At the Intersection of Workers Compensation and Unemployment IAWC Conference October 18, 2019
Workers Compensation and Unemployment
October 18, 2019
Marlon Mormann, Attorney at Law
Workers’ Compensation and Employment Law
Workers’ Compensation Bad Faith Expert Witness
3320 Kinsey Ave
Des Moines Iowa 50317
515 710 0902
Marlon Mormann, Attorney at Law
3320 Kinsey Ave., Des Moines, Iowa 50317-2712 | 515.710.0902 | firstname.lastname@example.org
Workers Compensation and Unemployment
About the Author:
Marlon Mormann attained his Juris Doctor at the University of Nebraska College of Law-Lincoln, 1983. In 1984 Marlon was admitted to practice law in the states of Nebraska and Iowa. He has served as a Iowa Deputy Workers’ Compensation Commissioner as an Iowa Administrative Law Judge for the Unemployment Appeals Bureau. He left State of Iowa employment after 24 years and now engages in general practice legal work, workers’ compensation and employment law. Marlon also serves as an expert witness in workers’ compensation bad faith and wrongful termination cases.
Disclaimer, this is legal information, not legal advice.
- Unemployment benefits under Iowa Code sections 96.5 usually have a value near $10,000. Generally, a settlement with a former employer has a covenant that states: “Employer shall not protest Claimant’s claim for unemployment.”
- Settlement Language protecting claimant: The problem with an agreement to not protest comes when the employer accidentally protests in breach of the agreement. This agreement to not protest is difficult to enforce. Ultimately it is IWD that has the right to determine whether a claimant receives unemployment. Additional language will protect claimant, such as: “Employer shall not protest Claimant’s claim for unemployment, and employer shall pay liquidated damages in the amount of $xx,xxx for breach of this covenant.” Here “X” is the amount of money claimant could potentially receive in an unemployment claim. This MBA or maximum benefit amount is found on the green sheet also termed a Monetary Record. Employers are reluctant to agree to liquidated damages and as such this language is not often found in a global settlement.
A second option for settlement language might include a less egregious remedy such as attorney fees to resolve the breach: “Employer shall not protest Claimant’s claim for unemployment, and employer shall pay liquidated damages up to $1,000 or actual cost of attorney fees, whichever is less, to remedy a breach of this covenant.” This language gives the employer an incentive to adhere to the agreement without deal breaking language.
Why do employer breaches occur? Most breaches by employers are pure negligence. The employer simply forgets about the agreement not to protest the minute the papers are signed. Other breaches by employers occur due to automatic protocols in place where every claim is protested by a third-party administrator. The employer representative often does not know how their own system works for unemployment protests.
Cost effective cures for employer breaches of a covenant to not protest. First, the employer should never appear at fact finding or an unemployment appeal hearing if they have agreed to forego protest. The first defense is to have the third-party administrator withdraw the protest as they are in the best position to do so. Language could include: “Employer withdraws its protest for Jane Doe for Original Claim Date, 00/00/20**. The protest was made in error. “ In no manner should the employer reference a settlement agreement and the workers’ compensation claim. If the IWD ignores the withdrawal of protest, as it often does, the employer should not appear at any further hearings. Instead, communication with claimant’s counsel on the efforts made is imperative so that both parties can present a united front. Better to have claimant proceed with the further hearings alone than have the employer appear and be subject to examination by an administrative law judge or fact finder.
- Termination of TTD or Healing Period benefits. Workers’ Compensation Attorneys should remind their client to explore unemployment benefits immediately after TTD or Healing Period ends. Do not wait until after PPD is paid as the Claimant may not have a sufficient wage history at that late date to qualify for unemployment.
There are ways to obtain a substitute wage history that allows receipt of workers’ compensation benefits if it has been too long. If claimant has 2 or more quarters of TTD or HP and no wages in the base period, it is possible to substitute prior wages to qualify for Unemployment. Call IWD or Marlon Mormann.
