NCR Blog

What To Do When The Department Of Labor Is Coming For An Audit

By Cathleen "Cathy" A. Martin

Whenever an employer receives notice that the federal Department of Labor ("DOL") will be conducting a back wage audit of the employer's payroll and time records, there are certain steps an employer should do to help lower its liability and ensure compliance with state and federal wage and hour laws. Employers can:

  1. Contact an employment attorney experienced in DOL audits to assist with the audit confirming what practices the employer may need to change in order to come into compliance with overtime and minimum wage requirements as soon as possible and working to lessen the employer's liability.
  2. Gather all of the information requested by the DOL investigator including, but not limited to, payroll and time records for review by the employer's attorney.
  3. Allow the DOL investigator to conduct interviews of groups of employees at the employer's worksite at times and in a manner coordinated by the employer and its attorney.
  4. Recognize and correct common overtime errors such as:
    1. offering comp time to employees instead of paying overtime wages (unless the employer is a governmental entity);
    2. using job titles to try and make an employee fall under an exemption when the job duties of an individual employee are controlling;
    3. paying an employee a salary does not make them exempt from overtime;
    4. failing to have employees count time worked while driving between company locations during the workday;
    5. failing to log all hours worked especially at the beginning of the day, after work or during the lunch hour if the employee worked during such times; and
    6. paying nondiscretionary bonuses to employees without calculating them into the employee's overtime rate.
  5. Confirm whether the employer has/had any minors working during the prior two years and discuss with the employer's attorney what duties the minor employees performed and the hours that the employees worked to ensure that the minors were performing work that is allowed under state and federal law.
  6. Make sure that the employer does not pay any back wages outside of two years from the date of any agreement with the DOL related to back wages due.
  7. Recognize the DOL will allow employers to pay large back wage settlements over time dependent on the amount of the back wages due, findings and the employer's ability to pay.
  8. Make sure that employees receiving back wage checks sign WH-58 forms verifying that the employees are giving up any personal rights that they have to bring claims against the employer for back wages due.
  9. Make sure that the back wage checks for former employees who may not sign the WH-58 forms have language printed on the checks waiving the employee's right to bring a separate private cause of action related to the back wages with the cashing of the check.
  10. Continue to stay in compliance with the state and federal overtime requirements after the audit to avoid having a three-year look back period for compliance issues in any future DOL audits.

If you receive notice that the DOL will be conducting a back wage audit of your payroll and time records, call Cathy Martin. Ms. Martin has represented numerous small and large employers with DOL audits over the last 20 years. She has experience in counseling employers in overtime, minimum wage and child labor compliance issues and in working to minimize employer liability in DOL audits.

LDPS

By Steve Newman

What happens if the order of death among family members becomes unexpected? More precisely, what happens if a beneficiary of a nonprobate transfer under a beneficiary deed drafted pursuant to the Nonprobate Transfers Law of Missouri does not survive the owner of the real property? Who receives the real property when the owner dies under those circumstances?

Bill and Jane had one son named Tom. Bill and Jane did a noble thing. They raised the minor children of Jane’s sister Sue who was tragically killed in an international airline flight. Sue at the time of her death was a single mother because her husband had predeceased her due to cancer. Sue’s minor children were Amy and Ted. Bill and Jane never legally adopted Amy and Ted but raised them well as their court-appointed co-guardians and conservators.

Bill and Jane loved Amy and Ted as much as their own son Tom. Tom, Amy and Ted grew up. Each married a nice spouse. Each couple had two children; however, Ted’s two children did not find favor with Bill and Jane for unexplained reasons.

Although their liquid assets were modest, Bill and Jane owned hundreds of acres of land in Camden County, Missouri near the Grand Glaize Bridge. Pursuant to the encouragement of Bill’s golfing buddies and Jane’s luncheon ladies, Bill and Jane asked their attorney to draft a beneficiary deed to cover all their acres of real property in Camden County. The beneficiaries named on the beneficiary deed were as follows: Tom, Amy LDPS and Ted no LDPS. If Tom, Amy and Ted survived the last of Bill and Jane to die, Tom, Amy and Ted each were to receive an undivided one third interest as a tenant in common under the beneficiary deed upon the death of the survivor of Bill and Jane. One day after Bill and Jane signed the beneficiary deed, it was recorded in the Recorder of Deeds’ Office for Camden County, Missouri.

Bill died four years later. Jane died two years after Bill’s death. Jane still owned all the acres of land in Camden County described in the beneficiary deed. Before Jane’s death, the unexpected happened. Tom was snorkeling in the Caribbean and died unexpectedly of a heart attack. Amy died before Jane when Amy was fatally killed in a car accident by a drunk driver who was going the wrong way on a one way street. Ted, a community resource officer for a school district, died in a senseless high school shooting. All transferee beneficiaries under the beneficiary deed died before the last owner of the real property.

Who receives the hundreds of acres of real property when Jane died last if the beneficiary deed remained the same? Answer is Tom’s two children in equal undivided shares receive a one half interest in the hundreds of acres in Camden County. Amy’s two children in equal undivided shares receive the other one half interest in the hundreds of acres in Camden County. Each of these individuals receive an undivided one fourth interest in the entire acreage as tenants in common. Ted’s children do not receive anything under the beneficiary deed.

The use of LDPS in the beneficiary deed was important to promote the clients’ objectives. To find out more about the use of LDPS on beneficiary deeds or on TOD accounts, call our office and visit with one of our estate planning attorneys to make certain that your directions are accurately reflected.

Five Things to Do Before Meeting With an Attorney

By Ryan McDaniels

If you have never met with an attorney before, it can be a nerve-racking experience. It can be difficult to know what to do to prepare for your meeting. Here are five things attorneys want their clients to do before their first meeting. Following these first steps can help to make that initial meeting easier.

1. Provide the Attorney with Names

Before meeting with you, any attorney will need to do a conflict check. A conflict check is a process by which the attorney and his or her firm ensures that they do not represent anyone else in your case, and do not have an issue representing you. To do a thorough conflict check the attorney will need your name and the names of any other parties that might be involved in the litigation. Most firms will not set up an appointment with you until they are sure there is no conflict.

