Ninth Circuit Clarifies Meaning of "Voluntary Departure" Under WARN Act
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In Collins v. Gee West Seattle, LLC, a three member Ninth Circuit panel held 2-1 that employees who receive notice of a plant closing, but stop returning to work before the plant closing takes effect, have not “voluntarily departed” under the Worker Adjustment and Retraining Notification Act (WARN).
In Collins, the employer announced to its employees in late September 2007 that it would be closing its doors at the end of business on October 7, 2007. Before that announcement, the employer had approximately 150 employees. By October 5, however, only 30 employees continued to report to work, the remainder having opted to stop coming in.
Under the WARN Act, an employer must provide at least 60-days notice to each affected employee, assuming the closing or shutdown would result in “an employment loss…during any 30-day period for 50 or more employees.” 29 U.S.C. § 2101(a)(5). An “employment loss” is defined as a termination “other than a discharge for cause, voluntary departure, or retirement.” (Emphasis added.)
In Collins, the employer argued that the 120 employees who stopped coming to work were “voluntary” departures because they left of their own free will before the plant closed. As a result, only the 30 remaining employees were "involuntary" terminations, and therefore the WARN Act was never implicated. The Ninth Circuit disagreed, reversing the District Court’s grant of summary judgment, and holding that employees who stopped coming to work because of the notice that the plant would close did not depart “voluntarily” within the meaning of the Act. The Court noted that the employer’s interpretation is “inconsistent with the Act’s general structure and its overall purpose,” and would render “superfluous” the “faltering business” exception to the WARN Act—which allows employers who are uncertain as to the future of the business to provide notice of the closure “as is practicable.”
While Collins applies to only a narrow set of circumstances, employers facing the unfortunate circumstance of an uncertain mass layoff or plant closing must take into consideration that employees who stop coming to work before the layoff or closure, but based on the representation that the layoff or closure will occur, must be counted for purposes of WARN Act calculations. When faced with such an uncertain situation, employers are better off providing notice when practicable, and consider arguing a faltering business defense.
See also World of Employment's prior WARN Act related posts:
- FOREWARN Act Introduced - Changes to WARN Act in 2009?
- Changes Coming to the WARN Act?
- Tenth Circuit Affirms Dismissal of WARN Act Case
Supreme Court Holds Title VII Can Cover Third Party Retaliation Claims
The United States Supreme Court issued a unanimous opinion today in Thompson v. North American Stainless, LP., 562 U.S. ___ (2011), that confirms the expansive scope of persons protected by Title VII. The Court held that it is unlawful for an employer to intentionally harm one employee in order to retaliate against another employee who engaged in protected activity.
Plaintiff Thompson and his fiancée Regalado were engaged to be married and both worked for North American Stainless (NAS). The EEOC notified NAS that Regalado had filed a charge of sex discrimination. Thompson was fired three weeks later. The issue was whether Thompson could state a claim for retaliation, even though he had not engaged in any protected activity. The Court confirmed that “Title VII’s antiretaliation provision must be construed to cover a broad range of employer conduct.” It “prohibits any employer action that well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.” The Court found that it was “obvious” that Regalado would have been dissuaded from making her complaint if she knew that Thompson would lose his job as a result.
The employer argued that to permit a third party retaliation claim in this case would lead to a dangerous slippery slope – would firing an employee’s boyfriend count? How about just a friend? Anytime the employer fired a person who happened to have a connection to someone else who had filed an EEOC charge, the employer would have potential liability. The Court responded: “Although we acknowledge the force of this point, we do not think it justifies a categorical rule that third-party reprisals do not violate Title VII. . . . Given the broad statutory test and the variety of workplace contexts in which retaliation may occur, Title VII’s antiretaliation provision is simply not reducible to a comprehensive set of clear rules.” In other words, there is no bright line test for who is protected from retaliation.
After concluding that the antiretaliation provision of Title VII was broad enough to encompass the activity in this case, the Court tackled the question of whether Thompson could sue NAS. Here the Court took a more narrow approach. It declined to follow the Court’s prior view that, to be “an aggrieved person” under Title VII, all that was required was that the person have “minimal Article III standing, which consists of injury in fact caused by the defendant and remediable by the court.” That minimalist approach would lead to “absurd consequences.” For example, if the minimalist approach was applied, a shareholder who could show that his stock value declined because of the company’s unlawful termination of a valuable employee could sue under Title VII. Instead, the test, the Court said, is as follows: “[A] plaintiff may not sue unless he falls within the zone of interests sought to be protected by the statutory provision whose violation forms the legal basis for his complaint.” Thompson, it said, fell within the “zone of interests” protected by Title VII because he was a NAS employee and NAS intended to injure him in order to punish Regalado.
