Our Own Point of View

Sixth Circuit Rules Employer Violated FMLA by Failing to Advise Employee How It would Calculate FMLA Leave Eligibility

2012-01-20T10:54:00.001-05:00

The Sixth Circuit issued an ugly decision today in an FMLA interference claim. It's ugly because it didn't need to happen.

The dispute concerned when the employee was required to return from FMLA leave. The employee thought he had longer than did the employer, who fired the employee when the employee didn't return by the employer's deadline. The employee maintained he would have been able to return to work by the deadline as he understood it.

The problem arose in how the employer calculated the employee's eligibility for 12 weeks of leave. The court explained:

The FMLA stipulates that, “an eligible employee shall be entitled to a total of 12 work weeks of leave during any 12-month period . . . because of a serious health condition that makes the employee unable to perform the functions of the position of such employee.” 29 U.S.C. § 2612(a)(D). Employers, for their part, are “permitted to choose any one of . . . [four] methods for determining the ‘12-month period’ in which the 12 weeks of leave entitlement . . . occurs.” 29 C.F.R. § 825.200(b). Two of these four methods, namely, the “rolling” method and the “calendar” method, are pertinent to this case. The “rolling” method calculates an employee’s leave year “backward from the date an employee uses any FMLA leave.” Id.

Under the rolling method, the employee's 12 weeks of leave would have expired on June 13, while under the “calendar” method, the allowed leave would have extended theoretically through July 14. The problem, the court said, was that (the emphasis belongs to the court):

At no time throughout the FMLA process did the Company mention to Thom that his leave time would be governed by a “rolling” 12-month period. The only written document he received from the company stated that his leave would expire on June 27. He was only notified that American Standard had accelerated his return-to-work date on June 14, after it had already elapsed the day before. The first time Thom was given actual notice that the Company was using a “rolling” method requiring him to return to work on an earlier date was after he filed his lawsuit in this case when the defense lawyers raised the rolling method as a defense.

The employer tried to argue that it had given notice to the employee but the court didn't buy it:

employers should inform their employees in writing of which method they will use to calculate the FMLA leave year. This standard is consistent with the principles of fairness and general clarity, and applying it, [the employer']s notice to [the employee] fell decidedly short. Although [the employer] did internally amend its FMLA leave policy in March 2005 to indicate that it would now calculate employee leave according to the “rolling” method, it did not give [the employee] actual notice of this changed policy.

Even worse, the employer had approved the employee's FMLA leave for though June 27, which was well after it later maintained, in the litigation, the employee's leave expired.

The lesson is pretty simple. Make sure to designate the manner in which you will calculate FMLA leave eligibility. The rolling calendar method is the one most employer's favor. But more importantly, make sure to calculate FMLA leave eligibility for each employee before approving a return to work date. But even if you mistakenly approve a return to work date after an employee's eligibility expires, you can fix the mistake by notifying the employee of the new return to work date. Depending on the circumstances, specifically, the employee's reliance on the longer leave period, you may have to be flexible in when the employee returns.

Sixth Circuit Upholds FedEx Reorganization Decision

2011-09-15T10:10:00.000-04:00

Linda Epps worked for FedEx in Memphis as an IT Manager, managing one project called the Managed Resource Services Office or MRSO. In 2006, FedEx brought in another manager (named Black) who carried four projects and one initiative. Not much later, Werner (to whom Black and Epps reported) decided to eliminate Epp's IT Manager position and transfer the MRSO duties to Black. Epps trained Black on those duties. FedEx gave Epps the opportunity to locate a new management position but after she was unable to do so, she took a demotion which required her to report to Black and reduced (gradually over an 18 month period) her salary. Epps later sued for race discrimination.

What seems most helpful about the unpublished decision is how the court analyzed FedEx's reasons for the reduction/demotion. The question, of course, was why select Black instead of Epps to be the IT Manager.

Assigning the consolidated duties to Black required Black to learn one new project: MRSO. In contrast, had the consolidated job been assigned to Epps, she would have been required to learn four new projects and one initiative. Based on the number of direct reports managed by Epps and Black prior to the demotion, it is likely that MRSO was a larger project than any one of the projects on which Black was working. However, it appears that Black had the larger sum total of management responsibilities, and her work covered a greater number of discrete areas. Therefore, FedEx has provided a legitimate, nondiscriminatory explanation that it was more efficient to assign the MRSO project to Black than to move all of Black’s projects to Epps.

Further, Black had a longer tenure with FedEx, had more experience reporting to senior level management, and had won two of the company’s five-star awards for excellent work. Although Epps had a consistently positive work history with FedEx and had earned a promotion to management, her most recent year-end evaluation had identified several areas in which improvement was needed. Werner stated that he was focused on efficiency—not prior job performance—in choosing who should take on the consolidated duties. However, he mentioned his awareness of Black’s strong track record with the company, and that history further supports the business decision to select Black over Epps for the remaining management position.

In making difficult decisions to select employees for a reduction in force, employers are smart if they can explain the reasons for the decision in the manner recounted above. The temptation, as I bemoaned before, is to try to objectify or quantify what is really a subjective analysis. While not illegal, I feel it is better to be able to explain the decision in words, as FedEx did, rather than by assigning numbers to subjective factors.

Epps tried to argue her selection was pretextual because she had gotten her first negative evaluation just after her demotion. The court's response to this argument is a good lesson for all employers because even Epp's prior evaluations, while overall positive, "indicated several areas in which" Epps supervisor "expected improvement, clearly signaling the potential for a future negative review." Again, wise employers will address performance problems as they arise, and then document them as areas for improvement on performance evaluations, even if the issues do not themselves merit a lower overall rating.

Documenting Poor Performance

2011-09-14T10:30:00.000-04:00

It's a recurring theme, one I have addressed before, but it can't be stressed enough how helpful it is in defending employment litigation to have adequate documentation of poor performance.

In an unpublished decision issued today, the Sixth Circuit affirmed summary judgment for ServiceMaster in an age and disability lawsuit because the employee's new manager properly documented her dissatisfaction with the employee.

The court rejected the employee's ("Webb") several attempts to establish that he was meeting the employer's legitimate qualifications for the job, explaining:

Webb does not offer probative evidence that he was qualified. First, Webb relies on positive performance reviews from prior years to establish his qualifications at the time of termination. On facts closely resembling this case, this court in Strickland expressly rejected such use of prior year-end performance reviews because they suffered from “staleness” and did not establish that a plaintiff was “qualified at the time of her termination.” Strickland, 45 F. App’x at 424. As in Strickland, this evidence is stale because Webb’s performance or ServiceMaster’s expectations may have legitimately changed since the prior review period. Second, Webb offered emails in which coworkers requested Webb’s assistance on a project, which Webb believes show that his work was adequate and, therefore, met ServiceMaster’s expectations. The opinion of Webb’s coworkers is irrelevant: under both the ADEA and THRA the relevant test is the legitimate expectations of an employer, not a coworker. See Strickland, 45 F. App’x at 424. Even if the court were to consider these emails, they do not create a genuine issue of material fact: no reasonable jury could find that one routine request for assistance demonstrates that Webb was meeting the legitimate expectations of his employer. For these reasons, Webb has provided no evidence that he was meeting his employer’s legitimate expectations at the time of his termination and, therefore, has not established either his age or disability discrimination claims.

What did the employer do right? The court explained that Webb's new manager, "had concerns about Webb’s productivity, began supervising him directly and found his work unacceptable or incomprehensible, gave Webb a negative midyear performance review, placed him on a [performance improvement plan] during which Webb failed to improve, and ultimately recommended Webb’s termination for unsatisfactory performance and a failure to perform “at the manager level.”

There was, of course, no evidence of disparate treatment.

Similarly Situated Evidence - Employers Must Consider Differences

2011-09-12T15:00:00.000-04:00

The court of appeals in Chicago recently issued an instructive decision on comparing similarly situated employees. The fired employee worked for the Indiana Department of Corrections and repeatedly refused a job assignment to the point that the DOC fired her. She sued under the ADA alleging the firing was a pretext for getting rid of her because she had back problems (which was one reason she refused the job assignment).

The court of appeals initially addressed whether the employee was similarly situated to two other employees who had also refused (to some degree) a job assignment. This aspect of the decision can be summed up by saying that employers shouldn't try to split too fine a hair in making employee comparisons.

