U.S. District Court Upholds OSHA Subpoena in Grain Enguflment Case

July 2011
By: Nancy E. Joerg, Esq.

This OSHA case arises from a particularly tragic and heart-wrenching fact pattern. On July 28, 2010, two teenagers died in a grain bin tragedy. The United States Department of Labor Occupational Safety & Health Administration (OSHA) investigated the deaths which occurred as a result of grain engulfment at the company's grain elevator in Mt. Carroll, Illinois. The two teenagers "drowned" in a sea of grain in the grain bin. OSHA eventually hit the company with numerous violations and fines (which the company is fighting).

OSHA SUBPOENA: As part of the hard fought legal battle between OSHA and the grain bin company, OSHA issued a subpoena demanding inspection reports and documents prepared by the grain bin company's workers' compensation carrier. The workers' compensation carrier argued in court that it should not have to provide OSHA with the safety inspection records. The carrier lost this legal struggle in May of 2011.

WORKERS' COMPENSATION INSURANCE COMPANY ARGUED UNSUCCESSFULLY AGAINST THE SUBPOENA: The workers' compensation insurance company argued unsuccessfully that the subpoena from OSHA would actually discourage businesses from permitting workers' compensation insurance carriers to conduct safety inspections. The insurance carrier told the court that if the inspection reports can be used against a business during later litigation or OSHA enforcement proceedings, such safety inspections would be curtailed. However, on May 2, 2011, the court did not agree with the insurance carrier and therefore ordered that the safety inspection records be given to OSHA. ( Hilda L. Solis v. Grinnell Mutual Reinsurance Co.)

COURT'S DECISION: Judge Philip G. Reinhard of the U.S. District Court of Northern Illinois ruled on May 2, 2011 that OSHA has jurisdiction to investigate the workplace fatalities; and further, has the authority to require the production of relevant evidence and the ability to issue a subpoena to obtain that evidence. The requested documents, which included copies of site safety inspections, applications for insurance coverage for the site, and correspondence between the workers' compensation insurer and the grain bin company concerning the site, were found by Judge Reinhard to "reasonably relate to the investigation of the incident and the question of OSHA jurisdiction."

GRAIN BIN SAFETY: Grain bin safety has become an important focus for OSHA. OSHA's Region V, which includes Illinois, Ohio and Wisconsin, initiated a Grain Safety Local Emphasis Program in August 2010, and has since conducted 61 inspections and cited grain operators/facilities for 163 violations. The 163 violations cover hazards associated with grain engulfment, machine guarding, electricity, falls, employee training, combustible dust and lockout/tagout of energy sources on potentially dangerous equipment. Grain bins are extremely hazardous work environments and OSHA is trying to decrease danger where possible in these bins.

OSHA has great legal powers to investigate workplace safety matters. Courts generally support OSHA's mission. Companies should expect that all safety inspection records are likely to be obtained by OSHA when it investigates.

Questions about OSHA or any related matters? Please contact WS Shareholder and Senior Attorney Nancy E. Joerg at 630-377-1554 or najoerg@wesselssherman.com.

Employer Alert: Keep Track of 30 Working Days for Illinois Unemployment Insurances Purposes

March 2010
By: Nancy E. Joerg, Esq.

Many clients ask me: "How many days does an employee need to work for me before my company becomes the chargeable employer for Illinois Unemployment Insurance purposes?"

There is a simple unemployment insurance rule that Illinois employers should be aware of: A company will usually not be "charged" for an ex-employee's unemployment insurance benefits if that ex-employee did not work for the company for at least 30 working days.

This is an extremely simple rule that employers should keep in mind because, if used properly, it is a wonderful way for a company to help keep its unemployment insurance rate down.

Below are some examples to provide guidance on how the Illinois Department of Employment Security (IDES) calculates the 30 working days: 

1. The individual works a shift which begins at 10:00 p.m. on Monday and ends at 7:00 a.m. on Tuesday. While this individual performs services for this employer on two calendar days, for the purpose of determining whether the 30 day requirement has been met, the individual's shift counts as only one day of service (Monday).
2. The individual begins his shift at Noon but becomes ill fifteen minutes later. Since the individual performed services for the employer for fifteen minutes, one day is counted toward meeting the 30-day requirement.
3. The individual is scheduled to work on a certain day but fails to report for work because he is ill. Even if the employer provides paid sick leave to the individual for that day, it will not be counted toward the 30-day requirement.
4.  Upon the permanent layoff of an individual, the employer pays that individual for any unused, accrued vacation time that the individual is due and grants him severance pay in the amount of one day's pay for each year of continuous service. These payments are not included for the purpose of determining whether this employer has met the 30-day requirement.
5. The individual works a four-day work week. That is, instead of working eight hours per day, five days per week, he works ten hours per day, four days per week. Even if the individual's ten-hour shift extends over two calendar days, each shift still counts as only one day, and this individual will have worked only four days in a normal work week.

