Fifth Circuit Sides With EEOC In Finding Lactation Discrimination Constitutes Title VII Violation
Last year, we posted about a decision from the Southern District of Texas in which the court ruled that firing a woman because she was lactating or breast-pumping did not amount to sex discrimination under Title VII or the Pregnancy Discrimination Act (PDA). The Fifth Circuit Court of Appeals recently reversed the district court’s decision. In a none-too-surprising opinion, the Fifth Circuit ruled that taking an adverse employment action against a woman because she is lactating or expressing breast milk is a cognizable sex discrimination claim because (1) it imposes upon women a burden that male employees do not suffer, and (2) lactation is a medical condition of pregnancy under the PDA.
Is this earth-shattering news? Probably not. To most of us, it probably seems like common sense. But the opinion likely does represent a significant victory for the EEOC, which now has another tool in its belt to pursue pregnancy discrimination claims. Employers should be wise to know that pregnancy discrimination claims may now be viable for a longer period of time after childbirth than was the case prior to this ruling. The district court essentially took the position that a woman does not fall within the protections of the PDA after she gives birth to her child. Now, under the Fifth Circuit’s ruling, mothers could fall under the protections of PDA for as long as they are breastfeeding.
The Fifth Circuit was careful to note, however, the Title VII and the PDA do not require employers to provide special accommodations for nursing mothers to pump breast milk. Title VII and the PDA only prohibit an employer from taking an adverse employment action against a mother for lactating. Although the Fifth Circuit was careful to note this distinction, employers should remember that under the recent amendments to the FLSA imposed by the Affordable Care Act, employers must provide breaks and a room for nursing mothers to pump. Nursing mothers who are exempt under the FLSA are not afforded rights to pump in the workplace under either federal statute, but may be covered under applicable state statutes, which are summarized here.
Oregon Supreme Court Takes Another Big Bite Out of the At-Will Employment Doctrine in Cocchiara v. Lithia Motors
Most people understand that employment in Oregon, as in most states, is at will, meaning that either the employer or the employee can end the relationship at any time for any reason or no reason at all, absent a contractual, statutory, or constitutional requirement to the contrary. Of course, that last clause provides that there are limits on at-will employment. An employer can’t end the relationship because the employee becomes disabled, needs to fulfill duty obligations in the armed forces reserves, files a complaint against the employer, or a myriad of other unlawful reasons. Some plaintiff’s lawyers would argue that the at-will employment doctrine is so riddled with exceptions that it doesn’t really exist. And good employer defense attorneys will advise their clients that, while the doctrine still exists, every termination should be supported by clear, legitimate business reasons – and ideally with good documentation. But it is clear that no employee can have a reasonable expectation of continued employment, since he or she could be fired at any time. But what about an applicant?
Suppose an applicant meets with a hiring manager and, after the interview, the manager shakes the applicant’s hand and says “You’re hired! Come in tomorrow to sign the paperwork.” The applicant has another offer and the hiring manager encourages him to turn it down. The applicant does so and, the next day, shows up at his new employer’s offices. There he is told that they have changed their minds and don’t need him after all. The applicant is devastated because not only does he not have this job, but the other offer he turned down has already been filled. The employer, on the other hand, reasons that it could have fired the applicant anyway on his first day on the job under the at-will doctrine, so where is the harm? The employer argues that if the applicant has a claim, how long does an employer have to employ new hires?
The Oregon Supreme Court's Opinion in Cocchiara v. Lithia Motors
Those are the facts presented in Cocchiara v. Lithia Motors, which the Oregon Supreme Court decided on March 7, 2013. In a departure from prior state court cases, the Oregon Supreme Court ruled that an applicant in that situation (who in the case was actually already a long-time employee seeking a transfer to a different job within the company, and therefore an internal "applicant") does have a valid claim and can pursue damages for the lost opportunity.
The technical claims at issue in Cocchiara are promissory estoppel and fraudulent misrepresentation. Promissory estoppel provides a remedy when a person makes a promise that he reasonably should have anticipated would cause the other person to do (or not do) something in reliance on the promise. Enforcement of the promise must be necessary to avoid injustice and the beneficiary of the promise must have reasonably relied on the promise. The Oregon Supreme Court held that the fact that the position was at-will “does not carry with it a conclusive presumption that the employer will exercise that right.” It may therefore be reasonable for an applicant to rely on a promise of employment, depending on the circumstances.
But what damages is the applicant entitled to? Does he get future lost pay and benefits equal to what he would have earned on the job he accepted? Or the job he turned down? For how long, given that he could have been terminated at any time? The Oregon Supreme Court held that the applicant was entitled to try to prove what he would have earned in the job that was offered to him and how long he likely would have remained in that job had he been hired as promised and allowed to start work, although “at-will employment may be a factor that bears on whether the proof is sufficient in a particular case.”
The fraudulent misrepresentation claim turned on the elements of justifiable reliance and damages. The Court’s analysis was the same as for the promissory estoppel claim. The applicant was entitled to put on proof that he reasonably relied on the hiring manager’s representation (for example, by showing that he had been planning to accept the other offer until he was offered the new job). The claim serves an important public policy: “If employers could make misleading statements to prospective at-will employees without liability, business judgments regarding employment would not be protected from deceit. Business judgments regarding at-will employment inherently involve some risk, and a prospective employee (or employer) should be able to evaluate that risk without the interference of fraud.”
What Should Employers Do?
First, if you are not absolutely positive that the job will be available if the applicant accepts the offer, make sure the offer is conditional. Put language in the offer making it clear that even if the offer is accepted, eventual employment is dependent upon an order being placed, a background check being cleared, a contract being awarded, or whatever else may be motivating the new hire. If you make an offer for the same job to more than one candidate, be sure to tell both of them that there is another person in the running and only after you find out who has accepted your offers will you decide who the successful candidate is. Your offer of employment may be conditioned on anything – just make sure the condition is clear.
Second, make sure that your offers are time-limited and subject to withdrawal at any time. Include language like: “This offer will remain open through _____ and is automatically withdrawn if not accepted by that date and time. In addition, this offer may be withdrawn at any time prior to it being accepted.”
Third, train your hiring managers. A promise is a promise, and it doesn’t have to be in writing. Hiring managers should make it clear to an applicant that an offer of employment is subject to approval by a superior or HR, or whatever other conditions may exist before a new hire actually comes on board.
Proposed Utah Bill To Prohibit Discrimination Based On Sexual Orientation or Gender Identity
Utah State Senator Steve Urquhart (R-St. George) is sponsoring a bill that would amend Utah’s employment and housing antidiscrimination statutes to address discrimination on the basis of sexual orientation and gender identity. Urquhart introduced Senate Bill 262 to the Utah Senate Rules Committee on March 1, 2013. Currently, several municipalities in Utah have ordinances prohibiting employment or housing discrimination against LGBT individuals, but there is no state-wide protection against such discrimination, nor is the state’s Labor Commission empowered to investigate or remedy any such discrimination.
S.B. 262 would amend the Utah Antidiscrimination Act to make it unlawful for an employer to discriminate against or harass an otherwise qualified person because of that person’s sexual orientation or gender identity. The bill defines “sexual orientation” as “an individual’s actual or perceived orientation as heterosexual, homosexual, or bisexual.” The bill defines “gender identity” as “an individual’s internal sense of gender, without regard to the individual’s designated sex at birth.” Utah’s Antidiscrimination Act applies to employers employing 15 or more employees but does not apply to religious organizations or associations. S.B. 262 would also exempt organizations “engaged in public or private expression if employing an individual would affect in a significant way the organization’s ability to advocate public or private viewpoints protected” by the First Amendment from the definition of “employer.” Thus, certain advocacy groups would not be required to employ LGBT individuals under S.B. 262 if doing so was inconsistent with their mission and would significantly affect their ability to advocate their viewpoints.
