• Steve Minor Published in VADA's Journal of Civil Litigation
• WHEN MUST AN EMPLOYER DELIVER AN EMPLOYEE'S FINAL PAYCHECK?
• HEALTH CARE COVERAGE DURING LEAVES OF ABSENCE
• EMPLOYERS MUST GIVE NOTICE TO EMPLOYEES OF "LEAVE YEAR" UNDER FMLA
• SHOULD EMPLOYERS PLACE LIMITS ON EMPLOYEE CELL PHONE USE?

Steve Minor Published in VADA's Journal of Civil Litigation

The Virginia Association of Defense Attorneys published in the Fall 2000 edition of its Journal of Civil Litigation an article by Steve Minor on the subject of "Asserting Qualified Immunity in the Fourth Circuit." Qualified immunity is a defense available to government officials sued for constitutional violations. Steve Minor has been a member of VADA, a statewide group of insurance defense lawyers, since 1993, and regularly represents local government officials and local government agencies in litigation matters.

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The statutory law of both Tennessee and Virginia set forth specific time limits in which an employer must make a final payment to a former employee.

According to Tennessee law, "[a]ny employee who leaves or is discharged from employment shall be paid in full all wages or salary earned by [him] no later than the next regular pay day following the date of dismissal or voluntary leaving, or twenty-one (21) days following the date of discharge or voluntary leaving, whichever occurs last." Tenn. Code Ann. § 50-2-103(g) (emphasis added). For example, if Employee Smith, who is paid once a month, is discharged four days before payday, his employer has twenty-one (21) days to pay Smith in full because the twenty-one-day cutoff would fall after the payday. However, if Employee Smith was paid the day before he was terminated, and he is not due to be paid for another twenty-five (25) days, the employer may wait until the next payday to make a final payment to him because the payday will occur last. A Tennessee employer who violates this rule is subject to a misdemeanor fine of $100 to $500, and a civil penalty for a willful violation of $500 - $1000 for each and every infraction.

In Virginia, the law is more straightforward. When an employee is terminated, he shall be paid "on or before the date which he would have been paid for such work had his employment not been terminated." Va. Code 40.1-29(A)(1). That means he needs to be paid on or before his next, original payday. A Virginia employer who violates this statute is subject to a civil penalty of up to $1,000 for each violation, and is guilty of a misdemeanor for a willful violation. Finally, an employer who fails to make payment of wages in accordance with the statute "shall be liable for the payment of all wages due, plus interest at an annual rate of eight percent accruing from the date the wages were due."

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Employers face a number of issues when trying to comply with federal and state laws concerning employee rights and benefits. One of the most vexing issues for employers is determining when the employer must continue health care coverage for employees who are taking a leave of absence.

Health Insurance under the FMLA

Employers covered by the Family Medical Leave Act ("FMLA") that provide health care benefits under a group health plan must maintain the same health benefits during an employee's FMLA leave that it would have provided if the employee were working. During an FMLA leave, the employee remains responsible for his/her share of the employee's normal premium.

The employee's health insurance coverage may be terminated if the employee's premium payment is more than thirty (30) days late. Before terminating coverage, however, the employer must provide the employee with at least fifteen (15) days' written notice that the premium is late and that coverage will lapse if payment is not received by a certain date. The date selected for termination of coverage must be at least fifteen (15) days after the letter is written and at least thirty (30) days after payment was due. Also, an employer should remember that an employee's health care coverage must be reinstated upon return from FMLA leave.

When an employee chooses not to return to work from FMLA leave, the employer ordinarily can recover any health premiums it paid on the employee's behalf during the unpaid portion of the leave. The employer's right to recover any payments made for the employee's portion of the premiums extends to both paid and unpaid FMLA leave.

Health Insurance under the ADA

Employers are not required to continue health insurance benefits to employees who are on an unpaid leave as an accommodation for a disability. However, possible discrimination liability arises if benefits are continued for employees on leave not related to disability but discontinued for employees on disability leave.

Health Insurance under Worker's Compensation

Employers are required to pay medical costs for an employee's work-related injuries and compensation while an employee is on a workers' compensation leave. Except for FMLA coverage as discussed below, health insurance and other benefits are not guaranteed.

If the worker's compensation leave runs concurrent with FMLA leave, the employer must comply with the FMLA requirements to maintain group health insurance benefits. Additionally, employees who return to work after a concurrent FMLA and worker's compensation leave are entitled to reinstatement of all benefits.

COBRA Implications

Every employer (with 20 or more employees) of a group health insurance plan must insure that each covered employee under the plan who would lose coverage as a result of a "qualifying event" will be entitled to continuation of coverage under the plan. A "qualifying event" includes termination or a reduction in hours of the covered employee's employment.

