3-29-2011; If the Big Cat takes off, you can forget about jobs in central Illinois—What are we prepared to do?

We salute Caterpillar CEO and Chairman Doug Oberhelman who recently reached out to Illinois Governor Pat Quinn to explain Illinois business policies were making him consider moving the company elsewhere. Mr. Oberhelman sent a March 21 letter to Illinois Gov. Pat Quinn and confirmed governors from at least four other states including Texas, Nebraska, Virginia and South Dakota have been wooing Caterpillar, adding each has made “compelling arguments.”

We assure our readers one of the compelling arguments being made by Texas, Nebraska, Virginia and South Dakota are much fairer and more predictable workers’ compensation benefit levels. Texas remains in the top twenty of the Oregon WC Premium Rankings but they have made massive changes and are dropping quickly from their previous high rank. Nebraska, Virginia and South Dakota are all farther down the line and present favorable workers’ compensation environments in comparison to Illinois that is number three below only Montana and Alaska. If South Dakota is at the median, Illinois is 149% of their expected WC premium. When you are talking about several billion dollars in premium and benefits, that is a lot of money. Don’t take our word for it, please feel free to review the report online at: http://www.cbs.state.or.us/imd/rasums/2083/10web/10_2083.pdf

Mr. Oberhelman wrote: “Before, I never really considered living anywhere else, and certainly never considered the possibility of Caterpillar relocating. But I have to admit, the policymakers in Springfield seem to be making it harder by the day.” While Oberhelman did not cite specific policies he felt were bad for business, a Caterpillar spokesman recently stated that Illinois’ recent income tax increase is a prime example.

The possibility of a relocation came to light after a letter written by Caterpillar's CEO to Governor Pat Quinn was leaked to the media. The letter says the four states listed above have approached the company about moving since Illinois raised its income tax in January. Nothing is written in stone and a spokesperson for Caterpillar says the letter, which they say they did not intend to be made public, was only an attempt to open a dialogue and certainly not a threat. Caterpillar officials say if Illinois doesn't shape up its business climate, the heavy equipment maker may have to ship out.

Caterpillar officials note they are going to pay about $40M in new taxes. Governor Quinn claimed “it’s worth it” reminding us of former Chicago Mayor Harold Washington who called the “head tax” in Chicago that drove hundreds of businesses and jobs out of the city a “drop in the bucket” for big companies, many of whom quickly left the “bucket” behind for Schaumburg and Naperville. Quinn plans to meet with Oberhelman during a visit to Caterpillar plants in Peoria on April 5.

We caution the “Trilogy” of Governor Quinn, Senate President Cullerton and House Speaker Mike Madigan, if Big Cat pulls up their jobs and the jobs of the thousands of folks who support their workers, it will be the equivalent of a neutron bomb going off in the center of our state. There may be buildings left behind but there won’t be anyone left in them. And as we have always said about companies leaving our state—they only leave once and they won’t be back. Let’s hope our Governor and legislative leaders start to show the business community they care about jobs and the future of our children in Illinois.

One hot tip for our state leaders comes from none other than Mayor-elect Rahm Emanuel in Chicago who stunned most political observers by suggesting the Chicago City Council trim its membership and wards from 50 to 25. We think this brilliant idea should be considered in Springfield that has both a Senate and House representing the same voters in the same districts—why not follow the lead of Nebraska that has a unicameral legislature with just one body? Illinois could get rid of one or the other legislative body and have a governor and single-body for a legislature. The savings would be both immediate and immense is a state which is clearly way past broke. One wag in our office pointed out this simple change would save Illinois private citizens, unions and employers millions because there would be fewer legislators to bribe.

This article was researched and written by Joseph R. Needham, J.D. Please reply to Joe at jneedham@keefe-law.com with your thoughts and comments.

3-29-2011; The first in a series of articles by Arik D. Hetue, J.D. taking a look at some of the recent rulings of the Supreme Court of The United States which point toward a...

KC&A styles itself as a “one-stop shop” for employer defense needs. We have successfully defended IDHR suits in Illinois and Title VII suits in the Federal courts at very reasonable rates. In these discrimination settings, there are clearly defined paths for defendant employers to follow in order to limit their potential liability. Earlier this month, the Supreme Court of the United States decided a series of cases involving workers’ rights in the employment law setting. Over the next few weeks we will be looking at some of these decisions. This week we highlight Staub v. Proctor Hospital, U.S. No. 09-400, which significantly expanded Plaintiff’s rights in regard to the “cat’s paw” theory of liability.

Staub v. Proctor Hospital, U.S. No. 09-400, decided on March 1, 2011, dealt specifically with the “cat’s paw” theory of discrimination, which hinges liability on the assertion an unbiased decision maker is influenced by a co-worker with a discriminatory bias to make an adverse employment decision against an employee. As an example – if a male supervisor with a gender bias wrote up false reports with the intention to get a female worker terminated, and an independent regional manager relied on those reports to make the determination to terminate, without an independent investigation, the regional manager would effective be the “cat’s paw” of the biased supervisor who actually made the decision to terminate. Prior to Staub, the solution was for the employer to perform a wholly independent investigation into the issues prior to making the determination to terminate. On March 1, 2011, the United States Supreme Court addressed this theory of liability in a military discrimination case and ruled an employer can be held liable if the bias of the manager was a “proximate cause” of the employment action, if the decision maker relied on those reports to make their decision.

