Employers employing independent contractors, temp workers, and other individuals potentially involved in joint employment relationships should be breathing a bit of a sigh of relief these days. On June 7, 2017, the U.S. Department of Labor (DOL) withdrew guidance that had been in place since as early as 2015. This guidance, developed under the Obama Administration, emphasized a broad interpretation of the Fair Labor Standards Act and supported prior efforts to crack down on employers potentially classifying employees and not complying with wage and hour laws. Not surprisingly, this withdrawal of the guidance creates a more employer-friendly environment.
Effectively, this should not change how employers operate. This withdrawal does not mean that employers can be lax in complying with federal wage laws. In announcing the withdrawal, the DOL made it a point to state that it will continue to fully and fairly enforce all laws within its jurisdiction. This withdrawal, however, potentially signals that the Trump Administration will be focusing its enforcement on other areas of the law. MRR will continue to monitor the DOL for any new guidance on these subjects.
Mazanec, Raskin & Ryder (“MRR”) attorneys Todd Raskin and Frank Scialdone earned a unanimous appellate decision in favor of an Ohio township that had been improperly subjected to a probate court’s authority.
Ohio’s Eleventh District Court of Appeals reversed and vacated the Geauga County Probate Court’s ruling that invalidated a contractual agreement between a park district and Chester Township. In re Creation of Park Dist. Within Chester Twp., 2017-Ohio-4031. The agreement defined the scope of the park district’s involvement with the township’s park lands. The Eleventh District also rejected the probate court’s imposition of costs on the township for the probate court’s use of a master commissioner that consulted with a park district on allegations of financial misconduct. MRR founding partner Todd Raskin and partner Frank Scialdone handled the case on behalf of MRR’s client, Chester Township.
The heart of the case involved whether the probate court had jurisdiction over Chester Township. Probate Court Judge Timothy Grendell had initially invoked the probate court’s “continuing jurisdiction” over the township based on its role in the creation of the park district in the early 1980s. In 1984, the Chester Township Board of Trustees (“Trustees”) had applied to create the Chester Township Park District (the “Park District”) in the probate court. The primary question on appeal was: Did the probate court maintain jurisdiction over the Trustees and the township as a political entity either through the exercise of its plenary power to enforce the terms of the 1984 order creating the Park District or, otherwise, through the probate court’s continuing jurisdiction over the Park District as provided in R.C. Chapter 1545.
The unanimous Eleventh District answered that question with a resounding no. The appellate court agreed with MRR’s arguments that the probate court exceeded its jurisdiction.
In this unique and complex matter, MRR’s Raskin and Scialdone asserted that probate courts have sharply limited responsibilities over Chapter 1545 park districts. In accord with MRR’s arguments, the Eleventh District held that there are no statutory provisions allowing a probate court “a general supervisory power over park district matters or  any additional jurisdiction over a party or entity other than the park district’s board of commissioners.”
The probate court’s effort to exercise broad jurisdiction over non-parties (the Township) was in part based on the court’s mistaken belief that it had “plenary power,” or complete power, over these matters. MRR asserted, and the Eleventh District held, that while “plenary power” exists in some instances not applicable to the present dispute, those matters must still be “properly before the Court” or based on a statutory grant of jurisdiction. The probate court exceeded its jurisdiction when it tried to interfere with and alter the terms of a contract entered into between the Trustees and the Park District, an agreement between two independent public entities that had been in force for decades. The Eleventh District rejected the probate court’s belief that the 1984 order gave it continuing authority. The 30-plus-year-old order did not impose any duties on the Township and the appellate court explained “there are no terms of that order to be enforced in perpetuity.”
The probate court also attempted to impose on the Township a portion of the almost $40,000 in fees of the “master commissioner” who the probate court used to investigate the conduct of the Park District Commissioners. The Eleventh District expressly rejected the imposition of fees because the probate court did not have jurisdiction.
After reviewing extensive briefing and hearing oral argument, the Eleventh District concluded that Chester Township was “not a party over which the probate court has continuing jurisdiction – the township has no authority to remove or appoint any of the Commissioners. The master commissioner’s fees imposed as costs against the township were improper.”
Over 85% of workplace homicides are the result of intentional shootings, according to 2015 statistics from the Bureau of Labor Statistics. Correspondingly, the number of new concealed carry permits issued is on the rise. Issuances of new permits increased in Ohio by over 100% between 2014 (58,066) and 2016 (117,951). The latest data for Kentucky shows 31,504 new licenses issued in 2014 and 39,173 new licenses issued in 2015, a 24% increase.
With the increased media coverage of gun-related violence and the increased likelihood that one or more of your employees possess a concealed carry license, many employers are seeking ways to address the presence of guns in the workplace. Certainly, employees’ perception of safety not only impacts their willingness to come into work but also their productivity while at work. Often, employers think of banning guns in the workplace as a way to minimize concerns of workplace safety and violence, but state laws in Ohio and Kentucky limit your ability to outright ban guns in the workplace.