2. Fees

Ask up front whether there will be a charge for your initial consultation. Depending on the type of case, it may be possible that your initial consultation will be free of charge. In other cases, there is regularly a charge for the first meeting. It is important to know this before meeting with an attorney so that you can plan accordingly.

3. Gather the Facts

Sitting down in an attorney's office for the first time can be intimidating. The attorney should do everything he or she can to put you at ease, but it is natural to be forgetful under the circumstances. As a result, it is important to do some preparation work prior to coming to the office. Sit down, think about your case and what you want to tell the attorney. Jot down some notes that you think will be helpful to jog your memory during the meeting and be ready for the attorney to ask you lots of questions. It is important for the attorney to know as much about your case as possible before agreeing to represent you.

4. Gather Documentation

The attorney you meet with will likely want to see and collect documents in your possession that are relevant to your case. The documents you need to bring will be different for each case. If you believe you have been wrongfully terminated, bringing any correspondence from your employer regarding your termination, discipline, or warnings will be important. If you are interested in amending a will, you should bring the will with you. (For more information on what to bring with you to your initial estate planning meeting, check out "What Should I Bring" blog post by Steve Newman). If you have been in a car accident, a copy of the police report and your medical bills will be helpful. Bringing these documents with you for your first visit will make that meeting more informative and worthwhile.

5. Relax

While it is easy to be nervous, remember that the attorney is there to help you. Be open with your attorney and understand that they are asking questions to understand as much as possible about your case. Be yourself and tell your story. The attorney will decide whether to take your case from there.

Congress Exempts Livestock Farms from Reporting Air Emissions

By Robert Brundage

On March 23, 2018, the president signed into law the "Fair Agricultural Reporting Method Act" that exempts the reporting of "air emissions from animal waste at a farm" under CERCLA. For several years agricultural groups have been asking Congress to enact this exemption to reverse a court decision that required livestock emission reporting.

A 2011 court case invalidated a 2008 EPA regulation exempting livestock emission reporting. In 2008, EPA published a rule that exempted most farms from certain release reporting requirements in CERCLA and EPCRA. Specifically, the rule exempted farms releasing hazardous substances from animal waste to the air above threshold levels from reporting under CERCLA. For EPCRA reporting, the rule exempted reporting of such releases if the farm had fewer animals than a large concentrated animal feeding operation (CAFO).

Environmental groups filed a lawsuit challenging EPA’s 2008 regulation. On April 11, 2017, the U.S. Court of Appeals for the District of Columbia Circuit struck down EPA’s rule, eliminating the reporting exemptions for farms.

The D.C. Circuit Court of Appeals it is expected to issue a mandate vacating the 2008 final rule as soon as May 1, 2018. Fortunately, since Congress has now exempted livestock operation emission reporting requirements farms will remain exempt from the CERCLA reporting requirements as a result of the "Fair Agricultural Reporting Method Act."

For more information and EPA updates, see the following EPA website: https://www.epa.gov/epcra/cercla-and-epcra-reporting-requirements-air-releases-hazardous-substances-animal-waste-farms

The Controversial Trend of Making Vaccinations Mandatory for Health Care Workers

By Valerie Kimball, Law Clerk

Currently, one of the most controversial directives from health care institutions, such as hospitals and nursing homes, to their health care employees is a mandatory vaccination requirement. Employers see this requirement as a way to keep their patients seeking treatment safer by requiring those treating them to be vaccinated. This requirement also can help keep the health care employees safe by providing them an extra line of defense when dealing with sick patients. While there are strong public policy reasons behind mandatory vaccinations, courts and the Equal Employment Opportunity Commission (EEOC), the federal agency that enforces civil rights laws on workplace discrimination, recognize situations in which employees should be exempt from receiving vaccines.

Two exceptions are well recognized to mandatory vaccinations including an employee’s sincerely held religious belief conflicting with receiving the vaccination or some medical reason/disability that prevents the employee from receiving the vaccination. For example, a sincerely held religious belief against vaccinations could be believing that nothing unnatural should be put into the body and can arise from traditional mainstream religious beliefs or even those sincerely held beliefs in non-religious practices. An example of a medical disability could be an allergy to a component in the vaccine. However, simply because an employee has an exemption from the vaccination does not mean they are free from taking other precautions to prevent the spreading of diseases and influenza. Cases reviewing an employer’s ability to require mandatory vaccinations show that employers must provide reasonable accommodations to the employees unable to abide by the mandatory vaccination. If an employer fails to provide reasonable accommodations and terminates employees failing to comply with vaccination requirements, employers may be guilty of violating Title VII of the Civil Rights Act.

Accommodations that employers provide to employees need to be determined on a case-by-case basis. For example, an accommodation based on a medical reason, such as an allergy, would need a different accommodation than a request for an exemption based on religious purposes. An employee with an allergy might be able to get a different version of the vaccine, but an employee with a religious belief disfavoring or precluding vaccinations does not have that same option. In the instance of an employee requesting a religious accommodation to receiving a vaccination, the more suitable solution might be requiring the employee to wear a mask which is an alternative that still provides protections to patients and other staff. The accommodation must be provided unless it would place an "undue hardship" on the employer. Undue hardship, defined by Title VII, is simply "more than de minimis" to the employer’s operation which is a lower standard than required by the ADA. Requiring unvaccinated health care employees with a religious objection to wear masks at all times, or at least when dealing with clients, would not be considered an undue hardship for an employer. However, the day-to-day practice of when an unvaccinated employee is allowed to remove his/her mask in the workplace to protect other employees and patients is bound to be a challenge for employers. Each accommodation needs to be tailored to the applicable situation.