S.B. 262 also contains provisions aimed at dress codes for transgendered employees and whether an employer can require proof that an individual is legitimately seeking protection as a transgendered individual. The bill specifies that an employer may require an employee undergoing gender transition to adhere to the same dress or grooming standards for the gender to which the employee has transitioned or is transitioning. If an employer has reason to believe that an applicant’s or employee’s gender identity is not “sincerely held,” S.B. 262 specifies that the employer may require the person to provide evidence of his or her gender identity, such as medical or counseling records. With respect to restroom use at the workplace, S.B. 262 provides that the employer must provide access to a restroom that is consistent with the employee’s gender identity, though an employee undergoing gender transition has the burden to provide notice to the employer of his or her gender transition in order to receive protection under this provision.
S.B. 262 also empowers the Utah Antidiscrimination and Labor Division to investigate and address violations of the Utah Antidiscrimination Act based on sexual orientation or gender identity.
Whether or not S.B. 262 will make it out of committee and eventually become law remains to be seen. Stay tuned for updates on the bill’s progress.
Allergy to Perfume Not a Disability, Says Ohio Federal Court
Employers got some relief from a situation that is becoming more and more common: an employee that claims a scent allergy and wants a work accommodation. In Core v. Champaign County Board of County Commissioners, Case No. 3:11-cv-166 (S.D. Ohio Oct. 17, 2012), plaintiff claimed she was allergic to a particular scent that substantially limited her breathing and requested, as an accommodation, that her employer institute a policy requesting that all employees refrain from wearing scented products of any kind. The U.S. Court for the Southern District of Ohio threw the case out, concluding that (1) plaintiff was not disabled, as that term was used under the pre-2009 amendments to the Americans with Disabilities Act; and (2) even if the broader post-2009 definition of “disability” were used, plaintiff’s requested accommodation was not reasonable.
Plaintiff worked for the Champaign County Department of Jobs and Family Services as a social service worker. Her job required her to conduct onsite inspections of childcare facilities, interact with the public and clients both onsite and offsite, and perform in-house client interviews, among other things. She claimed a disability because one particular scent she encountered occasionally in the workplace—Japanese Cherry Blossom—triggered asthma attacks, which substantially limited the major life activity of breathing. (She claimed reactions to other scents, too, but those reactions only included headaches and nausea, which the court found had no impact on plaintiff’s breathing or on any other major life activity.)
Allergy to Specific Perfume Not a Disability
The court, applying the pre-amendment definition of “disability,” concluded that plaintiff’s reaction to Japanese Cherry Blossom did not substantially limit her breathing because, among other things, she encountered it so rarely, and plaintiff admitted she was still able to perform the essential functions of her job even when exposed. The court acknowledged that, after January 1, 2009, the relevant inquiry is whether the asthma substantially limits plaintiff’s breathing when she is having an attack, rather than examining whether her breathing is substantially limited generally. But the court did not reach the issue of whether the amended standard would entitle plaintiff to relief because it concluded her requested accommodation was unreasonable.
Fragrance-Free Workplace Request an Unreasonable Accommodation
The court noted that, in the Sixth Circuit (encompassing Ohio, Michigan, Kentucky, and Tennessee), an accommodation requiring a fragrance-free workplace is objectively unreasonable. The court emphasized that it would be unreasonable to require employees to “alter all of their personal habits to ensure that all products of daily living, i.e., deodorant, lotions, hair products, etc., used in their private homes before coming into the workplace, are fragrant-free.” Moreover, plaintiff’s request that all fragrances be banned was not reasonable because she only alleged having breathing difficulty in response to one fragrance. Notably, her employer had offered her a wide array of accommodations—including allowing plaintiff to use an inhaler and take breaks, and circulating an email to all employees requesting that they refrain from wearing Japanese Cherry Blossom—all of which plaintiff inexplicably rejected.
What Does This Mean for You?
Employers should be cautious in relying on this decision. Because of the timing of the plaintiff’s claims, the court applied the pre-amendment definition of “disability.” An employee after January 1, 2009, who can demonstrate a substantial breathing impairment when encountering a particular scent can probably establish that he or she is disabled under the ADA Amendments Act. But that does not mean that employers are going to have to declare their businesses fragrance-free. The Sixth Circuit, at least, has declared such accommodations facially unreasonable; there does not yet appear to be any law in the Ninth Circuit on this issue.
So what should you do? When an employee complains about scents in the workplace, it is incumbent on the employer to gather as much information as possible. What scents trigger an episode? (This will help determine whether the employee has broad allergies/sensitivities that may require a broader response or has narrower allergies/sensitivities like the plaintiff in Core.) What happens when the employee encounters those scents? (If the reaction is headache and nausea, this may not qualify as a disability or may require very minor accommodations; if the reaction is anaphylactic shock, you can bet on probably having to find some accommodation(!).) If necessary, request that the employee provide medical verification of the allergy/sensitivity and its severity. Importantly, like the employer did in Core, talk to the employee about what might ameliorate the problem. The plaintiff in Core made the mistake of rejecting every accommodation offered—accommodations the court later concluded were all reasonable. Will a fan suffice? Can the employee be moved to a different work station? Will the job requirements permit the employee to work remotely part of the time? Are additional breaks to get fresh air adequate? The bottom line: Ask questions and get as much detail as possible.
As always, each case will depend on the particular circumstances. Note that the employer here was prepared to request (though not require) employees to not wear the particular scent to which plaintiff alleged an allergy. The court specifically declared that offer reasonable—though it did not say that kind of accommodation would have been required. Different facts—for example, an employee with broader scent allergies than the one particular scent at issue here—could well lead to a court concluding broader scent prohibitions are reasonable and necessary. All we can do is hold our breath and wait.
Where There Is At-Will, There Is A Way: NLRB Issues New Guidance On "At Will" Employment Policies
On Halloween, the National Labor Relations Board (“Board”) General Counsel’s Division of Advice handed out a rare treat to employers by issuing two Advice Memos (Mimi's Café, Case No. 28-CA-0844365 and Rocha Transportation, Case No. 32-CA-086799), deeming two particular (and common forms of) at-will employment policies contained in employee handbooks lawful under the National Labor Relations Act (the “Act").
Earlier this year, an Administrative Law Judge frightened many employers by ruling a particular company’s “at-will” policy violated the Act because it theoretically could make employees believe that they could not form a union or otherwise advocate to change their at-will employment status. That challenged policy stated, “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” The case, American Red Cross Arizona Blood Services Division, Case No. 28-CA-23443 (February 1, 2012), was settled before the NLRB could review it on appeal.
The Division of Advice’s Halloween memoranda distinguished American Red Cross case from Mimi's Café and Rocha Transportation – noting that the at-will policy in American Red Cross used the personal pronoun “I” (“I further agree that the at-will employment relationship cannot be amended, modified or altered in any way”), which as written essentially constituted an impermissible waiver of any right of employees to try and change at-will status (i.e., to try to form a union). The Division of Advice also noted that the policy in American Red Cross declared that the at-will employment relationship could never be modified under any circumstances whatsoever, which could be interpreted as chilling employees’ rights under the Act to engage in protected concerted activity such as forming a union. Finally, the Division of Advice, perhaps dismissively, noted that American Red Cross had settled before getting to the Board level.
In contrast, in the two cases and policies analyzed by the Division of Advice’s Halloween memoranda, one employer’s handbook specifically provided for possible changes to an employee’s at-will employment status if made in writing and signed by the company president, and the other employer’s handbook merely said that no one in management had authority to make changes to the at-will policy. Specifically, the two at-will policies validated by the Division of Advice provided:
At-Will Employment
The relationship between you and Mimi’s Café is referred to as “employment at will.” This means that your employment can be terminated at any time for any reason, with or without cause, with or without notice, by you or the Company. No representative of the Company has authority to enter into any agreement contrary to the foregoing "employment at will" relationship. Nothing contained in this handbook creates an express or implied contract of employment.
