns” full liability for your personal and non-work-related actions and decisions.

However, while it appears to us our reviewing courts are conjuring, calling up and creating this expanded body of WC coverage, there is another requirement. Citing a 1980 ruling named Howell Tractor v. IC, the Appellate majority indicates “the test of whether a traveling employee's injury arose out of and in the course of his employment is the reasonableness of the conduct in which he was engaged at the time of his injury and whether that conduct might have been anticipated or foreseen by [the employer].” We want our readers and everyone to understand this “legal standard” means basically any action by a human that isn’t completely insane or wholly unexpected from the moment they leave their home to go to work until they return is now covered by workers’ comp in this state. We consider that to be a gigantic expansion of WC coverage—for the vast majority of workers, we have no true accident defense or limitation of “arising out of and in the course of” employment as the Act appears to require. Please remember between the Cox ruling and this current decision, the Illinois legislature again restated the need for accidents to “arise out of and occur in the course of” employ—perhaps this majority missed that restatement of the limits in our law or perhaps we again need the legislation to again be clarified.

What does this truly mean? Is there a bottom line? Well, if we are all magically “traveling employees” in this state and everything we might reasonably and foreseeably do is covered, falling on ice walking down your own stairs at home would now be covered by IL WC. The woman from New South Wales who had a light fixture strike her on the head during romance in a hotel room would be covered if she were from this state. A firefighter at a convention who was wrestling like a schoolboy and tore his shoulder got IL WC benefits as a “traveling employee.” A street cop turning to give directions was covered when he claimed he strained his back. Do we truly want to cover all activities of off-duty truck drivers in truck stops under IL WC? Global WC coverage of any and all accidents be they personal or professional is global coverage—once we expand beyond the parameters of the legislation and rules, you lose any thresholds, limits or boundaries. Illinois appears to have gone that route to the detriment of us all.

Claimant in this Venture-Newberg-Perini Stone and Webster v. IWCC ruling was staying at a temporary home on a temporary assignment. He was traveling “to and from work” which is a status that should never be covered under workers’ compensation—you drive to work however you drive and you pick your route and take your own risks in doing so. Unless the IL Supreme Court takes and reversed this ruling, claimant has already been awarded over $70K in TTD for we feel should be a non-work-related occurrence. He will probably receive several hundred thousand dollars more in WC benefits that no state should award.

Skip the WC legislative “hair-cuts” we were discussing last week. In our view, if we keep expanding WC coverage in this fashion, we may move past California, Montana and Alaska to Number 1 in the whole country in WC costs. Underwriting WC risk in this state is going to be almost impossible to do. If you don’t think the folks at major Illinois employers like Caterpillar, Nestlé, Boeing, United Airlines and others are looking at what we are doing and shaking their heads in disgust and thinking of moving elsewhere, you aren’t paying attention.

As a final note, we have been brainstorming to try to find a “cure” or path out of this mess. One thought we had was to follow the trucking industry for “owner-operator” coverage. A union employer like this one might tell the workers they can’t start work unless and until they pay for their own WC coverage. We aren’t sure if there are any other paths out of this interesting predicament—if you have any thoughts, please let us know.

We appreciate your thoughts and comments. Please post them on our award-winning blog.

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Synopsis: Dealing with and Blocking Repeat WC Claimants.

Editor’s comment: Thoughts from our HR experts at KCB&A.

Safety policy approaches to block/terminate WC “repeaters” are

· One-strike—Start/promulgate a global safety policy providing workers can only suffer a single “at-fault” injury and receive a written warning.

o Thereafter, if they suffer a second “at-fault” injury, you will pay the benefits if the claim is accepted but the employee is terminated when the “at-fault” decision is reached.

o In union environments, your unions have to sign up for this challenging approach. We have had success in getting some unions to cooperate.

· Three-strike—Same as “one-strike but two “at-fault” events are allowed and termination occurs with the third such event.

· Be sure to post/promulgate this safety policy in your workplace and in your employee/personnel manual.

· Please remember it is arguably harder to “manage” return to work if you have terminated the worker.

· It is also harder to avoid wage loss differential claims if you terminate workers because you can’t bring them back to the same position.

No lump sum settlements for “at-fault” events.

· Some clients will not settle or provide a lump sum on WC claims where the employee was found to be “at-fault.”

· These clients will require any WC claim to be tried in that setting and pay out any permanency on a weekly basis, as appropriate.

Getting release/resignation on all WC settlements.

· Some of our clients now refuse to ever settle a WC claim without the employee leaving their current job.

· It is possible claimant may get more money if you try the claim but lots of folks will take fast money and quit, if that is what you require.

· KCB&A has a global release/resignation—if you have interest, send a reply.

Another concern you might consider is 24-hour or “same-shift” accident reporting. This doesn’t directly address repeaters but it is another aggressive HR tool.

· One of our clients requires same-shift or 24-hour accident reporting—they terminate for late-reported accidents. They may pay WC benefits but the employee is terminated.

· This approach does make everyone safety-conscious and if something goes wrong, all workers know they need to be sure you know about it quickly or face termination.

· Unions have to back up the concept. Signs about reporting requirement have to be posted everywhere about the requirement.

The aggressive defense experts at KCB&A can assist with any and all of these HR approaches—if you have interest, send a reply. We appreciate your thoughts and comments.

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Synopsis: Mark your calendar—Obamacare and Its New Punitive Costs Are Coming at U.S. Business in One Year. What Can/Should You Do Now to Be Ready?