In trying to match needed accommodations with an employee’s refusal to not be vaccinated, employers have the ability to question an employee’s claim of exemption. An employee may need to provide a note from a doctor about a medical issue that precludes him/her from being vaccinated, and can be asked what his/her religious belief is that precludes the vaccination. For religious exemption purposes, the employee only must provide a statement of his/her own sincerely held belief. If an employer has an objective basis for questioning the sincerity of the religious claim, then the employer is justified in seeking additional supporting information regarding the exemption. Should an employer decide to question the truth of the employee’s religious exemption claim, the employer must be careful because a court will likely view the failure to provide an accommodation as discrimination, unless there is truly a legitimate reason for the outright refusal of the request.

While there is no current Missouri law placing a ban on employers from making vaccinations mandatory, employers who implement such a policy need to ensure there are processes for an employee to request an accommodation to being vaccinated and that the employer does not automatically terminate the employee for refusing to be vaccinated. Strong encouragement to receive the vaccine, payment of vaccinations by the employer, or educational programs highlighting the benefits of getting vaccinated can move the vast majority of health care employees to get vaccinated. Then, healthcare employers can navigate the facts surrounding any remaining employees who refuse to be vaccinated balancing the protection of patients and other staff with the employees' protected rights.

So, You've Been Ordered to Pay or Receive Child Support?

By Kimberly J.Z. Guthrie

Many people either pay or receive child support. In a perfect world, the party who is ordered to pay child support would pay the exact full amount on time each month. However, that is sometimes not the case, so it is important to know your options and/or the consequences of your actions in the following scenarios regarding payment and receipt of child support.

While not something that happens very often, parents who are ordered to pay child support might pay more than they are obligated to pay. You might be thinking, "Now, why on earth would you do that?!" There are actually several Missouri Appellate opinions where a parent had overpaid child support and then sought a credit toward subsequent support payments when the other parent filed a Motion for Contempt. A party will not receive a credit against future support payments for a voluntary overpayment unless the parties agree to a credit or there are "equitable circumstances" that justify the Court giving a credit. Such equitable circumstances are determined by the Court on a case-by-case basis, and Missouri Courts have not articulated any general rules regarding when such equitable circumstances exist. (See Example 1 below)

Sometimes a party will make payments directly to a child or to third parties for their children's expenses. The parent receiving court-ordered child support has the right to decide how that child support will be used to support the child. Therefore, the parent paying child support cannot be credited for payments made directly to a child or third party without the agreement of the parent receiving support, or if the Court determines that the circumstances require a credit. Again, Missouri Courts have not expressed any hard and fast rules dictating when the circumstances would require a credit, and, absent agreement of the parties, the Court will make a determination if a credit is necessary on a case-by-case basis. (See Example 2 below)

More often, a parent will not pay the court-ordered amount of child support and end up owing an arrearage. If one parent owes past-due child support, the parties can make an agreement to forgive some or all of the arrearage. That agreement will likely be enforced by the Court, so long as the agreement is supported by adequate consideration. (See Example 3 below)

However, an agreement by the parents that in the future one party will accept a lesser amount of child support than the amount that was ordered is unlikely to be enforced by the Court unless the parties petition the Court for a modification of its order. (See Example 4 below)

There is a circumstance where the Court will not order a party to pay the entire amount he or she owes in past-due child support; this is called "waiver by acquiescence." Such a situation arises when the parties agree, or one party perceives that there is an agreement, that the parent receiving support will accept a lesser amount than is owed and the parent paying support changes her position to her detriment in reliance on the agreement or perceived agreement. Once more, whether a party changed her position to her detriment in reliance on the agreement is a question for the Court to determine on a case-by-case basis. (See Example 4 below)

The following examples are helpful to illustrate the above principles:

Mother is ordered to pay Father $500 per month in child support.

Example 1: Mother pays Father $1000 per month in child support for one year and then does not pay Father any child support for the next year. Father files a Motion for Contempt for Mother's failure to pay. The Court will likely determine that Mother owes Father $500 per month for the year she did not pay, despite her overpayments in the previous year because there was no agreement between Mother and Father that the overpayment would be credited toward future support payments.

Example 2: Neither parent was ordered to pay any of child's post-secondary school expenses. Mother pays child's college expenses of over $500 per month directly to the child's educational institution for one year and does not pay Father any child support that year. Father files a Motion for Contempt for Mother's failure to pay. The Court will likely determine that Mother owes Father $500 per month for the year she did not pay, despite her payments directly to the child's educational institution, because Mother and Father did not agree that Mother would make payments directly to the institution in lieu of her obligation to make child support payments to Father each month.

Example 3: Mother pays Father $100 per month in child support for 5 years. Father files a Motion for Contempt based on Mother having past-due support of $400 per month for 5 years ($24,000 total). Mother and Father agree that Mother will pay Father $5,000 immediately, and Father will forgive the remainder of the arrearage. If Father later files another Motion for Contempt for the remaining $19,000 arrearage, he will likely not succeed because he and Mother agreed the $19,000 arrearage was forgiven, and the agreement was supported by consideration.

Example 4: Mother and Father agree that Mother only pay Father $100 per month in child support, despite the Court's Order requiring Mother to pay $500 per month. Neither files a Motion to Modify the Court's Order and Mother pays Father $100 per month for 5 years. After 5 years, Father files a Motion for Contempt for Mother's failure to pay $500 per month. Unless Mother changed her position in some way based on this agreement, the Court will likely determine that Mother owes Father past-due child support of $400 per month for 5 years ($24,000 total). If the Court determines that Mother changed her position in some way based on this agreement, the Court could determine that Mother owes father less than $24,000 for past-due child support, or even no arrearage at all.

As you can see, when a party deviates from the Court's Order regarding child support, the situation can get complicated. It is important to know your options and the consequences of your actions in such scenarios. You should consult an attorney before you pay more or less child support than you have been ordered to pay, if you have not received all of the child support the other parent owes you, or if you or the other parent desire to make an agreement to deviate from the Court's Order regarding the payment of child support. Contact Kim Guthrie, or one of our other experienced family law attorneys if you have questions about child support.