Statement of At-Will Employment Status
Employment with Rocha Transportation is employment at-will. Employment at-will may be terminated with or without cause and with or without notice at any time by the employee or the Company. Nothing in this Handbook or in any document or statement shall limit the right to terminate employment at-will. No manager, supervisor, or employee of Rocha Transportation has any authority to enter into an agreement for employment for any specified period of time or to make an agreement for employment other than at-will. Only the president of the Company has the authority to make any such agreement and then only in writing.
The Rocha Transportation handbook also contained an "Acknowledgment of Receipt" that employees were required to sign, acknowledging that "nothing in the employee handbook creates or is intended to create a promise, contract, or representation of continued employment ...” The Division of Advice noted this was important in showing that the employer was trying to protect against contract claims, as opposed to trying to restrict employees’ rights under the Act.
The Division of Advice’s memoranda provide a welcome respite from an otherwise troubling (for employers) spate of Board decisions affecting both non-union and unionized employers on topics such as social media, off-duty access, and confidentiality policies. Although the Division of Advice’s memoranda are technically not binding, the Board’s Acting General Counsel has instructed all NLRB Regional Offices to consult with the Division of Advice before issuing any complaint challenging an employer’s at-will policy. And employers now have some helpful guidance from these memoranda concerning how to word at-will policies.
As the Election Nears, Employers Should be Cautious of Politics in the Workplace
From the Presidential debates to lawn signs, and TV ads to the Voters’ Pamphlet in your mailbox, there’s no denying that election season is in full swing. For employers, the home stretch to November 6 means not only around-the-clock coverage, but the potential for spirited debates—and resulting employee discord—in the workplace. Although with limited exception political activity or affiliation is not a protected status, and Oregon employers no longer have to worry about giving employees time off to vote due to mail-in ballots, the impending election still has significant potential to invoke myriad workplace issues ranging from discrimination and harassment to free speech and bullying. Here are some “dos and don’ts” to help guide employers over the next several weeks and keep polarizing political discourse from disrupting your workplace:
* Do set the tone. If you haven’t already, employers should clearly communicate their expectations to employees and foster a culture of mutual respect and understanding. Diversity—even with respect to politics—can be embraced as a positive. Employers lead the way by conveying their acceptance of varying ideologies, and encouraging employees to handle differences of opinion civilly and without letting it affect normal operations. Political conversations between employees often lead to discussion of sensitive (and protected) issues such as race, religion, immigration, and women’s rights. However, election season should not provide a license for employees to harass or bully one another by attacking contrasting political views, bragging about which ballot measures did or did not pass, or gloating over a candidate’s defeat. Employers can minimize risk by reminding employees that their policies prohibiting harassment, discrimination and retaliation apply to all political discussions, and investigating any complaints promptly. Moreover, some employers have in fact included political activity in their EEO or anti-harassment policies, so it may be prudent to dust off and review your handbook, because employees certainly will know what you have promised. Similarly, given that unions are frequently politically active, some union contracts prohibit politics-based discrimination.
* Don’t allow bad behavior in the name of “free speech.” Contrary to popular belief, there is no blanket right of “free speech” in a private workplace. The First Amendment covers only state action, and private sector employers are therefore free to limit political discussions in the workplace. Be careful, however, that any such limitations don’t run afoul of laws such as the National Labor Relations Act (NLRA) (see next "do," below) or federal and state anti-discrimination laws.
Read on for more election "dos and don'ts" below!
* Do be mindful of the NLRA. The NLRA offers some protections for employees’ political speech, both on and off the job, and even if you do not have a union-based workforce. As the National Labor Relations Board (NLRB) states on its website, employees have the right to work together to “improve their pay and working conditions or fix job-related problems, even if they aren’t in a union.” (See https://www.nlrb.gov/concerted-activity). Employers should be particularly cautious to ensure that any restrictions on employee communications, political or otherwise, don’t impede on employees’ ability to act in concert with respect to work-related matters such that they would run afoul of Section 7 protections.
* Don’t forget about social media. Undoubtedly, social media has played a significant role in 2012—and it’s likely becoming an increasing presence in your employees’ day-to-day lives, too. Employers should remind employees of any policies regulating internet usage in the workplace, along with any policies specifically governing social media. Although such policies should encourage employees to be respectful, they should not be so broad-sweeping as to prohibit political discussions over social media, as this again has the risk of crossing over into Section 7 protections referenced above. The NLRB has stated that employers should not “caution employees against online discussions that could become heated or controversial.”
* Do be cautious of Company political endorsements. It’s common for employers to provide general election information to employees, such as informing them when ballots are mailed or simply encouraging them to vote. In recent years, however, many employers have taken it further and perhaps garnered unintended press for making political statements—most often during election season. Although there is no per se law prohibiting a private company from voicing its own political views to employees, employers who do so should also make clear that employees retain the sole right to vote as they choose. Employers should also be mindful of the resulting pitfalls. For example, would a gay or lesbian employee be more likely to bring a sexual orientation discrimination claim against an employer that had voiced its opposition to same-sex marriage? There’s no way to know, but most employers probably wouldn’t want to be the test case.
* Don’t enforce policies on a selective basis. Many employers maintain no-solicitation or no-distribution policies, which generally prohibit employees from requesting support for or distributing materials about non-work events or causes. To be effective, however, these policies must be both strictly and evenly enforced. Don’t let a Democrat post political flyers, but not a Republican. And don’t let the CEO hand out buttons supporting the candidate of his or her choice, but prohibit employees from doing the same thing.
* Do know if local or state law protects provides greater protections. As mentioned above, political activity is not a protected status for most employees working for private employers under federal law, and only a handful of states have promulgated laws making it unlawful for employers to discriminate or retaliate based on an employee’s political activity or affiliation. Oregon in Washington have not, but California is one of the few states that has. Some protections are derived on a more local level, such as the City of Seattle, which prohibits discrimination based on political ideology, affiliation or similar terms. Public employers need to be ever mindful of the circumstances when political speech crosses the threshold into free speech, thus precluding adverse action on that basis.
* Don’t hesitate to reach out if things get sticky. Election-related employment issues can be complex and difficult to navigate. If you run into problems in the pre- or post-election flurry, contact your employment attorney. Although it may seem that all anyone cares about these days is the election, you’ve still got a business to run—and help is available.
Happy voting!
December 31, 2012 Deadline Looms Under Tax Code for Fixing Severance Agreements with Releases
Employers have until the end of the year to take advantage of relief from penalties under section 409A of the Internal Revenue Code for agreements that require employees to sign releases before severance benefits are paid. Section 409A was enacted in 2004 to regulate deferred compensation. Internal Revenue Service ("IRS") regulations made clear that it would affect not only traditional deferred compensation arrangements, but also arrangements previously not thought of as deferred compensation. Severance and change-in-control benefits are often subject to the section 409A requirements. Employees pay most of the price for mistakes that result in violations of section 409A, including a 20 percent tax penalty.
The IRS surprised many in early 2010 when it announced that agreements that require the employee to sign a release of claims (or non-competition or non-solicitation agreement) before severance or change-in-control payments start may run afoul of section 409A because they give the employee some control over when payments will start, sometimes allowing the employee to choose which year payments will be made. Industry push-back persuaded the IRS to provide transition relief, the last of which will end on December 31, 2012. This relief allows employers to modify agreements to deal with such release requirements to specify when payments will be made and what happens if a release is not signed on time. The transition relief allows correction of agreements with these problems – even if payments have already started – something not otherwise available. In addition, the employer is not forced to notify the employee of the documentary violation of section 409A and the employee does not have to attach a notice to the employee’s personal income tax return about the violation. After December 31, 2012, this relief will no longer be available.
If you are interested in a more detailed discussion of this relief and the required changes to employee releases, check out Stoel Rives' recent Client Alert on the subject.
