In This Issue

• Growing Concern Over Defamation Claims
• Ohio Supreme Court Chalks Up Victory
• Can Your E-Mail System Be Used Against You?
• IRS Change
• Growth in Kegler Brown's Labor & Employment Practice Group
• FMLA - Taking Care of Healthy Children
• H.B. 223 Introduced To Resurrect Ohio's Workers' Compensation Drug Testing Statute
• Tip Credits
• Get Out Of Jail For Free Card

Growing Concern Over Defamation Claims

By John Lowe IV

We have seen a recent increase in threats of defamation suits by discharged employees. The typical scenario is as follows: after investigating an employee for misconduct, the company discharges the employee. The company then receives a nasty-gram from an attorney representing the former employee, who alleges a number of things, including that the company defamed the former employee by telling employees the basis for the discharge. The letter usually ends with a settlement offer or demand for a severance package in return for the former employee waiving the right to file suit against the company for, among other things, libel and slander. Counsel for former employees know that even if they do not possess any evidence to support the defamation claim, there is usually some scuttlebutt after a termination and the grounds for it often leak out.

Handling these claims can be tricky for employers because the best and sometimes only defense to a defamation suit is to prove the truth of the alleged defamatory information. A couple of years ago we discussed in an E-mployment Alert a case where management representatives announced at a large meeting that an employee had been discharged for sexual misconduct. (E-mployment Alert, Issue 2, January 3, 2001, "Investigations of Harassment Require Thoroughness and Prudence"). In that meeting, management personnel told employees (including the former employee's father-in-law) that the employee had been discharged for sexual misconduct and described, in some detail, the alleged misconduct. At the trial on the former employee's defamation claim, the defendants were left with but one defense: they had to prove that the discharged employee had engaged in sexual misconduct. Thus, the defendants told the jury that the statements made about the alleged harasser were true and that they were made after a careful investigation. As the company learned, proving such misconduct with admissible evidence — especially where testimony is attacked on cross-examination — can be very difficult to do. In that case, the company's inability to prove that its statements about the former employee were true led to a verdict of $735,000 against the company and in favor of the discharged employee.

No doubt as a result of that case, post-employment negotiations with counsel for former employees now often include allegations of defamation by the former employee. While none of our clients have been stung to date, it has at times made negotiations significantly more difficult. We think it is important to remind you to keep these types of claims in mind when discussing alleged misconduct.

Caveat

This is not to suggest that you cannot discuss with management personnel sexual misconduct allegations or other sensitive information. It does mean, however, that you should not discuss such information with anyone who does not need to know the information. Explaining the results of an investigation to the president of the company so that the president can make the decision whether or not to discharge the employee will normally not be enough to sustain a defamation claim. As was made clear by the case, however, former subordinates of a supervisor terminated for misconduct do not need to be told why he is no longer an employee of the company. They need only be told that he is no longer an employee of the company.

What We Suggest

When you are documenting investigations or meetings in which you discuss potentially defamatory information, we think it is a good idea for you to include in the notes or memos a reference to the fact that the information will only be passed on to others on a need-to-know-basis.

Further, human resource departments may be well served to think about creating a brief internal policy reflecting your desire for alleged misconduct information to be kept within a core group. We may find ourselves forwarding to counsel representing discharged employees that policy and an affidavit stating that you stuck to that policy. This will ensure that they know we will have better evidence than usual that we did not unnecessarily forward potentially defamatory information about their client to people outside a core group.

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Ohio Supreme Court Chalks Up Victory

By David M. McCarty

In an important case for construction companies doing business in Ohio, the Ohio Supreme Court recently vacated a Franklin County Court of Appeals decision and reinstated an administrative decision finding that a company is not liable for violation of any specific safety requirements.

In State, ex rel. Mahoney v. Team America III and Wanner Metal Worx, the general contractor, Sherman Smoot Company, subcontracted work on the renovation of a building in downtown Columbus to Wanner Metal Worx. Smoot had erected two scaffolds on the outside of the building, adjacent to each other, with one being four to six floors above the other. Smoot employees were working on the upper scaffold while Mahoney, who was working for Smoot through Team America, a staff leasing agency, was working on the lower scaffold. He was injured when a piece of stone that was chipped off the side of the building by an employee on the upper scaffold struck Mahoney on the back of the neck. Mahoney's workers' compensation claim was allowed against Team America. He then filed an application for an additional award for violation of specific safety requirements, known as a VSSR, against both Team America and Wanner.

A provision in the Ohio Constitution provides that an employee who is injured in the course of his/her employment can request a VSSR award, which is a penalty levied against an employer if it is found that the worker's injury occurred because of the employer's violation of some specific safety requirement. These safety requirements are typically found in the Ohio Administrative Code. Mahoney cited provisions in the Administrative Code concerning overhead protection, safety belts and lifelines, and protective railings on scaffolds.