What This Case Means for Employers
Employers probably didn’t need another reminder that the potential claims they face are only limited by the imagination of plaintiffs’ attorneys. Before an employer takes any disciplinary action against anyone, it must ensure that it has legitimate business reasons for doing so and that an improper reason – such as a desire to exact revenge on another employee – hasn’t infected the decision.
NLRB to Consider Scope of Permissible Solicitation On Employer Premises
The National Labor Relations Board (NLRB) is on its way to making some significant changes, which favor organized labor. One change that may be coming relates to non-solicitation rules. These rules determine when a union organizer can come on a company’s property and solicit employees to join a union. For the time being, a company can prohibit a union organizer from coming on its property so long as it’s not discriminating by allowing other third parties on its property to solicit employees.
There are exceptions; for example, an employer can allow third parties on its property if it’s intended as a benefit for employees, such as a yoga or fitness company holding meetings on site to describe group rates. An employer is also allowed to bring charities such as United Way on site to solicit employees. If an employer allows only these types of solicitations, it is not considered discriminatory to prohibit union organizers from the premises. The blurry line relates to the situation when employees solicit for third parties that are good causes but not charities, such as the girl scouts or fundraisers for public schools.
A pending NLRB case called Roundy’s involved distribution of handbills on company property in front of its retail stores (sidewalks and parking lots). The handbills asked consumers not to shop at Roundy’s claiming unfair wages. The Union contends that Roundy’s allowed several outside third parties on its property – bloodmobiles, Salvation Army, Veteran of Foreign Wars, Shriners and others – and that union agents should be allowed the same access.
The NLRB took the unusual step of requesting amicus briefs from interested parties before it makes a decision. This often signals a major policy shift. Given the labor-friendly composition of the NLRB, it’s likely to give greater rights for union organizers to enter onto a company’s property, such as parking lots, sidewalks and possibly inside the facility itself – in a non-work area. If this becomes law, it’ll be much easier for an organizer to solicit an employee on company property.
One step employers can take now is to review and update their non-solicitation policy and ensure that’s it’s being applied in a consistent manner. That is, ensure that you’re not allowing third parties on your property to solicit your employees – or you may be opening your door to a union organizer.
California: Employee's E-Mails With Lawyer Are Not Privileged When Sent Via Company Computer
A clear and comprehensive computer policy is an essential component of any employee handbook. Last week, a California appellate court ruled that when such a policy is in place, an employee who uses the company computer to e-mail her attorney about perceived harassment and discrimination in the workplace waives the attorney-client privilege.
In Holmes v. Petrovich Development Company, the plaintiff alleged that she was the victim of sexual harassment and retaliation arising from her employer’s response to her pregnancy. Before quitting her job, the plaintiff used her work computer to send e-mails to her attorney regarding possible legal action. As might be expected, the employer subsequently located these e-mails on its computer system, and used the e-mails as part of its defense of the employee’s lawsuit.
Ordinarily, communications between a client and her attorney are confidential and privileged. In this case, however, the employer’s policies provided that: (1) company computers were to be used only for company business, (2) the company would monitor its computers for compliance with this policy and thus might “inspect all files and messages … at any time,” and (3) employees using company computers to create or maintain personal information or messages “have no right of privacy with respect to that information or message.”
The court ruled that when the plaintiff used a company computer to e-mail her attorney about an employment action against her boss, with knowledge of her employer’s computer monitoring policy, the employee knowingly disclosed the information to the company, and her communications with her attorney lost their privileged character. Summing it up neatly, the court said that sending the e-mails via company computer “was akin to consulting her lawyer in her employer’s conference room, in a loud voice, with the door open, so that any reasonable person would expect that their discussion of her complaints about her employer would be overheard by him.” The defendants prevailed on all of plaintiff's claims.
This case reinforces that there are many benefits to an employer’s implementation of a well-written computer policy.