The more important point, it seems to me, is that employers should consider all factors that distinguish an employee from co-workers when deciding on the level of discipline for an employee. Here, when the lawsuit got to litigation, the employer argued that the fired employee was not similarly situated to other employees who were not fired because the fired employee had a worse disciplinary history. Of course, an employee's disciplinary history is a perfectly valid consideration in imposing discipline.

The problem for the employer was that (as the court said): "not only does the evidence fail to indicate that disciplinary history was considered, but the record makes clear that disciplinary history played no role in DOC’s decision to terminate . . . employment." It explained:

A characteristic that distinguishes two employees, regardless of its significance when objectively considered, does not render the employees non-comparable if the employer never considered that characteristic. The purpose of the similarly situated requirement is to provide a basis for a judgment about the fairness of the employer’s decision. Factors never considered by the employer cannot provide any insight as to whether the employer’s decision was motivated by discriminatory intent.

The problem here was that the employer's evidence established that disciplinary history was not a consideration at the time.

So, in considering discipline for misconduct, it will help to make sure your documentation demonstrates you took into account all the differences between employees. While this should be documented (so as to avoid the argument that the evidence was manufactured after the fact), it is at least as important to consider all the reasons for distinguishing employees. At a minimum, the decision-makers need to be able to convincingly testify that they considered the factors which distinguished the fired employee from employees who were not fired.

Sixth Circuit: Tennessee Employers May Require Prompt Reporting of Compensable Injuries

2011-09-09T11:00:00.000-04:00

Julie Geronimo worked for Caterpillar in Dyersburg until she was terminated for failure to promptly report a work injury. Geronimo worked as a machinist and then an assembler. Not long after starting the assembler work, Geronimio began to experience pain. Her job required her to press down clutch plates on an assembly line and from the start, Geronimo experienced "muscle strain" in her palms, upper arms, and fingers. The pain continued and, after four weeks on the job, it increased, causing her hands to go numb and tingle when performing manual tasks even outside of work.

Geronimo said nothing to Caterpillar about the pain for some 35 days. She then spoke to the company nurse, telling the nurse she may have to have surgery. Geronimo had not consulted a physician. Rather, as she told the nurse, she had read about her condition on the internet a week earlier. By the time Geronimo spoke to the nurse, she was characterizing her pain levels as almost unbearable. The day after seeing the nurse, Caterpillar fired Geronimo because of her "failure to communicate an injury in a timely manner."

Caterpillar's safety rules require employees to report the occurrence of injuries immediately or, if the injury was gradually-occurring, to report it as soon as an employee realizes they are injured and suspects it is work related. Geronimo admitted she knew the policy. She decided not to report the pain, she said, because she thought she would lose her job.

Geronimo filed a lawsuit alleging Caterpillar's reporting requirements, specifically, her termination for failing to follow the reporting requirements, violated Tennessee's workers' compensation law. Her argument was that the workers' compensation law permits employees to obtain compensation if the employee reports an injury within 30 days and Caterpillar's immediate reporting requirement contravened the statutory reporting provisions.

The Sixth Circuit didn't buy it, holding that even though the statute gives her thirty days in which to report a gradually-occurring injury if she wants to obtain workers’ compensation benefits, the statute also provides that an injury "shall" be reported immediately. Tenn. Code Ann. § 50-6-201(a). Thus, the court held, an employer's policy requiring prompt reporting of injuries is not inconsistent with the workers' compensation law.

Caterpillar imposed the reporting rule, it explained, because the "late reporting of injuries can result in otherwise avoidable aggravation of those injuries, whereas timely reporting will allow the problems to be addressed before they become severe and may also help to prevent other employees from becoming similarly injured."

The court agreed with this policy, characterizing Geronimo's argument as giving:

employees the opportunity to aggravate existing work injuries, potentially compromise the safety of other individuals, and prevent their employers from providing possible remedies for gradually-occurring injuries at the earliest possible date, by choosing not to report their injuries for days, or even weeks, after the employee realizes she has been injured. Moreover, although the statute grants an employee a maximum of thirty days in which to report the injury and still obtain workers’ compensation, the language itself not only mandates immediate reporting by all employees, but provides incentive to do so by refusing to allow payment of physician’s fees or compensation for the period of time between when the injury occurred and when the employee provided notice of the injury. See Tenn. Code Ann. § 50-6-201(a).

Tennessee employers thinking about adopting Caterpillar's injury reporting policy should be aware that the facts of this case are rather unique and it will (or should) be rarely used to fire an employee. Geronimo made a crucial mistake in admitting to the nurse that she knew she had injured herself before she reported it. Most employees won't make that mistake, at least not after the employer fires an employee for violating the timely reporting requirement. In addition, employers must enforce a reporting policy evenhandedly. There was no allegation of disparate treatment in this case. Nor was there any evidence that Caterpillar used the reporting requirement to rid itself of employees who sustained compensable injuries, or that it fired employees before they could claim a compensable injury. Evenhanded enforcement will also help to avoid any potential FMLA or ADA concerns.

It can't be emphasized enough that employers who have a policy of this nature should do everything possible to avoid firing employees who timely report injuries. Had Geronimo, for example, presented evidence that employees who timely reported injuries did, in fact, lose their jobs (as she believed) the outcome might have been different.

Of course, Caterpillar's goal was to head off gradual (or soft) injuries before they necessitate significant or costly corrective action. That is laudable from several aspects and one or two firings for violating the policy should serve to emphasize that the employer is serious about employee safety.

Sixth Circuit Holds Volunteer Firefighters Can Be "Employees" for Title VII Coverage

2011-09-02T10:59:00.000-04:00

A published decision from the Sixth Circuit today held that volunteer firefighters may be counted as "employees" for purposes of determining whether the "employer" has enough employees for Title VII coverage.

Title VII only applies to employers of 15 or more employees. How to count 15 employees is somewhat complex and has required the Supreme Court to set in and resolve the issue on at least one occasion. The statute requires counting the number of “employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year . . . .” 42 U.S.C. § 2000e(b).

In this case, the employer only had 4 "employees" and without counting the volunteer firefighters, there would be not be enough employees to permit the employee to sue for sexual harassment under Title VII.

The EEOC position on whether to count volunteers is that "an individual may be considered an employee of a particular entity if . . . [she] receives benefits such as a pension, group life insurance, workers' compensation, and access to professional certification . . . .” EEOC Compliance Manual. The benefits must, the EEOC states, constitute "significant remuneration" rather than merely the "inconsequential incidents of an otherwise gratuitous relationship."

Where the Sixth Circuit parted company with the district court and to some degree the EEOC (which had previously ruled in favor of coverage) was in how to consider the remuneration factor. The Sixth Circuit concluded the district court, by holding there had to be "significant remuneration" put too much emphasis on the remuneration factor to the exclusion of other considerations. To the court the question is whether there is "remuneration" not "significant remuneration" and to illustrate the point, noted that the volunteer firefighters:

received worker’s compensation coverage, insurance coverage, gift cards, personal use of the Department’s facilities and assets, training, and access to an emergency fund . . . and that, for particular portions of the relevant time period, certain firefighter-members received a one-time, lump-sum retirement payment4 and others received an hourly wage. The district court, however, limited its analysis to remuneration without considering any other aspects of the Department’s relationship with its firefighter-members. Although remuneration is a factor to be considered, it must be weighed with all other incidents of the relationship.

Tennessee Appeals Court Addresses Similarly Situated Standards

2011-09-01T22:45:00.000-04:00

Sharon Hartman worked for Tennessee Tech for about 13 years as a Stock Clerk. Her job was to purchase supplies and equipment, which required her to be intimately familiar with Tech's purchasing policies. Tech fired Ms. Hartman after she made unauthorized purchases which exceeded the monetary limits of her authority. The mistake was inadvertent but had Hartman followed the purchasing policies it would not have occurred.

In Ms. Hartman's sex discrimination claim under the Tennessee Human Rights Act, she argued she was similarly situated to a male named Parks who was plumbing shop supervisor. Unlike Hartman, Parks was not charged with being familiar with Tech's purchasing policies. On one ocassion, Parks ordered plumbing supplies which exceeded the same monetary limits. Unlike Hartman, however, when Parks learned the supplies were over the limit, he rejected the order and went through the appropriate procedures for the purchase.

The court of appeals rejected Hartman's argument that she and Parks were similarly situated, explaining:

The duties and responsibilities listed on Ms. Hartman’s official job description include: “Maintains warehouse stock item inventory. Solicits, evaluates and awards bids; and orders warehouse stock items,” “Initiates bid process for warehouse stock items,” “Makes contract award recommendations to Purchasing [Office] regarding warehouse inventory stock items,” “Secures additional specification recommendations to Purchasing regarding warehouse inventory stock items.”

