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Client Alert: Castellanos vs. Next Door Company



On April 28, 2016, the Florida Supreme Court issued its long awaited ruling on the Castellanos vs. Next Door Company case. This case addressed attorney fees involving Workers’ Compensation insurance, challenging the current “limitation” of attorney fees for attorneys involved with Workers’ Compensation cases. Essentially, the court has ruled that the current mandatory fee schedule is unconstitutional and should return to the pre-2009 ‘reasonable standard’ as addressed by the Judge of Compensation Claims (JCC). The full ruling can be accessed here.

Castellanos vs. Next Door Company Ruling

How will this affect you as an employer?
Most everyone believes this decision will likely increase litigation, result in prolonged litigation, add substantially higher cost of attorney fees to many more Workers’ Compensation claims, and lead to increased settlement values and reserves. Increased claims costs will simply drive up Workers’ Compensation premiums.

Because Section 440.34 as enacted is unconstitutional, the JCC can adjust a fee up or down depending on factors such as time, labor, difficulty, customary fees, amount of benefits, etc. This may result in prolonged litigation, substantially higher attorney fees, and increased settlement values. This affects all “open” claims and/or claims where the statute of limitations has not run. Bottom line, we’re back to where we started in 2003 when the Florida legislature specifically sought cost-cutting measures by enacting the attorney fee schedule in the first place.

Based on this ruling, while the full impact is unknown, the NCCI (the entity that recommends premium rates to the state) has advised they are evaluating the financial impact of this decision on Florida’s Workers’ Compensation costs and subsequently, workers’ compensation premiums. They are expected to recommend a special rate increase which, if approved, would take effect this summer.

What can employers do?
It will be critical that employers report accidents timely, fill out wage statements completely and accurately, and provide complete information to the carrier. Even seemingly small oversights or delays could generate fee entitlement and have significant financial impact. Our commitment to our partnership, and the experience , dedication, and expertise from our Claims Advocate team will be instrumental in monitoring and assisting you in managing your Workers’ Compensation claims process.

Insurance carriers and defense attorneys continue to assess the impact of this decision and will provide us additional information as available. We will, of course, continue to keep you informed of any further implications or developments and how you might get involved in efforts to craft a curative solution. It is probably premature to contact legislators until the business community and the insurance industry can frame the problem and the solution in a compelling message.

When it comes to your company benefits program, we believe it’s important to measure the risks and manage the results and costs to your business. We help our clients accomplish this with expert advice, resources, and tools to identify and target the cost drivers and your exposure to risks.

In 2015, the Kaiser Family Foundation and the Health Research & Educational Trust (HRET) conducted their annual survey examining employer-sponsored health benefits trends such as annual deductibles, plan enrollment, health and wellness programs, and more.

Read more

As you’re aware, federal regulations such as ERISA, the Department of Labor (DOL), Centers for Medicare/Medicaid (CMS), and the Affordable Care Act (ACA) require employers to distribute various notices to employees, at specific times.

Some notices, such as the Exchange (Marketplace) Notice are required to be given to newly hired employees, for example in your new hire packets.

Other notices should be included in the enrollment materials you distribute when employees are deciding whether to join your benefits plan, both when they are first eligible and at your annual open enrollment. Some of those notices include a Summary of Benefits and Coverage (SBC) for each plan you offer, Notice of Special Enrollment Rights, Women’s Health and Cancer Rights Act (WHCRA), etc.

Read more

IRS Publishes 2015-2016 Special Per Diem Rates

On September 16, 2015, the IRS released the 2015-2016 special per diem rates for taxpayers to use in substantiating the amount of ordinary and necessary business expenses incurred while traveling away from home. The rates are effective for the period from October 1, 2015 to September 30, 2016.

The guidance provides the special transportation industry meal and incidental expenses (M&IE) rates, the rate for the incidental expenses only deduction, and the rates and list of high-cost localities for purposes of the high-low substantiation method.

Read IRS Notice 2015-63

OFCCP Announces Final Rule Prohibiting Pay Secrecy

On September 10, 2015, the Office of Federal Contract Compliance Programs (OFCCP) published a Final Rule implementing Executive Order (EO) 13665 issued by President Obama on April 8, 2014, which prohibits federal contractors from discriminating against employees or job applicants who inquire about, discuss, or disclose their own compensation or the compensation of other employees or applicants. EO 13665 amends EO 11246, which prohibits discrimination based on race, color, religion, sex, sexual orientation, gender identity, and national origin.