California Legislature Prohibits Requesting Employee Social Media Passwords
As we blogged about earlier this week, there have been a lot of recent cases before the National Labor Relations Board ("NLRB") testing the validity under federal labor laws of employer policies seeking to restrict employee use of social media.
The NLRB isn't the only place action is happening recently in this developing clash between employment law and social media. Responding to an emerging controversy about whether employers can require disclosure of social media passwords during the hiring process, the California Legislature has passed Assembly Bill 1844, which Governor Jerry Brown signed in late September. It takes effect on January 1, 2013.
This legislation prohibits an employer from requiring or requesting that an employee or job applicant disclose a user name or password for the purpose of accessing personal social media. AB 1844 also prohibits requiring or requesting that an employee or applicant access personal social media in the presence of the employer, or divulge any personal social media. Finally, it also prohibits retaliation against an employee or applicant for not complying with an employer's request for such information.
The law does contain a few limited exceptions. An employer may request that an employee divulge personal social media that the employer reasonably believes to be relevant to an investigation of allegations of employee misconduct or employee violation of law, provided that the social media is used solely for purposes of that investigation. Additionally, the law does not preclude an employer from requiring or requesting that an employee disclose a user name, password or other method for the purpose of accessing an employer-issued electronic device.
With the passage of this law, California becomes the third state (along with Maryland and Illinois) to legislatively limit employer access to social media accounts. Companies with employees in California should assess their hiring and employment practices to make sure they are in compliance with these new restrictions.
Oregon Court of Appeals Upholds Enforceability of Employer Arbitration Agreement
.jpg)
In the recent case Hatkoff v. Portland Adventist Medical Center, the Oregon Court of Appeals affirmed enforcement of a company arbitration provision in an employee handbook requiring that a former employee bring his employment discrimination claims in binding arbitration. The Court’s opinion offers a straight-forward application of the law regarding the enforceability of arbitration agreements, and the outcome is probably not surprising. Nevertheless, it contains a helpful and well-reasoned survey of the current state of Oregon law in this area, and provides another helpful case for Oregon employers interested in resolving employment disputes using arbitration or similar alternative dispute resolution (“ADR”) procedures.
Arbitration Agreements Are Upheld Where They Are Not “Unconscionable”
Arbitration is a form of private ADR in which the parties agree to waive the right to go to court and instead adjudicate disputes privately before an arbitrator. In the employment context, arbitration can be a cost-effective and quicker alternative to litigation. While the details of arbitration agreements can vary greatly, they may frequently be confidential (lawsuits are public proceedings), provide more limited procedures (especially with respect to discovery), require trial before a neutral arbitrator (not a jury), and provide a limited right to appeal. In general, Oregon courts, like most courts, uphold such employment arbitration agreements as long as they are not “unconscionable,” either procedurally (with respect to how the agreement was formed) or substantively (with respect to its terms).
The Oregon Court of Appeals applied this analysis to find Portland Adventist’s “Grievance and Arbitration Procedure” in an employee handbook was not unconscionable. It found the agreement was not substantively unconscionable, because while it did waive the right to a jury trial (like all arbitration agreements), it did not unreasonably limit the employee's rights or remedies that would be available in court. Interestingly, the Court specifically held that the fact the agreement required that employees file a complaint within 90 days of the complained-of employment action was not substantively unconscionable, even though the applicable statute of limitations was one year. The Court also went on to find the agreement was not procedurally unconscionable: the employee, a sales and marketing professional, signed multiple acknowledgments that he received the employee handbook containing the arbitration agreement and was aware of what he had signed.
Law On Arbitration Continues To Develop
Despite the fact that many cases come out similarly to Hatkoff and the law on arbitration agreements is generally favorable for employers, the enforceability of such agreements is routinely litigated in employment cases. For that reason, and also because the unconscionability analysis is very fact-specific and the outcome can be very different in each case, arbitration continues to be a “hot” and fluid area of employment law both in Oregon and around the country.
Sometimes that fluidity leads to conflicts in the law, such as between courts and legislatures. For example, since 2008 Oregon has had a statute, ORS 36.620(5), that prohibits employee arbitration agreements under certain circumstances where the agreement does not contain “magic words” provided in the statute, and where the employee does not have at least 72 hours advance written notice before starting work (the legislature lowered the advance notice requirement to 72 hours in 2011; it originally required 14 days). However, that Oregon statute itself may be unenforceable, because it may be preempted by a federal statute, the Federal Arbitration Act (“FAA”), that strongly endorses the use of arbitration and contains no such limitation. Several federal district courts in Oregon have found that ORS 36.620(5) is preempted by the FAA, and have enforced arbitration agreements that did not provide the advance notice required by that statute, although no Oregon state appellate court has yet considered the issue (the agreement in Hatkoff preceded the Oregon statute, so it was not a factor in the analysis in that case).
Other potential conflicts exist not between state and federal law, but between different parts of federal law. As we have blogged about previously , just such a conflict has been brewing between the U.S. Supreme Court and the National Labor Relations Board (“NLRB”) over whether arbitration agreements can include waivers of class action claims—the Supreme Court says they can; the NLRB says they violate federal labor laws allowing employees to engage in “concerted activity” relating to working conditions. We are waiting to see how the federal appellate courts resolve that conflict.
Ultimately, Hatkoff will likely stand, not as a departure from existing law, but instead as the latest in a series of federal and state cases over the past few years that are broadly supportive of employer efforts to utilize arbitration and ADR to resolve employment disputes. But, as we've said, this continues to be an evolving area of employment law, so employers will need to stay tuned to new developments.
In the meantime, here are a few things employers should keep in mind when crafting arbitration agreements to maximize the chance they will be enforceable:
- Make sure your arbitration agreement, whether a stand-alone agreement or part of a handbook, is clear, understandable, and well publicized. Include the "magic words" in ORS 36.620 to make it expressly clear to employees that arbitration involves waiving some legal rights, especially the right to a jury trial. Employees should sign acknowledgments that they have received and understand the agreement.
- If you have employees who don't speak English as a first language, have a translated version of the agreement to ensure it is understood.
- Give new employees the 72 hour advance written notice required by ORS 36.620 wherever possible. While some courts have found that statute is preempted and unenforceable, there's no guarantee every court will.
- Under ORS 36.620, current employees can only sign arbitration agreements at the time of "bona fide" promotion or advancement. Again, courts may find this requirement is also preempted and unenforceable, but if you can comply with it, all the better.
- Arbitrators are paid by the parties, unlike judges. While in theory the parties can split the cost, the agreement should not impose costs on employees unreasonably in excess of what they would pay to file a lawsuit in court. Many employers agree to pay a large portion, or even all, of the arbitration fees.
- Specify the rules and procedures that will apply. The American Arbitration Association's ("AAA") specific rules for employment arbitration are one option; other state or local arbitration forums are other (and sometimes cheaper) options.
Above all, work with your employment counsel in the crafting and implementation of the agreement. Many enforceability pitfalls can be easily avoided with careful planning, but the devil can be in the details. That is especially true for any state-specific rules or "gotchas," as arbitration agreements may be perfectly enforceable in some states but not in others.
Guidance on Terminations in Alaska
.jpg)
Two recent opinions from the Alaska Supreme Court offer helpful guidance to employers regarding termination processes.
In Barickman v. State, an employer suspected an employee of theft. When confronted, the employee signed a letter of termination and then wrote a letter stating that he was resigning to avoid a “black mark on his record.” The employee later sued, alleging wrongful termination based on breach of good faith and fair dealing.
To win a claim of wrongful discharge in Alaska, the employee must show that (1) he was discharged by his employer and (2) that the employer breached a contract or committed a tort in connection with the termination. Here, the employee argued that his employer terminated him in bad faith, treated him differently than similarly situated employees, and failed to conduct a reasonable investigation before deciding to fire him.