Troy Parks’s official job description, by contrast, does not contain a single reference to the purchasing guidelines or the bidding process. According to Ms. Hartman, Mr. Parks was required to work with a Buyer from the Purchasing Office, or someone with equivalent purchasing authority in order to make purchases. The affidavit of Dr. Michael Nivens, the director of Facilities and Business Services, states that “Troy Parks does not have the same kind of purchasing authority as [Ms. Hartman.] [Ms. Hartman] was a purchaser. Mr. Parks is not, and he is not expected to have the same level of knowledge regarding the purchasing policies.” The affidavit of Dr. Claire Stinson, the Vice-President for Finance and Planning, states, “[Troy Parks] is not expected to be familiar with the purchasing guidelines. It was a job requirement that [Ms. Hartman] be familiar with the purchasing guidelines.”

Ms. Hartman does not dispute these facts. Instead she contends the court should not consider the differing levels of responsibility and authority when evaluating whether she is similarly situated to Troy Parks. In essence, she asserts that the only relevant similarity in this case is the fact that both she and Mr. Parks were subject to the same purchasing rules and that they both violated those rules. We find no merit in this argument. It was a job requirement for Ms. Hartman to know and understand the purchasing policies because she had significant discretion in carrying out purchases using public funds. Mr. Parks on the other hand, required supervision when carrying out purchases, often times supervision by Ms. Hartman. He did not fail to fulfill an essential job requirement when he violated the purchasing policy.

* * *

Moreover, Ms. Hartman’s conduct was different from Mr. Parks’s. Troy Parks voluntarily informed his supervisors about his order before the University was required to pay the supplier. By contrast, Ms. Hartman’s supervisors approached her after the first invoice arrived on the filters, which were custom made and non-refundable. Even at that time, she did not inform her supervisors that the order was not complete, and that a second invoice would be arriving. Ms. Hartman argues that the effects of her actions vis á vis those of Mr. Parks are irrelevant, because the fact remains that they both violated the same rule. Again, we disagree. It is significant that Mr. Parks voluntarily notified his supervisors at a time when the damage could be limited.

The decision is significant because it recognized that job responsibilities as well as differences in conduct may establish that two employees are not similarly situated.

Sixth Circuit Holds Employee Did Not Agree to Arbitration When Handbook Simply Referred to Dispute Resolution Procedure

2011-08-30T11:30:00.000-04:00

Bickford Senior Living Group fired Maureen Hergenreder, a nurse, in early January 2007 and she filed a lawsuit alleging her firing violated the Americans with Disabilities Act. Bickford moved to compel arbitration. None of the documents Hergenreder signed when she started employment (only a few months before she was fired) mentioned arbitration. Bickford's employee handbook, as is typical, said it was not a contract of employment, but that it was a summary of policies and procedures that apply to employment.

The handbook made no mention of "arbitration" as such. Instead, it stated: “Dispute Resolution Process Please refer to the Eby Companies Dispute Resolution Procedure (DRP) for details.” The Dispute Resolution Procedure, of course, required employees to submit all disputes to arbitration. While Hergenreder acknowledged receipt of the employee handbook, she submitted an affidavit in which she stated she had "never seen or signed" for the Dispute Resolution Procedure. Bickford did not produce any acknowledgment form signed by Hergenreder for the Dispute Resolution Procedure. Instead, it provided an affidavit from its Vice President of Employee Relations, Jerry Knight, who states that the DRP “is distributed to employees.”

Absent evidence that Hergenreder had actual knowledge of the arbitration clause or at least was advised of the significance of the Dispute Resolution Procedure, the Sixth Circuit held Hergenreder could not be compelled to submit her ADA claim to arbitration (emphasis added):

There was neither an offer nor an acceptance. The objective signs that Bickford made Hergenreder an offer to be part of the arbitration agreement are few in number. The best Bickford can say is that Hergenreder was informed that, for “Employee Actions,” she should “refer” to the DRP. In Bickford’s view, Hergenreder “was or should have been aware of the DRP and so is bound by it.” Bickford Br. at 13 (capitalization removed). Yet she was not required to refer to the DRP; the “handbook does not constitute any contractual obligation on [Hergenreder’s] part nor on the part of Bickford Cottage[.]” Hergenreder Br. at Ex. 6 (Receipt of Employee Handbook Form). Moreover, the simple reference in the Handbook to “the Eby Companies Dispute Resolution Procedure” for “details” is not “the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.” Kloian, 733 N.W.2d at 770 (internal quotation marks omitted). This statement says nothing about arbitration, and it says nothing that would indicate to Hergenreder that accepting or continuing her job with Bickford would constitute acceptance. Indeed, it is incorrect to conflate the fact that Hergenreder knew generally of the DRP with the notion that she knew of the arbitration language—and Bickford’s desire to create an arbitration agreement—contained within the DRP. Were Hergenreder required to read, or even notified of the importance of reading, the DRP, the analysis here might be different. But this court’s inquiry is focused on whether there is an objective manifestation of intent by Bickford to enter into an agreement with (and invite acceptance by) Hergenreder, and we are not convinced that there is any such manifestation made by Bickford in the record in this case.

It turns out the holding is relatively narrow. If the employee handbook or any other document the employee signs does not expressly require arbitration of employment disputes, then the document must at least emphasize the "importance of reading" the document that contains the arbitration clause. The decision serves as a good reminder that the best course for employers is to have the employee sign a document consenting to arbitrate all employment disputes. While the Sixth Circuit may require less than this, there's no reason to beat about the bush on something like this.

In fact, I'm having a hard time understanding why the employer didn't mention the arbitration clause here. Perhaps it was just a clerical oversight. In any event, employers are generally free to draft policies and procedures how they want. In drafting employment contracts, policies and even benefit plans, I often advise clients to "take the easy road" and include language that will avoid a dispute if at all possible. It is relatively easy to add a sentence to a policy when drafting a document especially if it might avoid costly litigation.

Sixth Circuit Addresses "Associational Discrimination" Under the ADA

2011-07-08T10:30:00.001-04:00

A little used provision in the ADA prohibits "excluding or otherwise denying equal jobs or benefits to a qualified individual because of the known disability of an individual with whom the qualified individual is known to have a relationship or association." 42 U.S.C. § 12112(b)(4). Under this provision, the EEOC has explained,

an employer may not treat a worker less favorably based on stereotypical assumptions about the worker’s ability to perform job duties satisfactorily while also providing care to a relative or other individual with a disability. For example, an employer may not refuse to hire a job applicant whose wife has a disability because the employer assumes that the applicant would have to use frequent leave and arrive late due to his responsibility to care for his wife.

The Sixth Circuit appeal involved an employee, Stansberry, who managed the employer's, Air Wisconsin, operations at the Kalamazoo Michigan Airport from 1999 until he was fired on July 26, 2007. In the mid-1990s Stansberry’s wife developed Polyarteritis Nodosa, a very rare and debilitating autoimmune disorder. The treatment for this condition "involves medications to suppress the immune system, including prednisone and cyclophosphamide." It is expensive. Costing Air Wisconsin's insurer some $4,000 every six weeks.

At some point in 2007, Air Wisconsin increased it operations in Kalamazoo, growing from eleven employees to twenty-five. Stansberry was responsible for ensuring all employees properly carried out their jobs and there were several significant problems with the new hires. Between February and May 2007, six different employees received a total of nine security violation letters from the Kalamazoo airport director. Stansberry failed to notify Air Wisconsin’s corporate headquarters about the violations, they learned about the violation only when the Transportation Security Administration sent a letter of investigation to Air Wisconsin’s headquarters.

Stansberry, already had issues with his boss, Mulder. When Mulder reviewed the security violations, he let the TSA know he would be taking "severe disciplinary action" against Stansberry. Air Wisconsin asserts that it terminated Stansberry for poor performance based on his failure to stay within budget, failure to report security violations, and improper supervision of employees, which led to the security violations in the first place. The prepared termination letter Mulder brought with him to the meeting, however, simply mentioned the security violations.

