TOPIC 48a Applicability of the Civil Rights Tax Relief provision of the American Jobs Creation Act to cases arising under Section 48 of the Longshore Act

            On October 22, 2004, the President signed the American Jobs Creation Act of 2004.  Section 703 of this Act establishes a deduction from gross income for attorneys' fees and court costs incurred by, or on behalf of, individuals who prevail in employment discrimination and other cases.  This eliminates a burdensome tax effect on plaintiffs in employment discrimination cases which was often a barrier to overcome in settlement negotiations.  Under prior law, the IRS required such plaintiffs to pay taxes on the attorneys’ fees recovered in litigation or settlements, even though the money went straight to the attorney who also paid taxes on the amount as income.

            The provision covers a number of laws administered by the Department of Labor, and may include discrimination claims filed under Section 48(a) of the LHWCA adjudicated by this office.  The text of section 703 is posted on the OALJ web site at http://www.oalj.dol.gov/PUBLIC/LONGSHORE/REFERENCES/STATUTES/LHWCA.HTM#948A .

            The longshore practitioner should specifically note Sub-Sections 703(e)(17) and (18) of this  legislation.   Sub-part (17) references “any provision of Federal law (popularly known as whistleblower protection provisions) and specifically notes “reprisal against an employee for asserting rights or taking other actions permitted under Federal law.”  Sub-part (18) includes in tax relief coverage the following:

“(18) Any provision of Federal, State, or local law, or common law claims permitted under Federal, State, or local law—

            “ii) regulating any aspect of the employment relationship, including claims for wages, compensation, or benefits, or prohibiting the discharge of an employee, the discrimination against an employee, or any other form of retaliation or reprisal against an employee for asserting rights or taking other actions permitted by law.”

            Section 48(a) of the LHWCA (Amended 1984), formerly Section 49, addresses discrimination against employees who bring proceedings for filing compensation claims or testifying in longshore proceedings.   The employer alone and not his/her carrier is liable for penalties and payments under Section 48(a).   The LHWCA specifically states, “Any provision in an insurance policy undertaking to relieve the employer from the liability for such penalties and payments shall be void.”  A claimant who succeeds in a Section 48(a) discrimination claim is entitled to attorney fees for that claim.  While Section 48(a) has never officially been referred to as a whistleblower provision, it certainly falls within general whistleblower criteria as well as the criteria listed in Sub-sections (17) and (18) of the Civil Rights Tax Relief legislation.

Topic 48(a)     Discrimination Against Employees Who Bring Proceedings

[Ed. Note:  The following case is included for informational value only.]

Carter v. Tennant Co., ___ F.3d ___ (No. 03-2791)(7^th Cir. September 13, 2004).

            Here the plaintiff’s suit for wrongful discharge in retaliation for making a workers’ compensation claim was found to have been properly dismissed by the district court since the plaintiff was found to have given dishonest answers to a health history questionnaire.  He had not told the present employer about his previous injury or on-going medical care and benefits.  The Plaintiff had also argued that his Privacy Act rights were violated and that, therefore, his discharge based on incorrect answers should be voided.  However, the circuit court noted that the employer had asked if he had “ever had any occupational injuries, accidents, or illnesses;” “lost time from work for a work-related injury or illness;” or saw “a medical doctor for any work-related injury/illness.”  The court found that such questions were not in violation of the statute which specifically barred employers from inquiring “whether that prospective employee has ever filed a claim for benefits under the state workers’ compensation act or Workers’ Occupational Diseases Act or received benefits under these Acts.”  

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