Alaska law provides that when an employer makes a good faith determination that misconduct has occurred, there is no breach of the implied covenant of good faith and fair dealing, even if the employee can subsequently prove that the factual finding of misconduct was a mistake. Here, the Supreme Court found that the employee did not raise any facts alleging that the employer’s determination was made in bad faith, particularly since the employer provided a spreadsheet showing instances where other employees accused of similar charges were dismissed or asked to resign. The Court ultimately held that the employer did not breach its duty of good faith and fair dealing. The Court likewise found that the employee failed to present enough evidence on the issues of whether the employer had treated him differently than other similarly situated employees or whether the employer’s investigation was unreasonable.
Boyko v. Anchorage School District involved a teacher who sued the Anchorage School District, one of Alaska’s largest employers. The parties had entered into a verbal resignation agreement wherein the employer promised not to release any negative information about the teacher to prospective employers. The teacher claimed that the District had provided information that was not positive to another school district, and that these actions breached the termination agreement, violated the covenant of good faith and fair dealing, and interfered with her prospective contractual relations. She also claimed disability discrimination, because the termination stemmed from incidents associated with the teacher’s drinking problem. The employer won on summary judgment all counts in the lower court, where the court found that the employer was immune under an Alaska statute (see AS 09.65.160) immunizing employers who disclose job performance information in good faith.
The Supreme Court largely disagreed, finding that evidence the teacher produced in the trial court raised sufficient factual issues as to whether the District had breached the resignation agreement, and therefore whether the District had violated the covenant of good faith and fair dealing and interfered with the teacher’s prospective contractual relations. The Court also noted that statutorily-created rights can be waived where there is “direct, unequivocal conduct indicating a purpose to abandon or waive the legal right.” Ultimately, the Court found that whether such a waiver occurred through the District’s verbal negotiation of a resignation agreement was in itself a material issue of fact, and remanded the claim to the lower court.
It was not all bad for the employer. On the disability claim the court found that District had provided a legitimate, nondiscriminatory reason for the dismissal and that the teacher had not raised sufficient doubts as to whether the reason was a pretext. Therefore, the Court affirmed the lower court’s entry of summary judgment on the claim.
Four Practical Tips For Terminations:
- Always act in good faith and deal fairly with employees.
- Consider whether termination of employment is consistent with applicable policies and past practices.
- Good documentation demonstrates process (and calm reflection).
- Be careful what you say at termination – it can become an oral contract.
Melanie Osborne contributed to this post.
NLRB Finds Employee Arbitration Agreement Waiving Class Claims Violates Federal Labor Law
In DR Horton, a decision issued on January 3 and applicable to most private sector employers, whether unionized or not, the National Labor Relations Board (NLRB) held that federal labor law prevents employers from requiring their employees, as a condition of employment, to agree to broad waivers that would deny their right to pursue employment-related class actions both in court and in arbitration, leaving them no forum for pursuing class or collective claims. As a result, an important tool for managing the risk of employment-related litigation has been taken away (for now).
The facts of the case are straightforward. DR Horton, like many employers, required its employees to sign an arbitration agreement as a condition of employment. The agreement required employees to arbitrate all claims arising out of their employment, and precluded arbitrators from issuing class or group relief. As a result, employees were prevented from bringing class or collective actions in any forum. Relying on this agreement, DR Horton refused to arbitrate a class action alleging that it had misclassified certain employees as exempt from the protections of the Fair Labor Standards Act (FLSA).
Not so fast, according to the NLRB. Tracing federal labor law back to its origins, the NLRB found that the filing of a class action “to redress workplace wrongs or improve working conditions” is activity at “the core” of what Congress intended to protect when it enacted the National Labor Relations Act in 1935. This intent, the NLRB reasoned, is reflected in Section 7 of the Act, which gives employees the right to engage in “concerted activities” for the purposes of “mutual aid or protection.” Relying on Section 7, the NLRB found that Employers cannot compel their employees, as a condition of employment, to entirely waive the right to bring class or collective actions.
The NLRB’s ruling in DR Horton clashes with the U.S. Supreme Court’s recent decision in AT&T Mobility v. Concepcion, which held that arbitration clauses that waive the right to bring class claims entirely (in the commercial contract context) may be lawful and enforceable. But unless and until the courts intervene to resolve this tension, requiring your employees to completely waive the right to bring employment-related class or collective actions - a common feature of arbitration agreements - is probably no longer permissible under federal labor law.
If You're Interested In Learning More, Sign Up For Our Webinar
Stoel Rives is hosting a webinar on January 11, 2012, to address employee arbitration agreements generally and the DR Horton decision in particular. Click here if you're interested in learning more or attending.
Stoel Rives World of Employment Voted a Top 25 L&E Law Blog!
The results are in, and based on the votes from you, our readers, Stoel Rives World of Employment was selected as a LexisNexis Top 25 Labor and Employment Law Blog of 2011! See here. We would like to take this opportunity to thank our readers for the initial nomination and the subsequent votes that made this distinction and honor possible. We hope you will continue to frequently check in on us as we continue to provide up to date and timely information, news items, expert anaylis, and helpful tips for employment and labor law practictioners.
Thanks again!
-Your Stoel Rives World of Employment Bloggers.
Thanks For Nominating Stoel Rives World of Employment As A Top 25 L&E Law Blog!
Based on feedback from you, our readers, LexisNexis has nominated the Stoel Rives World of Employment as a "Top 25" law blog in the Labor and Employment category! Thanks to those of you who nominated us to this elite group. Readers now have until September 12 to vote for their favorite blog. After voting is completed LexisNexis will announce which of the nominated blogs are selected to the final top 25.
Please Cast Your Vote For Us
At this point we'd like to engage in a bit of shameless self-promotion, and urge you to cast your vote for us before September 12. To do that, simply click here to vote, scroll to the very bottom of the page to the Add a Comment section, and add a comment. In the comment field, type something like "I vote for the Stoel Rives World of Employment blog." You can also view information about the competition and see the other nominated blogs on this page too. If you haven't already used the LexisNexis Communities feature, you may need to create an account to be able to vote.
Again, thanks for the nomination and support! (Here ends the shameless self-promotion...now we'll get back to blogging.)
- Your Stoel Rives World of Employment Bloggers
Why Should Employers be Fair?
Martha walks into your office and says she wants to fire her assistant, Roy, because he keeps sending emails with typos and it is embarrassing. Martha says, “We are at-will and I want him gone by the end of the day.” Like most others, Alaska is an “employment-at-will” state, which means that the employee and employer are free to end the employment relationship at any time and for almost any reason. But is there more to consider in terminating Roy?
Every employment relationship in Alaska contains an implied covenant of good faith and fair dealing. An employer can violate the covenant by acting with an improper motive, like firing an employee two weeks before he is tenured. The covenant also requires employers to treat employees in a way that a reasonable person would consider fair.
Violation of the covenant of good faith requires a very fact intensive inquiry, which often requires going through a trial with witnesses rather than resolving issues through a motion for summary judgment. Trial is incredibly expensive for employers, not only in court costs but also in terms of stress on staff and distraction from business. However, two Alaska Supreme Court cases issued in early July of this year, that you can see here and here, show that summary judgment is alive and well if an employer can adequately demonstrate it acted fairly and without improper motives in its termination process. The application of the implied covenant of good faith and fair dealing to the employment context varies from state to state, and clearly does not apply in some states, like Washington. Nonetheless these recent cases are a good reminder that fair and equitable treatment in discharging employees can help employers avoid costly and disruptive claims.
So what do we do about Roy? Here are five suggestions to help ensure compliance with the implied covenant of good faith and fair dealing:
- Follow a process. Require supervisors to provide good faith, fair reasons for discipline. Provide the employee an opportunity to respond to any allegations. Hear facts from Roy now, rather than for the first time in an EEOC proceeding or in court.
