Stoel Rives Law Firm : Stoel Rives World of Employment : Disabilities, FMLA, Military Leave, NLRA : Western United States

A Ninth Circuit panel ruled yesterday in Sanders v. City of Newport that when an employer opts to not restore an employee who was on FMLA leave to her former position, that the burden falls on the employer to demonstrate that such action was justified.

In Sanders, the plaintiff, a billing clerk, started feeling ill after an office move to a new location and the use of new low-grade billing paper. She was diagnosed with multiple chemical sensitivity, and took FMLA leave. Upon being cleared to work by her doctor, the City terminated her employment on the grounds that it could not guarantee a safe workplace for her given her sensitivity to chemicals. In instructing the trial court on plaintiff’s FMLA interference claims, the trial court placed the burden on plaintiff to prove that the employer lacked reasonable cause to reinstate her. On that instruction, the jury rendered a decision for the City on all claims.

The plaintiff appealed on the grounds that the instruction improperly placed the burden of proof on her, and the Ninth Circuit panel, consistent with rulings in the Eighth, Tenth and Eleventh Circuits, agreed. The Court based its decision on the plain text of regulations stating that “[a]n employer must be able to show, when an employee requests restoration, that the employee would not otherwise have been employed if leave had not been taken in order to deny restoration to employment.” The court held that the error was not harmless, and remanded the case for a new trial.

While this case was remanded based on a technicality in the jury instructions, and may yet culminate in an employer verdict, it provides a good reminder for employers that if they decide to deny restoration of employment to an employee following protected FMLA leave, it will be their burden to demonstrate that they had objective justification for the decision. Even if the decision was made in good faith, lack of objective justification may serve to limit damages, but not liability. 

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The Ninth Circuit Court of Appeals yesterday held in Lopez v. Pacific Maritime Association that an employer’s one-strike drug testing policy for applicants does not violate the Americans With Disabilities Act (“ADA”). The one-strike policy in question stated that the company would never hire any applicant who tested positive on a pre-employment drug screening. All applicants were given notice of the test seven days in advance. The plaintiff failed his test when he first applied in 1997. At the time he suffered from an addiction to drugs and alcohol. He re-applied in 2002, and was rejected based solely on his prior positive test. At that time the employer was unaware of plaintiff’s earlier addiction.

The plaintiff filed suit, alleging disparate treatment and disparate impact violations of the ADA based on his protected status as a rehabilitated drug addict. The trial court granted the employer’s motion for summary judgment, and the Ninth Circuit affirmed. The court dispensed with plaintiff’s disparate treatment arguments on the grounds that the rule, while arguably unreasonably harsh, was neutral, in that it “eliminates all candidates who test positive for drug use, whether they test positive because of a disabling drug addiction or because of an untimely decision to try drugs for the first time, recreationally, on the day before the drug test.” Citing the Supreme Court’s decision in Raytheon v. Hernandez, the court noted that “[t]he ADA prohibits employment decisions made because of a person’s qualifying disability, not decisions made because of factors merely related to a person’s disability.”

The Court also rejected plaintiff’s disparate impact argument, on the ground that he failed to produce evidence from which a juror could conclude that “the one-strike rule results in fewer recovered drug addicts in Defendant’s employ, as compared to the number of qualified recovered drug addicts in the relevant labor market.”

While this case does present something of a win for employers with similarly neutral policies, I would caution employers from getting too excited for two reasons. First, the Court hinted that summary judgment may not have been appropriate had the employer known of the plaintiff’s addiction before he reapplied. Second, plaintiff’s disparate impact claim failed only because he could not produce any evidence of disparate impact. The Court made clear that to survive summary judgment he’d only have to produce “some” evidence—a very low threshold indeed.

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Check out this Washington Healthcare News article authored by Stoel Rives Labor and Employment attorneys Keelin Curran and Karin Jones, in which they discuss the developing trend of strict no-smoking policies in the workplace, including no-nicotine hiring practices. Research indicates that smokers impose significant additional health and disability costs on employers, and experience twice as many illness-related absences from work.

In the article, they note that many states have enacted legislation specifically prohibiting employers from discriminating against employees on the basis of lawful off-duty activities such as tobacco use. However, for those states without such protections, employers have thus far successfully defended their right to exclude tobacco users from their hiring pools.

Read Curran's and Jones' analysis of the issue, including court cases and the potential pitfalls under the Health Insurance Portability and Accountability Act (HIPAA) and the Employment Retirement Income Security Act (ERISA) when such policies are applied to current employees.

"Snuffing Out Employee Tobacco Use: The Trend Towards No-Nicotine Hiring Policies" was published by Washington Healthcare News, February 2011.

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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

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Yesterday, the Supreme Court granted certiorari in Staub v. Proctor Hospital to address the question of when an employer may be held liable in “cat’s paw” situations, where an employee with unlawful intent influences a decisionmaker but is not involved in making the ultimate employment decision.

In this case the employee, Vincent Staub, was a member of the Army Reserves. He was required to attend occasional weekend training as well as a two-week training program during the summer. Reservists, of course, are protected from discrimination by the Uniformed Services Employment and Reemployment Rights Act (“USERRA”). The department’s second in command, Janice Mulally, resented the fact that Staub was in the Reserves. She made numerous anti-Reserves comments and purposely scheduled him on weekends when he had training. In the weeks leading up to his termination, Staub was disciplined for allegedly insubordinate behavior. The veracity of the allegations against him were suspect, coming largely from Mulally, who was known to dislike Staub. Staub was terminated by the Vice President of Human Resources after he allegedly engaged again in similar insubordinate behavior. The parties agree that the decisionmaker had no unlawful animus whatsoever. She testified that her decision was based on both the more recent allegations of insubordination, as well as Staub’s well-documented history of being difficult to work with.

At trial, Staub sought to attribute Mulally’s animus to the decisionmaker, arguing that the decision would not have been made but for Mulally’s unlawful animus. The jury returned a verdict in Staub’s favor.  On appeal, the Seventh Circuit reversed that decision, noting that in order to successfully assert a cat’s paw theory, the discriminatory animus of the non-decisionmaker can only be attributed to the decisionmaker where the non-decisionmaker had “singular influence” over the decisionmaker. The Court held that while the decisionmaker was clearly influenced by Mulally, there was no evidence of “blind reliance,” and the cat’s paw theory should never have gone before the jury.  The Court pointed to undisputed evidence that the decisionmaker took into account other aspects of Staub’s employment unrelated to the alleged acts reported by Mulally, including his reputation for being difficult to work with, and his history of employment issues dating back to the beginning of his employment--before Mulally became second in command of the department.

While not completely eviscerating the cat’s paw doctrine, the Seventh Circuit in Staub enunciated a very narrow, pro-employer, interpretation of the “singular influence” requirement. What the Supreme Court may do is anybody’s guess, but it seems likely that given the Court’s current makeup it will affirm the Seventh Circuit’s narrow interpretation of the cat’s paw doctrine. A copy of the Seventh Circuit opinion can be found here. 

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