No Harassment, No Problem: Idaho Court Holds Harassing Comments May Still Support Liability for Negligent Infliction of Emotional Distress

A November 27, 2013 opinion from the Idaho Supreme Court reinstated a former Assistant Vice Principal’s claim seeking damages for negligent infliction of emotional distress. This decision highlights that allegedly harassing workplace comments may subject employers to liability even though e the complaining employee cannot make out a traditional sexual harassment claim. 

In Frogley v. Meridian Joint School Dist., 2013 opinion No. 124, the employee claimed that he had been the victim of sexual harassment based upon sexually-charged comments to and about him. Mr. Frogley claimed that the behavior continued despite making known that the behavior was offensive. The complaints came at approximately the same time his superiors began to question his work performance.

All of the claims, including sexual harassment under federal and state law, were dismissed before they were allowed to proceed to trial. The Supreme Court’s opinion does not detail the reason for the lower court’s decision in that regard and the employee chose not to appeal dismissal of the sexual harassment theories; pursuing instead his claims for retaliation and negligent infliction of emotional distress.

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Idaho Supreme Court Rejects Lawsuit over Intra-Office Romance

On June 29, 2011, the Idaho Supreme Court unanimously upheld a district court ruling that a state worker could not maintain an action against her employer for wrongful discharge based on allegations that her supervisor’s intra-office romance and consequent favoritism toward his paramour created a hostile work environment. See Patterson v. State of Idaho Dep’t of Health & Welfare. In the first Idaho case of its kind, the Court found that paramour favoritism did not violate Title VII and therefore opposition to such activity is not “protected activity” under the Idaho Human Rights Act (“IHRA”).

The longtime Idaho Health & Welfare employee who initiated the action, Lynette Patterson, asserted that her boss’s affair with another worker resulted in favoritism toward the other worker and created a hostile work environment for her and others in her unit. Following Patterson’s initial complaints of her supervisor’s misconduct, the department launched an investigation into her allegations and found that although Patterson’s supervisor did in fact have an inappropriate relationship with another employee in violation of the department’s internal policy, there was no evidence to support preferential treatment. Thereafter, Patterson claims she was the victim of retaliation. Upon receiving a performance evaluation stating that she had failed to achieve performance standards, she quit her job, alleging that she was constructively discharged.  

Patterson’s complaint against the department asserted constructive discharge under the IHRA and violation of the Idaho Protection of Public Employees Act. Following an unfavorable summary judgment ruling, she appealed both issues to the Supreme Court.

 

In its analysis of Patterson’s retaliation claim under the IHRA, the Court used the Ninth Circuit’s three-prong test for a retaliation claim, which requires a plaintiff to demonstrate: 1) that she engaged in protected activity; 2) that she suffered an adverse employment action; and 3) there was a causal link between her activity and the adverse employment action. See EEOC v. Luce, Forward, Hamilton & Scripps. Courts have found the first prong satisfied when an employee demonstrates he or she subjectively and reasonably believed that he or she was opposing activity that violates Title VII. See Little v. United Technologies, Carrier Transicold Division.

 

The Court found that Patterson subjectively believed she engaged in protected activity when she opposed the paramour relationship allegedly resulting in favoritism, but it concluded that such a belief was not objectively reasonable. The Court noted that a critical element of the inquiry regarding objective reasonableness of an employee’s belief that he or she is engaging in protected activity is the existing case law at the time of the incident. The case law at the time of Patterson’s resignation did not support her position. Moreover, the Court found that the favoritism, even if true, affected all concerned on a gender-neutral basis.

 

This decision aligns Idaho with other jurisdictions that have confronted the specific issue of paramour favoritism and ruled that paramour favoritism does not constitute gender discrimination because it affects both men and women equally. The Court’s ruling is useful to Idaho employers to the extent that it requires employees to demonstrate the reasonableness of their belief that they are engaging in protected activity under the IHRA. Notwithstanding these holdings, employers must continue to be careful about the prospect of retaliation claims, which constituted 25% of all complaints filed with the Idaho Human Rights Commission in 2010.

Idaho Enacts Law Providing Tax Credits for Private Employers

On the final day of the sixty-first Legislature, Idaho lawmakers passed a bill which provides varying levels of tax credits for private employers who hire at least one employee after April 15, 2011. Governor Otter signed the legislation amending Idaho Code section 63-3029F on April 13.

In order to qualify for the credit, a newly hired employee must receive qualifying employer-provided health care benefits as determined by the Idaho State Tax Commission and be employed in a county within in the state of Idaho with an unemployment rate at or greater than the benchmarked annual employment rate as determined by the Department of Labor on the date the new employee was hired.  That benchmark is either ten percent (10%) or more at average annual earnings of twelve dollars ($12.00) or more per hour, or less than ten percent (10%) at average annual earnings of fifteen dollars ($15.00) or more per hour.   The available credit is not earned, however, until the new employee has worked for a minimum of nine consecutive months with any part of the qualifying period ending during the taxable year for which the credit is claimed. Additionally, the credit is not available when an employer acquires a trade or business or who operates in a place of business the same or substantially identical trade or business as operated by another qualifying business within the prior twelve months. Employees transferred from a related business shall also not be included in the computation of the credit.