- Be fair. Enforce personnel policies in a way that a reasonable person would regard as fair. Follow personnel policies when disciplining employees. What policy is Roy violating? Is termination an appropriate response to Roy’s violations?
- Be consistent. Treat like employee alike, and justify any reasons for inconsistency in treatment. What type of conduct has resulted in other terminations? Have other employees received progressive discipline under similar circumstances, instead of termination? Treat Roy like other employees in similar situations.
- Act in good faith. Do not manufacture reasons to justify a termination. Is Martha frustrated with Roy for some other reason? Better to learn about it now.
- Document your process, fairness, consistency, and good faith.
Meghan M. Kelly also contributed to this post.
Ninth Circuit Holds Shareholder Hire Preference Not Facially Discriminatory
Meghan M. Kelly also contributed to this post.
.jpg)
In an unpublished opinion in Conitz v. Teck Alaska Inc. the Ninth Circuit held that an Alaska Native corporation’s shareholder employment preference was not facially discriminatory because it was based on shareholder status, not racial status.
Teck employee Gregg Conitz works at the Red Dog Mine, which Teck operates and NANA Regional Corporation, an Alaska Native corporation, owns. Conitz alleged that he was passed over for promotions as a result of Teck’s policy favoring NANA shareholders in hiring – a preference Conitz argued was racially discriminatory because the majority of NANA shareholders are Alaska Native. The district court found that Teck’s employment preference for NANA shareholders was not a racial distinction and therefore did not violate either the Civil Rights Act or any other provisions of federal or state law. Given this, the district court declined to address Teck’s argument that as a joint venture between NANA and Teck, the Red Dog Mine is exempt from Title VII under a provision of the Alaska Native Claims Settlement Act. The district court also found that Conitz failed to show he was qualified for the promotion, and therefore failed to make out a case of discrimination under Title VII.
The Ninth Circuit affirmed, holding that a shareholder preference is not facially discriminatory because it favors candidates based on shareholder status, not race. The court also found that Conitz failed to show the elements of a prima facie case of discrimination under McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). Conitz did not demonstrate he was qualified for the supervisory position and was, in fact, not promoted because he was not qualified. The court declined to decide whether the shareholder preference policy constitutes racial discrimination since the policy did not affect Conitz.
Fred Has a Very Bad Day (Termination Checklist and Guide)
.jpg)
Unless your life’s ambition is to reprise George Clooney’s role in Up In The Air, Part II, you probably don’t like having to fire people. But someone’s got to do it . . . and it has to be done right. Here are some things to consider before you step into that room to do the dirty deed. (Pronouns are a nuisance, so our terminated employee will be known as Fred .)
- Has the decision been properly vetted by everyone who should participate? You may simply be the “implementer,” not the “decider,” so make sure you have buy-in from all the relevant stakeholders.
- Particularly when the decision is prompted by misconduct, poor performance or something else Fred did, have you gotten his side of the story? Even if you end up finding Fred’s version a little less than credible, wouldn’t you rather know now what he has to say for himself, rather than read it for the first time in a Summons and Complaint?
- Has the basis for the decision been properly documented? Most, if not all, employment lawsuits could be avoided if the employer took the time to properly document the performance faults, the efforts made to remedy performance (i.e., notice to Fred of his poor performance), and the legitimate business reasons for the termination decision.
- Have you reviewed Fred’s file to determine whether he has any post-employment obligations such as a covenant to not compete, or to not solicit your customers or your employees, or a confidentiality agreement? If such agreements exist, be sure to give Fred another copy of the document and remind him of his continuing obligations.
- Will you offer severance? If so, more often than not, you will want to have an appropriate release to give Fred to consider. There are occasions when you will want to offer severance but not require a release of claims, but that rarely happens these days.
- If you are going to have a written separation agreement (and you don’t have to have one), have you considered other provisions that might induce Fred to sign the release, like:
- A letter of recommendation;
- An agreement to not oppose an unemployment benefits application;
- An agreement to reimburse Fred for a certain amount of COBRA expenses, etc?
- Similarly, if you are going to have a written agreement, have you included all the provisions you need, in addition to the release of claims, like:
- A non-disparagement clause;
- An agreement to not reapply (watch out – these clauses can be tricky);
- An acknowledgement of continuing confidentiality duties;
- A promise to return all company property;
- If Fred is over forty, all of the provisions necessary to comply with OWBPA?
- Will you conduct the termination meeting alone or with a witness? The advantage of having a witness there is that he or she can take notes and be the corroborating witness should things go south. The disadvantage is that the presence of the silent witness may irritate Fred. Nine times out of 10, you’ll want the witness.
- Have you advised your trusted IT person to sever Fred’s computer access (including remote access) during the time that you will be meeting with him? Rarely will you want the employee to work at all after the termination meeting. If the meeting is delayed, be sure to tell the IT person.
- Have you considered when to schedule the meeting? Best is near or at the end of the day. Your office or Fred’s office is fine, but it might be easier to meet in Fred’s office or a conference room so that you can leave if Fred wants to argue and you need to end the meeting. It is easier to leave Fred’s office than to try to make him leave your office. Wherever you choose, make sure it is private.
- During the meeting: Don’t beat around the bush. Be direct, but gentle. Give a reason, but don’t go into detail. Resist being drawn into an argument. State that the decision has been made, is final, and won’t be reconsidered. Acknowledge Fred’s pain. Sensitive, caring companies get sued less often than cold, heartless ones.
- If Fred claims he is being or has been discriminated or retaliated against for some unlawful reason, (as opposed to just complaining that the decision isn’t right or isn’t fair) ask him to tell you very specifically why he says that, make careful notes of what he says, tell him that you will investigate the claim and get back to him, but that the decision stands. Call your lawyer.
- Tell Fred that his computer access has been cut off. Explain that you will work with him to get any personal information off his computer.
- Ask for Fred’s keys, card access, phone, laptop, thumb drive, or whatever other company property he has. Ask him if he has any company property or documents at home. Ask him if he ever emailed himself company documents. If he has materials at home, arrange a time to pick those things up. If he sent himself documents at home, get his assurance that he will delete those emails. You may need to take more serious steps than these if you suspect that Fred is not being straight with you.
- Decide in advance how Fred will collect his personal items. Will you walk him back to his desk and watch him pack? Will you agree to meet him at the office on the weekend?
- Regardless of whether you offer benefits in exchange for a release, give Fred a letter that says he has been terminated and reminds him of any post-termination obligations, if any. (Some states require that you state the reason for the termination.)
- Know what final pay is due and when it is due. State rules vary a lot. Do you have to pay out unused vacation upon termination? Depends. Do you have to pay out unused sick leave? Depends. When is the final paycheck due? Depends on whether Fred quits with or without notice or is fired or leaves by mutual agreement. In Oregon, because he was fired, Fred is entitled to receive his final pay no later than the end of the first business day following his termination. During the termination meeting, you should ask Fred whether he will come in to pick up his check or whether he wants you to mail it to him.
- Do your final paperwork or take steps to see that it gets done.
- Go home. Have a drink.
Supreme Court: Disparate Impact Plaintiffs Can Sue Based on the Application of the Discriminatory Practice
.jpg)
The Supreme Court today issued a judicial smackdown to the Seventh Circuit Court of Appeals, unanimously reversing its decision in Lewis v. City of Chicago (as we suggested it should when we reviewed the details of this case back in October!). Briefly put, the plaintiffs are a group of approximately 6,000 black firefighter applicants who filed charges of race discrimination with the EEOC more than 300 days after the initial announcement of their application test results, but within 300 days of the hiring of the new firefighter class from which they allege they were denied consideration. The Seventh Circuit held that the “discrimination was complete when the tests were scored...and the applicants learned the results.”