Effective March 20, 2017, revised O.R.C. §2923.1210 went into effect, limiting an employer’s ability to prevent employees who possess valid concealed carry permits from carrying firearms onto the employer’s premises. The new law permits concealed carry permit holders to store firearms or ammunition in their cars while their cars are on the employer’s property or assigned job site. You may require that firearms or ammunition remain in the employee’s private vehicle and be stored in a locked box or compartment when the employee is not in the motor vehicle. You may still prohibit the possession of firearms that are not properly stored or that are not possessed by an employee with a valid concealed carry permit. You can also still prohibit employees from carrying firearms (1) into the workplace, (2) in company cars, (3) outside of their vehicle while on company property, or (4) where otherwise prohibited by law, such as police stations, correctional facilities or school safety zones.
The law also protects business owners from liability associated with firearms or ammunition that are brought onto the business owner’s property under the law.
Kentucky Revised Statute 237.106(1) provides that an employer cannot prohibit an employee from keeping a firearm in a vehicle on company property unless the employee is prohibited from carrying a firearm by federal or state law; however, that firearm can only be removed from the vehicle in an act of self-defense of others or property or with the employer’s authorization. An employer who violates these rights is liable in civil damages. Even with these broad protections, Kentucky courts have upheld additional administrative requirements, such as requiring employees to disclose any weapon kept in their privately-owned vehicle while that vehicle is on the employer’s property, requiring a copy of the permit to carry to be kept on file with the employer, or requiring employees to store all firearms in a locked safe while the firearms are on the employer’s premises.
You should generally consider what, if any, protections that you would like to put into place to address workplace violence. The trend in concealed carry permits shows that the number of new permits being issued is on the rise. As such, it is increasingly likely that one or more of your employees will have a license and may wish to carry while at work. This trend along with the corresponding state laws makes it imperative that you have a clear policy outlining your expectations and convey that policy to your employees.
In creating your policy, consider whether you wish to restrict the carrying of concealed weapons in your building generally or whether you want to restrict employees from bringing weapons into the building or company cars. Restricting employees from having ready access to firearms can potentially deter violence; however, those bent on causing harm are unlikely to comply with such a policy. Alternatively, consider whether allowing the limited carrying or access to firearms by those who are properly licensed through the state may potentially deter others from causing violence.
If you want to allow (or must allow depending on your state law) licensed employees to carry their firearms, consider how you want to address storage of those weapons, under what circumstances (if any) an employee can remove that weapon from their vehicle, whether you want to be advised of who is carrying a weapon, and whether you want the employee to provide a copy of his or her state issued license. Consider whether you want to (or already) have a system securing or monitoring employee parking lots to minimize the likelihood that an upset employee returns unnoticed with a weapon. The policy should also provide clear warnings to employees as to the potential discipline they could face if they violate your policy.
Note that the concealed carry of a weapon by an individual without a validly issued permit is a crime. Policies should expressly prohibit employees from carrying concealed weapons without possessing a valid, state issued permit regardless of which stance you take on permitting weapons by those with a permit.
Aside from crafting a policy addressing the carrying of guns, you should also consider and prepare a workplace violence policy. This policy should outline what is considered workplace violence, set procedures for employees to report threats or violent acts, set a disciplinary procedure or sanction for employees that violate the policy, and explain any resources you offer to assist employees, such as counseling or an employee assistance program.
In light of increasing workplace violence, special consideration should also be given to addressing situations that can be highly emotional, such as terminations or layoffs of employees. It is best to contact legal counsel before undertaking these situations for assistance in determining best practices to minimize potential issues.
Business owners and managers recognize that litigation is inevitable.
Saving for another day any discussion of its sanity, this reality drives the imperative that every prudent business create, implement, and maintain a Litigation Hold Policy. This is particularly true inasmuch as most every jurisdiction in the United States recognizes some bases for a potential and separate claim for “Spoliation of Evidence.” A “Spoliation Claim” (in most every jurisdiction) is recognized as a separate tort and depending upon the litigation venue, proof of evidence spoliation can result in an award of (among other items) separate monetary damages and negative inferences. In other words, an instruction/directive from the particular court that says, in effect and to the entity (or person) not having properly preserved a document, “OK, then … since you can’t produce the document and did not preserve it from loss or destruction, then that document must have contained information adverse to you position … and that’s how this court will rule.”
So, how to best attempt to protect against a potential “Spoliation Claim”? If your business is sued or even (in most jurisdictions) has some reasonable belief that litigation is imminent, then you must be proactive and among other steps (without limitation):
- Develop a written “Hold Notice” and “Hold Policy,” and make certain these both are communicated to all employees.