Overtime work (or working additional shifts) is not included in determining whether the 30-day requirement has been met unless there is at least 6 hours between the beginning of the overtime work (or the additional shift) and the end of the prior shift and the overtime work (or additional shift) does not occur on a day which will otherwise be included in meeting the 30-day requirement. Examples:

1. The individual's normal shift ends at 3:00 a.m., and he is asked to work the next shift which begins at 4:00 a.m. Even if he works both shifts, since there is not at least 6 hours between the shifts, only one day will be counted toward meeting the 30-day requirement.
2. The individual's shift ends at 3:00 a.m. on Saturday, and he is asked to return to work for an additional overtime shift from 9:00 a.m. until 2:00 p.m. He must then return to work at 7:00 p.m. to work his regular shift. This overtime work does not count as an additional day toward meeting the 30-day requirement because his regular shift begins that same day and would already be included in meeting the 30-day requirement.
3. The individual's normal shift begins at 3:00 p.m. and ends at 11:00 p.m. However, he is required to work four hours of overtime every day so that he does not complete his shift until 3:00 a.m. This shift still counts as only one day toward the 30-day requirement.

 NOTE: An employer may also become the chargeable employer after less than 30 days if it was the single employer that paid wages to the individual permitting the individual to requalify for benefits after a previous disqualification under Section 601 (voluntary leaving), 602 (misconduct), or 603 (refusal of work). To requalify, the individual must earn an amount equal to or in excess of his current Weekly Benefit Amount in each of four calendar weeks.

Questions? Please contact WS Shareholder and Senior Attorney Nancy Joerg at (630) 377-1554, or najoerg@wesselssherman.com.

Ten Tips for Employers Who Face Going to an Illinois Department of Human Rights Fact Finding Conference

October 2011
By: Nancy E. Joerg, Esq. 

As companies who have been the recipient of an Illinois Department of Human Rights (IDHR) Charge of Discrimination will know, part of the process is for the company to attend an IDHR Fact Finding Conference, usually held at the Thompson Center in Chicago on the 10 ^th Floor where the IDHR offices are located.

Even in the flimsiest of cases, companies are asked to attend the Fact Finding Conference as it is a standard part of the process, with very rare exceptions. When a company receives a Charge of Discrimination from the IDHR, the company is first required by law to send in a Verified Response within 60 days of receipt of the Charge. The Verified Response is a brief document where the company basically "admits" or "denies" each allegation.

Next, the company must send in a Letter of Position and answer a lengthy Questionnaire.
Finally, the Fact Finding Conference is scheduled by the IDHR Investigator and the company must attend in person. Many clients ask me what they can expect at a Fact Finding Conference, and so my hope is that these 10 key tips will help many companies facing an IDHR Fact Finding Conference :

• Always attend as required. Do not be late. Allow for heavy traffic in Chicago. If the company does not attend the Fact Finding Conference, the IDHR Investigator may default the company.
• Prepare for the Fact Finding Conference by reviewing the facts, details and arguments you have given the IDHR so that you will faithful to the facts and not vary them. Companies and their witnesses should have a prep session prior to the Fact Finding Conference-to read over all the documentation submitted to the Investigator. Companies who vary their facts (or seem unsure of them) appear to be less reliable. Be consistent.
• Suggest to the IDHR Investigator that certain key witnesses would be helpful at the Fact Finding Conference. Only bring witnesses who are eyewitnesses to the facts (or have firsthand knowledge of the facts) you wish to emphasize at the Fact Finding Conference.
• Have your attorney (who is assisting you with the IDHR Charge) attend the Fact Finding Conference with you. The attorney does not participate but will be able to listen to all statements made during the Fact Finding Conference (from both the company and the Charging Party) and this witness information will be extremely valuable. Think of it as a form of "discovery."
• Be aware that there is a strict security system at the Thompson Center. You should arrive at least one-half hour before the start of the Fact Finding Conference so you have time to comfortably go through security and get up to the 10 ^th Floor by the scheduled time.
• If you feel you are open to settlement of the Charge, have the company representative who has authority to authorize settlement attend the Fact Finding Conference. If that individual cannot attend the Fact Finding Conference, have him/her available by phone.
• Take notes at the Fact Finding Conference of all statements made. That way, as the case continues beyond the Fact Finding Conference, you will recall key facts and issues raised at the Fact Finding Conference. There are no court reporters or tape recordings of the Fact Finding Conference so there will be no transcript available of what occurs during the Fact Finding Conference. This is why it is important to take notes.
• You can have your own notes and submissions in front of you during the Fact Finding Conference, so it is an excellent idea to bring your Verified Response, a copy of the Charge, your Letter of Position, and your Responses to the Questionnaire, and any other documents you may need to be accurate and fully responsive during the Fact Finding Conference.
• The IDHR Investigator will not make a decision at the end of the Fact Finding Conference. You will leave the Fact Finding Conference not knowing what the decision on the case will be.
• The Investigator often asks for additional information to be sent as a result of what the Investigator heard during the Fact Finding Conference. Be fully responsive because you want to get all of the facts in front of the Investigator.