Oregon Supreme Court Allows Greater Punitive Damage Award in Some Employment Cases
The Oregon Supreme Court has recognized an exception to limits on punitive damage awards in certain employment cases where the compensatory damages are low. In Hamlin v. Hampton Lumber Mills, Inc., the Oregon Supreme Court considered the case of a plaintiff who was injured on the job and whose employer failed to reinstate him as required by ORS 659A.043. That statute requires employers to reinstate injured workers on request within three years of the injury, unless other exceptions apply. A jury found the employer had violated ORS 659A.043 and awarded the plaintiff $6,000 in lost wages and $175,000 in punitive damages.
As the Court noted, the Due Process Clause in the Fourteenth Amendment of the United States Constitution imposes limitations on punitive damages awards. The exact limitations are based on factors including the ratio of compensatory to punitive damages and the reprehensibility of the act, among other things. Courts have held that in the ordinary case, the ratio of punitive damages to compensatory damages should be limited to single digits (for example, 4:1). In this case, the ratio was 22:1. The Oregon Court of Appeals held that the punitive damages award was unconstitutional and ordered it reduced to $24,000 – or a 4:1 ratio.
The Oregon Supreme Court reversed, upholding the 22:1 ratio because it determined that the compensatory damages were “relatively small” and that a violation of ORS 659A.043 was particularly reprehensible. The Court noted that “the harm that offending employers inflict may be more than monetary and . . . a plaintiff who is not reinstated and who is, therefore, unemployed, is in a more vulnerable position than is a person who is employed when he or she suffers monetary loss. A person who suffers a loss of employment is without the present ability to earn money to recover economic loss and to avoid further consequential loss.”
The ruling leaves a number of perplexing loose ends. First, as the dissenting justices noted, the opinion creates the possibility that a plaintiff who receives a larger compensatory damage award could actually be limited to a smaller punitive damages award. For example, a plaintiff who received $25,000 in lost wages could be limited to a ratio of 4:1, allowing only $100,000 in punitive damages – less than those awarded in this case. Second, the ruling leaves unclear whether ORS 659A.043 is the only statute that the Court will consider it particularly reprehensible to violate, or whether the Court’s holding applies to any unlawful employment practice that leaves the plaintiff employee without a job. The matter may end with the United States Supreme Court. In an unusual move, the dissenting justices specifically requested further clarification from that Court.
GINA Compliance?
As Stoel Rives World of Employment has previously reported, Title II of the Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits employers from discriminating against employees and applicants based on their genetic information and regulates employers’ acquisition and use of genetic information.
GINA applies to private employers with 15 or more employees, employment agencies, labor unions, and some other entities. Laws in 34 states also prohibit employment discrimination on the basis of genetic information and some of them may apply to employers with fewer than 15 employees. On November 9, 2010, the Equal Employment Opportunity Commission (EEOC) issued final regulations to Title II of GINA.
While many employers don’t think they collect genetic information covered by the law, its definition of “genetic information” is quite broad and includes family medical history. “Genetic tests” which come under the law are becoming more common, such as tests which detect the gene thought responsible for a predisposition to breast cancer. (The regulations helpfully specify that some tests, like a cholesterol test or a drug and alcohol test, are not “genetic tests.”) The regulations broadly prohibit an employer’s efforts to obtain an applicant’s or employee’s genetic information, but do provide a safe harbor for “inadvertent acquisition.” This safe harbor will protect an employer, for example, who gains genetic information by innocently inquiring about an employee’s well-being.
But employers commonly make requests for medical information such as when asking an employee to provide a medical certification for a FMLA leave or as part of the ADA interactive process. The regulations specify that employers must tell employees – using specific language – to not disclose protected genetic information when the employer requests medical information. Not surprisingly, the regulations require employers to maintain any genetic information obtained in a separate confidential medical file. Genetic information may be kept in the same file as other medical information.
The EEOC’s helpful FAQs on GINA are here. (Question 17 contains the suggested safe harbor language.)
What should employers do?
- Revise the EEO statement to include a prohibition on discrimination based on genetic information or ensure that the EEO statement includes broad language like “and as provided by law.”
- Check to ensure that application forms or on-boarding forms don’t seek family medical history information.
- Update template communications to employees when requesting medical information to include the approved safe harbor language.