Relying on a Seventh Circuit decision, Larimer v. Int’l Bus. Machs. Corp., 370 F.3d 698, 700 (7th Cir. 2004), the Sixth Circuit decision summarized the types of theories under which an associational discrimination claim could be brought:

Several circuits, including this Court in an unpublished opinion, have relied on Larimer’s outline of three theories into which “association discrimination” plaintiffs generally fall: (1) “expense”; (2) “disability by association”; and (3) “distraction.” The “expense” theory covers situations where an employee suffers an adverse employment action because of his or her association with a disabled individual covered under the employer’s health plan, which is costly to the employer. The “disability by association” theory encompasses two related situations. Either the employer fears that the employee may contract the disability of the person he or she is associated with (for example the employee’s partner is infected with HIV and the employer fears the employee may become infected), or the employee is genetically predisposed to develop a disability that his or her relatives have. The “distraction” theory is based on the employee’s being somewhat inattentive at work because of the disability of someone with whom he or she is associated. Id. at 700.

Stansberry relied only on a “distraction” theory. Stansberry, who lacked direct evidence, argued that the court should infer discrimination because he was discharged shortly after his wife's condition worsened. The court rejected the argument:

although her condition grew worse immediately before Stansberry was terminated, Air Wisconsin had been aware of her illness for many years. Because Air Wisconsin knew of her disability for a long period of time, this undercuts the inference that Stansberry’s termination was based on unfounded fears that his wife’s disability might cause him to be inattentive at work.

While the court held Stansberry couldn't establish a prima facie case, it also held he could not show his discharge was because of his association with his wife:

Importantly, while Stansberry’s poor performance at work was likely due to his wife’s illness, that is irrelevant under this provision of the Act. Stansberry was not entitled to a reasonable accommodation on account of his wife’s disability. Cf., e.g., Larimer, 370 F.3d at 700. Therefore, because his discharge was based on actually performing his job unsatisfactorily, and not fears that his wife’s disability might prevent him from performing adequately, Air Wisconsin’s conduct is not prohibited by this section of the Act.

There is an important caveat to the decision. While the ADA does not require an accommodation in these circumstances, the FMLA (which may not have applied to Stansberry) might require time off from work.

The EEOC also points out that "an employer must avoid treating an employee differently than other employees because of his or her association with a person with a disability." It gives two examples:

Example J: Kyung, an employee at an accounting firm, requests a week of unpaid leave and is told by her supervisor that there will be no difficulty in granting the leave. Kyung then mentions that she will be using the leave to care for her mother with a disability, who is coming into town for medical treatments. The supervisor denies the leave request, telling Kyung that the firm's leave policy is not intended to cover this type of situation and that she should hire someone to look after her mother. A few days later, the supervisor approves Diego's request for a week of unpaid leave to attend a father-son camp with his son. If the firm grants requests for unpaid leave for certain personal or family reasons, it is a violation of the ADA's association provision to deny Kyung's request because she wishes to use the time to assist her mother with a disability.

Example K: A law firm permits its attorneys to use 100 hours of administrative leave a year to provide pro bono legal services. One attorney, Sylvia, wants to use these hours to work with a non-profit organization that provides legal and other services to individuals with psychiatric disabilities. The law firm denies her request because it does not believe that this type of work will reflect well on its image. If the firm allows attorneys to use administrative leave to provide pro bono legal services, it is a violation of the association provision of the ADA to deny Sylvia's request because she wishes to use the time to assist individuals with disabilities.

DOL Wage and Hour Division Looking to Hire 6 New Investigators for Tennessee

2011-06-27T18:01:00.000-04:00

I like to follow local (Knoxville for me) openings for federal employees. It is not tempting personally but I do a lot of business with the federal government and it is a good barometer of hiring activity.

I was intrigued by the fact that the U.S. Department of Labor today announced openings for six new Wage and Hour investigators working out of Nashville, Memphis and Knoxville (here is a link to all six openings). The position vacancy posting encouraged applicants (who pretty much must be federal employees already) to "Begin a challenging career with the U.S. Department of Labor (DOL), and you will help shape the workforce of tomorrow." I thought Tennessee employers might benefit from seeing the minimum objective qualifications required for the position.

The job duties are described:

The incumbent conducts complete investigations and negotiations involving routine issues and situations to obtain the compliance of business enterprises and State and local governments with the provisions of Federal labor laws, regulations, and orders pertaining to minimum wage rates, overtime pay requirements, child labor provisions, wage garnishments, employment eligibility, domestic service in households, and similar matters pertaining to conditions of employment, wages, and hours worked. Develops information required to resolve issues in cases requiring a full investigation through: interviews with employers and workers; analysis of pertinent business records; and review of laws enforced by the Wage and Hour Division, related interpretive bulletins, and precedents to identify specific provisions that are applicable to the case peculiarities. Conducts negotiations with the firm owner or manager, attorney, or other firm representative at the appropriate authority level to: (1) advise the employer that there is a violation of the law; (2) fully explain requirements needed to achieve and maintenance compliance; (3) persuade the employer to accept computed back wages found due to employees; and (4) obtain agreement to pay the back wages due employees involved within prescribed monetary limitations. Prepares case reports, including recommendations for closing the case or any further administrative actions that should be taken. The above duties are developmental assignments, and as the incumbent progresses, the assignments will become more difficult and complex, leading to progression ultimately to the full performance level of GS-12.

The qualifications (forgetting the ones unique to being a federal employee) are:

1. General knowledge of Federal wage and hour labor laws, industrial occupations, wage scales, employment practices, or salary and wage administration practices.
2. Skill in analyzing written/verbal information and numerical data and making decisions on issues based on interview, records review, reconstruction of missing or fraudulent records and applying legal or regulatory provisions, precedents, and principles to specific investigative matters.
3. Skill in personal contacts requiring the ability to explain requirements or rights and obtain information and cooperation from people with diverse backgrounds and levels of understanding, reconcile conflicting interests, and persuade others to comply voluntarily with requirements.
In addition to the criteria specified above, applicants must have knowledge of and ability to apply the provisions of Federal wage and hour labor laws pertaining to wages, hours of work, or related conditions of employment. Examples of qualifying specialized experience include:
Developing, interpreting, or applying policies, procedures, and operating standards in determining compliance for an organization or government based program. Conducting interviews and providing information about laws and/or regulations. Industrial personnel or salary and wage administration or responsible work in a certified public accounting firm. Analyzing or apply labor legislation. Reviewing and evaluating operations and procedures through analysis, audits, or surveillance inspections. Federal, State, or self-regulatory agency work involving obtaining compliance with appropriate program requirements.

I have almost always gotten along with the DOL investigators with whom I have dealt. I don't necessarily agree with them all but that is the nature of the business anyway. Here is hoping the new hires are well-qualified for the job.

Governor Signs Bills Restoring Summary Judgment to Employment Discrimination Claims in Tennessee

2011-06-20T14:54:00.000-04:00

The Governor has now signed both bills passed by the General Assembly designed to restore summary judgment standards in Tennessee.

The General Assembly's website indicates that on June 10, 2011, the Governor signed HB 1641, which, as I explained in a prior post, codifies the McDonnell Douglas / Burdine analysis at all stages of the proceedings, including, on a motion for summary judgment. While the Act takes effect as of June 10, 2011, it also provides that it applies “to all causes of action accruing on or after such effective date.” Thus, employment decisions made after this date, will have summary judgment decisions adjudicated using the McDonnell Douglas / Burdine analysis.

My prior post mentioned another bill. This one is not directed at employment discrimination claims but applies to all civil claims. It legislatively overrules Tennessee Supreme Court decisions that made it much more difficult (if not impossible) to obtain summary judgment. The governor signed this bill on June 16, 2011. The summary judgment bill, by the way, would not take effect until July 1, 2011, and states that it only applies to “actions filed on or after that date."

These bills will certainly be good news to employers who have been sued for discrimination or retaliation in state court where the evidence of discrimination or retaliation is weak or non-existent. Prudent employers shouldn't take the passage of these bills as a "get out of jail free" card. Courts will still have the responsibility to deny summary judgment when the material facts are disputed. As I have said several times on this blog, the dumbest thing employers can do is run their mouths. Loose lips are a sure fire way to be forced to defend an employment decision before a jury.

U.S. Supreme Court Reverses Wal-Mart Class Certification

2011-06-20T11:11:00.000-04:00

The largest class action ever certified in a discrimination claim is history. The decision is interesting if you like issues that arise under the federal rules of civil procedure class action but that makes it pretty wonkish from the employer's point of view. At first read, the Court's decision (it was unanimous in part) will spell doom for large employment based class actions where the evidence does not present a policy or practice of intentional discrimination or a practice that unintentionally causes a disparate impact.