 

What's in a Word? Missouri's New Standard for Proving Employment Discrimination

By: John T. Brooks, Law Clerk at Newman, Comley & Ruth P.C. and Third-Year Law Student at the University of Missouri.

New legislation will impact the workplace relationship between Missouri employers and employees. On June 30, 2017, Governor Greitens signed into law Senate Bill 43, which will change several aspects of the Missouri Human Rights Act (MHRA) - including raising the standard for proving employment discrimination. The MHRA makes it unlawful for employers with six or more employees to discriminate against employees because of their race, color, religion, national origin, sex, ancestry, age, or disability. Discrimination is unlawful conduct based on membership in a protected class - for example, firing an employee because they are female. Discriminating by changing terms or privileges of employment also can be unlawful under the MHRA. Under Senate Bill 43, employees seeking to prove workplace discrimination now will have to prove that their membership in a protected class was the "motivating factor" for the employer's adverse employment action. Senate Bill 43 also contains a number of other changes to Missouri's employment discrimination laws.

Missouri's Previous Standard

Prior to SB 43, an employee claiming employment discrimination had to prove that the employee's status as a member of a protected class was "a contributing factor" in the employer's action against them. If an employee was fired due to his or her age, a jury hearing the case would be instructed:

Your verdict must be for plaintiff if you believe:

First, defendant discharged plaintiff, and

Second, age was a contributing factor in such discharge, and

Third, as a direct result of such conduct, plaintiff sustained damage.

If the jury found that age was a contributing factor to the employer's decision, they would likely find the employer liable for damages. Evidence of a contributing factor could be found in any number of circumstances, but a plaintiff would not have to prove age was the only factor in the employer's decision to fire, or the most important factor - merely a contributing factor.

Missouri's New Standard

SB 43 replaces the word "contributing" with "motivating." An employee seeking to prove discrimination now will have to prove their membership in a protected class "actually played a role in the adverse action or decision and had a determinative influence on the adverse decision or action." While no jury instructions have been issued yet under this new standard, a new instruction might like look this:

Your verdict must be for plaintiff if you believe:

First, defendant discharged plaintiff, and

Second, age was the motivating factor in such discharge, and

Third, as a direct result of such conduct, plaintiff sustained damage.

The new standard is similar to the one outlined in federal employment law. Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, color, religion, sex, or national origin. A plaintiff can prevail under Title VII by showing that their membership in a protected class was "a motivating factor" in an employer's decision.

Notably, however, SB 43 provides that a plaintiff must prove his or her membership in a protected class was " the motivating factor." Is " the motivating factor" a higher standard than " a motivating factor?" The definition given of "the motivating factor," discussed above, is similar to the one used in federal law. While it remains to be seen how courts will handle instructing juries on this issue, careful and judicious advocacy will be needed on both sides of employment cases arising under the new standard.

Cap on Damages Based on Employer Size

Under SB 43, certain damages an employee could receive, if he or she wins at trial, now will be limited based on the size of the employer. An employee can receive "actual back pay and interest on back pay," typically referred to as compensatory damages, which are not capped - but which must be calculated and proven. All other damages, including future loss, emotional pain, and punitive damages, are capped based on the size of the employer. An employer with between 5 and 100 employees only will be liable for a maximum of $50,000. An employer with between 100 and 200 employees only will be forced to pay a maximum of $100,000; one with between 200 and 500 only will be forced to pay a maximum of $200,000; and one with more than 500 employees only will be forced to pay a maximum of $500,000. With the new caps of SB 43 in place, if an employee works for an employer with 25 employees, proves age was a motivating factor in the employer's decision to fire, and proves he or she was owed $10,000 in back pay and interest on back pay, the employee's maximum available damages would be $60,000. Statutory caps similar to those in SB 43 have been the subject of numerous appeals, such as Watts v. Lester E. Cox Med. Centers, 376 S.W.3d 633 (Mo. 2012). In that example, the Missouri Supreme Court held that a Missouri statute imposing a cap on non-economic damages for medical negligence violated the right to trial by jury. Thus, the caps in SB 43 also will likely be challenged.

Individual Liability

Prior to SB 43, not only could employers be sued for employment discrimination, but individual employees working for the employer also could be sued. Supervisory employees often were named in lawsuits arising under the MHRA. SB 43 specifically prohibits plaintiffs from naming employees who are alleged to have discriminated or ignored discrimination by redefining "employer" to not include any individual employed by an employer. Now, plaintiffs will not be able to name individual employees as defendants in future state discrimination claims.

Whistleblower Provisions

SB 43 also contains provisions relating to a person who reports an unlawful act of his or her employer, such as a statutory violation, and subsequently has an adverse employment action taken against him or her - commonly referred to as a "whistleblower." SB 43 allows whistleblowers who have adverse actions taken against them an avenue for recovering damages, but also caps the damages stemming from whistleblower lawsuits at twice the amount of back pay and medical bills a person is owed. The law does not provide for additional punitive damages in the event of a particularly outrageous set of circumstances. Rather, such damages only can be twice whatever back pay and medical bills a person is owed. Missouri law excludes the State and political subdivisions from whistleblower liability. Under SB 43, if a whistleblower proves his or her reporting of an unlawful act was the motivating factor in the employer's decision to take an adverse employment action against him or her, and the employee was owed $10,000 in back pay and $20,000 in medical bills, the maximum additional damages that person could receive if he or she proved the employer's conduct was outrageous would be $60,000, for a total award of $90,000.

What the Future Holds

Many provisions of SB 43 will be contested in the appellate courts. Among them are whether the change in the standard from contributing factor to motivating factor is "procedural" or "substantive." If the change is deemed "substantive," it could not apply to acts of discrimination or retaliation which arose before the law becomes effective August 28, 2017. However, if the change is "procedural," then a court could require a plaintiff who filed his or her case before SB 43 was enacted to meet the new standard of proof. Regardless, employers should expect to see the number of lawsuits filed in the next two months jump before SB 43 goes into effect on August 28, 2017. Similarly, in 2005, when damage caps on medical malpractice lawsuits were passed, there was a substantial rise in lawsuits in the months before the caps went into effect. All employers and employees need to stay informed on the changes in Missouri law under SB 43 to ensure they are following the law and not exposing themselves to potential liability.