After the hearing, at which Dave McCarty represented Wanner, the Industrial Commission denied Mahoney's request for a VSSR award. First, it found that Wanner, rather than Team America, would be liable for any VSSR because Wanner actually supervised and controlled Mahoney's work. However, it found no safety violation. The Commission found that Wanner provided safety belts and lifelines and all of the open sides of the scaffold were properly guarded. The Commission also found that Wanner provided sufficient overhead protection for Mahoney. Mahoney appealed the matter to the Franklin County Court of Appeals. Though a Magistrate recommended denial of Mahoney's appeal, a panel of the appellate court rejected that recommendation and found that Wanner did not provide overhead protection. Wanner then appealed the matter to the Ohio Supreme Court.

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Can Your E-Mail System Be Used Against You?

By Lawrence F. Feheley

By now, most companies have established e-mail systems to facilitate business-related communications, both internally and externally. Some allow limited, or even unrestricted, use of the e-mail system for employees' private or personal reasons.

Now we move to the second generation of e-mail usage. Consider this potentiality: you fire an employee for reasons that you feel are more than justified. The employee, embittered and defiant, obtains a listing of all of the company's e-mail addresses and begins sending a series of vituperative and demeaning messages to every employee of the company. Can you do anything? While the law is far from being fully-developed in this area, two recent cases from, of all places, California offer some solace.

In one of the cases, Varian and Associates, the employer, fired an employee after he was accused of sexual harassment. His girlfriend, also an employee of the company, then quit. After they left the company, the two former employees posted more than 14,000 messages about the company and its management on more than 100 internet sites. The messages accused managers of the company of various offensive acts, such as discrimination, secret videotaping of employees, and extramarital affairs. Eventually the company and two of the individual managers sued the two former employees for defamation. The response from the former employees was that they were simply exercising their constitutional rights to free speech. The jury did not buy the argument. The jury determined that the former employees' statements were defamatory and that they injured the reputations of the company and the managers. The jury directed that the former employees pay $425,000 in punitive damages.

The second case also involved a discharged employee. This employee obtained a copy of the company's e-mail address list. On multiple occasions he sent e-mails that disparaged the company to all of its 35,000 employees. The company first asked that he stop, but he refused. Thereafter, the company went to court and sought an injunction to prohibit the former employee from sending the e-mails. The company's two arguments were (a) that its computer network was proprietary, and (b) that the volume of the e-mails interfered with its employees' work productivity. This former employee also claimed that he was simply exercising his free speech rights. The outcome was that both the lower court and the appellate court sided with the company. The courts ruled that the former employee essentially committed a trespass when he used the company's computer network and disrupted the company's business. Intel Corporation v. Hamidi, 118 Cal. Rptr. 2d 546 (Cal. App. 2002).

The law is still evolving, but there may be some basis for employers to have a remedy if former employees misuse technology as a means of revenge.

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Growth in Kegler Brown's Labor & Employment Practice Group

The labor and employee relations practice at Kegler Brown recently added an attorney specializing in workers' compensation. The firm is pleased to announce the addition of Randall W. Mikes, who will serve in "of counsel" position with the firm.

Randall W. Mikes (614) 462-5414 Randy earned his law degree with honors from The Ohio State University College of Law in 1990. He also holds an undergraduate degree from Kenyon College in Gambier, Ohio, where he majored in political science. He claims to have played a little basketball there too, but we have been unable to confirm that claim. Prior to joining Kegler Brown, Randy practiced with another Columbus law firm, and served as a staff assistant to U.S. Senator John Glenn, and as a legal extern for Judge John D. Holschuh in the U.S. District Court in Columbus, Ohio. Randy is the past president of the Central Ohio Association of Civil Trial Attorneys. Randy's practice will focus on assisting clients with employer intentional tort litigation and workers' compensation litigation.

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H.B. 223 Introduced To Resurrect Ohio's Workers' Compensation Drug Testing Statute

By Randall W. Mikes

On June 17, 2003, House Bill 223 was introduced in the General Assembly proposing amendments to Revised Code 4123.54(B), Ohio's former workers' compensation drug testing statute, which was declared unconstitutional by the Ohio Supreme Court last December. The bill represents an effort to remedy the Court's constitutional concerns while reinstating the preclusive effect that a positive drug test could have on the receipt of workers' compensation benefits.

Former R.C. 4123.54(B), which went into effect in April 2001, created a rebuttable presumption that if after an injury an employee tests positive for drugs or alcohol at or above levels specified in the statute, or refuses to submit to a drug test, then the employee's intoxication is deemed the proximate cause of the injury and is precluded receipt of workers' compensation benefits. In State x rel. AFL-CIO v. BWC, the Court held that the statute violated the constitutional protection against unreasonable searches and seizures such that it improperly made the payment of workers' compensation benefits contingent upon submission to a drug test without a reasonable suspicion that intoxication contributed to the injury. As a result of the Court's decision, Ohio law reverted to its prior status, and employers were again required to prove that the injured worker was intoxicated and that such intoxication caused the injury.