What really hurt the employees trying to get their claims certified was that they took inconsistent positions in trying to establish that their claims of discrimination had an important point in common. They claimed Wal-Mart had a policy of providing store management with unchecked discretion. The Court didn't buy it, saying the employees failed to identify "a common mode of exercising discretion that pervades the entire company:"

we have recognized that, “in appropriate cases,” giving discretion to lower-level supervisors can be the basis of Title VII liability under a disparate-impact theory—since “an employer’s undisciplined system of subjective decision making [can have] precisely the same effects as a system pervaded by impermissible intentional discrimination.” Id., at 990–991. But the recognition that this type of Title VII claim “can” exist does not lead to the conclusion that every employee in a company using a system of discretion has such a claim in common. To the contrary, left to their own devices most managers in any corporation—and surely most managers in a corporation that forbids sex discrimination—would select sex-neutral, performance-based criteria for hiring and promotion that produce no actionable disparity at all. Others may choose to reward various attributes that produce disparate impact—such as scores on general aptitude tests or educational achievements, see Griggs v. Duke Power Co., 401 U. S. 424, 431–432 (1971). And still other managers may be guilty of intentional discrimination that produces a sex-based disparity. In such a company, demonstrating the invalidity of one manager’s use of discretion will do nothing to demonstrate the invalidity of another’s. A party seeking to certify a nationwide class will be unable to show that all the employees’ Title VII claims will in fact depend on the answers to common questions.

The decision reduces the risk that an employer will have a class action filed against it alleging all of its decisions are discriminatory. This decision will require a pretty good showing that the discrimination claims have facts or decision making in common. As I said earlier, employers that have discriminatory policies or who permit neutral practices to have a discriminatory effect are still at risk.

Eighth Circuit Remands Dismissal of Retaliation Claim Where Employer Refused to Consult Lawyer

2011-06-17T12:57:00.000-04:00

Today, the Eighth Circuit upheld the dismissal of a racial hostile work environment claim but reversed the dismissal of a retaliation claim. Even recognizing that there are disputes over the facts, the case is a good lesson in how not to respond to a complaint about racial comments even if you believe the employee to be lying.

In July 2007, NuAir hired Lionel Pye as a temporary employee doing metal finishing work. It was entry level work. He was made a regular employee in October 2007, at which point he asked the company payroll administrator to fill out a form so he could get housing assistance from the county government. The payroll administrator was apparently rude to Pye, and uttered a racial slur in his hearing (she disputed this). Pye complained about it to the HR manager (Johnson) who met with Pye and his supervisor. What was said at the meeting was disputed. After the meeting, Johnson reported to the Vice-President (Peters) that Pye was trying to shake down the company by making an implied threat to sue. The court explained what happened next:

Johnson suggested to Peters that a lawyer be consulted to see if NuAire could fire Pye for making threats. Peters responded that he did not need to consult a lawyer, and directed McKnight [the supervisor] to fire Pye when Pye next returned to work on Monday, November 19, 2007. The only information Peters had at the time he made the decision to terminate Pye pertained to Pye’s allegations of discrimination, and to the investigation; he had no information regarding Pye’s performance on the job.

The court's decision shows the employer made a critical error. "There is no evidence that NuAire had any concerns regarding Pye’s performance before he engaged in protected conduct. Indeed, Peters acknowledged that he had no information regarding Pye’s work performance when he made the decision to terminate him." This led the court to hold that, if Pye's version was true, a jury could "believe that NuAire’s assertions of intimidation, coercion, and threatening behavior were pretext for -- if not further evidence of -- NuAire’s true prohibited reason for Pye’s termination."

Making false accusation of racial misconduct is not protected any more than are using those false accusations in an attempt to shake down an employer. Even so, the standard, as I said in a prior post about a decision from this same court, is very high. Most of the time, the employer's decision will have to be defended to a jury. The employer could hopefully have saved itself some grief and expense by consulting with an attorney before firing Pye.

Given this post's title, I suppose I should say what I would have recommended had I been called after the meeting. In a situation like this, I would have recommended the employer document the statements made at the meeting in a memo to the employee. I would ask the employee to confirm that the memo is accurate or get the employee's version of events (in writing, if possible). Only then would I make a decision about whether to fire or otherwise discipline the employee for making threats. A little patience goes a long way. (And yes, I realize the title is self-serving and hope it is taken with the humor in which it is intended.)

Court Clarifies Federal Summary Judgment Standard in Employment Discrimination Claims

2011-06-01T13:28:00.001-04:00

The topic of summary judgment, being procedural, is not frequently a topic of a post. It is discussed, of course, because, short of settlement, summary judgment is the way most employment-related claims avoid going to trial.

But summary judgment has recently been in the news with the General Assembly's passages of two bills that would override Tennessee Supreme Court decisions on summary judgment and how to analyze employment discrimination and/or retaliation claims in ruling on a motion for summary judgment.

For that reason, I thought the perspective of the federal court of appeals in St. Louis on summary judgment in employment discrimination claims would be of interest. (It is also a slow employment news day.) Two applicants brought a failure to hire claim against the Rochester, Minnesota fire department. After losing the claim in the trial court, they appealed and a three judge panel ruled in their favor. The full court, on the city's motion, agreed to reconsider the panel's ruling. The decision on the merits divided the court; one judge made the difference in affirming the dismissal of the failure to hire claims.

While they split on whether a trial was needed, all of the judges agreed that the same summary judgment rules apply to a discrimination or retaliation claim.

Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed “to secure the just, speedy and inexpensive determination of every action.”
Celotex Corp., 477 U.S. at 327 (quoting Fed. R. Civ. P. 1). Because summary judgment is not disfavored and is designed for “every action,” panel statements to the contrary are unauthorized and should not be followed. There is no “discrimination case exception” to the application of summary judgment, which is a useful pretrial tool to determine whether any case, including one alleging discrimination, merits a trial.

What made the decision interesting (at least to legal wonks like me) was that the court specifically and unequivocally disavowed a number of the court's previous decisions that had said summary judgment in employment discrimination cases should “seldom” or “sparingly” be granted, not in “very close” cases, only “with caution,” or after being “particularly deferential” to the employee.

I suppose it always depends on your point of view.

Courts Finds Account Manager for Media Buyer Meets FLSA Administrative Exemption

2011-05-27T09:59:00.000-04:00

The administrative exemption from the FLSA overtime requirements presents a challenge for many employers, so much so that some employer don't try to use it. It is much less clear and therefore more difficult to apply than the professional or executive exemptions (and contrary to the latter's name, the exemption applies to supervisors who have some meaningful input into hiring or firing). A decision issued today (Verkuilen v. MediaBank) from the federal court of appeals in Chicago helps to better define the rather vague DOL regulation that governs the administrative exemption.

In general terms (from a DOL fact sheet on the subject) the administrative exemption requires that:

The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

The court of appeals sitting in Chicago dealt with the "primary duty" questions. The employer was in the business of selling a software package to advertising firms that would help them place advertising in media outlets. The software was complex, the court explained, "because it integrates so many functions, and it must be customized to the needs of each client, which vary. The complexity and variance are where the account manager comes in. The manager of a customer’s account has to learn about the customer’s business and help MediaBank’s software engineers determine how its software can be adapted to the customer’s needs."

The account manager's job was "to learn about the customer’s business and help MediaBank’s software engineers determine how its software can be adapted to the customer’s needs." She is

on the customer’s speed dial during the testing and operation of the customer’s MediaBank software. As the intermediary between employees of advertising agencies struggling to master complex software and the software developers at MediaBank, she has to spend much of her time on customers’ premises training staff in the use of the software, answering questions when she can and when she can’t taking them back to MediaBank’s software developers, and then explaining their answers to the customer and showing the customer how to implement the answers in its MediaBank software. Identifying customers’ needs, translating them into specifications to be implemented by the developers, assisting the customers in implementing the solutions—in the words of MediaBank’s chief operating officer, account managers are expected to “go out, understand [the customers’ requirements], build specifications, understand the competency level of our customers. Then they will build functional and technical specifications and turn it over to . . . developers who will then build the software, . . . checking in with the account manager, making sure what they are building is ultimately what the customer wanted.”

