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Archive for May, 2012

Pietrangelo Cook attorney suggests careful contract drafting for homebuilders

Wednesday, May 23rd, 2012

Pietrangelo Cook attorneys talked with a group of Memphis-area home builders Tuesday about the risks inherent in many home construction contracts.  In particular, we explained how a recent Tennessee Supreme Court decision creates broader legal exposure for general contractors and suggested ways they might mitigate their risk when negotiating with homeowners.

The event was a contract law seminar organized by and for members of the Memphis Area Home Builders Association (MAHBA).

The recent decision, Federal Insurance Company v. Winters, 354 S.W.3d 287 (Tenn. Oct. 2011), has garnered much attention for its holding, that general contractors cannot delegate their “duty to perform work carefully, skillfully, diligently and in a workmanlike manner” to subcontractors.  It means owners are not limited in their recourse to negligent subcontractors, and can now go after their general contractors too, even if the general played no role in causing the damage.

PC attorneys suggested homebuilders compose their contracts with a mind toward the Federal Insurance case and offered drafting suggestions that may limit some of that exposure.  We also shared lessons from a recent victory in a dispute between a prominent local builder and a wealthy homeowner.

In that case, the owner stopped all payment to the builder mid-project unless the builder agreed to change the standards of construction and finish the job under the supervision of a commercial architect.  The dispute went to arbitration and the builder prevailed.

We shared the disputed contract provisions and explained how more careful drafting might have better served to deflate the dispute before informal resolution between the parties became impossible.


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Tenn. Governor signs broader unemployment eligibility rules into law

Thursday, May 10th, 2012

by Darrell Phillips, Attorney

On May 9, 2012, Tennessee Governor Bill Haslam signed into law the “Unemployment Insurance Accountability Act of 2012” which, among other things, broadens the definition of work-related misconduct and creates greater hurdles for claimants seeking to receive unemployment benefits.  Specifically, it increases the definition of misconduct to include absenteeism, it heightens work search requirements for those utilizing unemployment benefits, it limits benefit eligibility for claimants who are incarcerated, and it ensures claimants cannot receive both severance packages and draw unemployment support at the same time.

Effective immediately, “misconduct” includes, but is not limited to:
1.  Conscious disregard of the rights or interests of the employer;
2.  Deliberate violations or disregard of reasonable standards of behavior that the employer expects of an employee;
3.  Carelessness or negligence of such a degree or recurrence to show an intentional or substantial disregard of the employer’s interest or to manifest equal culpability, wrongful intent or shows an intentional and substantial disregard of the employer’s interests or of the employee’s duties and obligations to the employee’s employer.
4.  Deliberate disregard of a written attendance policy and the discharge is in compliance with such policy;
5.  A knowing violation of a regulation of this state by an employee of an employer licensed by this state, which violation would cause the employer to be sanctioned or have the employer’s license revoked or suspended by this state; or
6.  A violation of an employer’s rule, unless the claimant can demonstrate that:

a.  The claimant did not know, and could not reasonably know, of the rule’s requirements; or
b.  The rule is unlawful or not reasonably related to the job environment and performance.

The new law disqualifies any claimant from receiving unemployment benefits:

1.  For any week with respect to which the claimant is receiving, or has received, remuneration in the form of wages in lieu of notice. “Wages in lieu of notice” means wages paid where the employer, not having given an advance notice of separation to the employee makes a payment to the employee equivalent to the wages the employee could have earned had the employee been permitted to work during the period of notice;
2.  If the claimant received a severance package from an employer that includes an equivalent amount of salary the employee would have received if the employee was working during that week;
3.  If the claimant was discharged from the claimant’s most recent work through a layoff by the employer and the employer has offered the claimant the same job the claimant had prior to the layoff or a similar job with an equivalent level of compensation that the claimant had prior to the layoff; or
4.  If the claimant has an offer of work withdrawn by an employer due to the claimant’s refusal to submit to a drug test or the claimant’s positive result from a drug test.

Claimants who are incarcerated for four or more days in any week for which they are claiming benefits are no longer eligible.

Beginning September 1, 2012, unemployment claimants must make “reasonable efforts to secure work”, which will require them to provide detailed information regarding contact with at least three employers per week or to access services at a career center created by the Tennessee Department of Labor and Workforce Development.  Claimants who provide false “work search” information for at least eight benefit weeks will be disqualified.

Read the entire bill summary here.

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Tennessee High Court adopts new test for workers compensation defense

Tuesday, May 8th, 2012

by Darrell Phillips, Attorney

The Tennessee Supreme Court today filed its opinion in Troy Mitchell v. Fayetteville Public Utilities, No. M2011-00410-SC-R3-WC (Tenn. filed May 8, 2012), adopting  a four-part test for the employer defense of willful misconduct and willful failure or refusal to use a safety appliance in workers’ compensation claims.  A typical example of this defense arises when an employee fails to follow a company procedure and suffers an on-the-job injury as a result.  By arguing that the employee willfully failed to follow a safety procedure,  or suffered the injury because of that employee’s own misconduct, an employer may avoid its obligation to pay worker’s compensation benefits.

The four-part test adopted today requires that an employer prove: 1) the employee’s actual, as opposed to constructive, notice of the employer’s rule or procedure; 2) the employee’s understanding of the danger involved in violating the rule or procedure; 3) the employer’s bona fide enforcement of the rule; and 4) the employee’s lack of a valid excuse for violating the rule.

In Mitchell, a lineman for Fayetteville Public Utilities, had taken off his protective gloves to attach a lightning arrestor, when a copper ground wire he was holding touched a transformer on the pole.  He received a shock of approximately 7,200 volts and suffered serious injury to his hands.  At trial, the employee admitted that he knew about the company policy requiring use of the gloves, understood the rationale, and appreciated the danger in taking them off.  His explanation however, that he was saving time or found it easier to staple the lightning arrestor without the gloves, was not valid or plausible, according to the Tennessee Supreme Court.  The Court stated that, “convenience to the Employee does not qualify as a valid excuse.”   The Court therefore reversed the trial court and denied the employee benefits.

Click here to read the opinion.

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