- In-person hearings do not provide a better result in all cases. In most circumstances an in-person hearing is neutral or detrimental to claimant. Employer’s do not like in-person hearings because of the time away from work. The in-person hearing delays the process and is often detrimental to both parties. Claimant’s often get a new job before the hearing can be held and do not want to take a day off work. Ask for in-person hearing only if you have good reasons. If your client has trouble hearing over the telephone you should strongly consider an in-person hearing. There are many good reasons for in person hearings that allow tactical advantages. Requesting in person hearings as a default is ill advised and not in the best interest of claimants and employers in most situations. The ALJ has discretion to allow participation by telephone if at least one in-person witness is present. 871 IAC 26.6(3,4)
- Telephone Unemployment Appeal hearings require registration of the employer, claimant, witnesses and lawyer’s telephone number. Sending a letter to the appeals bureau is not sufficient to register a telephone number for hearing. The parties must call the number on the hearing notice or register online.
- Read the unemployment appeals bureau hearing notice. It is probably not the same notice you received last week. This document changes frequently with telephone numbers, procedure and technology. Read the notice on the day of receipt and follow the instructions to the letter. Failure to follow the instructions on the hearing notice may result in exclusion from the hearing.
- Read the back side of the hearing notice. It has almost everything necessary concerning pre hearing procedure, discovery. Failure to read the back side of the hearing notice is imprudent. This is probably the most important thing any lawyer can do to prepare for a hearing. Do not accept an unemployment case if you are unwilling to read the back side of the hearing notice. By reading the hearing notice, both sides, you will probably know more about unemployment than 95% of the lawyers in this state.
- Non-English-speaking Claimant’s often think that to qualify for unemployment they must prove they can’t work. An essential element of Unemployment is that the claimant is able and available for work each and every week. Able to work means that they can physically perform work that is available in the local job market. Available for work means that the claimant has at least 40 hours of time available to use to engage in gainful employment.
- Wrongful termination investigation often begins with the unemployment case, Springer v. Weeks & Leo Co., Inc., 475 N.W.2d 630 (Iowa, 1991). “This is a retaliatory or wrongful discharge case. Recovery of lost wages is permitted because such an action is an exception to the at-will employment doctrine. Although we did not address the damages issue in Springer, we later recognized a wrongfully discharged employee was entitled to a remedy for his or her complete injury. Niblo, 445 N.W.2d at 355.” Springer v. Weeks & Leo Co., Inc., 475 N.W.2d 630 (Iowa, 1991).
- Civil Rights actions investigation often begins with the unemployment case, Iowa Code section 216. Allows actions against employers and individuals. “The legislature's use of the words "person" and "employer" in section 216.6(1), and throughout the chapter, indicates a clear intent to hold a "person" subject to liability separately and apart from the liability imposed on an "employer." “Vivian v. Madison, 601 N.W.2d 872 (Iowa, 1999).
Duty to inform of third party actions. “If a point of law is involved, then the licensee should not attempt to advise his client outside the field of his competency, but should advise consultation with a lawyer.” (Duty of Real Estate Agent.) Menzel v. Morse, 362 N.W.2d 465 (Iowa, 1985). Fear not of malpractice as the attorney is protected by the benefit of the attorney-judgment rule. Martinson Mfg. Co. v. Seery, 351 N.W.2d 772, 775 (Iowa 1984) “In professional malpractice cases the law does not impose an implied guaranty of results. [Internal citations omitted] Moreover: If an attorney acts in good faith and in an honest belief that his acts and advice are well founded and in the best interest of his client, he is not held liable for a mere error of judgment.”
Thus, both the defendant and claimant attorney should inform the client of potential causes of action even though there is no contract obligating legal service. Often the discovery in a workers’ compensation case is the same discovery that would be performed in a number of common law torts. This evidence should be sent to the client with instructions that it may warrant exploration. All too often clients are not informed of smoking gun correspondence that could lead to a significant common law tort action. The more common examples come from email correspondence among supervisory personnel.
