New Regulation on Employee Overtime Exemption

September 2016

On May 18, 2016, the U.S. Department of Labor - Wage and Hour Division announced the much anticipated Final Rule revising the overtime exemption for "white collar" employees under the Fair Labor Standards Act (FLSA). Under the FLSA, non-exempt employees are entitled to overtime pay (time and one-half) for working over 40 hours in one week. The "white collar" overtime exemption generally applies to executive, administrative, and professional employees: 1) paid on a salary basis, not less than the amount specified in the regulations; and 2) whose primary job duties satisfy certain minimum requirements set for the regulations. See 29 C.F.R. §541. The Final Rule did not amend the regulations concerning the job duties prong of the exemption, but significantly increased the minimum salary requirements.

The new regulations, which take effect December 1, 2016, increase the minimum salary basis to $913 a week or $47,476 annually. Since 2004, the salary basis for the "white collar" overtime exemption was $455 a week or $23,660 annually. This significant increase is in part due to the passage of time with no adjustment to the minimum salary. Under the new law, the salary basis will be adjusted every three years starting on January 1, 2020. The new regulations will also, for the first time, allow employers to use up to 10% of non-discretionary bonuses, incentive payments and commissions (if paid at least every quarter) to satisfy the minimum salary required for the exemption.

Country Mutual Insurance Company V. Charles Dahms, 12 CH 43692

September 2016

The Appellate Court for the First District in the above captioned matter held Country Mutual Insurance Company ("Country Mutual") had a duty to defend its insured, Charles Dahms, ("Dahms") in a civil suit filed by Terry Enadeghe, ("Enadeghe") wherein Enadeghe pleaded causes of action for negligence and battery stemming from an altercation which occurred on October 10, 2011. Enadeghe pulled his taxi up to a crosswalk near Dahms. Dahms' briefcase made contact with the windshield of the taxi. Enadeghe left his taxi and pursued Dahms on foot, a scuffle ensued, and Dahms struck Enadeghe with his briefcase.

The trial court found Country Mutual had a duty to defend Dahms because Dahms had filed an affirmative defense of self defense in the civil case. The trial court found the duty to defend arose the day Dahms filed his answer and affirmative defenses.

The Appellate Court held Country Mutual owed a duty to defend Dahms in the tort action and that duty arose the moment the tort lawsuit was filed and not on the date Dahms filed his affirmative defenses. The Appellate Court further held Country Mutual's duty to defend terminated on the date Dahms was convicted of aggravated battery as his conduct fit within the policy's criminal acts exclusion.

PPD May Be Awarded Without an AMA Report

June 2016

By Francis M. Brady

In a decision published on June 28, 2016 (Corn Belt Energy Corporation v. The Illinois Workers' Compensation Commission, et al.), the Illinois Appellate Court affirmed an award of 3% loss of the whole person even though the record lacked an AMA Rating. The employer had appealed, arguing that Section 8.1(b) of the Illinois Workers' Compensation Act requires the injured worker provide an AMA opinion. The Court declined to so obligate the injured worker finding that, in fact, neither the worker nor her employer must submit a report. It determined that "clearly, the plain language of Section 8.1(b) places no explicit requirement (regarding submission of an AMA Rating) on either party." The Court conceded that when an AMA report "is admitted into evidence, it must be considered by the Commission, along with the other identified factors, in determining the claimant's level of PPD." But, it reiterated that "...nothing in the plain language of the Act precludes a PPD award when no PPD impairment report is submitted by either party."

The Court's decision also addresses the issue of causal connection. The evidence at trial, consisting only of treating medical records and petitioner's testimony, was clear that his conditions pre-existed the work accident. He had undergone a significant amount of chiropractic care before the trauma, not completely dissimilar from what he underwent afterwards. The employer contended the Commission could not award PPD because the worker "failed to present any medical opinion evidence" affirmatively tying his condition to the work accident. The Appellate Court disagreed, indicating that petitioner's evidence was sufficient to show, on a circumstantial basis, that his back and neck conditions were different, and more significant, after the work trauma.