This, the court held, meant that the account managers "primary duty was directly related to the general business operations both of her employer and (as in a consulting role) of the employer’s customers." It didn't matter, the court further held, that the account manager did not perform all or even many of the functions listed in the DOL regulation on what makes a job administratively exempt. See 29 C.F.R. § 541.202 (listing numerous "[f]actors to consider when determining whether an employee exercises discretion and independent judgment with respect to matters of significance.")

General Assembly Passes Bill Legislatively Overruling Deeply Flawed Gossett Decision

2011-05-24T18:16:00.001-04:00

A prior post addressed a bill pending in the Tennessee General Assembly which would have the effect of over-ruling the Tennessee Supreme Court's decision in Gossett v. Tractor Supply. (My post on Gossett can be found here).

Last week, both houses of the General Assembly voted to send the bill (as amended) to the governor. If Governor Haslam approves the bill, it becomes law immediately, but would only apply to causes of action that accrue after the Governor signs the bill (more on that in a minute).

The version of the bill that passes can be found here: http://www.capitol.tn.gov/Bills/107/Amend/SA0598.pdf. This is an amendment the Senate adopted to clarify the effective date. The Senate passed the bill on May 20, 2011. The House approved the amendment a day later.

The purpose of this bill was to require application of the McDonnell Douglas Burdine (MDB) analysis in all THRA claims and retaliatory discharge claims (common law and statutory) including on summary judgment motions. (“The foregoing allocations of burdens of proof shall apply at all stages of the proceedings, including motions for summary judgment.”) Remember that Gossett held that McDonnell Douglas Burdine was inconsistent with the Court's summary judgment precedent.

The operative language in the bill is (similar language is used for wrongful discharge claims) is:

In any civil cause of action alleging a violation of this chapter or of Tennessee Code Annotated, Section 8-50-103[which prohibits disability retaliation], the plaintiff shall have the burden of establishing a prima facie case of intentional discrimination or retaliation. If the plaintiff satisfies this burden, the burden shall then be on the defendant to produce evidence that one or more legitimate, nondiscriminatory reasons existed for the challenged employment action. The burden on the defendant is one of production and not persuasion. If the defendant produces such evidence, the presumption of discrimination or retaliation raised by the plaintiff’s prima facie case is rebutted, and the burden shifts to the plaintiff to demonstrate that the reason given by the defendant was not the true reason for the challenged employment action and that the stated reason was a pretext for illegal discrimination or retaliation. The foregoing allocations of burdens of proof shall apply at all stages of the proceedings, including motions for summary judgment. The plaintiff at all times retains the burden of persuading the trier of fact that he or she has been the victim of intentional discrimination or retaliation.

To anyone familiar with employment discrimination litigation, the bill requires courts apply the McDonnell Douglas Burdine analysis to all discrimination and retaliation cases. An interesting point about the language of the bill is that in some situations, such as where the employee claims to have so-called "direct evidence" of discrimination (e.g., an admission of discrimination by the decision-maker), this bill seems to require application of McDonnell Douglas/Burdine even where a federal court might not. This isn't a big deal as an admission of this nature is probably going to be sufficient to require a jury trial even under the federal summary judgment rule. The argument could also be made that this bill negates any hint of a dual motive analysis under the THRA (though that was probably not the intent). Again, this is not a huge issue, as I explained in my prior blog posts about the U.S. Supreme Court's decision in Gross.

As noted, the effective date is interesting:

This act shall take effect upon becoming a law, the public welfare requiring it and shall apply to all causes of action accruing on or after such effective date.

The word "accruing" means, in this context, "happens" but that can be somewhat uncertain in the employment discrimination context. A termination of employment claim accrues when the employee is informed of the decision. Easy enough. But a hostile work environment claim accrues over time, not all at one. These will not be insurmountable problems, just headaches for judges to work out over the next few years.

Note that the bill has not been enacted yet. It still needs Governor Haslam’s approval.

On another note, the General Assembly also passed a separate bill which would require the Tennessee courts to the federal summary judgment standards. A full explanation of this issue would be beyond the scope of this blog.

It is enough to say that both bills, if signed by the Governor, will restore a Tennessee employer's repeatedly dashed hope of obtaining summary judgment in state court when the employee has no competent evidence to warrant a trial.

Court of Appeals Holds Private Employer May Refuse to Hire Applicant Who Has Filed For Bankruptcy

2011-05-17T17:05:00.000-04:00

It isn't one of the more familiar retaliation statutes but for years, the bankruptcy code has included a provision that prohibits employers (private and governmental) from taking certain types of employment action "against[] an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt." 11 U.S.C. § 525(b).

Today, the federal court of appeals in Atlanta held that the bankruptcy retaliation statute, as to private employers, does not prevent an employer from refusing to hire an applicant who has a pending or prior bankruptcy action (I'll call the applicant a "debtor" to use the bankruptcy code terminology).

The court's reasons were pretty simple. Subsection (a) of section 525 applies to governmental employers. It provides that governmental employers may not "deny employment" to a debtor. This "deny employment" language is not found in subsection (b) which applies to private employers. The court explained:

A comparison of the words used in subsections (a) and (b) demonstrates that subsection (a) prohibits government employers from “deny[ing] employment to” a person because of his or [her] bankrupt status, whereas subsection (b) does not contain such a prohibition for private employers. Rather, the private sector is prohibited only from discriminating against those persons who are already employees. In other words, Congress intentionally omitted any mention of denial of employment from subsection (b), but specifically provided that denial of employment was actionable in subsection (a). Thus, by its plain language, the statute does not provide a cause of action against private employers for persons who are denied employment due to their bankrupt status. “Where Congress has carefully employed a term in one place but excluded it in another, it should not be implied where excluded.”

One point should be stressed (for governmental employers). As the court said, if the employer "were a governmental unit, [the applicant] would have a refusal to hire claim; because it is not, he does not." A governmental unit under the bankruptcy code is pretty much any public employer, federal or state. 11 U.S.C. § 101(27).

The decision is called Myers v. Toojays Management Corporation

DOL Develops iPhone App for Employees to Track Time

2011-05-10T11:43:00.000-04:00

I received an email from the DOL today that made me scratch my head. It seems the DOL Wage and Hour Division has developed an iPhone "app" that is a "timesheet" that lets employees record the hours that they work. The DOL explanation of the app is that it will "help employees independently track the hours they work and determine the wages they are owed." It will let employees "track regular work hours, break time and any overtime hours for one or more employers."

There is a "glossary, contact information and materials about wage laws" accessible through links to the Web pages of the department's Wage and Hour Division. The time sheet the app generates can be reviewed and emailed as an attachment.

The purpose of the app seems to be to permit employees to "keep their own record" instead of "relying on their employers' records." The DOL says: "This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records."

The app does not yet provide for calculation of tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials and pay for regular days of rest. Android and BlackBerry versions are being considered.

The reason I am skeptical is that, as anyone knows who has tracked time worked, the rules on when the work day begins and ends are not always easy to understand. Just yesterday, for example, I read about a court of appeals decision involving an employee who thought they were "working" when they drove to work because the employee had done some minor tasks at home. I was also reviewing hand written timesheets where one employee added time for their commute from home to work and back, none of which was properly compensable.

In most instances, the start and end of the work day will not be difficult to discern. This app, while well-intentioned, will permit employees to record their time based upon their own idea as to when the work day should start and end. The glossary is no help; it simply instructs employees to record the hour "at what time you started working." The app gives no caution to employees that there may be grey areas that must be considered, and worse, seems to imply that the DOL will regard the hours an employee records in the app as more accurate than the employer's official time records.

If nothing else, the app serves as a reminder that employers should scrupulously keep accurate time records for their non-exempt employees.

Federal Court Holds EEOC May Subpoena Records For "Overall" Conditions In the Workplace

2011-04-29T12:43:00.000-04:00

The federal court of appeals that sits in Chicago issued a decision today that lets the EEOC subpoena records relating to hiring practices from an employer (Konica Minolta) accused of wrongful termination in the employee's EEOC charge. The decision serves as a lesson to employers about the broad subpoena power of the EEOC. The only relevant facts are that Konica Minolta fired a minority employee ("Thompson") for poor sales performance after he had worked for 8 months. He filed a charge alleging his firing was disparate treatment because of his race. The EEOC then asked and later subpoenaed records of Konica Minolta's hiring practices.

As a side note, the facts that led the EEOC to seek the hiring practices records were that it:

discovered that there were only six blacks employed at Konica, out of 120 total employees in the identified facilities, and all six were employed in Tinley Park. Of the approximately 100 employees at the other locations, only one was a person of color. The EEOC also learned that there were two sales teams at the Tinley Park facility, and those teams were segregated largely along racial lines. Thompson’s team was made up of five black employees and two white employees.

