Tag Archives: commerce clause

Thankfully, SCOTUS doesn’t make or interpret workers’ compensation laws

Posted on January 17, 2022 by Jon Rehm

I am glad the 2.0 version of the Roberts court can’t, and doesn’t seem to have any interest in , writing controlling authority over Nebraska workers’ compensation laws or state workers’ compensation laws period.

That was my takeaway when I read over National Federation of Business v. OSHA and Biden v. Missouri over the extended Martin Luther King Jr. holiday weekend.

Last week the United States Supreme Court struck down OSHA’s proposed vaccine or test rule on the basis that OSHA can only regulate employment risk, not what the Supreme Court called “universal” or public health risks.

Though the cases weren’t about workers’ compensation, the discussion addressed core issues about what kinds of injuries and illnesses are deemed to be related to work.

Universal risk: Neutral risk by another name?

If you practice workers’ compensation law, you might think isn’t a “universal risk” also a “neutral risk” that is often covered by workers’ compensation? A neutral risk is a risk that isn’t specific to a particular employment nor is it something personal to an employee. Severe weather is a prime example of a neutral risk that can be covered by workers’ compensation. So are hazards like ice or potholes in an employers’ parking lot. COVID-19 would seem to fit within that framework.

The dissent in NFIB v. OSHA pointed out that OSHA regulates many risks related to physical facilities that aren’t strictly occupational either. But the majority held that COVID wasn’t purely an occupational risk, so OSHA could not broadly issue rules in all workplaces. There needed to be some showing of a heightened risk of exposure in the workplace for federal regulations to be valid.

Biden v. Missouri: COVID as an occupational risk for health care workers?

One example of such a workplace could be healthcare facilities. In Biden v. Missouri the Supreme Court held narrowly that the Department of Health and Human Services had shown enough of a risk to COVID in medical facilities that accept Medicare and Medicaid that a vaccine or test rule for health care workers passed constitutional muster.

I believe it’s fair to read NFIB v. OSHA and Missouri v. Biden to hold that while COVID exposure may not be an occupational risk in general, it is an occupational risk for health care workers – at least according to the United States Supreme Court.

Interstate commerce v. spending power, part 2?

The Supreme Court upheld the Affordable Care Act on spending powers rather than on interstate commerce powers. It seems like that logic was applied in striking down the general vaccine or test rule, but upholding it for health care workers.

The risk of getting COVID-19, in the eyes of six Supreme Court justices, isn’t something tied directly enough to employment that the federal government can enact general preventative measures. Though the Supreme Court doesn’t state the argument expressly, implicitly the majority is holding the ability of Congress to regulate interstate commerce through the Occupational Safety and Health Act (OSHA) should be narrowly interpreted.

But in Biden v. Missouri, the Supreme Court held that HHS could mandate vaccines for health care employees under the spending powers in facilities that accept Medicare and/or Medicaid.

State workers’ compensation laws, enacted under 10^th Amendment police powers, are an area where the Supreme Court recently refused to intervene in a case involving air ambulance billing. Workers’ compensation laws are generally accepted to state laws mostly beyond the purview of federal courts. But even if this decision isn’t controlling, will it be persuasive to state courts?

NFIB v. OSHA as persuasive authority in state workers’ compensation?

When I first read posts about the Supreme Court deeming the “universal risk” of COVID not being an occupational risk, I was worried about that argument being used as persuasive authority in workers’ compensation cases related to COVID-19. Fortunately, the majority opinion holds that states have broader powers to enact workplace safety laws

I think this means, to the extent that states recognize neutral risk in workers’ compensation through either severe weather or risks related to workplace facilities, plaintiffs should be able to cite to them if they assert COVID-19 as a neutral risk. Maybe, NFIB v. OSHA could be a legal thumb or the scale or defendants in state workers’ compensation cases, but the same could be said about Biden v. Missouri for COVID-19 workers’ compensation claims for health care workers.

Not as simple as ABC

Posted on March 29, 2021 by Jon Rehm

Much of the discussion over worker classification, whether over California’s Prop 22/AB5 or the federal Protecting the Right to Organize or PRO Act, centers on the use of the employee-friendlier ABC test in distinguishing employees from independent contractors. Employees enjoy the benefit of employment laws, independent contractors don’t.

