12-8-14; PART I Rising Min. Wage Bad for Jobs--Good for Your IL WC Claims; Brad Smith, JD Reviews Important ADA Win for Business; WCLA CLE Review by John Karis and much more

Synopsis: Higher Minimum Wage is Bad for Jobs but Great for Claims Adjusting in IL Workers’ Compensation.


Editor’s comment: We hate to see our State keep pushing the button on the very populist theory of raising the minimum wage. Our former Governor basically ran almost his entire campaign on the concept because the people who were in his camp love the idea of getting raises without having to do anything other than vote for them. Our main problem with a high minimum wage is the concept is a jobs-buster. Real economic growth would naturally increase the demand for labor-increasing wages without costing jobs. Perhaps the best example of this is from Williston, North Dakota where their vibrant and growing economy is creating a strong demand for labor. Crew-level restaurant employees are already making $11 to $15 an hour and big box retailers are offering work starting at $17 an hour. Even without a government mandate, wages will be higher in any region where economic growth increases the demand for labor.


From the workers’ compensation perspective in the State of Illinois, higher minimum wages are a counterpoint and may cut the popularity of the worst of Illinois WC benefits—wage loss differential benefits. In order to qualify for Section 8(d)(1) differential benefits, Claimant must prove two things:


ü  a partial incapacity which prevents the pursuit of his/her “usual and customary line of employment,” and

ü  an impairment of earnings.


The wage differential was to be paid for the duration of disability which had previously interpreted to mean “for life” – not “work life,” even if after an award was rendered, the employee changed jobs resulting in a change of wages. This aspect of the ruling made the values on a wage loss claim very high. However, for claims starting in 2011 and after, the Amendments to the IL WC Act now mandate wage differential benefits would terminate when the employee reaches the age of 67 or five (5) years after the award becomes final, whichever is later.


Under the IL WC Act, Petitioner cannot recover for both section 8(d)(1) wage differential and a specific loss of use for a man as a whole under section 8(e) or section 8(d)(2). In a wage loss differential claim, the injured worker is entitled to 2/3 of the difference between what they would be making now based on the job they had at the time of the injury and what they are able to make in alternative work at present. From our perspective, the IWCC doesn’t want and won’t provide total and permanent disability benefits if the doctors and medical care providers agree the injured worker can locate some sort of alternative work after recovering from their injury. And the Americans With Disabilities Act also federally mandates reasonable accommodation in the hiring process, so injured workers have to be provided job modifications and other adaptations to allow them to return to functionality.


So is the current and coming math on traditional IL WC wage loss calculations. We are assuming the worker would be making $800 a week in the job they had prior to injury. They become injured and don’t recover fully and the only work they can now locate is an entry-level job at minimum wage:


·         At the current federal minimum wage of $7.25 per hour times 40, the worker would be making $290.00 per week. Wage differential would be calculated as $800 minus $290 times 2/3 or $340 a week.


·         At the current Illinois minimum wage of $8.25 per hour times 40, the worker would be making $330.00 per week. Wage diff would be $800 minus $330 times 2/3 or $313.33 per week.


·         At the minimum wage of $9 passed by the IL Senate that is to start in July 2015, wage diff would be $800 minus $360 times 2/3 would be $293.33 per week.


·         At the Chicago minimum wage, the City-mandated raises are $10.00 per hour by July 1, 2015, then $11 by 2017, and $13 by 2019. Wage diff for jobs in Chicago will soon be calculated $800 minus $400 times 2/3 or $266.67 a week. Those values are sure to be getting lower and lower, as the minimum wage goes up and up.


·         In calculating the minimum wage at the future City of Chicago rate of $13 per hour in 2019, the math is $800 less $520 times 2/3 or $186.67. This means such a wage loss claim would provide an annual benefit of only $9,706.84 a year and more traditional permanency values for serious work injuries may supplant wage loss.


We feel these coming numbers can be used right now to start to recalculate reserves and settlements on any wage loss differential claim. We are happy to assist risk managers and claims handlers in doing so.


We also have a great claim strategy on how to completely avoid or end wage loss differential claims for construction and other industries. If you have interest in learning how to cut reserves and save millions by completely avoiding wage loss claims, send a reply.


If you have questions and concerns about how this will impact your current IL WC claims, send a reply and we will get right back to you.