These facts were not, strictly speaking, necessary to the court's decision but they do show the EEOC's concern was not completely irrational, either. The employer took the position that information on hiring practices in a termination claim was not relevant. The court disagreed, saying:

When the EEOC investigates a charge of race discrimination for purposes of Title VII, it is authorized to consider whether the overall conditions in a workplace support the complaining employee’s allegations. Racial discrimination is “by definition class discrimination,” and information concerning whether an employer discriminated against other members of the same class for the purposes of hiring or job classification may cast light on whether an individual person suffered discrimination. For that reason, the EEOC is authorized to subpoena “evidence concerning employment practices other than those specifically charged by complainants” in the course of its investigation.

* * *

The Commission is entitled generally to investigate employers within its jurisdiction to see if there is a prohibited pattern or practice of discrimination. Here, Thompson alleged both a specific instance and such a pattern of race discrimination. He asserted that he was treated differently from white co-workers in the “terms and conditions” of his employment, and that he was unequally disciplined for not meeting a sales quota. It is true that Thompson was not saying that Konica had refused to hire him, but that does not make hiring data irrelevant. The question under Shell Oil and its progeny is not whether Thompson specifically alleged discrimination in hiring, but instead is whether information regarding Konica’s hiring practices will “cast light” on Thompson’s race discrimination complaint.

(I've omitted citations to other court decisions from these quotes.)

Pending Tennessee Legislation would Overturn Summary Judgment Rulings of the Supreme Court

2011-04-28T13:14:00.000-04:00

A bill pending in the General Assembly would effectively reverse several decisions of the Tennessee Supreme Court that have all but made it impossible for an employer to get an employment lawsuit dismissed without a jury trial.

The bill would add a new provision to the Tennessee code which would say:

In all motions for summary judgment in any civil action in Tennessee, the moving party shall prevail on its motion for summary judgment if it:
(1) Submits affirmative evidence that negates an essential element of the nonmoving party's claim; or
(2) Demonstrates to the court that the nonmoving party's evidence is insufficient to establish an essential element of the nonmoving party's claim.

One sponsor of the bill explained (in the House Judiciary Subcommittee - see video of the session from April 27, 2011, set out below) the purpose of the bill was to addresses the Supreme Court's 2008 decision in Hannan v Alltel Pub where the Tennessee Supreme Court changed how they applied rule 56 and made a wrong or incorrect decision which makes it almost impossible for a court to grant summary judgment by requiring a party to essentially prove a negative.

A prior post of mine criticized the Supreme Court's "deeply flawed" application of the Hannan decision after it issued the decision in Gossett v. Tractor Supply, which held that the method of analyzing discrimination claims adopted in the U.S. Supreme Court's decisions in McDonnell Douglas / Burdine (an explanation of what these decisions held was included in my prior post) did not apply to summary judgment motions under state law because they were inconsistent with the Hannan decision.

Not surprisingly, the Tennessee Employment Lawyers Association (a group of lawyers that represent employees) opposes the bill, saying it would let employment lawsuits be dismissed without given employees the opportunity to respond. Their arguments (to the House Judiciary Subcommittee) were poorly founded and were sharply challenged by the bill's sponsor. The fact that TELA spoke against this bill should tell Tennessee Employers all they need about whether to get behind this bill. Here is a video of the most recent subcommittee discussion about the proposed legislation:

Interestingly, a separate bill (House Bill 1641, by the same sponsor) would directly overturn the Supreme Court's decision in Gossett by adding a provision to the code which specifies that McDonnell Douglas / Burdine principles would apply to claims under the Tennessee Human Rights Act and claims for retaliatory discharge. I am quite sure that TELA opposes this bill, as well.

Sixth Circuit Rejects DOL Guidelines on Determining Employee Status in a Training or Educational Setting

2011-04-28T10:54:00.000-04:00

The Secretary of Labor sued Laurelbrook Sanitarium and School, Inc. (“Laurelbrook”) for potential child labor violations. Laurelbrook is a nonprofit corporation located in Dayton, Tennessee which observes the Seventh-Day Adventists philosophy and teachings which include the view that children are to receive an education with a practical training component. The DOL sued contending that the students are really employees and being worked in violation of the child labor requirements.

The principal issue the court addressed (which makes the decision more relevant than it otherwise would be) was the test to apply in this type of situation. The DOL wanted the court to apply guidelines it established in the DOL Field Operations Handbook and in a publication available on its website: Employment Relationship Under the Fair Labor Standards Act, WH Pub. 1297 (Rev. May 1980). The publication set out minimum requirements (all of which must be met) for determining whether a student or trainee was not an employe:

the training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
the training is for the benefit of the trainees or students;
the trainees or students do not displace regular employees, but work under their close observation;
the employer that provides the training derives no immediate advantage from the activities of the trainees or students, and on occasion his operations my actually be impeded;
the trainees or students are not necessarily entitled to a job at the conclusion of the training period; and
the employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.

The Sixth Circuit, however, rejected application of this test saying it was "a poor method for determining employee status in a training or educational setting. For starters, it is overly rigid and inconsistent with a totality-of-the-circumstances approach, where no one factor (or the absence of one factor) controls." Furthermore, the court said, the DOL test is inconsistent with the Supreme Court's decision in Walling v. Portland Terminal Co., 330 U.S. 148, 152 (1947), which "suggests that the ultimate inquiry in a learning or training situation is whether the employee is the primary beneficiary of the work performed. While the Secretary’s six factors may be helpful in guiding that inquiry, the Secretary’s test on the whole is not."

The proper inquiry (the one the district court used) is to focus on "which party receives the primary benefit of the work performed by Laurelbrook students." The court went into considerable detail (by discussing the facts in a separate court decision) about the considerations for this test. I won't repeat them here. The following explanation will suffice for present purposes:

If a purported employer receives the primary benefit from a working relationship with a child, it is likely that the child is in competition with adults, whom the employer cannot employ without complying with the FLSA’s costly and burdensome requirements. If, however, a child receives the primary benefit of the work performed for a purported employer, and the child’s presence does more harm to the purported employer’s operations than good (or no good at all), it is unlikely that the child is competing with adults for the opportunity to hinder the employer’s operations.

To conclude, we hold that the proper approach for determining whether an employment relationship exists in the context of a training or learning situation is to ascertain which party derives the primary benefit from the relationship. Factors such as whether the relationship displaces paid employees and whether there is educational value derived from the relationship are relevant considerations that can guide the inquiry. Additional factors that bear on the inquiry should also be considered insofar as they shed light on which party primarily benefits from the relationship.

Harassment Decision Demonstrates Importance of Clear Policies and Training

2011-04-27T16:46:00.000-04:00

The federal court of appeals in Richmond issued a decision today which demonstrates the importance of having clear harassment policies and training first level supervisors about reporting harssment complaints.

The lawsuit, brought by the EEOC (EEOC v. Xerxes Corporation) alleged a racially hostile work environment on behalf of two employees. The employees say they complained to their supervisor months before the company did anything. (The supervisor disputed having received any complaints.) It was clear, that once more senior management learned of the conduct, they took prompt action that was reasonably calculated to end the harassing conduct.

The court of appeals upheld the dismissal of the EEOC's harssament claims for conduct that occurred after management learned of the conduct. Ironically, this conduct was among the worst of the lot (assuming there are degrees of offensive racial conduct) consisting of anonymous hate-speech (e.g., KKK messages and the "N" word included in a written message) left in the locker of one African-American employees. The employer promptly and effectively responded to these incidences, the court held, even though it never caught the perpetrator. The employer called a meeting, threatened to fire the person if caught, and called in the police to investigate.

The employer's problem was that the employees claimed to have reported to their supervisor a number of racial slurs that were directed at them but it was months before the company took action. This allegation, the court held, created an issue of fact for the jury over whether the employer had effectively responded to their complaints.

I don't often get to give advice on how to avoid issues of fact. An issue of fact isn't discrimination. There can be all sorts of factual disputes but if a jury believes the employer's testimony, the employer will win. Factual disputes are only an issue because it is vastly cheaper for the employer to have the discrimination/retaliation claims dismissed prior to a full blown trial.