But even if the ABC test appears to apply, workers don’t always enjoy protections under the laws. Understanding the ABC test better, helps explain why workers don’t always win even if the ABC Test applies.

The ABC test – control in fact

At least in Nebraska, if an employer can answer these four questions no, then their worker is not an employee : 1) worker free from control of work both under contract and in fact 2) service is outside of normal course of business and 3) the workers is customarily engaged in a trade, occupation, profession or business.

The biggest hurdle to obtaining employment status is showing a worker is free from control “in fact.” How exactly do you determine if a worker is free from control in fact? Courts like to use tests. The good news is the courts already have tests that they can use to distinguish a contractor from an employee.

The bad news is that these common law tests are the reason why the ABC test statutes were passed in the first place. More bad news, is that I believe many state court and federal judges will continue to apply common law tests to determine control in fact under the ABC test. Using common law tests tends not to work out well for workers.

I think the role of judges in interpreting statutes is a good transition to another reason why the ABC test is far from a panacea for worker injustice issues. Courts, aided by lawyers from management, are going to find ways not to apply the ABC test. I can think of at least two ways employers could dodge the ABC test when it would appear to apply.

Narrow definition of wages for state unemployment

In Nebraska, the ABC test applies to unemployment insurance. But our state Supreme Court found away around applying the test.

In Omaha World-Herald v. Dernier, the Nebraska Supreme Court held that a newspaper distributor for the Omaha World-Herald was not earning wages for the purposes of unemployment benefits. (Nebraska later broadened the definition of wages for unemployment, but kept the Dernier exemption for newspapers).

Narrow definition of interstate commerce for Fair Labor Standards Act

The 7^th Circuit Court of Appeals, in a decision written future Supreme Court Justice Amy Coney Barrett, found that Grub Hub drivers were not covered by the Fair Labor Standards Act because the drivers were not engaged in interstate commerce. The court ruled that commerce between the states was only incidental to the drivers’ employment.

The commerce clause, or interstate commerce, is how federal laws that protect employee pass constitutional muster. Federal courts can also narrowly interpret what constitutes commerce for the purposes of federal law. That narrow definition of commerce stated in US v. EC Knight is why workers’ compensation is a state law. Up until 1947, insurance was excluded from the definition of interstate commerce, which would help explain why unemployment insurance laws are dual state and federal laws.

Unless you have Marine One, Air Ambulances are a pricey proposition

Posted on October 5, 2020 by Jon Rehm

Last Friday President Trump travelled to Walter Reed Hospital in the Presidential helicopter, Marine One, to seek treatment for COVID-19. The President has use of a helicopter, most of us don’t. Sometimes air ambulances are necessary, particularly in remote rural areas, to transport individuals with severe injuries or illnesses.

But if you read this blog, you know that air ambulance bills are often incredibly expensive — and even worse not covered by insurance.

So why are air ambulance charges often not covered by insurance?

Preemption: Federal rock breaks state scissors

Air ambulances are regulated by the Federal Aviation Administration. The authority for this regulation is the so-called interstate commerce clause. Insurance, whether health insurance or workers compensation, is governed by state law because Congress ruled that insurance regulation is the purview of state law. Workers’ compensation laws are state laws that are constitutionally valid due to a state’s general police powers under the 10^th Amendment.

So when accident victims try to pay for an air ambulance charge with health insurance or through workers’ compensation insurance, air ambulance providers argue they aren’t bound by state laws regulating insurance since they are regulated by the federal government.

This argument is called preemption. Preemption means that if state and federal laws conflict on a subject that federal law governs. In other words, the federal rock crushes the state scissors. A majority of courts side with the air ambulance companies in holding that federal law regulating air ambulances pre-empts states from using their laws on insurance to regulate air ambulance charges.

In practical terms, injury cases involving air ambulances are more difficult to resolve. Fortunately, air ambulances aren’t covered by Nebraska’s lien statute which gives doctors and other providers a right to recover unpaid bills out of a personal injury settlement. This can give attorneys some leverage over these providers

What would the Founding Fathers think about air ambulances?

