Lose Those Liability Gaps

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Ross Williamson

Like most of you, the attorneys at the Local Government Law Group started the New Year by making New Year’s resolutions. But, as local government junkies, some of our resolutions can be a little “different”. This year, we skipped the weight loss resolution. Instead, we are resolving to help our clients lose those nasty tort liability gaps created by using outdated contracts.

By now, we all know that caps on tort liability damages for public entities under the Oregon Tort Claims Act (“OTCA”) increase from year to year effective July 1. But many may not know exactly what to do about these annual increases.

For most purposes, the good folks at City County Insurance Services (“CIS”) and the Special Districts Association of Oregon (“SDAO”) have public entities covered for these increases in the OTCA damage caps. CIS and SDAO are well aware of the OTCA damage caps and provide coverage accordingly. However, that does not mean that your government is in the clear.

Does your government use form contracts or recycle previous contracts? One area where form contracts can quickly become obsolete is in listing insurance requirements for contractors. If you are using a contract with a static liability insurance requirement, and one or more July has come and gone, it is likely that your contract is creating gaps in liability protection.

For example: Say you have been using the same contract for several years that requires a particular service vendor to obtain liability insurance in the amount of $500,000 to cover personal injury claims against your public entity. Well, that may have been good in 2010, but today’s OTCA personal injury damage cap is up to $566,000 for a single claimant. These numbers nicely illustrate the possible $66,000 liability gap that using an old contract creates.

In addition, the State of Oregon’s OTCA damage caps are much higher than those of local public entities. The State’s current personal injury damage cap for a single claimant is $1.7 million. But that doesn’t mean anything to us local government entities, right? Wrong. If you contract with the State, and especially if you provide services to or on behalf of the State, you need to be aware of the State’s OTCA liability limits. In certain situations, by doing work for the State, you may be taking on the State’s higher liability cap. Make sure to contact your insurance company, insurance broker, or attorney when you review a contract that has you working closely with the State of Oregon. If you take on the State’s liability limits, you certainly only want to do it with full knowledge.

We hope you will join us in resolving to get rid of those nasty tort liability gaps. And remember, come July 1, those OTCA damage caps will go up again.

The Appropriate Role of Elected Officials for Collective Bargaining

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Diana Moffat

From our Spring 2015 e-newsletter

When local governments (cities, counties, and special districts) are negotiating successor Collective Bargaining Agreements with their unions, it is good to take some time to think about the role of elected officials in the process. Elected official involvement is critical for successful negotiations. But should that involvement extend to the actual physical presence at the bargaining table? The answer is usually no.

First, elected officials make policy decisions which guide your overall bargaining strategy. They establish the parameters for your bargaining team. For example, if the policy direction is to change health insurance benefits and/or increase the employee’s share of the insurance premium, then the bargaining team’s responsibility is to put that on the bargaining table and make every effort to gain voluntary union approval. The bargaining team is tasked with the strategy of how to get this goal accomplished. If there is no agreement, then the team brings that information back to the Council, Commission or Board for an update and any recommendations. If the Board, Commission or Council determines the issue is to be a “line in the sand,” then their bargaining team continues that position, including any dispute settlement process (mediation, strike, interest arbitration). The jurisdiction’s labor lawyer/negotiator meets with the elected officials in executive session to fully and confidentially discuss these parameters, goals and directions.

Secondly, the elected officials also evaluate the effects of your bargaining proposals on service delivery. They look at the “big picture” and are not involved in the exact wording of a contract provision, which may take numerous bargaining sessions to arrive at a mutually-acceptable clause. The responsibility for exact language is your negotiators, who works with the appropriate department heads and the chief administrative officer to protect the jurisdiction’s long-term ability to manage and implement the proposals. No elected official can be expected to have operational expertise in all aspects of the jurisdiction’s services.