Art Auction in the Explorer's Lounge on Deck 6

By Steve Newman


My wife and I recently returned from an Alaskan cruise tour. It was a "bucket list" trip. In addition, we celebrated our 30th wedding anniversary on a ship that included about 2,200 happy people. One of the many scheduled on-board activities was an art auction. I went to the afternoon event as a complete novice straining to remember the primary colors. The auction featured fine art by well-known artists. Each art piece, except sculptures, was beautifully framed and matted. The artists included Peter Max, Itzchack Tarkey, Pino, Daniel Wall, Norman Rockwell, Thomas Kinkade, LeRoy Neiman, Duaiv, Simon Bull, Viktor Shvaiko, and others.

The auctioneer was named Pierre who hailed from South Africa. He was sharply dressed in a business suit and tie. He knew how to move an auction quickly. In his introductory remarks, he said that each purchased piece would be framed and shipped to your home with a promise to replace any frame damaged in transit. An appraisal of a purchased piece was available for $35.00 and $15.00 for each piece thereafter. The appraisal would help to insure properly the purchased piece. I knew then that dynamic bidding must be next.

Pierre also said that purchasing one or two pieces was nice; however, the purchase of three or more pieces was a collection. I sensed immediately that Pierre was looking for collectors. Experienced art purchasers flanked me on all sides. As a result, my innocence was exposed. A couple to my left were particularly active successful bidders and proudly knew the names of most of the artists when a new piece was hoisted by the hired help to the center easel which was illuminated by a bright overhead light.

The free champagne courtesy of the auction company seemed to unleash the couple's spirited bidding. In contrast, I sipped the free orange juice in stunned silence.

As an estate planner, I wondered privately how this active couple to my left would dispose of their purchases at death although the grim reaper did not appear imminent for either of them. Did they have a revocable trust? If yes, did they previously sign an assignment of a tangible personal property that included a provision for after acquired personal property items to add these new purchases to their trust? Was the couple's estate planning based solely on two wills - one for him, one for her? Did their respective wills include a paragraph or incorporate a personal property list to indicate who should receive these new fine art pieces after the death of the survivor of them? Did they live in Missouri where a bill of sale could be used to avoid probate on their newly acquired fine art pieces? Did they have any estate planning in place at all? Shudder the thought that they were barren of any personal estate planning documents. Collections are often coveted and valuable assets in a couple's net worth. These professional thoughts entered my mind as their bid number became a frequent winner. My professional musing was suddenly interrupted by Pierre the auctioneer stating loudly "Going once, going twice. Sold. Number 217. A very good purchase indeed." The active couple to my left had added to their collection that afternoon in the Explorer's Lounge on deck 6. My witness of their achievement and happiness along with my orange juice satisfied me enough.

 

Missouri's Motor Vehicle Financial Responsibility Law and the Duty to Defend>

By Ryan J. McDaniels

The State of Missouri requires all drivers to carry certain minimum coverage under the Motor Vehicle Financial Responsibility Law (MVFRL) as prescribed in RSMo. § 303.190. That section provides that all motor vehicle liability policies must carry at least twenty-five thousand dollars of liability coverage for bodily injury or death of a person in any one accident, fifty thousand dollars of liability coverage for bodily injury or death in each accident and ten thousand dollars of coverage for property damage from each accident. Certain entities are allowed to self-insure, as opposed to purchasing insurance through a third party, if they meet the requirements of RSMo. § 303.220. In order to obtain a certificate of self-insurance, the self-insurer must agree to, "pay the same judgments and in the same amounts that an insurer would have been obligated to pay under an owner's motor vehicle liability policy if it had issued such policy to said self insurer." RSMo. § 303.160.

Typically, when a person purchases insurance through an insurance company, the insurer agrees to defend the insured in the event the insured is sued or a claim is made against the insured that is covered under the insurance policy. A failure to defend the insured or to settle a claim against the insured can result in a claim by the insured against the insurer for the insurer's failure to perform its duties under the insurance contract. Insurers typically agree in their policies to defend the insured so that they are not forced to pay large judgments without the ability to participate in the defense.

While the MVFRL makes clear that each driver must carry certain minimum coverage, either through insurance or self-insurance, a recent case from the Eastern District Court of Appeals, clarifies that the minimum coverage does not require a self-insurer to provide a defense to the insured. Instead, the only requirement is that the self-insurer pay the amounts required under the MVFRL.

In Clayborne v. Enterprise Leasing Co of St. Louis, LLC the Eastern District Court of Appeals was faced with an interesting fact pattern. Carlus Parker rented a car from Enterprise, but refused Enterprise's insurance coverage. In his rental agreement, Enterprise stated that it was not an insurer, but met the minimum requirements of the MVFRL as a self-insurer. After renting his vehicle, Mr. Parker was involved in an accident with Mr. Clayborne. Mr. Clayborne sued Mr. Parker for his injuries.

Mr. Clayborne's attorney contacted Enterprise, and sought to settle with Enterprise as Mr. Parker's insurer for $25,000, the coverage amount required by the MVFRL. Enterprise refused stating that it was not Mr. Parker's insurer. Enterprise further refused to provide Mr. Parker with a defense at the trial of Mr. Clayborne's claim against Mr. Parker. Mr. Clayborne obtained a judgment of $575,000.00 against Mr. Parker. Shortly thereafter, Enterprise paid Mr. Clayborne the $25,000 under the MVFRL, but refused to pay any additional amounts.

Mr. Parker then sued Enterprise claiming that they had acted in bad faith toward him as his insurer, in failing to defend him and refusing to settle with Mr. Clayborne for Enterprise's $25,000 in coverage. Mr. Parker claimed that Enterprise's refusal to settle for its $25,000 in coverage allowed Mr. Clayborne to take a large judgment against him, when Enterprise had the opportunity to settle Mr. Clayborne's claim for an amount that would not have exposed Mr. Parker to a judgment. The Circuit Court of the City of St. Louis found that Enterprise owed no duty to Mr. Parker other than to pay its $25,000 and entered judgment in favor of Enterprise. Mr. Parker appealed.