The amount of the credit varies between 2-6% depending on how the employer is rated for unemployment tax purposes.   Employers with a positive rating earn the highest amount of the credit while deficit rated business earn the lower amount. The credit is calculated based on the gross salary paid to the eligible new employee during the initial twelve months of employment and claimed during the qualifying taxable year.

The Tax Commission is charged with promulgating rules implementing the legislation.  To claim the credit, rated employers must attach to the employer's income tax return the taxable wage rate notice issued by the department of labor for the income tax year for which the credit is claimed.   An estimate of the financial impact from the Department of Labor and Division of Financial Management indicates that the legislation could draw $7.9 million per year from the general fund while generating $25.3 million in state tax revenue.

This legislation is very complex and may be difficult for employers to determine whether they may quality for the credit.  If you have questions, please contact your attorney.

Companion Anti-Union Bills Slated to Pass Idaho Legislature

Never shy about taking on unions, especially in a state where organized labor enjoys little support outside the government sector, the Idaho Legislature recently introduced a pair of bills for addition to the state’s existing Right to Work statute. 

Senate Bill 1007, named the “Fairness in Contracting Act,” is intended to “promote fairness in bidding and contracting.”  This bill provides, among other things, that a “contractor or subcontractor may not  directly or indirectly receive a wage subsidy, bid supplement or rebate on behalf of its employees, or provide the same to its employees, the source of which is wages, dues or assessments collected by or on behalf of any labor organization(s), whether or not labeled as dues or assessments.”  The proposed measure would also prohibit labor organizations from “directly or indirectly” paying “a wage subsidy or wage rebate to its members in order to directly or indirectly subsidize a contractor or subcontractor, the source of which is wages, dues or assessments collected by or on behalf of its members, whether or not labeled as dues or assessments.”  Use of any fund financed by wages collected by or on behalf of any labor organization, whether or not labeled as dues or assessments, to subsidize a contractor or subcontractor doing business in the state of Idaho would be deemed unlawful. 

Contractors, including subcontractors, or labor organizations that violate the provisions of this proposed law will be guilty of a misdemeanor and could be fined an amount not to exceed ten thousand dollars ($10,000) for a first offense, twenty-five thousand dollars ($25,000) for a second offense, and one hundred thousand dollars ($100,000) for each and every additional offense. 

The legislation would also confer standing on any “interested party,” including a bidder, offeror, contractor, subcontractor or taxpayer, to challenge any bid award, specification, project agreement, controlling document, grant or cooperative agreement in violation of the provisions of the law.  If an interested party prevails in a lawsuit challenging the bill, it will be awarded costs and attorney's fees.

A companion bill, Senate Bill 1006 (“The Open Access to Work Act”), introduced at the same time, bars bidders on public works projects from paying a predetermined amount of wages or wage rate; or type, amount or rate of employee benefits.  The law does not apply when federal law requires the payment of prevailing or minimum wages to persons working on projects funded in whole or in part by federal funds.  A separate provision makes clear that the contractor party cannot be required to enter into an agreement with a labor organization as part of the contract.

Both of these bills were printed and sent to the State Affairs Committee for further action last week.  Yesterday, the full Senate considered and voted on SB 1006, approving it by a 27-7 vote. It has now been referred to the Idaho House. SB 1007 on Monday passed the Committee by a 7-2 party line vote, and will soon be taken up by the full Senate. 

Although these bills remain at a relatively early stage, questions have been raised about their legality and potential conflict with federal labor law.   Stay tuned for more.

9th Circuit: No Compensatory or Punitive Damages in ADA Retaliation Cases

The Ninth Circuit Court of Appeals recently limited the remedies available to employees who sue for retaliation under the Americans with Disabilities Act (ADA), ruling that the statute does not provide for punitive damages, compensatory damages or a jury trial in ADA retaliation cases.  Click here to read the decision in Alvarado v. Cajun Operating Co. 

Mr. Alvarado worked as a cook in defendant’s restaurant. He complained after his supervisor made allegedly discriminatory remarks related to his age and disability, and shortly afterward he received several disciplinary write-ups for poor performance.  After Mr. Alvarado was ultimately terminated, he sued his former employer for, among other things, retaliation under the ADA.  Prior to trial, the federal district court granted defendant’s motion in limine, barring plaintiff from seeking punitive and compensatory damages, and a jury trial, on his ADA retaliation claim on the grounds that the statute provided only equitable relief for such claims.

The Ninth Circuit affirmed the district court’s ruling by holding that the plain, unambiguous language of the ADA remedy provisions specifically enumerate only those sections of the act for which compensatory and punitive damages (and a jury trial) are available, and that the ADA anti-retaliation provision is not included in that list.  Somewhat surprisingly considering the laws at issue have been on the books since 1991, the Ninth Circuit appears to be only the third Circuit Court of Appeals to have been presented with the issue, after the Seventh and Fourth Circuits (which reached similar conclusions).  The court also noted that several district courts in other circuits had reached the opposite conclusion (perhaps most surprising of all), by ignoring the text of the remedy provision and instead emphasizing the overall structure of the ADA and the “expansive” intent of the 1991 amendments. 