Editor’s comment: The Play-or-Pay-Penalties provisions of Obamacare will become effective in one full year on January 1, 2014. You may want to anticipate that challenge and take steps/make decisions about it right now. At that time, U.S. employers with at least 50 full-time employees, including full-time equivalents, will be required to pay a significant per-employee penalty to the U.S. Government if they fail to provide legislatively defined health coverage to full-time employees. For example, a company with 50 employees that doesn’t provide healthcare coverage will owe $150,000 in penalties, starting on 1/1/2014! Specifically, the employer will have to provide minimum essential coverage (MEC) to all full-time employees and dependents in order to avoid that penalty if a single full-time employee receives a tax credit or cost-sharing reduction. In addition, the MEC has to be affordable and must provide minimum healthcare value.

If you have concerns about the possibility of a per-employee penalty, consider these options right now:

1. Opt for “Play and/or Pay”

If you want to avoid per-employee penalties, you will have to offer the requisite affordable MEC. Alternatively, you may decide to not offer coverage, pay the applicable penalty, and redesign compensation arrangements for full-time employees.

2. Opt for Hybrid Approach.

In between offering affordable MEC and not offering any healthcare coverage, there are "hybrid" approaches where a U.S. employer can offer healthcare coverage to a portion of its population and pay the applicable penalty for the remainder. For example, you could structure employee contributions so low-wage earners qualify for a subsidy and then pay the $3,000 penalty for those employees who elect coverage through a healthcare exchange.

You may also create a healthcare plan for a select group of employees and pay a $2,000 penalty for all full-time employees, provided the arrangements meet federal nondiscrimination rules.

3. Hire/Retain More Part-Time Employees.

Although part-time employees are included in determining whether you are a large employer with at least 50 full-time employees or full-time equivalent employees, employers do not have to provide health coverage for part-time employees. Employers who do not cover part-time employees, however, must be careful in categorizing these employees each measurement period.

4. Hire Less Employees or Split Up Your Business Groups into Smaller Units.

We are confident some companies may be better served and save millions to become smaller. If you have 195 employees today, we feel some employers may split into four independent companies with less than 50 workers each. The companies are going to have to be truly “independent” and we are sure there will be federal watchdogs snooping into how the companies are operated. If you want to consider this option, we vote you do it last week and not wait until next year when it will appear more obvious and potentially create heightened scrutiny.

5. Call/write/email Your Healthcare Broker.

We are confident your broker is going to be on the point with developments and what you are going to need. All solid healthcare brokers should be able to do the “math” on what is best for your business in this new challenging and potentially business-disruptive environment. If you aren’t getting the right answers from your broker, send us a reply and we can make solid recommendations for Midwest healthcare brokers who know these concerns.

To Do List

Your "To-Do List" may vary. Here are planning tips/thoughts:

Set up HR systems/documentation to classify new and ongoing employees as full-time, part-time, variable or seasonal.
Clearly define independent contractors as such—watch out for employee misclassification issues; if you need help on the topic, send a reply.
Insure independent contractors are not common law employees and have their own healthcare coverage—we urge you to confirm that fact in any agreement with an independent contractor.
Identify measurement and stability periods.
Make sure healthcare/benefit plan documents cover all employees who are determined to be full-time employees within the applicable measurement period throughout the stability period.
Amend plan documents to insure employees who switch from full-time to part-time don't lose coverage until the end of the stability period.
Consider providing employees with information about total compensation, including the total cost of health benefits to include both employer and employee contributions.
For collectively bargained or union workers, insure full-time employees are, provided with affordable MEC under the terms of the CBA and future bargaining agreements contain language that will allow you to redesign plans as needed.

We appreciate your thoughts and comments. Please post them on our award-winning blog.

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Synopsis: Government Ghost Payroller Double-Dipping to Stay at Work and Get Both Pension/Regular Pay?

Editors comment: The IL Supreme Court just took this case so we will have to wait and see what they do with it.

In Prazen v. Shoop, No. 115035, 4th Dist., Claimant was ordered by his Pension Board to return $307,100.50 in early retirement incentives where he hadn’t retired!! After taking retirement, Plaintiff self-incorporated and returned to the same municipal job from which he “retired” and was receiving both pension and salary at the same time.

Our Illinois Appellate Court, in reversing the Pension Board found the IL legislature did not grant the Pension Board the power to “pierce the corporate veil” to find Plaintiff’s corporation was a sham device to circumvent the return-to-work restrictions under Section 141.1(g) of the IL Pension Code. If this decision stands, every municipal worker may be able to retire, incorporate and legally “double-dip” if their government employee will allow it.

If that isn’t completely clear, this guy took early retirement in a gov’t pension system that is unbelievably badly funded and rapidly running out of money. He was the Peru, IL Electrical Department head and ostensibly took a buyout and early retirement.

Despite receipt of early retirement benefits and his pension, he then started a corporation composed of himself, his wife and a daughter.

Operating with the City mayor’s knowledge, he continued to work as the Peru, IL Electrical Dep’t head as an “independent contractor” and continued to be double-paid well over $100K in pension and salary for the next 12 years before he or his corporation finally stopped working for the City and actually “retired.”

We not only think these actions should be reversed, we feel this should be against the law and future situations should have criminal implications. We appreciate your thoughts and comments.

KCBA Blog

12-10-12; Home Away From Home = Big Bucks in IL WC; HR Strategies to Limit WC Repeaters; Long-Range Plans to Anticipate Obamacare; Government Ghost Payroller Double-Dip and much more