9-13-11; Murdering the Golden Goose and kicking it down the nearest alley—should we really tax services in Chicago or IL? Is the challenge to see how fast services will move to other cities...

We recently saw a blurb about Chicago Mayor Rahm Emanuel thinking it may somehow be a good idea to stop taxing mostly real estate and the sales of goods and to start globally taxing services. We are growing sick of hearing our elected leaders finding new fertile places to levy taxes rather than cut bloated budgets.

We urge all vendors and basically everyone in the service industry of the workers’ comp arena to contact your favorite politician and tell them to stop the madness. Most of us are less than thrilled to see the State of Illinois bump up the income tax and jump the cost of riding on our tollways to record high levels—do they really have to add even one more insult to all the current and painful tax levels?

Please note almost every vendor in the Illinois workers’ compensation milieu may be subject to new service taxes—insurance carriers/TPAs, brokers, nurse case managers, physicians and other healthcare givers, surveillance operatives, vocational counselors and attorneys on both sides may be brought into the mix. None of them want to have to charge our Chicago or Illinois clients an additional vigorish for the services we provide. We hope Mayor Emanuel and other politicians understand how fast everyone who provides such services can and will move from your bailiwick. The last law firm to leave may or may not turn off the lights, as our clients can call and email/text us in other cities and/or states, as easily as they call and email/text to Chicago.

From recent press coverage, it appears Mayor Emanuel is considering transforming a silly campaign sound bite into reality. While specifics are wholly unclear, what Emanuel was talking about is an idea kicked around like a bad tin can for a long time in Illinois—taxing both purchases of goods and adding services that represent a fast-growing segment of the Illinois economy.

The underlying concept is supposed to be a trade-off, sort of like the silly concept of instituting tolls to build toll roads to then cut them off when the roads are paid for—that didn’t seem to work, now did it? Mayor Emanuel asserts sales tax rates will come down across the board—sure, we are happy to trust that concept, as Illinois tolls are being just about doubled. He also asserts government won't be broke as long as most services are taxed, as we indicate above. We can hardly wait to see the political battlefield unfold with every trade association and professional group fighting to bribe the right alderman to leave their members out of the mix.

At present, the State of Illinois relies on sales tax revenue to pay about one-fourth of its day-to-day operations. At present, the City of Chicago relies on sales tax for 16 percent of its budget.

The sales tax is a hot button topic and hardly in a good way. Many retail shoppers across Chicago, Cook County and across our state are furious about having purchases taxed at 9-9.75% which is a rate among the highest sales tax rates in the U.S.. Sales tax rates in many Chicago suburbs aren't far behind Chicago’s record high rates. As you may have read, retailers and other businesses have turned to creative but controversial ways to route transactions through far-flung communities where sales tax levies are lower. For some reason, Mayor Emanuel doesn’t think the phenomenon will apply to services.

At the same time, Illinois' heavy reliance on the sales tax as a major revenue source has come under growing criticism as unfair, a drag on commerce and a tool that makes it harder for government bodies to cope with economic downturns. A key problem, as many tax critics view the situation, is Illinois has been far slower than other states to recognize our citizens spend an increasing share of their dollars on simple purchases for services such as lawyers, landscaping, nail care and recreation. Illinois is very much a service economy, as the retail sector has moved to the internet whenever possible.

9-13-11; Claimant’s claim work-related stress caused tummy ulcers which under FMLA were hard for the Federal Courts to “digest” and dismissal affirmed

Our Federal Seventh Circuit Court of Appeals falls in line with other federal circuits on FMLA. In doing so, the Court defines limits to liability under FMLA protections and offers the rather elementary observation a claimant must be entitled to FMLA leave in order to establish a cause of action under the Statute. In Breneisen and Lineweaver, v. Motorola, Inc. (2011 WL 3873771, 7th Circuit, Sept. 2d 2011), the Seventh Circuit affirmed the District Court’s dismissal, finding Plaintiff failed to establish a wrongful discharge claim arising out of the stress imparted by his supervisors, since his FMLA leave was already exhausted earlier in the year.

Plaintiff Breneisen was employed at various Motorola facilities and took FMLA leave to receive treatment for gastroesophageal reflux. He returned to work twelve weeks later and was assigned to a different position, allegedly because his position had been eliminated during his leave and his former duties had been dispersed among several other positions. He received the same pay and benefits, but personally considered the change a demotion.

On April 20, 2001, just weeks after returning to work, Plaintiff Breneisen took medical leave again, this time for esophageal surgery. He returned to work in September 2001, but in February 2002, he took leave for a third time to undergo a total esophagectomy. 0Breneisen never returned from this leave and was eventually terminated in June 2003. He alleges the esophagectomy was necessary because a supervisor at Motorola caused him to suffer stress, high blood pressure, and stomach reflux, all of which exacerbated his pre-existing medical condition.