Thirdly, union negotiations are an adversarial process dictated by state statute and by nature. Many items can become “zero sum” at the table. If an elected official is present, then the union will always look to him/her for the final answer, no matter what the negotiator may say. This puts unreasonable pressure on the elected official to say yes or no on the spot, without the opportunity to discuss the issue in a larger context with their other elected officials, and outside of the heat of the immediate situation. If an elected official agrees to a particular union proposal while at the bargaining table, he/she is obligated under the law to make an affirmative yes recommendation during formal Council, Commission or Board hearings no matter what the public input or colleague input might be. That may place an elected official in a very awkward position.

Fourthly, collective bargaining can take a huge amount of time. Given the number of hours involved in the budget, land-use, public safety, public works, and other policy decisions, there is usually not time for an elected official to adequately participate as a bargaining team member. This is not to argue that an elected official could never be a team member, only that it is very difficult to do so without negative consequences for the jurisdiction.

Finally, the U.S. Conference of Mayors, the National League of Cities, the National Public Employer Labor Relation’s Association, and their Oregon State affiliates, all recommend that elected officials not be at the bargaining table. The officials need the flexibility to change their position over the course of the negotiations, if necessary, to gain a voluntary agreement. Officials pay the negotiator to say “no,” but, negotiators can also give credit to the elected officials for any voluntary agreements reached with the union. This formula has worked well for most jurisdictions during the history of collective bargaining in the public sector.

Construction project in your future? Remember 1.5% for green energy!

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Ross Williamson

From our Spring 2015 e-newsletter

Is your public entity considering a new building, or the major renovation of an existing building? If so, you need to consider whether state law requires the inclusion of green energy technologies in your building project.

Oregon law requires public entities, including local government entities, to spend 1.5% of the total contract price of a public improvement contract for new construction or major renovation of a public building on green energy technology. This requirement was originally established in 2007, but was amended in both 2012 and 2013. The requirements are found in ORS 279C.527 – 279C.528 and administrative rules adopted by the Oregon Department of Energy.

So what is “green energy?” It is more than just solar panels. Green energy includes solar technologies (photovoltaic, solar hot water, passive solar and day lighting) and certain geothermal systems.

The requirement for adding green energy technology to a building applies to any new public building with construction costs of more than $1,000,000 and any building renovations with construction costs of more than $1,000,000 and 50% of the insured value of the building.

The law also includes reporting requirements. If you have a building project subject to the requirements, you must report the project to the Department of Energy. An electronic form is available on the Department’s website. You will need to make the report before construction of the green energy system begins.

Even if the construction project fits within the dollar values requiring the green technology, there are some exceptions. For example, a public body can consider whether green energy technology would be inappropriate for the building site. But the exceptions come with other requirements that the public entity must follow.

The 2015 Legislature is proposing small “tweaks” to the law, but no wholesale changes. HB 2987 would make some changes to the process used by governments if the government excludes a project from the green energy requirement. HB 3329 would make a change to the geothermal technologies that would qualify as “green energy.” As of this printing, both bills have received hearings, but neither bill has been adopted.

The take-away is this: If you have a construction project that is projected to cost over one million dollars in your future, please make sure you investigate the green energy requirements. These requirements have been in place for several years now, but we have found that many public entities are not familiar with all the requirements. Before you start a new project, you should contact your legal counsel or the Department of Energy to help you understand all the ins and outs of the green energy requirements.

Employment Investigations: When Should We Hire an Outside Investigator?

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Christy K. Monson

From our Spring 2015 e-newsletter

Most employers understand that they have a duty to promptly and fairly investigate employee complaints, especially where discrimination, harassment or retaliation is alleged. However, even sophisticated employers may not have given much thought to when they should hire an outside investigator as compared to handling the investigation themselves. The purpose of this article is to provide you with some factors to consider when deciding whether to use an outside investigator or whether to handle the investigation in house.