Taking an FMLA leave is not necessarily a qualifying event. Rather, a qualifying event occurs only if: (1) the employee is covered by the employer's health insurance on the day before the first day of FMLA leave; and (2) the employee does not return to work with the employer at the end of the FMLA leave.

Worker's compensation leave (absent a concurrent FMLA leave) is a qualifying event for purposes of COBRA. In this situation, the employer may:

• (1) treat the date of the start of disability leave as the qualifying event; or
• (2) treat the date of the loss of health insurance coverage as the qualifying event; or
• (3) offer the employee the choice between alternative disability leave coverage (i.e., employee pays entire premium, so long as it is not higher than COBRA premium) or COBRA coverage.

Before discontinuing the employee's health benefits during a worker's compensation leave, the employer should insure that this act is consistent with past practice and any written policies of the employer.

Conclusion

Maintaining compliance with federal and state employment laws can be a daunting prospect. However, with careful consideration of each claim and by keeping an eye on conformity among employees, the task becomes considerably more approachable.

Regina W. Calabro

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From 1994 to 1996, Bachelder took FMLA leave for various health and family-related reasons. In February 1996, Bachelder was absent for a total of three weeks with a doctor's excuse. In early April, she called in sick one day, caring for her child, and she was terminated April 9. Her termination letter complained Bachelder had been absent from work 16 times since counseling in January. Bachelder sued under the FMLA, alleging that her employer impermissibly considered her use of leave protected by the FMLA in its decision to terminate her. Her employer countered that her February 1996 absences were not protected by the Act because the company used the retroactive "rolling" year method to calculate employee eligibility for FMLA leave. Thus, Bachelder had exhausted her annual allotment of FMLA leave as of June 1995. Bachelder argued that under FMLA regulations, she was entitled to have her leave eligibility calculated by the method most favorable to her. Under a calendar year method of calculation, the February 1996 absences were protected by the Act, and her employer violated the Act by relying on those absences when it fired her.

On August 8, 2001, the United States Court of Appeals for the 9th Circuit reversed a District Court judgment for the employer and directed that summary judgment be entered against the employer. Making reference to FMLA regulations, the Court noted that if an employer fails to select a method for calculating the twelve-month period in which an employee is limited to 12 weeks of FMLA-protected leave, then an employee is entitled to that method which provides the most beneficial outcome for the employee. In this case, the Court found that the employer did not adequately inform its employees that it would use the "rolling" leave year method for calculating their eligibility for FMLA leave. An employee handbook statement that "employees are entitled of up to 12 calendar weeks of unpaid [FMLA] leave within any 12-month period" did nothing more than parrot the language of the Act. Merely paraphrasing the statutory language did not inform employees of the method chosen.

When the employer failed to adequately inform its employees that it had chosen the retroactive "rolling" leave year method for calculating their eligibility for FMLA leave, the employer in effect failed to select a calculating method. Therefore, Bachelder was entitled to use that method most beneficial to her, which was the calendar year method. Thus, Bachelder's absences in 1996 were covered by the Act, and the employer was prohibited from considering them in its discipline decision. Bachelder v. America West Airlines, Inc., 259 F.3d 1112 (9th Cir. 2001).

Mark M. Lawson

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SHOULD EMPLOYERS PLACE LIMITS ON EMPLOYEE CELL PHONE USE?

What happens when one of your employees while driving a company vehicle, or driving their personal vehicle for a work-related task, has an accident while talking on a cell phone? More and more courts are determining that both the employee and his/her employer can be liable for significant damages caused by accidents that occur while an employee is making a work-related cell phone call. As a result, several employers are restricting mobile phone use on the road by their employees, and several states have either passed or are considering passing similar prohibitory legislation.

Some employers are resistant to banning or restricting employee use of mobile or company wireless phones while in their car. This is so, because typically companies get the benefit of increased productivity by having their employees conduct business while in their car or truck. However, some courts have determined that companies bear "vicarious responsibility" if their employee's negligence causes an accident.

"There is nothing special about the cell phone," says Kenneth Abraham, a professor of tort and insurance law at the University of Virginia. Companies can still be responsible if employees are only slightly deviating from their assigned tasks when the accident occurs. Abraham thinks the new guidelines restricting or prohibiting the use of cell phones while driving company vehicles makes sense. "If they have a policy, their employees are less likely to have accidents," said Abraham.

In June, New York became the first state to ban the use of handheld cell phones while driving. Similar restrictions are pending in 42 other states. Japan, Israel, Portugal, and Singapore are among 23 countries with restrictions.

Kurt Pomrenke

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