The crux of Breneisen's argument is the alleged mistreatment he received from his supervisor at Motorola upon returning from his second leave in September 2001 exacerbated his pre-existing condition and caused him to take the third leave, from which he never returned. He asserted the evidence the District Court excluded was offered to prove this alleged causal link.

In the Court’s analysis, our Seventh Circuit turned to a similar case from the Sixth Circuit, where they ruled FMLA does not address the cause of an employee's injury. Edgar, 443 F.3d at 516. Our Seventh Circuit agreed the cause of an injury was irrelevant under the FMLA, although the Court commented the cause of an injury would be relevant to a claim based in tort law, noting Breneisen already filed an intentional infliction of emotional distress claim. The Court already affirmed summary judgment in favor of Motorola on that claim when the case first came before them in 2008.

The Federal Appellate Court went on to point out that, even if the cause of an employee's medical condition were relevant under the FMLA, it would not be relevant in Plaintiff Breneisen's case, since the exacerbating conduct he alleges occurred after a second, unprotected leave. There seems to be no dispute Defendant Motorola fully complied with the requirements of the FMLA during and immediately following Breneisen's first leave. At the end of that leave, his entitlement to twelve weeks of leave per year for a qualifying condition had been exhausted.

In April 2001, Motorola again allowed him to take leave; when he returned to work five months later, the company reinstated him. His second reinstatement did not occur because the FMLA required it; rather, it appears to have been a courtesy extended to a long-standing and veteran employee. Although his second leave may have been “approved,” an employer's approval of extra leave time has no bearing on the established parameters of taking leave pursuant to the FMLA. Since the retaliatory conduct which Plaintiff Breneisen alleges occurred happened when he was no longer subject to the FMLA's clearly defined protections, he was not entitled to recovery for an alleged FMLA violation.

The Court also commented “stress can adversely affect many common ailments from which physically infirm employees suffer, granting relief on this basis would contravene the straightforward premise of the FMLA—to protect employees from adverse actions by their employers during finite periods when short-term personal or family medical needs require it”. When serious medical issues render an employee unable to work for longer than the twelve-week period contemplated under the statute, the FMLA no longer applies. This is true regardless of the cause of the infirmity.

This article was researched and written by John P. Campbell, Jr., J.D. Please feel free to contact John directly at jcampbell@keefe-law.com.

9-6-11; The United States Court of Appeals Seventh Circuit held pregnancy-related complications did not render an employee disabled within the meaning of the ADA

Due to a lack of any substantial impairment limiting a major life activity as well as refusal to accommodate pregnancy-related complications resulting in termination, the Federal Appellate Court found it was not discrimination under Title VII/PDA to terminate due to lack of evidence employer treated similarly situated non-pregnant co-workers more favorably.

In Serednyj v. Beverly Healthcare, LLC (2011 WL 3800123 C.A.7 issued Aug. 26, 2011), the employee worked as an Activity Director for a nursing home. The execution of duties entailed some physically strenuous functions including rearranging dining room tables for specific activities as well as transporting residents to activities in heavy wheelchairs and co-workers often assisted Employee in performing job duties. Employee began to have pregnancy complications and a doctor implemented work restrictions limiting activities to no heavy lifting or strenuous activities directly in conflict with job duties.

The employer considered reasonable accommodation but refused same based on policy allowing restriction only when medically necessary for qualified individuals with disabilities to perform essential functions and permitting no other restricted or limited duty for non-work related injuries or conditions. The employer felt the employee did not qualify for FMLA leave based on insufficient length of employment. Employer paid all available sick and vacation leave pursuant to policies and informed employee to return to work or risk termination. The employee remained absent from work and the employer terminated employment.

The employee then requested accommodation from majority of job duties or at the very least assistance by co-workers in performing duties similar to pre-pregnancy employment. Despite terminated status, the employer again considered reasonable accommodation but again refused same based on work policy.

Under both Title VII and the PDA, the issue of pregnancy-related complications was a case of first impression in the Seventh Circuit; however pregnancy itself has long been protected under federal law. Title VII prohibits employment discrimination on the basis of sex and the Pregnancy Discrimination Act (PDA) explicitly extends Title VII protection to pregnant women as pregnancy is a proxy for gender, and, therefore, discrimination against pregnancy is discrimination against women.

