The Employer's Legal Resource - October 2010

We have written many times before about Oklahoma's Standards for Workplace Drug and Alcohol Testing Act and about the courts' strict adherence to that law. We have reminded (almost pleaded) with you to ensure your policies comply with the law and your testing procedures are spotless. Well, here we go again.

Ms. Creekmore applied for a job with Pomeroy IT Solutions. Pomeroy was staffing a team of IT employees to perform technology services for McKesson Corporation. As part of the agreement between McKesson and Pomeroy, McKesson required that Pomeroy conduct pre-employment drug testing on any person who would perform services at McKesson.

Pomeroy sent Ms. Creekmore for testing. Ms. Creekmore tested positive for Phenobarbital and, for that reason, Pomeroy did not hire her for the McKesson project.

Ms. Creekmore sued, claiming that Phenobarbital is not a substance for which an applicant or employee can be tested under Oklahoma law. According to the court, she is correct.

The law outlines very specific drugs for which testing may occur:

• Amphetamines, cannabinoids, cocaine, phencyclidine (PCP), hallucinogens, methaqualone, opiates, barbiturates, benzodiazepines, synthetic narcotics, designer drugs, or a metabolite of any of the substances, plus those listed by the Oklahoma State Department of Health regulations

• Those regulations state that the drugs for which testing may occur include any drug or class of drugs or their metabolites included in Schedule I, II, or III of the Controlled Substances Act, 21 U.S.C. § 801.

On September 16, the Court held it was illegal to test Ms. Creekmore for Phenobarbital because it is a Schedule IV substance.

Pomeroy argued that it was just doing what McKesson required and that it had used a licensed laboratory. In other words, Pomeroy argued it wasn't intentionally trying to do anything wrong and should not be held liable. The Court was not impressed.

In holding Pomeroy liable for violating the law, it noted the following:

[Pomeroy] argues that a third party, McKesson, required it to conduct testing for all barbiturates and it relied on a licensed testing facility to conduct the testing properly. Although a violation of the Testing Act occurred, [Pomeroy] argues that it did not know the law and was unaware that terminat[ing Creekmore's] employment for a positive test for a Schedule IV substance violated the Testing Act. . . . However, ignorance of the law is not a defense to a violation of the Testing Act, and [Pomeroy] may not shift the blame to third parties in an attempt to escape civil liability for unlawfully terminating plaintiff's employment.

Before you consider implementing drug and alcohol testing of Oklahoma employees (not covered by the Department of Transportation regulations), be sure you are familiar, and strictly comply, with all aspects of the Standards for Workplace Drug and Alcohol Testing Act.

Final note. If you are testing non-DOT-covered employees in other states, you must be sure to comply with that state's laws, and don't forget to check any applicable collective bargaining agreements.

By Kristen L. Brightmire, kbrightmire@dsda.com

The Oklahoma Court of Civil Appeals recently discussed Oklahoma law as to whether customer names should be treated as trade secrets. Chilcutt Direct Marketing, Inc. v. A. Carroll Corporation. 2010 OK CIV APP 58.

James D. Hall, Jr., worked for Chilcutt Direct Marketing, Inc. (CDM). Upon the termination of his employment with CDM, Hall was allowed to keep his address book based upon his assurance that he would only use the book to stay in contact with his friends. When he went into direct competition with CDM five days later with the assistance of the customer list, CDM sued for damages and injunctive relief. The jury ultimately awarded damages to CDM specifically finding that Hall had misappropriated a trade secret and was liable for deceit. The remaining issue presented to the trial judge was whether injunctive relief should also be awarded. The trial judge denied injunctive relief and CDM appealed.

In discussing whether Hall had taken a trade secret, the appellate court cited previous Oklahoma Supreme Court decisions stating that, in the absence of an express prohibitory agreement to the contrary, names and addresses of customers that are remembered or easily ascertainable will not be treated as trade secrets. However, a list of customers built up through years of effort in the course of business constitutes an important asset of the business and will be treated as a trade secret. Any employee who departs and takes such a list, through confidence placed in him or surreptitiously, may be enjoined from using it. In the Chilcutt case, the court ultimately declined to enter injunctive relief, but only because Hall and his new employer satisfied the court that they had returned the customer list and purged the list from their phones and computers. The court decided that further injunctive relief was unnecessary.

From the employer's standpoint, the lesson to be taken from this case is that customer lists, if they are to be treated as trade secrets, should be well-protected and maintained confidentially. Employees should be expressly prohibited from taking any such lists with them upon termination of their employment. Even then, names and addresses well known to the departing employees may not be protected.

