By Marjorie Johnson, J.D.

A financially waning coal brokerage company did not act unlawfully by terminating a 67-year-old sales VP after he racked up $2,300 on the company credit card during an unapproved business trip, the Sixth Circuit ruled in an unpublished opinion affirming dismissal of a myriad of claims on summary judgment. He failed to make out his prima facie case of age bias since he was not replaced; rather, his duties were assigned to another employee who maintained his duties, during a time that the company was reducing its workforce and “winding down.” He also failed to revive his disability bias claim since, although he suffered a heart condition and cancer, he testified that he came back to work “full steam” after treatment (Stearman v. Ferro Coals, Inc., November 2, 108, Siler, E., unpublished).

The VP, who began working for the coal company in 2009, was required to travel as part of the job. He was provided with a company credit card to cover the costs. He also signed the employee handbook, which stated that employees were required to seek pre-approval for business travel.

Unauthorized travel leads to firing. Due to “declining market conditions” in the coal industry, the company suspended all business travel in 2012. Employees could still travel, but only if they received specific permission to do so. The VP followed this protocol in 2013 when he requested and received approval to attend a seminar in Myrtle Beach.

He asked to go again in 2014 but never heard back. He attended the seminar anyway and charged about $2,300 to the corporate credit card. He was subsequently terminated ostensibly for improper use of a company credit card in the broader context of the declining coal industry and a need to downsize.

The company did not hire a replacement but instead assigned his duties to a substantially younger field representative. And while the VP had the highest monthly health-insurance premium in 2013, his premium dropped when he became eligible for Medicare in 2014, resulting in a substantially lower amount than what the company paid for anyone else.

Medical leave. In the months prior to his termination, the VP went through some personal hardships which resulted in his missing some time from work. Over a four-month period in 2013- 2014, he suffered a heart attack and struggled with the recurrence of prostate cancer. His mother died in July 2014 and his wife fell ill a month later. Though he claimed that he was not allowed to return to work after his medical leave, he testified that he returned to work “full steam” after receiving treatment.

Waning coal market. Meanwhile, the waning coal market caused the company to suffer financial losses. For instance, its largest customer left, and another large customer switched from coal to natural gas. As a result, the company slashed its workforce from 18 employees at the time the VP was hired to 12 by the time he left.

Post-termination. After the Kentucky Unemployment Insurance Commission awarded him unemployment benefits, the company’s owner wrote a letter to the Commission challenging its determination because the employee was terminated for cause. The employee testified that he had no serious health issues and did not consider himself disabled at the time he was let go.

He filed this lawsuit alleging age and disability discrimination under the Kentucky Civil Rights Act (KCRA), a violation of the Kentucky Equal Opportunities Act (KEOA), interference with his ERISA rights, a violation of the Kentucky Wage and Hour Act (KWHA), and a conspiracy to violate civil rights under the KCRA.

No replacement. Affirming dismissal of his age bias claim, the Sixth Circuit agreed with the district court’s determination that he failed to make the prima facie showing he was replaced by someone outside of the protected class. Rather, the company established that it did not hire a new employee, but instead assigned his duties to another worker. “Spreading the former duties of a terminated employee among the remaining employees does not constitute replacement.”

The court rejected his assertion that the replacement test applied only in “reduction-in-force” (RIF) cases. First, the supporting case itself involved a disciplinary demotion and it didn’t expressly confine itself to the RIF context. Moreover, the record showed that the coal company was engaged in a RIF since, by the time the VP left, it had cut its workforce from 18 to 12 employees. Plus, the trend continued as it now had fewer than five employees, had a single contract remaining, and was “winding down.”

No disability. He also failed to revive his claim of disability bias since he could not show he was disabled for purposes of his claims under the KCRA or KEOA. Though he suffered heart problems and received cancer treatment, he had no serious health issues at the time of his termination. As he himself put it, he came back to work “full steam” after treatment. Nor did the record suggest that he suffered any restriction in his ability to perform his job—thus eliminating a “regarded as” disability theory.

Remaining claims. The record also did not support his ERISA interference claim since he produced no evidence that he was terminated because his employer believed he would cost substantial medical expenses. Moreover, because he admittedly had no entitlement to a Christmas bonus and wasn’t denied any other agreed upon wages, he failed to show that the company violated the KWHA. Finally, because he did not engage in age or disability bias under the KCRA, the company also did not commit conspiracy to violate the KCRA.

A federal court in Massachusetts ruled that the Railroad Unemployment Insurance Act (RUIA) completely pre-empts the Massachusetts Earned Sick Time Law. But the impact of the decision is limited, because it applies only to companies that qualify as employers under the RUIA.

By Lorene D. Park, J.D.

The Massachusetts’ independent contractor statute, G. L. c. 149, § 148B, does not determine whether an injured worker is an “employee” for the purpose of workers’ comp benefits under G. L. c. 152, ruled the Massachusetts Supreme Judicial Court. Consequently, the reviewing board of the Department of Industrial Accidents correctly applied the workers’ comp statute’s definition to decide if the claimant was an employee, and she was properly classified as an independent contractor. Concurring, Justice Gants wrote separately to highlight the problem inherent in having different tests for “employee” status under different state employment laws (Ives Camargo’s Case, May 10, 2018, Kafker, S.).