The PDA requires an employer ignore pregnancy and fairly treat pregnant employee the same as if no pregnancy existed. Therefore, an employer is not required to provide an accommodation to a pregnant employee unless it provides the same accommodation to its similarly situated non-pregnant employees. In the case at bar, the employee first unsuccessfully argued her employer treated employees with a qualified disability or work related injury more favorably by providing accommodation to disabled and work-related injured employees but refusing accommodation to all other employees requesting accommodation.

However, the Seventh Circuit reasoned the policy complied with the PDA because it did, in fact, treat non-pregnant employees the same as pregnant employees – both are denied an accommodation of light duty work for non-work-related injuries. The PDA merely required accommodation policies, in this case, be “pregnancy-blind,” in order to be valid.

Second, the employee unsuccessfully argued she suffered unfavorable treatment post-pregnancy as compared to pre-pregnancy because other employees assisted the employee in performing job duties before pregnancy but after pregnancy, the employer denied request for the same assistance or accommodation. The Seventh Circuit reasoned for purposes of Title VII/PDA, a request for an accommodation was materially different than a request for assistance. Co-workers assisting Employee before pregnancy did so completely voluntarily in a spirit of teamwork but any co-worker was free to decline request and under no obligation to provide assistance. However, if Employer granted request for assistance, only then would duties be formally modified to light duty work, and the assistance given by co-workers now obligatory.

ADA and Retaliation

The Americans with Disabilities Act (ADA) prohibits discriminating against a qualified individual with a disability of a physical or mental impairment substantially limiting one or more of the major life activities of such individual. A medical condition by itself does not constitute a disability. Pregnancy cannot be called impairment and although pregnancy per se is not covered by the ADA, the Act does not necessarily exclude all pregnancy-related conditions and complications.

Yet, even if pregnancy was a physical/mental impairment this arguable “impairment” must still substantially limit an individual. Factors considered include the nature and severity of the impairment; the duration or expected duration of the impairment; and the permanent or long term impact, or the expected permanent or long term impact of or resulting from the impairment.

The Seventh Circuit reasoned short-term, temporary restrictions, with little or no long-term impact, are not substantially limiting and do not render a person disabled for purposes of the ADA. Pregnancy is, by its very nature, of limited duration, and any complications arising from a pregnancy generally dissipate upon birth. However, dictum in the opinion appears to indicate if pregnancy-related complications were not of limited duration but rather long-term limitations then an employee would be disabled with an impairment substantially limiting a major life activity, namely reproduction. The Seventh Circuit remained silent on examples of when pregnancy-related complication rose to the level of a disability but it appears any chronic, long-term, or permanent impact such as infertility or psychological conditions resulting from the emotional distress of a miscarriage may in fact be considered, or at least argued in the future, a disability within the ADA.

Finally, the Seventh Circuit held the employer did not retaliatorily discharge the employee reasoning the employee suffered no adverse employment action after her request for reasonable accommodation. The employee was no longer employed at the time of the request for accommodated. Therefore, there was no evidence of retaliation because there was no action yet for the employer to retaliate against. Further, the employer attempted to delay termination as long as possible by paying all available sick and vacation leave pursuant to policies.

Recommendations

First and foremost, the abovementioned precedent does not allow for blanket protection when terminating pregnant employees. Employers with similar policies allowing accommodation only to qualified individuals, namely the disabled and injured workers, should ensure such policies comply with federal law. As previously reported in this KC&A Update, the ADA is very clear U.S. employers are required to engage in the interactive process and conduct an individualized assessment to determine supplying a reasonable accommodation to employees upon request. Please be advised “blind” adherence to attendance requirements and auto-termination presents the risk of seven figure exposure.

In order for employers to prevent and protect against claims by pregnant employees, we recommend following the same techniques used in considering accommodation for disabled or work related injured employees as well as:

1.         Maintaining “pregnancy-blind” accommodation polices;

2.         Declining to order co-workers to assist pregnant employees;

3.         Delaying termination by paying all available sick and vacation leave;

4.         Refusing to overlook absences of non-pregnant employees upon the decision to auto-terminate for failing to return to work;

5.         Denying requests to accommodate other non-pregnant employees not qualifying for accommodation according to work policy;

6.         Avoiding the appearance of more favorable treatment amongst employees;

7.         Carefully considering reasonable accommodation potential under ADA and ability to perform the essential job functions of the position despite the fact employee does not qualify for accommodation according to policy;

8.         Requesting confirmation of restriction prior to termination;

9.         Determining whether pregnancy complication may result in chronic, long-term, or permanent impairment by keeping in contact with treating doctor as well as requesting suggestions whether any open positions fit the restrictions, allowing the employee to return to work;

10.       As always, documenting all steps thoroughly and referring with defense counsel when necessary.