Before he went to the hospital, the President nominated 7th Circuit Court of Appeals Judge Amy Coney Barrett to replace Ruth Bader Ginsburg on the Supreme Court. Barrett’s views on abortion and other hot button social issues have drawn attention. But the bulk of cases decided by federal courts tend to be esoteric and obscure issues like air ambulance charges that stem from tensions within the United States Constitution.

I don’t know if Barrett has ruled on an air ambulance case. Barrett is known as an “originalist” or someone who looks at the intentions of the Founding Fathers in interpreting the Constitution.

But in my mind air ambulance cases are one example of the limits of the originalist approach. Passenger air travel post-dates the Constitution by about 130 years. What would the Founding Fathers know about air ambulances? Anyone who brings an originalist approach to deciding an issue like air ambulance charges is just dressing up their policy preferences in late 18th century garb.

Feds prosecuting COVID fraud by employees

Posted on June 8, 2020 by Jon Rehm

My jaw dropped last Tuesday when I read a blog post by Ohio-based management defense attorney Jon Hyman.

Hyman posted the Department of Justice criminally charging an employee for allegedly defrauding his employer by submitting a forged doctor’s note stating he had COVID-19. Human Resources and management-side defense social media share a near obsession with Family Medical Leave Act (FMLA) fraud by employees.

So why can HR now sic the FBI on employees who forge off-work notes?

The CARES Act, interstate commerce and taxing power

The answer to this question is the CARES Act. Passed in response to the COVID-19 crisis, the CARES Act amended the FMLA to provide some employees with paid leave related to COVID-19. The CARES Act also used federal funds to expand unemployment benefits related to COVID-19.

Normally state law would govern the prosecution of small-time workplace fraud under crimes like forgery and unemployment fraud. But a federal bailout creates federal criminal jurisdiction. The United States Department of Justice is aggressively prosecuting COVID fraud. Some employer-advocates question the use of the federal power to regulate interstate commerce for the good of employees. But the interstate commerce clause also expands the ability to federalize crime. It seems like employer-advocates are welcoming the expansion of federal authority to prosecute fraud by employees.

Federal taxes partially fund unemployment benefits. This would give the federal government the power to federalize unemployment fraud through the taxing power granted to Congress by the Constitution.

The real COVID fraudsters

The Georgia case is the first known incident of an employee being prosecuted for forging a medical note. COVID-related fraud mirrors workers’ compensation fraud in that most fraud is not committed by employees. Apparently organized crime is submitting false unemployment claims. Some individuals and businesses are falsely submitting claims under the Paycheck Protection Program. If an employee suspects their company is abusing the Paycheck Protection Program they could bring a claim under the False Claims Act.

But while low level employees are not committing the vast majority of COVID fraud, low-level employees are the easiest to prosecute. Prosecuting low-level employees for COVID fraud serves at least two purposes for employers.

Reopening and unionizing

As the perceived threat of COVID recedes, many businesses are reopening and employees are returning to work. Employers complain that some employees are reluctant to return to work because of enhanced unemployment benefits. However many employees are expressing safety concerns about COVID exposure. Publicizing the prosecution of COVID fraud by employees calls into question the legitimacy of employee safety concerns. Criminalizing COVID fraud by employees also allows employers and their mouthpieces in the media to portray workers worried about COVID as welfare cheats.

The use of state power on behalf of employers against employees serves another purpose. Mike Elk of Payday Report tracked walkouts and strikes related to the COVID 19 pandemic. Management-side pundits are also expressing concern about rising pro-union sentiments by employees. Prosecuting employees is one way to intimidate employees who want to form unions or engage in collective action in the workplace.

Compstitutional Law 101: Part 2: Will Sveen signal a move to judicially dismantle the “grand bargain”?

Posted on April 12, 2018 by Jon Rehm

Watch out for what these three could say in Sveen v. Melin

WILG is hosting a summit on the constitutional challenges in workers’ compensation on April 18th, I won’t be able to attend, but this post and my last post are my contribution to this ongoing discussion.

Stating that “a seemingly obscure case could have far-reaching implications” is one of the most overused clichés in legal blogging and journalism. But a case involving a dispute over the proceeds of a life insurance policy might impact the constitutional basis for workers’ compensation and other state laws protecting employees.