Questions? Call Attorney Nancy E. Joerg of Wessels Sherman's St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.

Seventh Circuit Backs Walmart Firing of Anti-Gay Religious Employee

October 2011
By: Nancy E. Joerg, Esq.

On March 31, 2011, the Seventh Circuit Court of Appeals [in an unpublished Opinion (No. 10-2242)] ruled in favor of defendant Walmart and found no evidence of religious discrimination.

By way of background, in September 2005, Tanisha Matthews (an overnight stocker at Walmart for nine years) became involved in a heated discussion about God and homosexuality with a lesbian co-worker, named Amy, during a break. When Walmart officials later investigated the incident, they learned that Ms. Matthews screamed at Amy that God does not accept gays, that gays should not "be on earth," and that they will "go to hell" because they are not "right in the head."

After the three-month investigation of the incident by Walmart, Walmart fired Ms. Matthews for violating Walmart's Discrimination and Harassment Prevention policy. This policy clearly prohibits Walmart employees from harassment based on an individual's status, including sexual orientation.

Upon being fired, Tanisha Matthews sued Walmart under the civil rights laws, arguing that Walmart fired her for stating her sincere religious belief that gays will go to hell, which she maintained is central to her Apostolic-Christian faith. The trial court granted summary judgment to Walmart, finding no evidence for the religious discrimination claim.

Next, Tanisha Matthews brought her religious discrimination case to the Seventh Circuit Court of Appeals. However, Ms. Matthews did no better on appeal.

The Seventh Circuit Court of Appeals affirmed the trial court's decision, noting the following:
"Walmart fired [Matthews] because she violated the company policy when she harassed a coworker, not because of her beliefs, and employers need not relieve workers from complying with neutral workplace rules as a religious accommodation if it would create an undue hardship. In this case, such an accommodation could place Walmart on the 'razor's edge' of liability by exposing it to claims of permitting workplace harassment."

Clearly, Tanisha Matthews believed that she had a religious duty to scream anti-gay epithets at her Walmart coworkers. Tanisha Matthews believed and unsuccessfully argued that Walmart must permit her to admonish gays at work to accommodate her religion.

The bottom line in this case is that the Seventh Circuit decided that Ms. Matthews' right to exercise her religious freedom at work did not permit her to harass gay people. Walmart fired Ms. Matthews "because she violated company policy when she harassed a co-worker, not because of her beliefs," the Seventh Circuit ruled. Even though Ms. Matthews' anti-gay harassment was religious-inspired, Walmart did not violate Ms. Matthews' civil rights when it fired her.

This case stands for the common sense principle that the Civil Rights Act does not protect religious-based bigotry in the workplace. Walmart fired Tanisha Matthews because she violated company policy when she harassed a co-worker, not because of her religious beliefs.

Anti-gay remarks by employees professing religious beliefs are not part of religious accommodation in the workplace.

Congress adopted Title VII of the Civil Rights Act in 1964. Title VII makes it unlawful for an employer to discriminate against an applicant/employee with respect to hiring, firing, promotion, or any other terms or conditions of employment based on that employee's race, color, religion, sex or national origin.

In addition to this prohibition against religious discrimination, employers are affirmatively required by state and federal law to reasonably accommodate employees' religious observances and practices unless such accommodation causes undue hardship to the employer. Courts have ruled that a proposed accommodation of a religious belief is an undue hardship if it imposes more than a de minimis cost on the employer. The EEOC has stated that an employer can show undue hardship if accommodating an employee's religious practices requires more than ordinary administrative costs, diminishes efficiency in other jobs, infringes on other employees' job rights or benefits, impairs workplace safety, causes coworkers to carry the accommodated employee's share of potentially hazardous or burdensome work, or if the proposed accommodation conflicts with another law or regulation.