The Eastern District Court of Appeals upheld the Circuit Court of the City of St. Louis' judgment in favor of Enterprise. The Court found that nothing in the MVFRL required Enterprise to provide Mr. Parker with a defense or gave Mr. Parker a right to sue Enterprise for failing to settle. The Court stated:

In the instant case, Appellant [Parker] can point to no provision in the rental agreement establishing an obligation on Enterprise...to defend him in a lawsuit or to settle any claims brought against him by a third party damaged by Appellant while driving the rental car. Enterprise...ha[s] satisfied the only duty of coverage they have in this case, namely a statutory duty under the MVFRL to provide the minimum amount of $25,000 to third party Clayborne.

While the case may be reversed by the full panel of the Eastern District Court of Appeals or transferred to the Missouri Supreme Court, if the opinion stands the clear message is that the MVFRL requires nothing more than $25,000 in coverage for bodily injury or death per person, $50,000 in coverage for bodily injury or death per accident and $10,000 in coverage for property damage per accident.

This case clearly raises the question, can an insurer avoid its duty to defend similar to the self-insurer in Clayborne. While this case does not address that issue, it is likely that an insured under a state minimum policy would still have a claim against their insurer for bad faith failure to settle or defend due to the contractual agreement between the insurer and insured. The Court's opinion in Clayborne however makes clear that a self-insurer does not have that duty unless it contractually agrees to it.

A copy of the Eastern District Court of Appeals' Opinion in Clayborne v. Enterprise Leasing Co. of St. Louis, LLC can be found at: http://www.courts.mo.gov/file.jsp?id=111615.

SHORT-TERM PROBATE

By Steve Newman

Probate. This singular word stirs negative thoughts in the minds of many individuals. For many, the possibility of probate is something to be avoided like a natural disaster or a physical illness.

When a person dies, sometimes probate cannot be avoided. It becomes necessary to settle a decedent's affairs under court supervision. For this article, probate means a judicial procedure to administer a deceased person's assets. Under Missouri law, a probate case can incur significant costs of administration and move at a slow and unfamiliar pace for interested and often anxious persons. It is not unusual for probate cases to last ten (10) months and sometimes more than a year. It is little wonder why the thought of probate often generates negative reactions.

There are, however, certain probate procedures under Missouri's Probate Code that take a shorter period of time to complete. If the right circumstance exists for a short-term probate procedure, a probate case can be settled more quickly. Some short-term probate procedures recognized under Missouri law are a refusal of letters to a surviving spouse or unmarried minor children, refusal of letters to a creditor, a small estate affidavit procedure where the estate is less than $40,000 in value and a petition for determination of heirship. Administration of nonresident decedent estates also can use short-term probate procedures in Missouri for assets located in Missouri. A brief description of each short-term probate procedure is mentioned below.

Application for Refusal of Letters for a Surviving Spouse or Unmarried Minor Children

A Court can refuse to grant letters. Refusing to grant letters means that the Court will not issue letters testamentary if a will is admitted to probate or letters of administration if the

decedent died without a will. Issuance of letters either testamentary or of administration appoints a personal representative to start a probate case.

The estate of the decedent in a refusal of letters situation can be for that property allowed by law as exempt property under §474.250, RSMo. and the allowance granted to a surviving spouse and minor children under §474.260, RSMo. There is no dollar limit on the value of assets that can be included in a refusal of letters to the surviving spouse and unmarried minor children as long as the assets are exempt property items mentioned under §474.250, RSMo. and would meet the allowance granted to a surviving spouse and minor children under §474.260, RSMo. After the application for refusal of letters is filed, it should be ruled upon by the court in 60 days if not sooner.

Application for Refusal of Letters to a Creditor

If the personal estate of the decedent does not exceed $15,000 and there is no widower, widow or unmarried minor children, any creditor of the decedent may apply for refusal of letters. The creditor will sell the assets of the decedent, pay the debts of the decedent in order of their preference and distribute the balance, if any, to the persons entitled to such balance under the law. After the application for refusal of letters to the creditor is filed, it should be ruled upon by the court in 60 days if not sooner.

Affidavit to Establish Title Where Total Estate is Less Than $40,000

The net value of the probate estate must not exceed $40,000. Thirty days must pass from the decedent's death before the small estate affidavit can be filed. If the net value of the estate is greater than $15,000 plus less than $40,000, two publications in a local newspaper are required. A probate estate with a net value of less than $15,000 does not have a publication requirement.

Often the small estate affidavit procedure is used by members of the decedent's family other than the spouse or unmarried minor children. A bond could be required by the court but often it is waived. The affidavit must represent that all debts, claims, demands and estate taxes have been or will be paid. The liability of the person signing the affidavit is limited to the value of the property received. A small estate affidavit can be usually processed by the court anywhere from two to six weeks.

Petition for Determination of Heirship

A petition for determination of heirs can only be pursued when no administration of the decedent's estate has commenced and no will has been presented in Missouri within one year of the decedent's death. A court hearing is required. Evidence must be produced. Notice must be given to interested parties. Notice must be published in the paper. At the hearing, the court is directed to enter a decree determining who the heirs are and their respective interests in the decedent's property. The case can usually be resolved within 90 days of its filing with the court.

Nonresident Decedents Can Dispense With Administration

Nonresidents can pursue short-term probate procedures in Missouri. If a nonresident decedent owned property in Missouri, a short-term probate procedure can be used. The proceeding in Missouri is an original proceeding conducted under the laws of Missouri and is independent of and not ancillary to the proceedings in any other state. The timing involved in a short-term probate proceeding for the nonresident decedent should be the same as for a resident of Missouri.

If probate administration must be pursued in Missouri, pause to consider if any of the short-term probate procedures could be used. Ask our probate attorneys for help in determining whether the probate experience in Missouri can be shorter.