In Staub Army reservist Vincent Staub alleged his employer violated the Uniformed Services Employment and Reemployment Rights Act (“USERRA”) when he was fired from his civilian job as a hospital technician. Staub presented evidence his direct supervisors were openly hostile to his military obligations. Evidence of openly anti-military comments, evidence the supervisors asked co-workers to help “get rid” of Staub, evidence supervisors scheduled Staub extra shifts to “pay back” co-workers who had to cover his military training absences, and confirmation his supervisor gave him an allegedly sham disciplinary warning, followed by another allegedly sham violation of the warning. Staub was reported to Human Resources following this violation, and relying in part on the supervisor’s accusation, the VP of Human Resources fired him.

The jury rendered a verdict for Staub. The verdict was overturned by the Seventh Circuit, which ruled Staub had to prove his immediate supervisors had a “singular influence” on the unbiased decision maker in order to establish a cat’s paw claim. This is clearly delineating the pathway noted above which employers had previously used to safeguard themselves from such claims – that an independent investigation into the events leading to the termination decision would effectively insulate the employer from liability, unless the investigation was solely reliant on the biased reporting.

Justice Kagan took no part in the decision, however the remainder of the Court was unanimous in reversing the Seventh Circuit. The Court ruled “if a supervisor performs an act motivated by anti-military animus that is intended by the supervisor to cause an adverse employment action, and if the act is a proximate cause of the employment action, then the employer is liable under USERRA.” Proximate cause is a legal concept which is sometimes referred to as “legal cause”. There can be multiple proximate causes for an employment action; for generalization purposes, it can include everything leading up to the decision to terminate. Because Staub’s supervisors were found hostile to his military obligations in the manner listed above, and because their disciplinary action was a causal factor underlying the investigator’s decision to terminate Staub, the Court held a reasonable jury could find the bias was the proximate cause of the termination, and therefore rule in favor of Plaintiff.

In so ruling, the Court rejected the employer’s argument the decision maker’s independent investigation should insulate the employer from the supervisor’s prior instances of discrimination. The Court limited this defense by confirming an employer would be liable unless it could show an independent investigation resulted in the decision being made for reasons unrelated to the supervisor’s original biased actions. The more difficult pill to swallow was their holding a supervisor’s biased report can remain a causal factor, and therefore a proximate cause, if the independent investigation takes it into account without determining that the adverse action was, apart from the supervisor’s recommendation, entirely justified.

Practically speaking, Staub increases employer liability in all employment law settings where the “cat’s paw” theory can be used, including Title VII and the ADA. In fact, the Court specifically implied the ruling would apply in those settings due to the similarity of the requirement the bias be a “motivating factor” in each of those settings. That said, this expansion of rights will apply only in certain limited cases where complaining employees were able to demonstrate actual animus by the biased supervisor and intent by the biased supervisor to cause an adverse employment action. The facts of this case were egregious, and we would hope most employees will be unable to establish the kinds of facts Staub was able to evidence at hearing. Also of note, the Court did not eliminate the defense of independent investigation, however, they did leave unclear the circumstances which would allow independent investigation to insulate an employer from a Cat’s Paw claim. As is the case in these types of rulings, such details will be left to the lower courts to address.

In regard to how this affects your business practice, as always, we recommend you have a clearly defined reporting procedure in place which all employees are made aware of. We also recommend clear and accurate documentation of all workplace infractions, with witness statements being taken any time there is a need for them. As noted, the independent investigation is still a defense, but the more your investigator has to review, the more likely their decision will be based on something other than a biased report.

This article was researched and written by Arik D. Hetue, J.D. If you have thoughts and comments, please send a reply to ahetue@keefe-law.com, or post them later today on the blog at www.keefe-law.com/blog.

3-29-2011; Grin and “Bear” It—one reason Montana “bears” the U.S. lead in wildly high WC benefits

Man high on dope mauled by Bear, gets work comp benefits. Read it and weep at http://www.huffingtonpost.com/2011/03/24/brock-hopkins-bear-maul-marijuana_n_840374.html

You have to love this quote from their court—is ‘mind-bogglingly’ a word?:

The Workers' Compensation Court ruled last June that claimant Hopkins was an employee and noted while his "use of marijuana to kick off a day of working around grizzly bears was ill-advised to say the least and mind-bogglingly stupid to say the most," there was no defense evidence presented regarding Hopkins' level of cannabis impairment.

The WCC found Grizzly Bears are "equal opportunity maulers" without regard to marijuana consumption. Analogous to the recent Illinois ruling in Metropolitan Water Reclamation District v. IWCC, we assume the Montana Court felt this was “bear risk” and therefore compensable.