For now, the law in the Ninth Circuit on this question is clear:  while still entitled to compensatory or punitive damages in disability discrimination or failure to accommodate claims under the ADA, employees may not receive those damages for ADA retaliation claims.

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Use Workshare Program to Cut Costs and Keep Workers

Are you looking for ways to hang on to staff, yet reduce costs?  Those goals are not necessarily mutually exclusive if you choose to participate in your state's workshare program.  A workshare program allows your employees to collect some unemployment benefits but continue working part time.  Here's an article from the Center for Law and Social Policy that gives additional detail.

Seventeen states have such programs:  Arizona, Arkansas, California, Connecticut, Florida, Iowa, Kansas, Maryland, Massachusetts, Minnesota, Missouri, New York, Oregon, Rhode Island, Texas, Vermont and Washington.  For a sample of a workshare law, see Section 1279.5 of California's unemployment insurance code.

Each state’s program is a little different, but they have common attributes.  We’ll use Oregon’s program as an example. 

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Supreme Court Upholds Idaho Law on Union Speech 6-3

The U.S. Supreme Court ruled earlier this week that an Idaho law banning local government employers from allowing payroll deductions for political activities does not violate unions' First Amendment free speech rights.  You can download the opinion here:  Ysursa v. Pocatello Ed. Ass'n, U.S., No. 07-869, 2/24/09).

The Idaho Voluntary Contributions Act, enacted in 2003, prohibited public employees' unions from using payroll deductions to fund political activities, defined as “electoral activities, independent expenditures, or expenditures made to any candidate, political party, political action committee, or political issues committee or in support of or against any ballot measure.”  A group of unions representing state and local employees in the state sued to challenge the VCA on the basis that it unlawfully restricted unions' First Amendment Right. 

A 6-3 majority of the Supreme Court held that the VCA does not violate unions' rights:  “Idaho's law does not restrict political speech, but rather declines to promote that speech by allowing public employee checkoffs for political activities,” Chief Justice Roberts wrote for the majority. Applying rational-basis review, he found that the restriction “is reasonable in light of the State's interest in avoiding the appearance that carrying out the public's business is tainted by partisan political activity.”

With that endorsement, don't be surprised if more states (particularly right-to-work states) pass similar legislation. 

U.S. Supreme Court to Hear Six L&E Cases This Term

The U.S. Supreme Court opened its 2008-2009 term on October 6 with six labor and employment law cases on its docket.  (For docket information and questions presented, click on the name of the case). 

  • Locke v. Karass:  may a public employee union may charge nonmembers for representational costs for litigation expenses incurred by the international union on behalf of other bargaining units?
  • Kennedy v. Plan Administrator for DuPont Savings & Investment Plan:  is a qualified domestic relations order (QDRO) is the only valid way under ERISA for a divorcing spouse to waive his or her right to the other spouse's pension benefits?
  • Crawford v. Metro. Gov't of Nashville & Davidson County:  Is an employee who cooperates with an employer-initiated investigation into alleged unlawful discrimination protected by Title VII's anti-retaliation provisions? 
  • Ysursa v. Pocatello Education Ass'n:  does an Idaho law that prohibits local government employers from allowing employee payroll deductions for political activities violate the First Amendment free speech rights of unions and their members?
  • 14 Penn Plaza LLC v. Pyett:  do employees covered by a collective bargaining agreement which providies that statutory employment discrimination claims must be pursued through the contractual grievance and arbitration procedures have a right for a court to decide their discrimination claims?
  • AT&T Corp. v. Hulteen:  must an employer give full service credit for purposes of calculating retirement benefits for pregnancy leaves taken before the Pregnancy Discrimination Act of 1978 if the plan gave full credit for other types of temporary disability leaves? 

Some of these cases (such as the Penn Plaza and Crawford cases) have the potential to make significant changes in existing law.  Stay tuned to the Stoel Rives World of Employment for developments as they occur!

Idaho Supreme Court Clarifies Covered Employment for Unemployment Insurance Tax Purposes

In Excell Construction Inc. v. Idaho Department of Commerce and Labor, the state's high court provided a detailed analysis of each the factors to be considered in determining whether a worker is covered for tax purposes.  The court adopted a list of fifteen factors an employer should consider in making that determination (and that the courts will consider to see if the employer got it wrong).  The case is of critical importance for employers who rely heavily on independent contractors to assure that they are not classified as employees for unemployment insurance tax purposes. 

New Idaho Statute Expands Noncompetition Agreements

A new Idaho statute (Idaho Code 44-2701 et seq.) set to go into effect July 1, 2008 defines presumptively reasonable limitations applicable to covenants against competition and solicitation by  employees and independent contractors. 

Under the statute, a noncompetition period of up to 18 months are presumptively reasonable, as is a geographic scope that includes anywhere the employee provided services or "had a significant presence or influence."  The law also encourages courts that find such provisions unreasonable to determine the intent of the parties and modify the covenant to make it enforceable. 

This should be good news for Idaho employers, who have historically received with a chilly reception in Idaho courts when trying to enforce noncompetition agreements.