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Failing to Respond to a Lawsuit Filed Against You May Be Costly

Alicia Embley Turner

When a civil lawsuit is filed, the Missouri Rules of Civil Procedure require that the defendant file an answer within 30 days after service or if the lawsuit is filed in associate circuit court, that the defendant appear on the return date indicated in the court summons. Failure to respond to the lawsuit will result in a default judgment being entered against the defendant. Sometimes a defendant against whom a default judgment has been entered will request that the court set aside the default judgment for excusable neglect, such as he was late for court or she failed to properly note the deadline for responding. To the extent there was any doubt that this does not constitute good grounds for setting aside the default judgment, that doubt was eliminated by the Missouri Court of Appeals, Western District, in Bryant v Wahl, WD7888 (Aug. 2, 2016). In Bryant, even though Mr. Wahl had been adjudged mentally incompetent in a prior criminal proceeding, the court refused to set aside a default judgment entered against him because he failed to follow the proper procedures for filing such a motion. This resulted in the affirmation of a $5 million default judgment entered against him.

Missouri Rule of Civil Procedure 74.05(d) states that in order to have a default judgment set aside, a party must state facts "constituting a meritorious defense" and show "good cause." The court in Bryant reminds us that there is an initial pleading requirement as well. Courts require that motions to aside default judgments be supported by affidavits or sworn testimony. In other words, these motions are not self-proving. Also, defaulting parties are not entitled to an evidentiary hearing to overcome any evidentiary deficiencies in their written motion. Defaulting parties are not entitled to evidentiary hearings as a matter of right.

With regard to the requirement that the defaulting party show he or she has a meritorious defense, it must be an "arguable theory." Nevertheless, the facts supporting the theory must have a basis in reality and cannot be mere speculation. The court in Bryant emphasized that there must be some evidence to support the defense. Allegations that "discovery may reveal affirmative defenses" will not suffice.

The lesson of Bryant v. Wahl is that if you are served with a lawsuit, you should not ignore it even if you think you have a good defense or if you think the court knows you have a good defense. Rather, you should give it your full attention and proceed with filing a response or appearing on the required date for associate level cases. The burden of proof to have a default judgment against you set aside later is high and the requirements are strict, and if the motion is denied, the default judgment could be very costly to you. It could possibly be much more costly than hiring a law firm to help you defend it in the first place.


The Things Your Mother Told You Not to Talk About at the Dinner Table

Cathleen A. Martin

While secrets, drugs, politics, sex and the bathroom are still topics of conversation banned from polite conversation at many family dinner tables, employers should not be taking the same approach to communications in the workplace. With the new federal Defend Trade Secrets Act, the Occupational Safety and Health Administration's changes to post-accident drug testing rules, the United States Supreme Court's recent decision emphasizing the freedom of speech protection for public employees when expressing political views and broad changes in federal protections against discrimination and harassment based on sexual orientation and gender identity, employers need to talk about all of these topics and how they affect their workforces.

A. Secrets

In regard to secrets, employers now have a new level of protection and remedies to keep their proprietary information or intellectual property such as formulas, client lists, business strategies or technologies not protected by patents, confidential. Previously, employers historically depended on the protections of state versions of the Uniform Trade Secrets Act (UTSA) in conjunction with confidentiality agreements to protect their secrets. However, this resulted in national businesses protecting their secrets by filing litigation in multiple states all with separate and differing versions of the UTSA which ultimately was an inefficient and expensive way to protect secrets. On May 11, 2016, President Obama signed the federal Defend Trade Secrets Act (DTSA), 18 Section 1831, et seq, which provides injunctive, royalty, regular and exemplary damages, attorney's fees, and civil seizure remedies that can be secured in federal courts with jurisdiction to issue orders effective across state lines.

To take advantage of all of the remedies available under this new law, employers must incorporate a notice of the immunities available under the DSTA to whistleblowers who provide trade secrets to the government in an investigation of a violation of the law, in court under seal or to a whistleblower's attorney. If employers fail to include such notice in their contracts, the employers will be precluded from being awarded exemplary damages and attorney's fees in any future litigation. Thus, it is time for employers to talk about their trade secrets and how their contracts need to be altered to ensure that they can take full advantage of the provisions of the DTSA.

B. Drugs

Many employers have mandatory post-accident testing polices that require all employees involved in a workplace accident to be drug tested immediately after any accident. The Occupational Safety and Health Administration (OSHA)'s new regulations, under 29 C.F.R. Part 1904, dramatically affect a covered employer's ability to do drug testing because the regulations prohibit employers from ordering post-accident or injury drug testing unless the employer can demonstrate that employee drug use is likely to have contributed to the incident and the situation is one in which a drug test can accurately identify impairment caused by drug use. These changes will require employers to separately analyze in each work injury situation whether an employee can be tested for potential drug use and are effective August 10, 2016.

In addition to revising their drug testing policies, OSHA will also require employers to submit records of workplace injuries electronically and public disclosure of employer data on workplace injuries to increase workplace safety. The new regulations related to electronic submissions are effective on January 1, 2017. Thus, it is time for employers to be talking about drugs in the workplace and confirming whether the new OSHA regulations apply to their business.

C. Politics

With the upcoming elections, workplaces tend to be more a buzz with political conversations. The United States Supreme Court in Hefferman v. City of Paterson, N.J., 136 S.Ct. 1412 (2016), issued a decision in April reminding public employers of the importance of allowing their employees to exercise their First Amendment Right to Free Speech. In this case, a police officer filed a Section 1983 action against the city, mayor, police chief and police administrator alleging he was demoted in retaliation for exercising his First Amendment Rights when his bosses assumed he was supporting a candidate for mayor whom the police chief opposed. Ironically, the police officer had been seen carrying a yard sign for the candidate, but he was actually picking it up for his bedridden mother and did not support the candidate himself. The Supreme Court found that the employer's motive was what was relevant rather than the employee's actual activity.