Here, the employer's policies played into the EEOC's goal of creating a factual dispute. The court noted, for example, that "Plant employees were instructed to report any violations [i.e., harassing conduct] to their 'supervisor, Plant Manager, . . . or a member of Xerxes’ Compliance Committee.'" The employer changed the policy (after the employees say the complained to their supervisor) to say that violations must be immediately reported to the supervisor and plant manager.

It would be interesting to see a policy that said harassing conduct must be reported to HR not the supervisor. I tend to think a court might not look favorably on that policy because supervisors are considered to be agents of the employer. A policy that says report violations to both is more likely to be enforced if the employee only reports to the supervisor. Regardless, the safest course, even if not required, is to make sure supervisors are clearly and regularly trained to report up the command chain all reported misconduct.

Whether or not this avoids an issue of fact, if a case goes to trial, evidence of this kind of training can be used to help convince a jury that no complaints were made to the supervisor.

Court Holds an Employer's Prior Leniency Doesn't Create Inference of Pretext

2011-04-25T15:44:00.000-04:00

The federal court of appeals that sits in Denver issued a rather interesting race and retaliation decision today in the case of Wythe Crowe v. ADT. Numerous complaints of harassment and improper conduct had been made against the employee (he, in turn, had complained about racial bias in promotions). The employee was a minority, however, and the implication in the decision was that ADT, the employer, had been too lenient towards him because he was a minority. After one more complaint of harassment, an HR manager wrote a report, which relied upon complaints against Crowe that occurred well before and after Crowe complained about promotion bias. (The report's conclusion is worth setting out as it reflects a frustration many HR Managers feel):

[W]hy have we allowed Wythe to treat management and specifically, women in positions of power, with such disrespect? Why did ADT continue to try to appease this person and not support or protect our management team from this type of harassing and disrespectful abuse? This behavior is against the law at any company in this country. Why do we allow it here at ADT? If Heather England took this case to the EEOC or to court, ADT could lose because we were not there to protect all employees from a hostile work environment that is free from harassment.
. . . .

The ramifications of not terminating Wythe Crowe could be huge! Think about this: What if a white male exhibits the same harassing, insubordinate, discriminatory, and disrespectful behavior as Wythe has done over the years. If we decide to fire this person, we have now set ourselves up for a reverse discrimination lawsuit. For that matter, since we have allowed Wythe to exhibit this type of behavior for many years, it does not matter whether the next person is white, yellow, or pink, we are setting ourselves up for a potential lawsuit due to the precedent we have set by allowing Wythe Crowe to continue his employment at ADT.

(The court rejected Crowe's argument that this report was itself evidence of bias.) What was most interesting was, when it came to the retaliation claim, the court rejected the employee's argument that the employer's history of being lenient towards him itself raises an inference of pretext:

Accepting Mr. Crowe’s argument would have the peculiar result of penalizing employers which, like ADT did in this case, attempt to rectify alleged inappropriate behavior instead of immediately terminating an employee upon the first transgression. Indeed, Mr. Crowe’s argument effectively inverts an employer’s incentives—if two employees engage in the same protected behavior, terminating the employee with a longer, more extensive history of serious complaints would invite litigation, while terminating the employee with a shorter, less extensive history of minor complaints would not entail that risk. In sum, ADT’s prior leniency with Mr. Crowe, without more, does not constitute evidence from which a reasonable jury could conclude that firing Mr. Crowe based on his long history of alleged in appropriate behavior was pretextual.

The idea isn't unprecedented. Years ago, the federal court of appeals in Chicago stated essentially the same thing when it said, "we cannot vilify every employer that exercises caution in the handling of delicate employment situations." Vore v. Indiana Bell, 32 F.3d 1161 (7th Cir. 1994).

No doubt, it is always better to be as even handed as possible in imposing disciplinary action but in today's costly litigation climate, the decision preserves some flexibilty for cautious employers.

Federal Court Upholds DOL Regulations on Tip Credit Limits

2011-04-21T13:46:00.000-04:00

Applebees had its bar tenders and servers perform a variety of duties which the employees contended were outside the scope of duties for which tips were traditionally paid. In a decision issued today, the federal court of appeals in St. Louis, sided with the Department of Labor in upholding the DOL's interpretation of its tip credit rules.

Tip credits, for those that don't know, permit employers to pay tipped employees a lower fixed hourly rate ($2.13) and having tips make up the difference to minimum wage. Today's decision explained the rules governing tip credits:

The FLSA requires employers to pay a minimum hourly wage, which is currently $7.25 per hour. See 29 U.S.C. § 206(a)(1). The "wage" paid to a "tipped employee" is defined as the sum of (1) the cash wage paid to the employee, which must be at least the minimum cash wage that was required to be paid to tipped employees on August 20, 1996 ($2.13 per hour), and (2) an additional amount based on the tips received by the employee that is equal to the difference between the amount stated in paragraph (1) and the current rate required by § 206(a)(1). See 29 U.S.C. § 203(m) (defining "wage").

I mentioned tip credits in a recent post on the recently issued Wage and Hour Division regulations. As to tipped employees doing other non-tipped duties, the court explained:

The DOL regulations recognize that an employee may hold more than one job for the same employer, one which generates tips and one which does not, and that the employee is entitled to the full minimum wage rate while performing the job that does not generate tips. See 29 C.F.R. § 531.56(e). The DOL's 1988 Handbook provides that if a tipped employee spends a substantial amount of time (defined as more than 20 percent) performing related but nontipped work, such as general preparation work or cleaning and maintenance, then the employer may not take the tip credit for the amount of time the employee spends performing those duties.

The bar tenders and servers contended they did a lot more than their tipped work:

The plaintiff bartenders claim that they were required to perform such duties as wiping down bottles, cleaning blenders, cutting fruit for garnishes, taking inventory, preparing drink mixers, and cleaning up after closing hours. The servers claim that they performed such duties as cleaning bathrooms, sweeping, cleaning and stocking serving areas, rolling silverware, preparing the restaurant to open, and general cleaning before and after the restaurant was open.

Applebee's argued these were incidental duties. The crux of the case concerned the Wage and Hour Division's regulation on performing non-tipped tasks. The regulation recognizes, the court explained, that an employee may perform "related duties in . . . a tipped occupation" that are not themselves tip producing "part of [the] time" and "occasionally," and that the time spent performing these related duties is subject to the tip credit, but it does not address the impact of an employee performing related duties more than "part of [the] time" or more than "occasionally." The DOL further explained these limits not in a regulation but in a handbook the DOL prepared for its investigators to use:

where the facts indicate that specific employees are routinely assigned to maintenance, or that tipped employees spend a substantial amount of time (in excess of 20 percent) performing general preparation work or maintenance, no tip credit may be taken for the time spent in such duties.

The court of appeals upheld the 20 percent limitation set forth in the DOL Handbook. The decision is an unfortunate reminder for any employer with tipped employees that the DOL rules on tips are a frequent source of litigation, are often complex and difficult to follow.

Bring Your Gun to Work Legislation Passes Tennessee House Judiciary Committee

2011-04-08T14:10:00.001-04:00

Looking to create a problem where no problem exists, a bill (HB 2021) pending in the Tennessee General Assembly would prohibit Tennessee employers from barring employees from bring firearms onto the employer's property. The operative language is:

no private or public employer, including the state and its political subdivisions, shall prohibit an employee who possesses a valid handgun carry permit authorized by § 39-17-1351, from entering the employer’s parking lot and parking in such lot during the employee’s regular work hours when the employee's privately-owned motor vehicle contains a firearm that is stored within the trunk, glove box, or other enclosed compartment or area where the firearm is not visible from outside the vehicle and such motor vehicle is locked.

Forcing employers to permit firearms on their property is an utterly bad idea. A sad graphic from the Department of Homeland Security listed the "active shooter" incidences in this country, including one at a church in the home town of the state senator sponsoring the "bring your gun to work" legislation:

Prepared by Department of Homeland Security

Bureau of Labor Statistics show an average of 70 people a year are killed at work by co-workers. Legislation is about balancing competing concerns and any increase in the risk of workplace violence should be weighed against the need for the action. No doubt, not everyone who would bring a gun to work is going to use it at work. The point is, however, that it is impossible to fathom the need for legislation that gratuitously increases the risk for all Tennessee employees.

But what is even stranger about the legislation is a separate provision which seems to say that employers may not prohibit firearms but if an employer fires an employee for bringing a firearm onto the employer's property, the employee has no right to sue for wrongful discharge.

Legislation that solves no existing problem but increases risks for employers and is incomprehensible. It has not been a good week in Nashville.