- Whenever such Hold Notices are distributed, make certain the distribution is tracked and maintained. NOTE: even “Hold Notices” and Hold Policies” can be separately challenged as inadequate.
- Currently and proactively identify those locations where potentially relevant information (hard copies, electronic data, photos, etc.) is stored … filing cabinets, work-rooms, desks, closets, back seats of cars, file rooms, data systems, servers, desk-tops, laptops, tablets, IT service providers, mobile devices, and even data that has been shared with any third-party service providers.
- Define and identify those positions and persons who are to be immediately contacted for the timely preservation of all possibly relevant information and communications.
- Communicate with your General Counsel, outside counsel, and all third-party document and IT service providers as soon as possible (after litigation is filed, or expected to be filed) and in so doing, establish and implement clear goals and expectations relative to the preservation of all possibly relevant information and communications..
- Develop an “Exit Checklist” together with a process that preserves such information relative to any employees who separate from employment, for any reason. This will most certainly require a coordinated effort with your organization’s HR Dept.
This is by no means an exhaustive list, yet hopefully will provide some guidance in the creation, implementation, and maintenance of a Litigation Hold Policy.
By Curt Graham
The Internet Age has opened up a world of possibilities for small business owners. “I can do business all over the country now!” The ambitious entrepreneur exclaims. “Heck, I’m worldwide!” However, this opportunity for higher sales does not come without unexpected risks. Imagine the entrepreneur’s surprise when she later receives a summons and complaint requiring her to appear in the court of a state she has never even visited. She feels certain she cannot be sued somewhere she has never been. Is she correct?
Answering this question requires analysis of a legal doctrine called “personal jurisdiction.” Simply put, personal jurisdiction is the power of a particular court over the parties in a lawsuit. Personal jurisdiction can be contrasted with “subject matter jurisdiction,” which is the power of a court to hear certain types of cases. In order for a court to exercise personal jurisdiction over any party, the general rule is that the party must have had at least some level of contact with the state where the court sits. This requirement arises out of state long-arm statutes and the United States Constitution (through the Due Process Clause).
As you might imagine, the existence of the Internet raises new and interesting questions about when personal jurisdiction over a defendant arises. For example, will you subject yourself to the courts of another state simply by conducting one simple business transaction online with a distant customer? Although the law continues to develop and is not completely settled, a few important cases are worthy of discussion.
One of the most well-known and important cases addressing these issues is Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997). This case is a good starting point for anyone interested in this topic. In Zippo, a manufacturing company based in Pennsylvania filed suit in Pennsylvania against a California corporation. However, the California company’s only contacts with Pennsylvania occurred online. The issue facing the Court was whether the California entity could be “hailed into” a Pennsylvania court based solely on those online contacts. The Court ultimately held the exercise of jurisdiction in Pennsylvania was reasonable because the defendant had “purposefully availed” itself of doing business in Pennsylvania. Essentially, the rationale was that if a company gets the benefit of doing business out-of-state, it must also accept the risk.
Perhaps the most important rule found in Zippo – and a statement still cited by courts today – is this: “the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet.” Id. at 1124 (emphasis added). This rule produced what is known as the “sliding scale test,” which generally means that a website with a higher level of interactivity is more likely to provide the basis for jurisdiction over the site’s owner. In other words, a site merely providing information in the form of advertisements (considered “passive” in nature) is treated much differently than a site that actively engages with customers. The latter likely gives rise to personal jurisdiction.
More recent Kentucky cases suggest the Zippo test is still utilized. In QSR Automations, Inc. v. KRS Corp. LLC, Civil Action No. 3:09-CV-242, 2010 WL 1416700 (W.D. Ky. Mar. 31, 2010), a Kansas business argued it should not be required to appear in a Kentucky federal court because it did not sell any products in Kentucky and did not have any employees there. The plaintiff disagreed, noting the defendant offered its products to Kentucky purchasers through its interactive website. The court sided with the defendant and dismissed it from the case, finding that no sales had ever been made to Kentucky purchasers online. The court properly observed that “the maintenance of a website in and of itself does not constitute purposeful availment” to doing business in Kentucky. Id. at *3.
To see how the issue plays out under Ohio law, the cases of Malone v. Berry, 2007-Ohio-6501 and Parshall v. PAID, Inc., 2008-Ohio-3171 are instructive. In Malone, the court held there were insufficient contacts made with Ohio when a nonresident seller simply placed an advertisement on an Internet auction site in order to sell his vehicle. The court noted the site was not maintained by the seller and the seller never entered Ohio as part of the sales transaction. Similarly, the Parshall court found personal jurisdiction was lacking when there was no evidence of an actual purchase by an Ohio customer through the defendant’s website, despite the fact that there was promotional material on the site. Both opinions are from the 10th District Court of Appeals, which is generally a fairly good predictor of later Ohio Supreme Court decisions.