Preparing for the Unemployment hearing
I. File a timely protest and/or a timely appeal.
II. Learn the differences between a fact-finding interview and an appeal hearing.
III. Do not skip the fact-finding interview.
IV. Have the right people testify at the appeal hearing.
V. Submit appropriate exhibits for the hearing in a timely manner and sent the exhibits to opposing party. Always note that the exhibits were sent to the opposing party.
VI. Provide a telephone number for the appeal hearing pursuant to the hearing notice by online registration or a call to the Unemployment Appeals Bureau.
VII. Prepare for the hearing with dates of employment, names, dates of events. Know the content of exhibits for discussing and ability to point out important facts.
VIII. Meet your burden of proof by presenting appropriate evidence.
IX. Know the definition of misconduct and voluntary quit. Find the rules and review examples of misconduct or voluntary quit. Read old decisions on the unemployment appeal data base.
X. Make certain that any discharge for misconduct is based on a current act. Evaluate the last incident for absenteeism to determine if properly reported and for an excusable event.
XI. Learn the definitions of, the differences between, and the significance of excused absences and unexcused absences—even if your business or agency has a no-fault attendance policy.
XII. Comply with Iowa Code section 730.5 private sector drug testing requirements. This is very detailed and can lead to a lawsuit against the employer for lost wages and attorney fees if not followed to the letter.
XIII. Investigate and document thoroughly and in a timely manner. Keep a good paper trail.
XIV. Report new hires to IWD.
XV. Respond to IWD Investigation Audits. Take note of all timelines for responding to IWD notices.
JOINT OR MUTUAL RELEASE
An often-overlooked option for settlement is the joint release. Claimants usually relinquish all legal rights to a former employer. Rarely is it the case where the Employer releases all rights it may have against the Claimant. Some situations follow where a joint or mutual release may benefit the workers’ compensation Claimant:
- White collar employee where reputation is important. i.e. PhD, M.D., CEO, etc.
- Missing or damaged company property. Lost cell phone, MVA and so on.
- Insurance paid by employer during absence when no wages paid. Some employers pay health coverage even when the Claimant is not in a pay status and then attempt to bill after the case is settled.
- Litigious employer, SLAPP type law suits. “SLAPPs are Strategic Lawsuits Against Public Participation. These damaging suits chill free speech and healthy debate by targeting those who communicate with their government or speak out on issues of public interest.” For example, Claimant informs the employer that he/she intends to pursue a bad faith claim with employer responding that it will sue Claimant for fraud if that happens.
- Finality! Both sides in a legal action want finality. The joint release gives closure and helps counsel close the case with no lose ends. Less client calls after settlement.
- Workers’ Compensation Fraud statues have been proposed in Iowa. This is a one-way street which pursues fraud against a Claimant but not against an Insurer or Self Insured. Iowa S. F. 2305 is the most recent example proposed in 2017 which includes a felony provision for a Claimant defrauding an insurer. Any allegation of fraud or report of fraud would have a significant chilling effect on a workers’ compensation related cause of action.
- Where the Claimant terminates the employment at the time of settlement. This prevents that gotcha surprise from an angry employer after settlement.
- Highly compensated claimants also have greater exposure to claims made by an employer.
- Covenants not to compete. The joint release can also eliminate some incumbrances on employability by eliminating altogether or reducing the term and distance.
- Problem clients.
DEFENDANTS PREDICTABLE RESISTANCE TO JOINT RELEASE
Understandably, some defense lawyers will exercise resistance to a joint release. This provision has value from a defendant’s perspective. It stops follow up calls that inevitably happen when money is paid to a claimant. It is easy to explain: “The employer has no right to make any legal claim against claimant. The Claimant has no right to make legal claims against Employer.” In summary, it provides finality for both parties. No more non-billable phone calls from clients!
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