Newspaper delivery. Since 2001, the claimant was a delivery agent for Publishers Circulation Fulfillment (PCF), which acts as a middleman for publishers, delivering newspapers through agents. The claimant signed various contracts over the years that identified her as an independent contractor. As part of her contract, she was given routes and a list of customers, but she used her own vehicle and could make deliveries at any time and in any order she wished, provided they were done by 6 A.M. on weekdays and 8 A.M. on weekends. She was paid for each newspaper delivered and paid a weekly stipend when she elected to redeliver newspapers to customers who did not receive a scheduled delivery. She was allowed to hire assistants or to subcontract deliveries; an option she exercised. And given the non-exclusivity of her contract with PCF, she could deliver newspapers or other items for other businesses. She also purchased and collected independent contractor work insurance and filed taxes as an independent contractor.

Work injuries. In September 2010, the claimant was loading papers from PCF into her vehicle when she fell off a ramp and hurt her right knee and right hand. She reported the injury to PCF but did not seek medical treatment and finished her work for PCF that day. She reported a second injury in January 2011 after slipping on ice while delivering papers and injuring her right leg. After the second injury, she was hospitalized and had surgeries on her right knee and right hand. She was fired the summer of 2012.

Workers’ comp denied. She filed a claim for workers’ compensation benefits in 2012 and the insurer objected. An administrative law judge (ALJ) issued an order directing the insurer to pay temporary total incapacity benefits and the insurer appealed. After a hearing, the ALJ concluded the claimant was an independent contractor and therefore not entitled to workers’ comp benefits.

Affirming, the reviewing board also concluded that the claimant was an independent contractor based on the definition of “employee” contained in the workers’ comp statute, as articulated in the 12-part test from MacTavish v. O’Connor Lumber Co. and Whitman’s Case, rather than the definition of “employee” found in the independent contractor statute, Chapter 149, Section 148B.

Relevant statutory provisions. Also affirming, the Massachusetts Supreme Court reviewed the relevant statutory text and history. The workers’ comp statute, General Laws c. 152, requires employers to provide workers’ compensation to employees who are injured within the scope of their employment. It applies to “employees,” defined in Section 1 as “every person in the service of another under any contract of hire, express or implied, oral or written,” with certain exceptions not relevant to this opinion.

The independent contractor statute, General Laws c. 149, provides specific benefits and protections to employees, including how often an employee must be paid, when an employee must be notified of wage deductions, etc. The two key provisions in Chapter 149, Section 148B (a) and (d) state: “(a) For the purpose of [G. L. cc. 149 & 151], an individual performing any service, except as authorized under this chapter, shall be considered to be an employee under those chapters unless: (1) the individual is free from control and direction…. (d)… Whoever fails to properly classify an individual as an employee according to this section and in so doing violates [G. L. c. 152] shall be punished as provided in [G. L. c. 152, § 14,] and shall be subject to all of the civil remedies, including debarment, provided in [G. L. c. 149, § 27C].”

Definition of “employee” for workers’ comp purposes. The claimant argued that the reference to G. L. c. 152 in subsection (d) incorporates the three-part independent contractor test set out in c. 149, § 148B, so the definition of “employee” in c. 149, § 148B (a), should be used in lieu of the definition of “employee” found in the workers’ compensation statute, c. 152, § 1, and the MacTavish-Whitman factors.

Disagreeing, the state high court explained that it needed to look no further than the plain and unambiguous language in the independent contractor statute c. 149, § 148B subsection (a), which states that Section 148B applies “for the purpose of” chapters 149 and 151. This expressed the legislature’s intent to limit the applicability of the independent contractor statute to chapters 149 and 151. Thus, while § 148B subsection (d) contained an isolated cross-reference to c. 152, it did not apply to c. 152 in its entirety or change the definition of “employee” for purposes of a workers’ comp claim. (The court noted that the reviewing board clarified the purpose of the cross-reference to c. 152, which addresses expanded penalties for misclassifying workers but does not address whether an individual is an employee for purposes of workers’ comp benefits).

Claimant was an independent contractor. Based on the foregoing, the definition of “employee” in the workers’ compensation statute, c.152 Section 1 governed the claimant’s employment status here and the MacTavish-Whitman factors provided the appropriate test. In applying those factors, the ALJ properly concluded, and the reviewing board properly affirmed, that the claimant was an independent contractor.

Concurring opinion. Joined by Justices Lowy and Budd, Justice Gants wrote a concurring opinion to highlight problems inherent in having different standards for determining employee status under various laws and to suggest “it is time to confront the problems that arise from this complex statutory scheme, especially to workers.” Justice Gants noted Maine adopted a uniform standard under its unemployment insurance, workers’ comp, and other employment laws. He encouraged the Massachusetts legislature also to take steps to address the issue.

Effective transition or outplacement services help separated employees find new jobs, protect the company’s reputation, prevent potential lawsuits and lessen an employer’s unemployment insurance taxes.