Despite its impact, the Zippo analysis offers little help when the Internet activity is “non-commercial” in nature. Kauffman Racing Equip., L.L.C. v. Roberts, 126 Ohio St.3d 81 (2010). For example, in Roberts the Court was analyzing the question of where allegedly defamatory Internet postings were “published,” and ultimately held the statements had been published in Ohio because several Ohio residents had seen the comments there. The Court did not have to resort to using the Zippo sliding scale.
With these considerations in mind, the answer to our entrepreneur’s question about whether she can be sued out-of-state is: “it depends.” Each case analyzing personal jurisdiction is decided on its own facts. In any event, it is safe to say that accepting orders or otherwise conducting business online brings with it the risk of having to defend against a lawsuit elsewhere. While this threat should not deter you from offering your products or services online, it pays to educate yourself in order to understand the risks involved.
For questions or additional information, please contact Curt Graham at firstname.lastname@example.org or 859.899.8516.
This is the last in our series of articles by MRR attorney Elisabeth “Lisa” Gentile describing a two-step defensive strategy for use by business owners and managers should guests or patrons suffer an injury on their premises. The time and money utilized in employing this two-part process far outweighs the risk of an adverse judgment should a business not have the proper tools to defend itself should an incident lead to litigation.
Part 3: The Investigation Report
The investigation process is a much more thorough analysis of not only what happened, but also why it happened. It is imperative that an investigative report document be protected from the discovery process since it will likely contain conclusions and possible remedial actions. Therefore, it is highly recommended that an attorney be involved in this process in order to invoke the confidential attorney-client privilege and work product doctrines.
Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action.” Potentially applicable privileges include the attorney-client privilege, which “prevents the disclosure of certain communications made from a client to that client’s legal counsel,” and the work product doctrine, which protects from discovery “documents and tangible things prepared in anticipation of litigation.” Ohio courts have repeatedly held that the attorney-client privilege protects from discovery witness statements or reports that are given to one’s legal counsel for the purpose of preparing a defense to a lawsuit. Therefore, it is important to obtain legal counsel’s involvement in this process.
An investigation should be conducted by legal counsel or a manager working under the guidance and instruction of legal counsel. Once an incident occurs, legal counsel should be notified within 24 hours and the attorney or the designated agent in the company (such as an asset protection or loss prevention manager) should begin the investigative process within the following 24-48 hours. It is imperative that any and all documents that are utilized in the investigation process contain language at the top of the document designating the document as attorney work product prepared in anticipation of litigation. Although not a guarantee in every jurisdiction, this will make it more likely than not that the investigation conducted will not be subject to disclosure to the opposing party.
The investigation should include the following:
- Incident report review with manager
- Incident report review and interview with employee that completed the report
- Analysis of what may have caused or contributed to the incident, including how the condition came to be and how long the condition lasted
- Procurement of all photographs taken
- Procurement of all video surveillance (it is recommended that video is captured for 24 hours prior to AND 24 hours following an incident)
- Clock report of all employees working at time of incident
- Interview of each employee separately as to their knowledge of the incident and any interaction with the customer
- Procurement of any company policies relevant to incident conditions (for example, how ice is handled, or, if the floor is wet due to mopping, obtain any current mopping procedure utilized by store)
- Procurement of any physical evidence (i.e. falling object that struck customer or object that customer tripped over)
- Identification of any other customers within incident area that may have knowledge and separate interviews of these individuals
Following the interviews, a statement should be drafted by counsel based upon each employee’s or witness’ recollection. The statement will be sent directly to the employee or witness for their review of its accuracy and, if no changes are required, final signature. Typically, the statements are limited to factual observations or information within the direct knowledge of the employee or witness and should refrain from conclusory statements or opinions unless directly related to the condition of the premises.
The Ingredients of Success….
When you have a completed a concise incident report and a thorough investigation, you have the main ingredients for a solid defense or assessment should litigation be pursued. In Ohio, a customer has two years to bring an action for an injury. In that two year period, many personnel changes may occur within the business and the employees with knowledge of the incident may no longer be employed with the company or may not be able to recall with specificity what occurred. In that instance, you have a statement signed by the employee as to their recollection close in time to the event. It is difficult to win a premise liability case if there are no defense witnesses to testify as to what occurred. Further, the procurement of the evidence, such as photos and video, helps to protect against the customer changing their story as to what happened or the condition of the area at the time of the incident. The time and money utilized in employing this two-part process far outweighs the risk of an adverse judgment should a business not have the proper tools to defend itself against this type of litigation.
 Civ.R. 26(B)(1)
 Hunter v. Wal-Mart Stores, Inc., 12th Dist. No. CA2001-10-035, 2002-Ohio-2604, ¶ 36
 Id., at ¶ 35; Civ.R. 26(B)(3)