Babcock Business Advisor
December 16, 2003 - Vol. 1 No. 006

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Business Law Updates

Country Club Taxes

Country club members can rest easy. If your country club is a non-profit organization that is exempt from income tax under the U.S. Internal Revenue Code and no part of the net earnings of the club inures to the benefit of any member, then the country club’s property will be exempt from ad valorem taxation.

In Metairie Country Club v. Louisiana Tax Commission, 2003 La. App. LEXIS 2938 (La. App. 5 Cir. 10/28/03), the country club paid ad valorem taxes in 2000 under protest and filed an action to recover the payments.

The Louisiana Fifth Circuit Court of Appeal held, since the country club operated for a fraternal purpose, and there was no part of the net earnings that inured to the benefit of its members, and it was declared exempt from federal income tax, the country club was exempt from ad valorem taxation.

For more information on the aforementioned case, please visit this site.

Sexual Harassment Compensation?

The Louisiana Third Circuit has recently held that an employee (claimant) for workers' compensation benefits for mental injury resulting from sexual harassment could not recover benefits. Scarlet Adams began working for Temple Inland, LA (Temple Inland) in late 2000 or early 2001 as a utility hand. Shortly thereafter, her supervisor and a co-worker began sexually harassing her. The harassment began to escalate beyond vulgar comments to propositions and threats, and resulted in Adams developing psychological problems. Adams discontinued working and filed a claim for compensation benefits for mental injury from the sexual harassment.

At the hearing on the claim, the Workers' Compensation Judge rendered judgment in favor of Temple Inland and dismissed Adams's claim. It was important that the claimant failed to prove her injury was caused by a sudden, unexpected and extraordinary situation; in fact, it was due to events that occurred over an extended period of time, not by a sudden, unexpected or extraordinary event. Thus, no workers' compensation.

Footing the bill for pre-employment drug tests

The Louisiana legislature authorized the withholding of wages to cover the costs of pre-employment drug testing, but the employer is required to have the employee sign a contract which explains the employer's right of reimbursement of such medical examinations. The catch? Well, the employee must resign within ninety working days, or not show up at all, and the employee must be compensated at a rate equivalent to not less than one dollar above the existing federal minimum wage and not be a part-time or seasonal employee. See R.S. 23:897(M).

Insurance Law Update

Life Insurance... mine or ours?

This week, in Fowler v. Fowler, 2003 La. LEXIS 3449 (La. 12/12/03), the Louisiana Supreme Court had to determine whether the proceeds of a life insurance policy paid during the matrimonial regime are the separate or community property of the beneficiary spouse.

The Court concluded that life insurance proceeds are sui generis and not governed by the Louisiana Civil Code principles which govern community property. Life insurance proceeds will go to the named beneficiary as stated in the life insurance contract, without regard to community claims. Therefore, life insurance proceeds received by a named beneficiary spouse during the existence of a matrimonial regime of acquets and gains are separate property.

For more information on the aforementioned case, please visit this site. NOTE: this decision is not final until expiration of the fourteen day rehearing period.

Firm News

Stephen Babcock recently accepted an appointment to serve on the Greater Baton Rouge Chamber of Commerce's Board of Directors.

Want more info about Babcock Law Firm? Visit www.babcockfirm.com

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