*By Patrick J. Hoban
The National Labor Relations Board (“NLRB”) has postponed the effective date for its new employee rights notice posters rule until January 31, 2012. Previously, most private sector employers were required to post the notice as of November 14, 2011.
The NLRB delayed the effective date after
receiving inquiries from business and trade organizations asking
whether they fell under the Board’s jurisdiction and needed to comply
with the notice requirements. The delay in implementation is designed
to allow employers time to determine if the new rule applies to them
and ensure broad, voluntary compliance with its requirements.
Importantly, this delay will not affect the rule’s very specific form and content requirements for the poster.
Therefore, most private sector employers will still be required to post the 11-by-17 inch notice available through download at www.nlrb.gov/poster or from a regional NLRB office. To ensure compliance, employers must
obtain and post the NLRB poster at all its work locations in the same manner that it posts other required employment posters before January 31, 2012.
*Patrick J. Hoban, an OSBA Certified Specialist in Labor and Employment Law, appears before the National Labor Relations Board and practices in all areas of labor relations. For more information about the new posting rule, its applicability to your business, or the NLRB, please contact Pat (pjh@zrlaw.com) at 216.696.4441.
Thursday, October 6, 2011
Wednesday, October 5, 2011
Buying or Selling a Business in Ohio? Be Careful to Consider the Impact of Ohio Workers’ Compensation Experience Issues
*By Scott Coghlan
The Franklin County Court of Appeals recently released its decision in State of Ohio ex rel. The K&D Group, Inc. v. Marsha Ryan, Administrator, Ohio Bureau of Workers’ Compensation, 2011-Ohio-5051 (“K&D Group”) upholding the Ohio Bureau of Workers’ Compensation’s (“BWC”) determination that K&D Group, Inc., a property management company, was the successor-in-interest to another property management company despite the fact that neither management company was a party to the sale of the apartment complex at issue.
This decision illustrates the need to include consideration of workers’ compensation transfer of liability issues as part of your due diligence checklist when purchasing, leasing or acquiring business interests or entering into management contracts related to such business interests.
Chapter 4123-17-2 of the Ohio Administrative Code permits the BWC to transfer the workers’ compensation experience rating and liabilities of a predecessor company to the “successor-in-interest.” In practical terms this means that the purchaser is liable to the BWC for all of the seller’s unpaid workers’ compensation premiums and it inherits the seller’s workers’ compensation experience rating. This often leads to higher than expected workers’ compensation premiums.
The K&D Group Court clearly articulated that the BWC can transfer liabilities and experience ratings between entities that are not in privity of contract with one another. At issue in K&D Group was an apartment complex that was operated by a professional management company hired by the owner. The apartment complex was sold by its owner to K&D Enterprises. K&D Enterprises, using several holding companies, eventually caused K&D Group to become the new property management company for the apartments.
Following an audit, the BWC found that K&D Group was a partial successor-in-interest to the prior management company despite the fact that neither management company was involved in the sale of the apartment complex. As a result, it transferred a portion of Mid-America’s experience rating to K&D Group, including a significant workers’ compensation claim that negatively impacted the transferred experience rating.
K&D Group protested the transfer. However, the BWC Adjudicating Committee and the Administrator’s Designee (which are the statutorily assigned entities to which premium rate making appeals are filed) upheld the BWC’s finding of successorship. The matter then was appealed to the Franklin County Court of Appeals.
The Court of Appeals upheld the BWC’s finding of successorship as well. The Court noted that OAC 4123-17-2 does not require an alleged successor to actually acquire something in order to be deemed a successor. Thus, the fact that K&D Group did not purchase the apartment complex or have a contract with the prior management company was irrelevant. The Court found that K&D Group was affiliated with K&D Enterprises (the purchaser of the apartments) despite the use of several holding companies to distance one from the other. It then focused on the management operations of the apartment complex before and after the sale. After stripping away the layers of holding companies employed to complete the assignment of the property management duties to K&D Group, the Court noted that the day-to-day operations of the apartment complex were unchanged before and after the sale; that K&D Group assumed all of the tenants’ prior leases; that it retained many of the prior management company’s former employees and the employees operated under the same manual job classification numbers. As a result, K&D Group was saddled with the prior management company’s workers’ compensation experience rating.