In this case brought by Tanisha Matthews, Walmart's anti-harassment policies trumped her religious speech. This Seventh Circuit decision is a message to all employees that if their employer wishes to bar anti-gay sentiments expressed in the workplace; the employer can establish policies and fire violators-even if the anti-gay rhetoric is based on sincerely held religious beliefs.

An interesting side note: Tanisha Matthews also relied on a decision by the Illinois Department of Employment Security, finding that the misconduct that led to her termination was not severe enough to bar her from receiving unemployment benefits. However, the Seventh Circuit found that the unemployment insurance decision was irrelevant because it was based on a different definition of misconduct used only for employment-benefits decisions.

Questions? Call Attorney Nancy E. Joerg of Wessels Sherman's St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com. 

Yes, the Illinois Employee Classification Act Complaints are Starting to Roll in!

By Nancy E. Joerg, Esq.


Clients are asking me if we have started receiving complaints from the Illinois Department of Labor relating to the harsh new Illinois law, the Employee Classification Act. Yes, we are starting to see these complaints coming in from the Illinois Department of Labor.

Under this new law, a company such as a construction company, a trucking company which hauls gravel or road building materials, a landscape company, and a wide variety of other construction related companies, can be challenged by the Illinois Department of Labor (IDOL) and "interested parties" on how the company classifies workers as either employees or independent contractors.
If the construction related trucking company who uses independent contractors is found in violation of the Illinois Employee Classification Act, the trucking company could be hit with substantial financial penalties, possible shut down of its business or job sites, and, most worrying to many, misdemeanor or felony criminal charges.

Below is the kind of wording we are seeing in these initial complaints:

Re: IDOL File No. 2008-###/Request for Records

Please be advised that the Illinois Department of Labor (IDOL) has received a complaint, alleging that you have violated Illinois' Employee Classification Act, 820 ILCS 185, by misclassifying one or more individuals performing construction services on your behalf in connection with re-roofing a house at 123 ABC Street, St. Charles, IL.

In connection with its investigation of this complaint, and pursuant to its authority under Section 25 of the Act, IDOL hereby requests that within fifteen (15) days you make available or provide copies to IDOL of all records in your power, possession or control relating to your business relationship with the individual(s) performing services, including but not limited to:

• Their names, addresses, phone numbers and Social Security numbers;
• Any/all written agreements or contracts you have with them;
• Any/all records of days/hours worked;
• Any/all payroll or payment records; and
• Any federal and state documents related to the individuals performing services.

Failure to comply with this request for records may result in the issuance of a subpoena to compel production of the requested information. Furthermore, failure to comply with a valid IDOL order may result in the imposition of civil and/or criminal penalties, as prescribed in the Act.

Also note that if there is any additional information you wish IDOL to consider in its investigation of this matter, please submit information in writing to IDOL within 15 days of this letter.

We urge all trucking companies who use independent contractors to seek legal counsel regarding their usage of independent contractors—not just with regard to the Illinois Employee Classification Act, but also in terms of the IRS, the Illinois Department of Employment Security (IDES), workers' compensation, etc. Don't wait until you are hit with a complaint or an audit. Get legal advice early on in the game.

This is the period in Illinois history when it is particularly important for construction and construction-related companies to really sit down, take the time, and lower liability in every way possible. Your independent contractor agreement must be carefully drafted to be consistent with the Illinois Employee Classification Act and any other independent contractor laws from other Agencies. It is a time to carefully assess independent contractor relationships, contracts, and practices.


CONSULTATION: If you have any questions about the Illinois Employee Classification Act and want to evaluate your company's liability (and discuss ways to protect your company in its use of independent contractors), contact Senior Attorney and Shareholder Nancy Joerg at 630-377-1554 or najoerg@wesselssherman.com.

Which Illinois Unemployment Insurance Contribution Rate Do I Use, The Employee Leasing Company's or the Client Company's?

June 2011
By: Nancy E. Joerg, Esq. & Chad A. Staul, Esq.

While it is true that an Illinois Employee Leasing Company (also known as a "PEO") allows employers to bundle and better manage payroll, workers' compensation, human resource compliance and employee benefits, those looking to also use a PEO to get a better unemployment insurance contribution rate (contribution rate) should be aware that this is far from a guarantee.