Beyond public employers needing to ensure that employees are allowed to exercise their freedom of speech rights, private employers also should not be taking action against employees based on their political views. Many states, including Missouri, recognize a public policy exception to the at-will employment doctrine of employment which precludes an employer from terminating an employee for refusing to violate the law or any well-established or clear mandate of public policy as expressed in the constitution, statutes, regulations or rules created by a governmental body. While Missouri has not directly applied the public policy exception to the at-will doctrine in the context of the First Amendment, such protection has been recognized by other jurisdictions and would likely be recognized in Missouri too. Thus, employers need to be talking about how political conversations will be handled in their businesses because it is not a matter if they will occur in this election year, but when.

D. Sex

While the Equal Employment Opportunity Commission (EEOC) in internal determinations had ruled that discrimination based on transgender status was sex discrimination in violation of Title VII in 2012, the EEOC had not filed litigation in court against any employer for engaging in such discrimination until this year. On June 23, 2016, Pallet Cos., doing business as IFCO Systems, entered into a consent decree with the EEOC providing that the company would hire a subject expert on sexual orientation, gender identity and transgender training to develop a training module on sexual orientation and sexual identity issues in the workplace. EEOC v. IFCO Systems, Case No. 1:16-cv-00595-RDB (U.S. Dist. Ct. MD 2016). In addition, a number of federal district courts now have recognized protection against discrimination based on sexual orientation and soon this issue will be before federal appellate courts.

Beyond recognizing the stance of the EEOC related to protection under Title VII against discrimination based on sexual orientation, employers should recognize that contrary state law on this topic is not a defense to discrimination under Title VII. 42 U.S. C. Section 2006e-7. Thus, even though Missouri's only state court decision on the issue of protection against discrimination based on sexual orientation found that there is no protection under the plain language of the Missouri Human Rights Act, federal law still requires Missouri employers with 15 or more employees to protect against discrimination based on sexual orientation. Pittman v. Cook Paper Recycling Corp., 478 S.W.2d 479 (Mo.App. W.D. 2015). Thus, employers need to be creating policies and discussing trainings to protect against discrimination based on sexual orientation.

E. Bathrooms


Finally, employers need to be talking about the restroom in the employment context to ensure that they are prepared to lawfully address the issue of transgender workers. OSHA has issued guidance for restroom access for transgender workers setting out that such employees should be allowed to use facilities that correspond with their gender identity. OSHA recognizes that the best policies include either allowing a person who identifies as a man to use the men's restroom, single-occupancy gender-neutral (unisex) facilities and/or multiple-occupant, gender neutral restroom facilities with lockable single occupant stalls.

Similarly, the EEOC held in an internal appeal in 2015 that denying an employee equal access to a common restroom corresponding to the employee's gender identity is sex discrimination. Lusardi v. Dep't of the Army, EEOC Appeal No. 0120133395, 2015 WL 1607756 (Mar. 27, 2015). The EEOC further noted that the employer could not condition the right to use a restroom corresponding to the employee's gender identity based on proof of surgery or any other medical procedure, and the employer could not avoid the requirement to provide equal access to a common restroom by restricting a transgender employee to a single-user restroom instead (though the employer can make a single-user restroom available to all employees who might choose to use it). Based on the above EEOC decision and OSHA guidance, employers need to be talking about their workplace bathrooms like never before. While civility and polite conversations should still be the goal for workplace discussions, employers need to be tearing down the stereotypes about what topics are acceptable for the work environment and being proactive in discussing the topics of secrets, drugs, politics, sex and the bathroom to ensure that their businesses are in compliance with the law.

What should I bring?

By Steve Newman

I assist individuals and couples with estate planning. In that context, an individual will call to schedule an initial meeting with me. During that call, the individual will often ask the following question: What should I bring? In other words, what information do I as an attorney expect the prospective client to bring for our first meeting together?

Having done estate planning for over 35 years, I hold fond memories of, and appreciation for, the individual or couple who answers that question well. I simply refer to them as a model client.

The model client will bring the following information to our first meeting:

1. Family information. The full names and dates of birth of children and grandchildren, if any, are helpful.

2. Trusted helpers. The model client knows who to appoint or designate as a trusted helper or fiduciary. Who should act as the personal representative under a will, an agent under a durable power of attorney (financial and health care), trustee under a trust, and a guardian and conservator for minor children? Who should be the successor person if the initially appointed person cannot serve?

3. Goals. What should the planning accomplish?

4. Assets. The model client usually knows his, her or their net worth financially and provides a written summary of their assets showing type, value and ownership.

5. Current estate planning documents. The model client brings current estate planning documents, if any.

The information shared by the model client makes for a productive first meeting. The information allows me as a professional to make a recommendation for the model client's consideration. The above information shared by the model client answers well the question what should I bring?

Water Quality Trading

Recently Introduced Legislation and MDNR Workgroup

By Robert J. Brundage

Recently introduced legislation seeks to establish a voluntary water quality trading program in Missouri. Representative Bart Korman introduced House Bill 2490, which proposes developing a market-based approach to complying with federal water quality regulations. The trading program would allow point and non-point sources, including agricultural operations, to meet regulatory requirements by exchanging credits among themselves. For more information on H.B. 2490, click here.

The Missouri Department of Natural Resources has organized a workgroup dedicated to designing a framework for a water quality trading program in Missouri. From the best way to set up a market structure to enforcement recommendations, the group meets monthly to discuss how to make the program viable. At the January meeting, the Nutrient Tracking Tool was introduced as a way to make trading more economically viable. Specifically, this technology would allow trading without the need to measure practice results at the edge of each field.

Water quality trading programs can be beneficial to municipalities and industrial dischargers that may not be able to comply with water quality limits and cannot economically support improvements to their wastewater treatment facilities. A trading program can be a more cost-effective and flexible way to protect water quality in Missouri.

The MDNR's next water quality trading workgroup meeting is on February 26, 2016 at 10 a.m. in the Lewis and Clark State Office Building in Jefferson City. For more information on the workgroup, including notes from previous meetings, click here.