H.B. 223 addresses the Court's constitutional concern by requiring that an employer have "reasonable cause to suspect that the employee is intoxicated or under the influence of a controlled substance not prescribed by the employee's physician" before the results of a drug test can be used in defense of a workers' compensation claim. "Reasonable cause" is defined as "evidence that an employee is or was using alcohol or a controlled substance drawn from specific, objective facts and reasonable inferences drawn from these facts in light of experience and training." Specific examples of such evidence cited in the bill include:

• Direct observation of the use, possession or distribution of drugs or alcohol.
• Direct observation of physical symptoms of use such as slurred speech, dilated pupils, odor or mood swings.
• Patterns of abnormal conduct such as erratic behavior, deteriorating work performance, frequent absenteeism or tardiness, or other recurrent conduct which appears to be related drug or alcohol use.
• Identification of the employee in a criminal investigation regarding unauthorized possession, use or trafficking of drugs.
• Evidence of drug or alcohol use from a reliable and/or credible source.
• Repeated or flagrant violation of work rules, which results in a substantial risk of physical injury or property damage and which appears related to drug or alcohol use.

If reasonable cause exists, a positive test for drugs or alcohol at or above statutory levels will again lead to the rebuttable presumption that the employee's intoxication was the proximate cause of the injury. A refusal to take a drug test will have the same effect so long as the employee was given notice of the consequences such refusal could have on the employee's eligibility for workers' compensation benefits. The presumption can also arise from a drug test requested by a police officer in conjunction with the employee's use of a motor vehicle or by a licensed physician who is not employed by the employer irrespective of the existence of reasonable cause on the employer's part.

H.B. 223 has been referred to the House Commerce and Labor Committee which, as of December 2, 2003, had conducted four hearings on the matter. It is likely that this legislation will not come to a vote until mid to late 2004. If and when it does, and assuming that it remains essentially in its current form, the legislation will lessen the employer's burden on the intoxication issue and provide an effective tool in creating a drug-free workplace.

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Get Out Of Jail For Free Card

By John Lowe IV

We detailed an Ohio Supreme Court decision in an E-mployment Alert titled, "Get Out Of Jail For Free Card." Because of the decision's importance and ramifications, we have reprinted it here. If you are not yet receiving our E-mployment Alert, you can sign up using our publications subscription form or by contacting the Marketing department at (614) 462-5400.

The Ohio Supreme Court issued a unanimous decision Wednesday that may serve as a "get out of jail for free card" for Ohio employees who are receiving temporary total disability benefits under Ohio's workers' compensation system and who have exhausted their available leave. Accordingly, you should promptly destroy this email for fear of this information leaking out.

The Case

There is an old adage that bad facts make bad law. It was proven once again in Coolidge v. Riverdale Local School Distr., 100 Ohio St.3d 141 (Oct. 22, 2003). On October 22, 1998, a teacher in the Riverdale School District was assaulted and seriously injured by one of her elementary students. She returned to work the next day, a Friday, but then left early to seek medical attention. She called in sick the following Monday. She thereafter remained off work and exhausted all available options for leave. Riverdale granted the teacher two 30-day periods of "paid assault leave" pursuant to the terms of a collective bargaining agreement. It denied her request for further extension. She then began to use her accumulated sick leave and when that ran out, she received unpaid "restoration of health" leave, which could be granted "for a period not to exceed one (1) school year."

Almost two years after the incident, she was terminated when the school board determined that she had exhausted all available leave, had been absent without leave, had failed to perform the duties of her contract and, as a result, "other good and just cause" existed for the termination of her employment.

The Ohio Supreme Court saw the issue as whether "public policy embodied in the Workers' Compensation Act protects an employee who is receiving TTD [temporary total disability] compensation from being discharged solely because of the disabling effects of the allowed injury, that is, absenteeism and inability to work." The Court unanimously answered affirmatively, holding that:

An employee who is receiving TTD compensation pursuant to R.C. 4123.56 may not be discharged solely on the basis of absenteeism or inability to work, when the absence or inability to work is directly related to an allowed condition.

What It Means

On its face, this ruling seems to require something akin to "indefinite leave" for certain employees. Ohio employers may want to consider amending their policies to allow extended leave for employees who (1) have exhausted all other leave available to them; (2) are currently receiving TTD; and, (3) as a direct result of the allowed condition giving rise to the TTD, they cannot currently return to work.

Even if you choose not to amend your policies, you must keep this case in mind before disciplining an employee who claims that an absence relates to an allowed condition.

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