Synopsis: Document! Document! Document Performance and Absences! In an Employment Law opinion as it relates to the Americans With Disabilities Act (“ADA”), the Seventh Circuit affirmed entry of summary judgment on a diligent employer’s behalf. Analysis by Bradley J. Smith, J.D.


Editor's Comment: In Taylor-Novotny v. Health Alliance Medical Plans, Inc., the Seventh Circuit rejected the employee’s claims of 1) failure to accommodate multiple sclerosis under the ADA; 2) discrimination and retaliation based on a disability; 3) interference with Family Medical Leave Act (“FMLA”) rights; and 4) discrimination based on race. The Court reasoned the employee could not succeed on her ADA claims because she failed to establish she was a “qualified individual” under the ADA.  The Court further determined the employee failed to meet her employer’s legitimate expectations for punctuality and accountability. Consequently, the Court’s determination of failure to meet her employer’s legitimate expectations was also fatal to the employee’s race discrimination claims. Next, the Court concluded the employee did not establish the reasonableness of her accommodation request and also the evidence presented for her ADA retaliation claim was insufficient to form a “convincing mosaic” suggesting her employer retaliated against her because she sought accommodations. Last, the Court reasoned the employer never denied the employee any FMLA leave. 


From a period of January 2007 through and including the employee’s termination in 2010, the employer repeatedly documented the employee’s issues with attendance and tardiness in its annual performance reviews. Shortly after the initial performance review, the employee was diagnosed with multiple sclerosis. In October 2007, the employee was placed on a Corrective Action Plan regarding her tardiness. A majority of the performance reviews and documentation demonstrated a finding of marginal performance relating to attendance and punctuality throughout her employment. On May 25, 2008, the employee submitted FMLA Certification paperwork to the employer for her multiple sclerosis requesting certification of intermittent FMLA leave related to her illness and the fatigue derived from it. Although the employer authorized the FMLA intermittent leave, it further informed the employee it was her responsibility to alert her manager each time an absence from work would be necessary, as well as whether or not her absence should be charged to the approved FMLA leave. In December 2008, the employer began allowing the employee to work from home three (3) days per week. In May 2009, the employee received an additional FMLA Certification approval for intermittent leave. Again, the employer required the manager be notified if an absence was to be applied to the FMLA approved leave. In February 2010, the employee requested and was approved to work from home two and one-half days per week. Beginning in March 2010, the employee requested her employer allow her to use badgescans to clock-in, instead of checking in with her supervisor. That request was denied. In March 2010, the Human Resources Director of the employer told Plaintiff she would need to use her FMLA leave for the other half of each office day if she limited her office work to two half-days per week. The Director informed the employee her request did not meet the employer’s “business needs.” 


Thereafter, in March 2010, the employee was given a final written warning for arriving late eight times, ranging from seven to forty-two minutes. In May 2010, the Director requested information from the employee’s physician as to whether her illness met the ADA definition of disability, which was responded to on July 13, 2010. The employee’s physician suggested “a flexible work schedule that would allow her to work efficiently when she is doing well, but allowed for rest on bad days.” On the same day, the employer terminated the employee for her continued tardiness and failure to accurately report her work time.


Upon de novo review, the Court reasoned the employee was not a “qualified individual,” as regular attendance was an essential function of her job. Additionally, the Court reasoned the employee was not meeting her employer’s legitimate expectations, which was fatal to both her ADA claim and Title VII race discrimination claim. Finally, the Court reasoned the employer did not interfere with any FMLA rights of the employee as it continued to approve intermittent FMLA leave, while the employee failed to use her FMLA leave for the two half-days per week. The employer’s continuous and thorough documentation of its issues with the employee’s attendance was critically important to its defense. It continued to provide performance reviews throughout the employee’s employment documenting the employee’s marginal attendance and punctuality. Additionally, it documented the discrepancies between the employee’s alleged performance and audits of her performance.


At KCB&A, we encourage our clients to implement progressive disciplinary policies and to accurately document and review performance of their employees. As demonstrated in Taylor-Novotny, the accurate documentation of performance issues is essential to the defense of an employment discrimination claim.


The research and writing of this article was performed by Bradley J. Smith, J.D. Bradley can be reached with any questions regarding employment discrimination claims and any other general liability defense questions at bsmith@keefe-law.com.