Should Our HR Staff Handle this Issue? If you are lucky enough to have an HR staff, you should weigh whether they can or should investigate the particular matter. Many times, if not most, a properly trained HR staff can handle workplace investigations. To determine if your HR staff should handle an investigation, ask yourself the following questions:

  • Do they have experience doing internal investigations?
  • Do they have at least some experience handling the particular type of matter being investigated?
  • Have you provided them with access to your legal counsel so they can get good advice regarding the investigation?
  • Have they been trained in investigation techniques and process?
  • What is their present workload?
  • Does the particular situation require specialized knowledge of certain employment laws or other laws?
  • Does your HR staff have the necessary personal characteristics to neutrally and dispassionately investigate?
  • Does your HR staff have any conflicts of interest or bias regarding this particular situation?
  • Does the particular situation place your HR staff in the awkward position of investigating a superior?
  • Is there any other reason to believe that your existing HR staff may be biased or unable to fairly investigate the matter?
  • Are Other State or Federal Agencies Involved?

Another factor employers should consider is whether other levels of government are involved in the particular matter. For example, some employment complaints also involve federal or state government agencies such as the Equal Employment Opportunities Commission, the Department of Labor, Oregon’s Bureau of Labor and Industry, or Ethics Commission. If other government agencies are involved, you may want to consider using an outside investigator with experience handling similar allegations and a working knowledge of the agencies’ processes. It’s often beneficial if such investigators are also employment lawyers.

Is Litigation Likely to Occur? Is there already a tort claim notice filed or a lawsuit in progress regarding the matter? If there is, you should consult with the attorney handling the lawsuit and with your insurance counsel to determine the best way to proceed. Often insurance counsel or an outside attorney will recommend another outside investigator to alleviate the risk of a retaliation lawsuit. If complaining employees have already hired a lawyer, you may also want to consider using an outside attorney/investigator. (When selecting outside attorney/investigators, keep in mind that an investigator may be called to serve as a witness at a trial, so should not be closely involved in your employment decisions.)

What types of complaints have been made? If more than one employee complains about the same serious problem or about systematic institutional problems, you may want to consider an outside investigator. However, it is important to evaluate the nature of the complaints. Are the employees merely complaining about a particular staff member’s work habits or supervisory skills or about illegal discrimination or retaliation? Are they complaining about ingrained institutionalized problems (such as racism or sexism) throughout all levels of your government? If the complaints are merely about an individual’s work habits or office communication breakdowns, the situation may be better handled by your HR staff. If they pertain to individual acts of discrimination, longstanding institutional discrimination, or other serious matters, an outside investigator may be warranted.

Who Is Alleged to Have Committed Misconduct? Governments often hire an outside investigator if the allegations are against a high-ranking employee or public official. In such circumstances it can be difficult for in-house HR staff to conduct the investigations due to political pressure, increased media attention, or anxiety about keeping one’s job. Hiring an outside investigator in such situations is also evidence that your government is making a good faith, unbiased effort to determine the facts.

What Type of Misconduct is Alleged? If the allegations are extreme, your government may want to use an outside investigator. Allegations of rape, assault, threats on an employee’s life or theft often require outside investigations because it can be difficult for in-house HR staff to remain impartial in such situations. A good rule of thumb is that any time the allegations require a heightened need for objectivity, neutrality or impartiality, it is wise to consider an outside investigator.

Lastly, if you’ve decided to work with an outside investigator, you should also consider the following:

  1. Outside investigator prices vary greatly depending on their background and the demand for the investigator. Meet with potential investigators and ask them about their rates, background and experiences with this particular type of investigation. Ask for references from other employers and about their interview techniques, approximate time estimates, availability, and length and level of detail in their reports. Ask to view a sample report. Consider whether the investigator would be a good witness at a trial.
  2. Do you want the outside investigator’s work and report to remain confidential? If so, you must discuss this with the investigator prior to commencing work and you must include your City Attorney in this discussion.
  3. Be absolutely clear with your investigator regarding the limited scope of the investigation. You should also provide clear directions about what the investigator should do if he/she discovers new violations.

If you would like more information about employment investigations, please feel free to call our offices.