Justice Scalia, writing for the entire Court, stated that because there is no dispute that the claim was filed within 300 days of the hiring of the new class, the issue in this case is not “whether a claim predicated on the [on the hiring of the new firefighter class] is timely, but whether the practice thus defined can be the basis for a disparate-impact claim at all.” (Emphasis in original.) In other words, while the parties agreed that the adoption of a practice had a disparate impact, the real question was whether a cause of action can arise from the application of that same practice. The Court held that it could. Citing its recent opinion in another firefighter test case—Ricci v. DeStefano, the court noted that “a plaintiff establishes a prima facie disparate-impact claim by showing that the employer ‘uses a particular employment practice that causes a disparate impact’ on one of the prohibited bases.”
Per the Court, the City believes that this decision “will result in a host of practical problems for employers and employees alike,” in that it may subject employers to an increased number of disparate-impact lawsuits based on long-stranding practices. That may, in fact, be true. Following this decision, any employer engaging in a practice whose application may result in a disparate impact on some protected classification of employees should take the time to reevaluate that practice. While there may be a legitimate business defense for the practice (as remains to be seen in the Lewis case on remand), it’s going to be easier for employees to get their foot in the door and state a claim.
President Obama to Sign Jobs Bill Today
President Obama is today expected to sign the Hiring Incentives to Restore Employment (HIRE) Act, which in its final form passed The House of Representatives 217-201 on March 4 and the Senate 68-29 on March 17. Click here to download the final version of the HIRE Act.
Key provisions of the HIRE Act include:
- An exemption from Social Security payroll taxes for private employers for each worker hired in 2010 who previously had been unemployed for at least 60 days;
- A $1,000 income tax credit, or a credit of 6.2% of total wages paid, for private employers for each new employee hired in 2010 and retained for at least 52 weeks and claimed on the employer's 2011 income tax return;
- An extension of the small business “expensing” tax break for one year, allowing small businesses to continue writing off up to $250,000 of certain capital expenditures instead of depreciating them over time;
- A $4.6 billion Build America Bonds program, which would provide an optional direct subsidy payment in lieu of a tax credit for tax credit bonds issued for certain school and energy projects; and
- Expanded federal aid for highway programs estimated to save or create 1 million jobs.
As previously reported in the Stoel Rives World of Employment, a slightly different version of the HIRE Act passed through the Senate on February 24. While the bill was in the House, several changes were to the Act, including increased funding to the Build America Bonds program and greater flexibility to the hiring tax credit program.
Despite Assertions to Contrary, Employment Laws Do Exist
On my way in to work this morning, I was listening to NPR’s Morning Edition, and caught an interview with Lewis Maltby, president of the National Workrights Institute. The interview was ostensibly to promote Mr. Maltby’s new book, “ Can They Do That?” in which he discusses employment termination cases that were deemed legal, but seem, in his opinion, to be disproportionately severe or unjust.
What Mr. Maltby appeared to decry (without using the proper terminology) is the American presumption of “at will” employment—the notion that an employer may terminate an at will employee’s employment for any reason or no reason, so long as it’s not otherwise illegal. A couple of Mr. Maltby’s examples demonstrate that concept well. For example, he mentioned instances where it was permissible for an employer to terminate an employee based on the political bumper sticker on the employee’s car, and for a school to terminate an overweight teacher’s employment because the teacher did not project the correct image. As there are no laws that specifically protect individuals from discrimination based on political affiliation or weight, these terminations were in fact permissible. (I would caution, of course, that terminating an overweight employee does carry risk to the extent the employee might be considered to have a disability under state or federal law.)
Mr. Maltby’s credibility, however, ends there. Mr. Maltby incorrectly made the assertion that there are no laws at all to protect employees—and his other examples demonstrate a lack of understanding of the law. For instance, he implied that there is no recourse for an employee whose employment is conditioned on having sexual relations with a superior. That is, of course, false. Such behavior constitutes impermissible quid pro quo sexual harassment under federal law and the laws of nearly every state (if not all of them). He also cited an example of an employee who was seen by his boss drinking beers at a bar after work, and where the boss fired the employee because drinking is “a sin.” While the outcome of a lawsuit would depend on the specific facts, such a scenario could constitute discrimination based on religious belief—another category protected by federal law and the laws of most if not all states. Every state and locality has a variety of employment laws already in place that protect employees from a wide range of impermissible employer conduct. Rather than engaging in hyperbole by stating that no laws exist to protect employees, a more useful discussion revolves around whether, as a policy matter, it makes sense to pass new laws protecting additional personal characteristics or affiliations. The challenge, of course, is striking the right balance between protecting those few things we all (or mostly) agree should be protected, with the interests of employers who should have the right to conduct their businesses as they see fit. A copy of the NPR story is available here.
New Salt Lake City Ordinances Prohibit Housing and Employment Discrimination Based on Sexual Orientation
Yesterday the Salt Lake City Council unanimously passed ordinances prohibiting discrimination on the basis of sexual orientation and gender identity. Click here to download a copy of the City Council's Staff Report on the ordinances, along with full text of the new laws. Highlights of the employment discrimination ordinance include:
- Forbids employment discrimination based on a person's sexual orientation or gender identity in Salt Lake City.
- "Sexual orientation" is defined as "a person’s actual or perceived
orientation as heterosexual, homosexual, or bisexual." - "Gender identity" is defined as "a person’s actual or perceived gender identity, appearance, mannerisms, or other characteristics of an individual with or without regard to the person’s sex at birth."
- "Sexual orientation" is defined as "a person’s actual or perceived
- Creates a complaint and investigation process. The complaint could be resolved through mediation or a fine of up to $1,000.
- Does not create a "private right of action" to sue over alleged discrimination.
- Exempts religious organizations, the State of Utah, and businesses with fewer than 15 employees.
- "Does not create any special rights or privileges," because "every person has a sexual orientation and a gender identity."
- Requires annual reports by the city's Human Rights Commission on the effectiveness of the ordinances.
- Takes effect on April 2, 2010.
In case you were wondering, the ordinances passed with the full support of the LDS Church. "The church supports these ordinances," LDS spokesman Michael Otterson told the City Council, "because they are fair and reasonable and do not do violence to the institution of marriage." For more coverage of the SLC ordinances, read this article from the Salt Lake Tribune, or this article from the Deseret News.
SLC employers should review the new laws and review existing policies and procedures to ensure compliance. Many states, counties and cities across the country have adopted similar ordinances. To check the state of the law in your location, check out this handy list of state and local sexual orientation and gender identity laws from the Human Rights Campaign.
The First Monday in October: Supreme Court Roundup
The first Monday in October traditionally marks the beginning of the United States Supreme Court's yearly term - and it provides an excellent opportunity to look at the cases the Court will be hearing this year. In an earlier post, the World of Work brought you detailed discussion of the Court's only Title VII case this term: Lewis v. City of Chicago. Here's a sampling of other labor and employment-related cases to watch for throughout the term:
This morning, in Mohawk Industries, Inc. v. Carpenter, the Court will consider whether an employer's attorney's investigation of an internal complaint is protected by the attorney-client privilege. The internal complaint alleged that the company was conspiring to hire individuals who were not authorized to work in the United States. The case involves a former employee's claim for witness tampering; a separate lawsuit involving the alleged conspiracy is proceeding on a separate track.
On October 7, the Court will hear a case involving the Railway Labor Act. The issue in Union Pacific Railroad Co. v. Brotherhood of Locomotive Engineers is whether the Seventh Circuit Court of Appeals had the power to overturn, on due process grounds, an arbitration award in the railroad's favor.
On October 14, in Perdue v. Kenny A., the Court will consider whether attorney fee awards under 42 USC 1988 can be enhanced when the lawyer does a particularly good job. Section 1988 is a common basis for fees in employment-related lawsuits.