Some employers are under the misconception that if they lease employees from a PEO (thereby becoming a "client company"), they can automatically use the PEO's more favorable contribution rate. While this may be true in some instances, it is not always the case.

The Illinois Department of Employment Security (IDES) follows very stringent statutory requirements that must be met in order to determine if a PEO's client company can use the better contribution rate. See 820 ILCS 405/206.1. The following illustrates these requirements by breaking them down into three straightforward steps:

STEP 1: In order to use the PEO's contribution rate, the leasing contract with the client company must provide:

• That the PEO pays the individual directly from its own accounts;
• That the PEO, either exclusively or with the client company, retains the right to direct and control the individual in the performance of the services; and
• That the PEO, either exclusively or with the client company, retains the right to hire and terminate the individual.

STEP 2: If the leasing contract meets the Step 1 requirements, then the PEO must file an IDES Report containing:

• The name of the client company;
• A general description of the client company's business and locations;
• The client company's unemployment insurance account number (if any);
• The effective date of the employee leasing company's contract with the client company; and
• The report must be accompanied by either a power of attorney to represent the client company or a certification by an officer or employee of the employee leasing company that the information in the report is true and correct to the best of his or her knowledge. See 56 Ill. Adm. Code 2732.306.

STEP 3: After checking the leasing contract for compliance with Step 1 and filing the report required by Step 2, each of the PEO's client companies must pass muster under a specific mathematical formula provided by 820 ILCS 405/206.1(C).

In its simplest terms, the issue comes down to who the IDES recognizes as the employer of a leased employee for purposes of unemployment insurance. If the PEO and the client company meet all of the statutory requirements outlined in Steps 1-3 above, then the IDES will likely recognize the PEO as the employer; allowing the PEO to report wages on behalf of the client company under the PEO's contribution rate. However, a client company that does not meet the statutory requirements is not relieved from reporting wages for the leased employees and must continue to do so under its existing rate.

For example, let's say a PEO leases employees to three different client companies, A, B and C. Further, let's assume that the PEO leasing contract meets Step 1 above and that the PEO has sent the IDES the required report for all three client companies required by Step 2 above. Upon review, the IDES determines that only client companies A and B meet the statutory mathematical requirements in Step 3. In practical application, the PEO will be allowed to do all the wage reporting for client companies A and B under its single contribution rate, but client company C will have to continue reporting separately under its different less favorable rate. Note that this has no impact on any other aspect of the employee leasing contract between the PEO and client company C.

Because of the complexities and detailed involvement the IDES has placed on whose contribution rate controls in an employee leasing situation, employers that use or are thinking about using a leasing company need someone who can wade through the minutiae and give them a straight answer. The consequence for improper wage reporting based on confusion or missteps in the above process may lead to the IDES imposing interest and penalties on both the client company and the PEO.

Questions? Call Attorney Nancy E. Joerg of Wessels Sherman's St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.

What is "Construction" Under the Illinois Employee Classification Act?

By Nancy E. Joerg, Esq.

The Employee Classification Act (formerly House Bill 1795) is a frightening and radical Illinois law which went into effect January 1, 2008. It applies to construction and construction-related companies (including trucking companies) who use independent contractors in construction and construction related jobs. It is very punitive towards companies who are found to have misclassified its independent contractors!!

Many nervous clients understandably ask, "Exactly what is construction and am I considered a construction or construction-related company?" As used in this far-reaching Act, "construction" means:

1. any constructing;
2. any altering;
3. any reconstructing;
4. any repairing;
5. any rehabilitating;
6. any refinishing;
7. any refurbishing;
8. any remodeling;
9. any remediating;
10. any renovating;
11. any custom fabricating;
12. any maintenance;
13. any landscaping;
14. any improving;
15. any wrecking;
16. any painting;
17. any decorating,
18. any demolishing;
19. adding to or subtracting from any building, structure, highway, roadway, street, bridge, alley, sewer, ditch, sewage disposal plant, water works, parking facility, railroad, excavation or other structure, project, development, real property or improvement or to do any part thereof; and
20. construction shall also include moving construction-related materials on the job site to or from the job site.

 Note that certain trucking companies are classified as "construction" under this harsh law because of the final sentence: "Construction shall also include moving construction-related materials on the job site to or from the job site."

If you have any questions about the Illinois Employee Classification Act, contact Senior Attorney and Shareholder Nancy Joerg at 630-377-1554 or najoerg@wesselssherman.com.