Psychologist William Frederick Book wrote a person should learn to adjust to the conditions they have to endure, but also try to prepare for and control those conditions so that they are as favorable as possible. The same is true in business. The legal landscape for businesses in Missouri is constantly changing, and most of those changes are beyond a company’s control. Businesses can, however, adapt to the realities of that landscape by making relatively small changes in the way they plan for and respond to contingencies. In the last year, there have been a number of court rulings that could affect Missouri businesses.
In 2005, the Missouri legislature put into effect a cap on punitive damages, which essentially punish a defendant for bad behavior. That legislation limited the amount of punitive damages recovered.
In September, however, the Missouri Supreme Court struck down the cap on punitive damages as violating the Missouri Constitution.
This change raises the risk a business could be liable for substantial damages outside the scope of its insurance policies, even when the business might not know to prepare for such an outcome because the damage claimed by a plaintiff is comparatively low. For example, earlier this year, a Missouri jury awarded a St. Louis police officer $7.5 million on her claim she was retaliated against for making complaints that she was being evaluated differently than her male colleagues. Interestingly, prior to trial, the plaintiff only had demanded approximately $100,000. Undoubtedly, the business was not prepared for this ruling.
In too many instances, business owners will receive a demand from a former employee or an injured patron and, because the demand is within its insurance policy limits, simply turn the matter over to its insurance company without maintaining an active role in the litigation or employing separate counsel to oversee the litigation.
The landscape for avoiding the risk of litigation is changing as well.
In August, the Missouri Supreme Court refused to enforce an agreement that an employer and employee would arbitrate, instead of litigate, disputes arising from the employment relationship. The court determined there were technical defects in the arbitration agreement used by the employer – a Sedalia-based operator of residential health care facilities – which could likely have been avoided by relatively minor changes to the agreement.
Assuming legal advice you received a few years ago remains accurate is a dangerous proposition in business.
For example, earlier this year, the Missouri Supreme Court decided it made a mistake nearly three decades ago. Since 1984, it has been Missouri law that in order for an employee to recover damages against an employer when they feel they have been retaliated against for claiming workers’ compensation benefits, the employee must show that exercising their rights under the workers’ compensation statute was “the exclusive cause” of whatever negative treatment they allege.
In May, the court determined its prior decision was wrong and an employee need only show exercising workers’ compensation benefits was “a contributing factor” in the negative treatment. This change means businesses must make a concerted effort to ensure, and document, any negative treatment, including changes in job duties, hours worked or pay, are completely uninfluenced by an employee’s prior or pending claim for workers’ compensation.
Derek Ankrom is an attorney in the Springfield office of Spencer Fane Britt & Browne LLP. He can be reached at dankrom@spencerfane.com. Spencer Fane attorney Jason Smith contributed to this article. He can be reached at jcsmith@spencerfane.com.[[In-content Ad]]