In March, the Supreme Court heard oral argument in Sveen v. Melin (paywall). In Sveen, a former spouse was challenging a Minnesota law automatically removing a spouse as beneficiary of an insurance policy upon divorce. The grounds for the challenge is the so-called contracts clause of the United States Constitution which prohibits states from passing laws that impair the obligation of a contract.

Pro-corporate legal commentators have long lamented the demise of the contracts clause at the expense of laws enacted by states under 10^th Amendment police powers. When these pundits and academics write about a “contracts clause revival”, they are really writing about diminishing the rights of states to enact laws under their police powers.

One of the most important set of state laws enacted under police powers are workers’ compensation laws. In New York Central Railroad v. White state workers’ compensation laws were found to be constitutionally enacted under a state’s 10^th Amendment police powers. State laws regulating workplace safety and the ability to injured employees to seek legal redress were one of the primary drivers for the broad recognition of police powers in the late 19^th century. A good discussion of the background behind the expansion of state police powers is found in the 1898 Supreme Court case of Holden v. Hardy. In short, the Supreme Court found that state workplace safety laws were a response to the new industrial economy of the late 19^th century and valid exercises of state police powers.

University of Chicago Law Professor Richard Epstein argued that minimum wage laws violated the contracts clause. It’s not much of an intellectual stretch to argue that mandatory workers’ compensation laws would violate the contracts clause using Epstein’s interpretation of the contracts clause. A gig economy employer like Uber subjected to a state workers’ compensation law might argue that they should not be subjected to such a law under the contracts clause.

On April 2nd the Supreme Court reversed 70 years of precdent in narrowly construing exceptions to the Fair Labor Standards Act in the Navarro case. Navarro will likely have the effect of pushing plaintiffs to file more wage and hour cases under state laws. A revived contracts clause could cut off or curtail opportunities for justice for victims of wage theft in state court.

A potential contracts clause revival should concern advocates for injured workers for other reasons. In recent years, attorneys for injured workers have had a fair amount of success in overturning anti-worker changes to workers’ compensation laws based on state constitutions. That avenue would likely be blocked with a full-blown contracts clause revival.

In the late 19^th and early 20^th century, state laws regulating workplace conditions were struck down under 14^th Amendment substantive due process. But substantive due process also allows claims for a broad variety of civil rights that are disliked by judicial conservatives, so the substantive due process clause is disfavored by courts. The contracts clause allows courts to strike down worker-friendly state laws without creating a mechanism for expanding rights for suspect classes of individuals like prisoners or victims of police brutality. In New York Central v. White, the Supreme Court considered and rejected arguments overturning workers’ compensation laws on substantive due process grounds and contracts clause grounds.

Finally, a broad interpretation of the contracts clause would allow the Supreme Court to overturn state workers’ compensation laws while still maintaining the narrowed interpretation of interstate commerce the Roberts court appear to be endorsing in NFIB v. Sebelius. As I wrote in a post last week, a narrow construction of the commerce clause could be a high hurdle in enacting worker-friendly chagnes to workers’ compensation laws on a federal level.

Sveen v. Melin will likely be decided this spring. If the Supreme Court strikes down the Minnesota law based on the contracts clause, I will be interested to read the language of the opinion. I will also be interested in reading any concurring opinions from hard core conservatives like Gorsuch, Thomas and Alito as those opinions could be a clue as to where the court could be going on contracts clause jurisprudence. It is unlikely that Sveen v. Melin will be grounds to invalidate state workers’ compensation laws. Supreme Court decisions are limited to actual cases and controversies that are presentd to them. But Sveen could be another step in undercutting New Deal and Progressive Era refroms. The Supreme Court has been chipping away at New Deal era laws in cases like Navarro and the Tackett decision in 2015. A bad decision in Sveen might accelerate the rollback of pro-worker laws.

Workers' Compensation Watch

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Tag Archives: commerce clause

Thankfully, SCOTUS doesn’t make or interpret workers’ compensation laws

Not as simple as ABC

Unless you have Marine One, Air Ambulances are a pricey proposition

Feds prosecuting COVID fraud by employees

The CARES Act, interstate commerce and taxing power

The real COVID fraudsters

Reopening and unionizing

Compstitutional Law 101: Part 2: Will Sveen signal a move to judicially dismantle the “grand bargain”?

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The CARES Act, interstate commerce and taxing power

The real COVID fraudsters

Reopening and unionizing

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