Management contracts are becoming commonplace, particularly in the healthcare industry. This decision reinforces the need to consider the successor-in-interest rules imposed by the BWC and the need to review workers’ compensation experience ratings as part of your due diligence in negotiating the sale, lease or assignment of business entities and contracts.
If you have any questions regarding the K&D Group decision or how to recognize, manage and reduce the impact that successor-in-interest issues may have on your business transactions, please contact us.
*Scott Coghlan, the chair of the firm’s Workers’ Compensation Group, has extensive experience in all aspects of workers’ compensation law and work safety and health matters. For more information, please contact Scott sc@zrlaw.com at 216.696.4441.
The Franklin County Court of Appeals recently released its decision in State of Ohio ex rel. The K&D Group, Inc. v. Marsha Ryan, Administrator, Ohio Bureau of Workers’ Compensation, 2011-Ohio-5051 (“K&D Group”) upholding the Ohio Bureau of Workers’ Compensation’s (“BWC”) determination that K&D Group, Inc., a property management company, was the successor-in-interest to another property management company despite the fact that neither management company was a party to the sale of the apartment complex at issue.
This decision illustrates the need to include consideration of workers’ compensation transfer of liability issues as part of your due diligence checklist when purchasing, leasing or acquiring business interests or entering into management contracts related to such business interests.
Chapter 4123-17-2 of the Ohio Administrative Code permits the BWC to transfer the workers’ compensation experience rating and liabilities of a predecessor company to the “successor-in-interest.” In practical terms this means that the purchaser is liable to the BWC for all of the seller’s unpaid workers’ compensation premiums and it inherits the seller’s workers’ compensation experience rating. This often leads to higher than expected workers’ compensation premiums.
The K&D Group Court clearly articulated that the BWC can transfer liabilities and experience ratings between entities that are not in privity of contract with one another. At issue in K&D Group was an apartment complex that was operated by a professional management company hired by the owner. The apartment complex was sold by its owner to K&D Enterprises. K&D Enterprises, using several holding companies, eventually caused K&D Group to become the new property management company for the apartments.
Following an audit, the BWC found that K&D Group was a partial successor-in-interest to the prior management company despite the fact that neither management company was involved in the sale of the apartment complex. As a result, it transferred a portion of Mid-America’s experience rating to K&D Group, including a significant workers’ compensation claim that negatively impacted the transferred experience rating.
K&D Group protested the transfer. However, the BWC Adjudicating Committee and the Administrator’s Designee (which are the statutorily assigned entities to which premium rate making appeals are filed) upheld the BWC’s finding of successorship. The matter then was appealed to the Franklin County Court of Appeals.
The Court of Appeals upheld the BWC’s finding of successorship as well. The Court noted that OAC 4123-17-2 does not require an alleged successor to actually acquire something in order to be deemed a successor. Thus, the fact that K&D Group did not purchase the apartment complex or have a contract with the prior management company was irrelevant. The Court found that K&D Group was affiliated with K&D Enterprises (the purchaser of the apartments) despite the use of several holding companies to distance one from the other. It then focused on the management operations of the apartment complex before and after the sale. After stripping away the layers of holding companies employed to complete the assignment of the property management duties to K&D Group, the Court noted that the day-to-day operations of the apartment complex were unchanged before and after the sale; that K&D Group assumed all of the tenants’ prior leases; that it retained many of the prior management company’s former employees and the employees operated under the same manual job classification numbers. As a result, K&D Group was saddled with the prior management company’s workers’ compensation experience rating.
Management contracts are becoming commonplace, particularly in the healthcare industry. This decision reinforces the need to consider the successor-in-interest rules imposed by the BWC and the need to review workers’ compensation experience ratings as part of your due diligence in negotiating the sale, lease or assignment of business entities and contracts.
If you have any questions regarding the K&D Group decision or how to recognize, manage and reduce the impact that successor-in-interest issues may have on your business transactions, please contact us.
*Scott Coghlan, the chair of the firm’s Workers’ Compensation Group, has extensive experience in all aspects of workers’ compensation law and work safety and health matters. For more information, please contact Scott sc@zrlaw.com at 216.696.4441.
Subscribe to:
Posts (Atom)