By Lewis N. Carter lcarter@dsda.com

The Department of Labor recently announced a partnership between The Occupational Safety and Health Administration and Department of Transportation to combat distracted driving on the job. Noting that motor vehicle crashes are a leading cause of worker fatalities, the DOL stated it is imperative that employers eliminate financial and other incentives that encourage workers to text while driving.

Accordingly, OSHA is calling upon all employers to prohibit any work policy or practice that requires or encourages workers to text while driving. As an enforcement mechanism, OSHA has stated they will issue citations and penalties to employers that require or encourage texting while driving. If you are facing an OSHA investigation, you should seek competent legal counsel. For more information on these initiatives, click here.

By Kenneth T. Short, kshort@dsda.com

Open enrollment is an excellent time to remind your employees to update their beneficiary designations on their employee benefit plans-401(k), life insurance, FSA/Medical accounts, whatever you have that may distribute money at an employee's death.

Here's a suggested note:

Are your [401(k), life insurance, etc.] beneficiary designations up to date? What is on file determines who gets the money, if you should pass away. It is surprising how often these are out of date, resulting in unintended consequences. Ex-spouses still listed, family members unintentionally omitted (or now deceased), no contingent beneficiaries listed and the primary beneficiary is deceased, etc. Please take a moment to ensure that your beneficiary designation forms are as you intend them.

For many employees, these plans may provide the majority of their estate, and the money may wind up going to the wrong person or even be available to creditors to satisfy credit card debts, medical bills and other claims, instead of directly to family or friends, as the employee decides.

Having proper beneficiary designations also helps employers. It allows employers to know how to pay out certain benefits, as opposed to waiting for the family to file a probate action with the courts.

By Harry V. Rouse, hrouse@dsda.com

Tax Alert

OVERVIEW OF THE TAX PROVISIONS IN THE 2010 SMALL BUSINESS JOBS ACT

The recently enacted 2010 Small Business Jobs Act includes a wide-ranging assortment of tax breaks and incentives for small business, paid for with various revenue raisers. Here's a brief overview of the tax changes in the new law.

Tax breaks and incentives

Enhanced small business expensing (Section 179 expensing). In order to help small businesses quickly recover the cost of certain capital expenses, small business taxpayers can elect to write off the cost of these expenses in the year of acquisition in lieu of recovering these costs over time through depreciation. Under pre-2010 Small Business Jobs Act law, taxpayers could expense up to $250,000 of qualifying property-generally, machinery, equipment and certain software-placed in service in tax years beginning in 2010. This annual expensing limit was reduced (but not below zero) by the amount by which the cost of qualifying property placed in service in tax years beginning in 2010 exceeded $800,000 (the investment ceiling). Under the new law, for tax years beginning in 2010 and 2011, the $250,000 limit is increased to $500,000 and the investment ceiling to $2,000,000.

The new law also makes certain real property eligible for expensing. For property placed in service in any tax year beginning in 2010 or 2011, the up-to-$500,000 of property expensed can include up to $250,000 of qualified real property (qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property). READ THE FULL OVERVIEW.

By Jeffrey C. Rambach, jrambach@dsda.com

BEST LAW FIRM RANKINGS

Best Lawyers® has partnered with U.S. News & World Report, the leading rankings publication in the U.S., to establish the U.S. News - Best Lawyers "Best Law Firm" rankings was released in print and online September 15.

The results, ranking 8,782 firms across the United States, will be featured in U.S. News & World Report, reaching 10 million readers; in a stand-alone publication, reaching 30,000 general counsel in the U.S. and 55,000 leading private practice lawyers around the world; and on the U.S. News website, which receives seven million unique visitors a month.

To view Doerner Saunders' rankings, click here.

JOURNAL TO PUBLISH ARTICLE ON PHYSICIAN-OWNED HOSPITALS BY ELISE DUNTIZ BRENNAN AND HILARY L. VELANDIA

The Journal of Health and Life Sciences Law's October 2010 issue will include an article written by Elise Dunitz Brennan and Hilary L. Velandia entitled Do the PPACA Amendments to the Stark Whole Hospital Exception Mean the Evolution of a Two-Tier System?. The article discusses the Patient Protection and Affordable Care Act's affect on the ability of physician to invest in hospitals and areas of uncertainty for physician-owned hospitals that are currently under development. Readers may obtain copies of the article by clicking here.

TULSA DAILY COMMERCE & LEGAL NEWS INTERVIEWS DSDA ATTORNEY

Jeffrey C. Rambach was interviewed regarding tax hikes that will go into effect January 1, 2011, in the September 28 edition of the Tulsa Daily Commerce & Legal News. If the Bush tax cuts are allowed to expire that means higher tax rates for everyone. A tax table featured on the front page compares the 2010 tax rates to the proposed Obama rates.

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