New Case Law: Rare IWCC Reversal on Slip/Fall Case

First Cash Financial Services v. IC

In a 4-1 opinion, the appellates reversed the arbitrator, Commission and circuit court on the issue of arising out of. The claimant slipped and fell, dislocating her elbow, while entering the bathroom at the end of her shift to retrieve a personal item (a lunch container.) She did not notice any defect or debris on the floor. Three co-workers testified that they did not notice any debris on the floor, although they could not recall the last time the bathroom had been cleaned prior to the accident. The case was found by the arbitrator to be compensable, and the Commission and circuit court affirmed without comment.

The appellate majority analyzed the three types of risks that occur in the workplace: employment-related risks (such as defective or debris-laden surfaces; or duties that increase the risk of injury), employee-related risks (such as idiopathic physical conditions in an employee that could cause one to fall), and neutral risks (not increased by any employment-related factors). The latter two are not generally compensable. The court held that the arbitrator improperly speculated that it was possible that the floor was dirty, and required the employer to prove that it was not:

New Case Law: Radosevich v. IC - Interest on Awards

This opinion is a long read, especially the convoluted procedural history, including a prior remand. The first part deals with an employer getting slammed with attorneys fees for not paying an arbitration award in full within 30 days, despite its claim that it was trying to negotiate a lump-sum settlement. The circuit court further found that this refusal to pay subjected the employer to additional attorneys fees under Section 19(g) (the provision for judicial enforcement of Commission awards.) The appellate court affirmed all of this. Next, the appellate court addressed the issue of interest.

The arbitration award consisted of TTD and PTD that accrued prior to arbitration, as well as future PTD, maintenance, and home healthcare to be paid in fixed monthly amounts after the arbitration. No review was taken to the Commission. The 19(g) proceedings were filed one month after the arbitration decision became final. The employer made partial payments of the award over the next six months, but never did pay any interest prior to the circuit courts judgment. The judgment order included Section 19(n) interest on the benefits that accrued prior to arbitration. This interest was calculated for the period between the arbitration decision and the entry of the court judgment. However, the court applied interest under the Code of Civil Procedure Section 2-1303 on the weekly/monthly benefits payable after arbitration but prior to the circuit court judgment, up until the date of actual payment. On appeal, the claimant argued that Section 2-1303 interest should apply to the entire award entered by the arbitrator beginning the date that the award became final. The respondent agreed with the circuit courts calculation.

The appellate court had to answer a few questions: Was section 19(n) interest chargeable to the benefits that were not payable until after the arbitration award? Past decisions of the court indicated this was not the case. However, the court now has stated:

Forty-One Years After Exposure, Illinois Supreme Court Finds Mesothelioma Claim Is Barred By The Exclusive Remedy Provision

March 2016

By Molly P. Connors

In a recent case, Folta v. Ferro Engineering, 2015 IL 118070, the Illinois Supreme Court held that an employee's lawsuit against his employer was barred by the exclusive remedy provisions of the Workers' Compensation Act and the Workers' Occupational Diseases Act, even when he was diagnosed with an occupational disease after the statute of repose in the Workers' Occupational Diseases Act had run. The plaintiff alleged he was exposed to products containing asbestos during the four-year period he worked for the defendant, from 1966 to 1970. Forty-one years later, the plaintiff was diagnosed with mesothelioma; one month later, he filed a complaint against Ferro Engineering ("Ferro") and 14 other defendants, seeking damages stemming from the asbestos exposure he experienced while working at Ferro.

Ferro filed a motion to dismiss the plaintiff's complaint, arguing that his claims were barred by the exclusive remedy provisions of the Workers' Compensation Act and the Workers' Occupational Diseases Act. In response, the plaintiff asserted that because his symptoms did not manifest until after the 25-year limitation period in the Workers' Occupational Diseases Act had expired, his claims were not compensable under the acts. Therefore, he concluded, the acts' exclusive remedy provisions did not apply. The circuit court granted Ferro's motion to dismiss. The appellate court reversed, finding that the exclusive remedy provisions do not apply when the employee's claim is not compensable, and the plaintiff's claim was not compensable because he did not have an opportunity to pursue his claim before the expiration of the statute of repose.