The Final Rule generally applies to any business or organization that:

  • Holds a single federal contract, subcontract, or federally assisted construction contract in excess of $10,000;
  • Has federal contracts or subcontracts that have a combined total in excess of $10,000 in any 12-month period; or
  • Holds government bills of lading, serves as a depository of federal funds, or is an issuing and paying agency for U.S. savings bonds and notes in any amount.

The Final Rule goes into effect on January 11, 2016.

Read the Final Rule View the FAQS on the Final Rule

Administration Issues Executive Order Requiring Paid Sick Leave for Federal Contractors

On September 7, 2015, President Obama issued an Executive Order (EO) requiring federal contractors and subcontractors to provide their employees with paid sick leave.

Pursuant to the EO, employees will accrue paid sick leave at a rate of one hour for every 30 hours worked. Employers may cap accrual at 56 hours (seven days) per year. Employees must be allowed to carryover all unused sick leave.

Paid sick leave may be used by an employee for an absence resulting from:

  1. A physical or mental illness, injury, or medical condition.
  2. Obtaining diagnosis, care, or preventative care from a health care provider.
  3. Caring for a child, parent, spouse, domestic partner, or any other individual related by blood or affinity whose association with the employee is the equivalent of a family relationship, who has any of the needs listed in (1) and (2) above.
  4. Absences resulting from domestic violence, sexual assault, or stalking, if the absence is a result of seeking medical attention, obtaining counseling, seeking relocation, seeking assistance from a victim services organization, or taking related legal action.

Requests for leave may be made orally or in writing and must include the expected duration of the leave. If the need for leave is foreseeable, employees must provide at least seven calendar days’ advance notice. If the need for leave is not foreseeable, notice must be provided as soon as practicable.

If an employee is absent for three or more consecutive days on paid sick leave, the employer is permitted to request a certification from a health care provider (if the absence is related to a medical condition) or from an appropriate individual or organization (if the absence is related to domestic violence, sexual assault, or stalking). The certification must be provided no later than 30 days from the first day of leave.

The Department of Labor is required to issue regulations by September 30, 2016.

The Executive Order applies to contracts entered into after January 1, 2017.

Read the Executive Order

NLRB General Counsel Issues Guidance on Electronic Signatures

On September 1, 2015, the General Counsel of the National Labor Relations Board (NLRB) issued guidance (Memorandum GC 15-08) regarding the use of electronic signatures to support a showing of interest on a union petition. According to the guidance, the NLRB has determined that the Amended Election Rules, which went into effect on April 14, 2015, permit the use of electronic signatures.

Pursuant to the guidance, to be acceptable and considered authentic and reliable by the NLRB, an electronic signature must include all of the following:

  • The signer’s name.
  • The signer’s email address or other known contact information (e.g., social media account).
  • The signer’s telephone number.
  • The language to which the signer has agreed (e.g., that the signer wishes to be represented by ABC Union for purposes of collective bargaining or no longer wishes to be represented by ABC Union for purposes of collective bargaining).
  • The date the electronic signature was submitted.
  • The name of the employer of the employee.

The guidance also explains the procedures for submission of a showing of interest based on electronic signatures. As such, a party submitting electronic digital signatures must submit a declaration:

  1. Identifying what electronic signature technology was used and explaining how its controls ensure both that the electronic signature is that of the signatory employee, and that the employee himself or herself signed the document; and
  2. That the electronically transmitted information regarding what and when the employees signed is the same information seen and signed by the employees.

The guidance further explains the procedures for electronic signature submission.

Read Memorandum GC 15-08

EEO-1 Filing Deadline Extended to October 30th

The Equal Employment Opportunity Commission (EEOC) has announced that the EEO-1 Joint Reporting Committee has extended the deadline for all EEO-1 Report filers from September 30 to October 30. The Employer Information Report EEO-1, otherwise known as the EEO-1 Report, must be submitted and certified by October 30 at the latest.

Visit the EEOC EEO-1 Survey Webpage

PosterFlorida recently changed its discrimination law by adding language to specify that discrimination based on pregnancy is specifically prohibited. Now, the state has released a new version of its discrimination labor law poster to reflect this recent change to the law. Since the Florida discrimination poster has never had a revision date, it becomes important to focus on what has changed about the new labor law poster. Most importantly, “pregnancy” is now listed as a protected category. Secondly, the Florida Commission on Human Rights has an updated address that is now reflected on the poster.

The Florida Commission on Human Relations, the state agency responsible for enforcing the Florida Civil Rights Act, requires Florida employers to post an anti-discrimination poster at their place of business.

Click here to download the new discrimination poster.