7/23/2015

Around the Nation: July 2015

State news and updates from CLM chapters, reps, and committees.

By Bevrlee J. Lips

CALIFORNIA: Employers Required to Provide Sick Pay

An amendment to California Labor Code Section 2810.5 requires employers to provide paid sick leave for full-time and part-time employees who have worked more than 30 days during a one-year period. The amount of paid sick leave days and the rate of sick leave pay depend upon the number of hours worked by the employee and the rate of pay prior to taking sick leave. Employees may begin taking paid sick leave as of July 1, 2015. Employers are now required to document accrued and used paid sick leave on employee pay stubs and must have all new hires sign a form acknowledging their paid sick leave rights. Employers also must display a poster in a conspicuous place within their premises advising employees of their paid sick leave rights.—From Orange County Chapter Member Robert A. von Esch 

COLORADO: UM/UIM Benefits Paid on a Piecemeal Basis

The Colorado Court of Appeals decision in Fisher v. State Farm raises a host of questions about the handling of uninsured motorist/underinsured motorist cases. When does a claim for UM/UIM benefits accrue if the obligation to handle the claim on a piecemeal basis begins on the date of the accident? To whom is the carrier obligated to pay benefits, in what order, and in what time frame? How can a claim be adjusted on a piecemeal basis if there is a dispute regarding liability? If a claimant settles a liability claim, how should the settlement be applied to the UM/UIM evaluation (i.e., to economic or noneconomic damages)? Who makes that determination? To make matters worse, the Fisher court ruled that the Division of Insurance regulations “have no application” to a determination of whether an insurance carrier’s handling of a claim was reasonable. This is contrary to the Colorado Supreme Court ruling in American Family Mut. Ins. Co. v. Allen, which held that administrative regulations “may be used as valid…evidence of industry standards.” It is anticipated that the Fisher decision will be appealed.—From CLM Member Heather Salg

ILLINOIS: Adequate Consideration for Noncompetes in Question

What is adequate consideration for noncompetes to be valid? The Illinois Appellate Court decision in Fifield v. Premier Dealer Services Inc. held that employment of less than two years was insufficient consideration to enforce noncompete agreements. Yet the court did not provide instruction about exactly what constitutes adequate consideration. Since Fifield, courts in Illinois have struggled to determine whether Fifield mandates a bright-line two-year rule. In the last year alone, the U.S. District Court for the Northern District of Illinois applied a fact-specific approach in one case and the more rigid two-year rule in another. Thus, questions about what constitutes adequate consideration remain.—From CLM Member Stephanie Jones

OREGON: Big Changes for UM and PIP Coverage

The Oregon Legislature recently passed SB 411, which will affect auto insurers in the state. SB 411 makes many changes, but the most notable include expansion of uninsured motorist (UM) insurance by allowing stacking of coverage, increasing the coverage period for personal injury protection (PIP) medical expenses to two years, and limiting PIP reimbursement. The law becomes effective for policies issued or renewed beginning Jan. 1, 2016.—From CLM Member Jack Levy

TENNESSEE: Family Purpose, Negligent Entrustment, and Statutory Agency Liability Rejected

In Daniels v. Huffaker, the co-defendant was staying at her brother-in-law’s home and had a wreck while using his truck. The Court of Appeals affirmed a grant of summary judgment for the brother-in-law, noting the statutory prima facie evidence of agency does not create a presumption or proof of liability. The statute also creates prima facie evidence that the vehicle was being used within the scope of employment. However, there was no employment relationship in this case. “Permissive use…establishes only a bailment. In and of itself, it is not a basis for the imposition of personal liability upon the owner[.]” The court also found the family purpose doctrine inapplicable, citing that “the true test is whether the driver was engaged in the owner’s business at the time of the accident…meaning the furnishing of pleasure to the owner’s family.” The court also found negligent entrustment inapplicable. Huffaker had no driver’s license and had some prior offenses. However, this failed to establish negligent entrustment on two grounds: (1) the owner did not know and (2) the mere fact of not having a driver’s license cannot establish negligent entrustment.—From CLM Member Jimmy Wright

VIRGINIA: Business or Personal Affairs

In Bartolomucci v. Federal Insurance Company, the Virginia Supreme Court interpreted language for several auto insurance policy provisions related to a personal injury claim. The issue dealt with whether the policy purchased by a law firm provided excess coverage for a partner admittedly at fault in an accident while driving to work from his home office. First, the court found that the excess coverage provision did not independently provide coverage because it only applies if the non-owned vehicle is a covered auto. The second issue was whether the vehicle was “used in connection with the named Insured’s business or personal affairs,” which would have made it a covered auto. The partner argued that the language was ambiguous noting that the reference to “personal affairs” does not make sense as it relates to a legal entity. The court rejected the argument noting that “the ordinary meaning of ‘business affairs’ refers to income-producing activities and ‘personal affairs’ refer to the nonincome-producing activities that benefit the business.” The final issue was whether commuting to work rose to the level of using a vehicle in the business or personal affairs of the law firm. The court reasoned that the partner failed to establish this despite testifying that he “habitually thought about work-related issues” during his commute.—From Potomac Region Chapter President Robert E. Rider Jr.



Bevrlee J. Lips was managing editor of Claims Management magazine (now CLM Magazine) from January 2012 until March 2017.

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