On December 9, the Court will hear Stolt-Nielsen SA v. AnimalFeeds International. This case asks the Court to decide whether an employee bringing a claim under an arbitration agreement may sue, not only on his own behalf, but on behalf of a class of similarly situated employees. In this case, the arbitration agreement did not specifically allow class claims, but the arbitrators allowed those claims anyway.
Finally, on a date to be announced, the Court will hear Granite Rock Co. v. International Brotherhood of Teamsters. This case again involves questions about arbitration. Here, the issue is whether an arbitrator (not a court) may decide whether a valid collective bargaining agreement exists.
Supreme Court to Decide Title VII Statute of Limitations Question
The U.S. Supreme Court agreed yesterday to hear a challenge to a Seventh Circuit Court of Appeals decision in a case with similar factual overtones to the Ricci case decided earlier this year. Like Ricci, this case involves a firefighter qualification test that had a disparate impact on black applicants; unlike Ricci, at issue here is the statute of limitations on a Title VII claim.
In this case, Lewis v. City of Chicago, the plaintiffs are a group of approximately 6,000 black firefighter applicants who filed charges of race discrimination with the EEOC more than 300 days after the initial announcement of their test results, but within 300 days of the hiring of the new firefighter class from which they allege they were denied consideration. The trial court held that the hiring of each new firefighter was a new violation of Title VII, so the EEOC charges were timely filed. On appeal, the Seventh Circuit reversed, holding that the “discrimination was complete when the tests were scored...and the applicants learned the results.” At issue for the Supreme Court is whether the limitations period for a Title VII claim begins to run when an employer announces the results of a test that could violate Title VII’s disparate impact provision, or if the right to sue begins only once the employer has acted on that policy.
At face value, it seems that the trial court probably got this one right and the Supreme Court should reverse the Seventh Circuit. How can an employee know what the actual disparate impact will be until the employer’s hiring decisions are actually made? If, for example, the employer’s business needs ultimately dictate that it need hire nobody, there has been no harm done regardless of the results of the test. An actual harm needs to occur before the right to sue accrues. Notwithstanding that analysis, and given the current makeup of the court, however, it is unclear which way the Court will go on this one. The Stoel Rives World of Employment will let you know when a decision is reached and how that decision may impact your workplace.
Oregon Court Of Appeals Holds Non-Disabled Employees Are Protected When Requesting Accommodations
On Thursday, in Herbert v. Altimeter, the Oregon Court of Appeals held that an employee does not need to actually be disabled in order to be protected from retaliation for requesting an accommodation under Oregon’s disability anti-discrimination law. The case serves as a useful reminder that anti-retaliation protections, like those in the Oregon disability law, can be very broadly applied and protect many types of employee requests or complaints. Employers should be careful when disciplining or terminating any employee who has recently made some kind of arguably protected request or complaint.
Sherrie Herbert was terminated from her truck-driving job with Altimeter shortly after she became ill, allegedly from exhaust fumes in the cab of her truck, and she reported those problems to her boss. She sued under various retaliation theories, including that she was terminated in retaliation for her having requested an accommodation for a disability (i.e., requesting to be reassigned to a different truck). The trial court granted a directed verdict for Altimeter at the close of Herbert’s case at trial and dismissed all claims.
The Court of Appeals reversed. Altimeter argued that it couldn’t have retaliated against plaintiff for requesting an accommodation as a matter of law, because she was not disabled and therefore not protected under the Oregon disability law's anti-retaliation provisions. The court rejected that argument, noting that while the law requires Oregon employers to provide a reasonable accommodation to a “person with a disability,” the anti-retaliation provision, ORS 659A.109, protects any “worker” who requests an accommodation. So, the court reasoned, by its plain terms the statute protects a broader class of employees (all of them) who make protected requests for accommodations, even though those employees may not be entitled to an actual accommodation.
The opinion also contained an illustrative reminder about the importance of well-drafted written responses filed with the Equal Employment Opportunity Commission (“EEOC”), the Oregon Bureau of Labor and Industries (“BOLI”), and similar agencies. Those written position statements are admissible later; if they’re not carefully drafted they could come back to bite the complainant. In Herbert, Altimeter’s BOLI position statement included several damaging admissions, the worst of which essentially stated that she was terminated because she insisted she be reassigned to another truck, i.e., requested an accommodation. Despite a general lack of other evidence of retaliation presented by Herbert at trial, the Court held that Altimeter's admission in the BOLI statement alone was enough to allow that claim to go to a jury.
Oops! While there are no easy, hard-and-fast rules about how to draft effective BOLI or EEOC position statements, generally you want to say as little as possible while still making your case, and above all, you don't want to provide the only evidence a plaintiff will need to take his or her case all the way to a jury!! Those kinds of careless statements early on can make litigating employment discrimination lawsuits very expensive for employers, because they become much harder to get dismissed before trial.
Fake Job Reference Site Highlights Importance of Verifying Applicant References
.jpg)
As if navigating the world of employment issues was not hard enough already, today's Consumerist highlighted a new service that purports to provide, among other things, fake job references. While I have not formed a conclusion as to whether the site is real or a sham (many of the internal links on the site don't work, but there is an actual recording identifying the company when you call the number), such services--the sole function of which is to perpetrate a fraud--highlight the importance of verifying the authenticity and experience of applicant references.
If you are suspicious about an applicant's job history or references, there are several steps you can take decrease your chances of being duped.
- First, if the company name is unfamiliar to you, look it up online. Is there a website? Can you find a phone number? If so, call it and ask to speak to someone who covers the human resources function. It is, of course, possible to fake all of these things (and a service like the one linked to above is paid to cover them), but chances are that someone who is lazy enough to fake a job reference isn't going to cover all of his or her bases.
- Second, don't rely on the information provided. If the applicant states that he or she worked at a major corporation and provides the number for someone to contact at the corporation, don't call the number. Instead, go to the website, call the main number, and ask to speak to the person in the reference. If that person doesn't exist, it's a good sign that the reference is not legitimate.
- Third, as the Consumerist post notes, make use of services provided by the phone company such as reverse lookup. The number may not show up for a legitimate reason (such as it's a direct dial line), but the failure to authenticate should still be considered a reason to proceed with caution.
- Fourth, if you are instructed to contact a reference at home that's fine, but try to otherwise authenticate the reference as discussed above.
- Fifth, you may want to include a policy in your handbook indicating that subsequent discovery of false information on an employee's application is grounds for immediate termination.
Once you verify that the reference is legitimate, be mindful that all references were not created equal. Make sure to establish that the reference interacted with the applicant in significant ways or over a substantial period of time. Many applicants provide otherwise legitimate references who, for example, left the prior employment long before the applicant did. Those references are less likely to have any useful information, and won't be able to discuss why the applicant left the prior employer.
Many employers don’t check references at all, or just do a cursory review. The lesson here is that due diligence checking references can go a long way toward avoiding significant problems down the road.
Judge Sotomayor's Record Shows Even-Handed Approach to Employment Law
President Obama recently nominated Judge Sonia Sotomayor to replace outgoing Justice David Souter on the United States Supreme Court. If you're like us, you're wondering what her nomination might mean for employment law. While it's never easy to predict how a nominee will rule once on the Supreme Court (just ask George H.W. Bush), early indications are that Judge Sotomayor takes an even-handed approach to employment law issues.
In her 16-year career on the bench, first as a District Court Judge and then as a Judge on the Second Circuit Court of Appeals, Judge Sotomayor has been involved in over 100 opinions on employment cases. She's ruled in favor of both employers and employees, and her decisions do not seem to be skewed one way or the other. Click here for a list of of Judge Sotomayor's employment law decisions.
If you look through this list, you'll see that she's made several rulings in favor of employers. While some conservatives are already attacking Judge Sotomayor for "judical activism," they will find no support for those charges in her employment law record. Assuming she takes this same approach on the Supreme Court, we can expect her to be a critical swing vote on future employment cases.
Tomorrow: Judge Sotomayor's Labor Record
