Happy New Year from the Oregon Legislature: New Employment Laws To Watch Out For in 2014

Today we continue with our recent New Years theme.  Not to be outdone by their neighbors to the south, the Oregon Legislature was also busy in 2013.  And now that 2014 is upon us so too are a slew of new Oregon employment laws. In areas ranging from social media to sick leave, Oregon employers should carefully review their policies and practices to ensure current compliance with these new laws.  Here is a round up of the major changes to employment laws enacted by the Oregon Legislature (and the City of Portland) that employers should be aware of in 2014:

  • Employers may not demand access to employees’ social media accounts. Beginning on January 1, 2014, employers may not demand access to employees’ or applicants’ personal social media accounts. House Bill 2654, which Governor Kitzhaber signed into law on May 22, 2013, prohibits employers from requiring an employee or applicant to disclose her username, password, or “other means of authentication that provides access to a personal social media account.” It further prohibits employers from requiring that an employee “friend” or otherwise connect with an employer via a social media account, and from compelling the employee to access the account in the employer’s presence such that the employer can view it. A number of other states have passed or are considering similar legislation.

The Oregon statute has two features that may prove particularly complicated in practice. First, the statute permits an employer to “require an employee to disclose any user name and password, password or other means for accessing an account provided by, or on behalf of, the employer or to be used on behalf of the employer.” (My emphasis.) What about a personal social media account that an employee uses occasionally for work purposes? The statute’s language suggests that an employer could validly demand access, say, to a personal Facebook account that an employee uses in part to advertise her employer’s products or services. But, from the employee’s perspective, how much use is too much? A recent California case in which an employee used his personal email address to set up a business-related Twitter account looked as though it would provide guidance in the area, but the case has since settled.

Second, the statute defines “social media” quite broadly. “Social media,” it says, includes “an electronic medium that allows users to create, share and view user-generated content, including, but not limited to, uploading or downloading videos, still photographs, blogs, video blogs, podcasts, instant messages, electronic mail or Internet website profiles or locations.” The breadth of that definition provides yet another reason for employers to design and implement strong, carefully-considered policies related to employees’ use of electronic communications technology for work purposes.

  • Employers with employees in Portland are required to provide sick leave. In March 2013, the Portland City Council passed a new ordinance requiring employers with six or more employees to provide at least 40 hours of paid sick leave (“PSL”) per year for employees who work within city limits (smaller employers must also provide leave, but it can be unpaid). The ordinance takes effect on January 1, 2014. The City Council slightly revised the ordinance in early October, and the accompanying regulations became available on November 1, 2013. Because the ordinance is only effective with respect to employees working within the City of Portland, it creates a number of twists, especially associated with companies who have employees working both within and outside of city limits. We previously blogged about the ordinance and its complexities here – check it out.
  •  Oregon employers must provide bereavement leave under OFLA. In June 2013, Governor Kitzhaber signed House Bill 2950, an amendment to the Oregon Family Leave Act (“OFLA”) that requires employers to provide up to two weeks of bereavement leave to OFLA-covered employees. The change becomes effective on January 1, 2014. We previously blogged about the changes here.

The amendments require employers to provide a covered employee with leave “[t]o deal with the death of a family member” by (1) “[a]ttending the funeral or alternative to a funeral of the family member,” (2) “[m]aking arrangements necessitated by the death of  the family member,” (3) or “[g]rieving the death of the family member.” The leave must be completed within 60 days of the date on which the covered employee receives notice of the death of the family member. The two weeks of bereavement leave count toward a covered employee’s the 12 total weeks of OFLA leave per year. The law incorporates OFLA’s existing definition of “family member,” which includes a spouse, same-gender domestic partner, parent, parent-in-law (including the parents of same-gender domestic partners), grandparent, grandchild, child, stepchild, or child of the employee’s same-gender domestic partner. 

As with any OFLA provision, however, there are a few potential pitfalls for employers. For example, the new law prohibits an employer from “requir[ing] an eligible employee to take multiple periods of [bereavement] leave . . . concurrently if more than one family member of the employee dies during the one-year period.” Thus, if an employee suffers a single tragedy involving the deaths of her mother, father, and sibling, the employer will usually be required to provide up to six total weeks of leave to the employee.

  • Oregon veterans are entitled to time off for Veterans Day. This one is simple: employers must provide veterans with paid or unpaid time off on Veterans Day. Governor Kitzhaber signed the legislation (Senate Bill 1) in March 2013, and it took effect immediately. The veteran employee need only provide documentation that she qualifies as a veteran and 21 days’ notice of her intent to take the day off. Then, within 14 days of Veterans Day, the employer must tell the veteran employee whether it can provide time off and, if so, whether the time will be paid or unpaid. An employer may only refuse to provide time off if doing so would “would cause the employer to experience significant economic or operational disruption, or undue hardship.” In that case, the employer must also either deny time off to all employees who requested time off for Veterans Day or “[d]eny time off to the minimum number of employees needed by the employer to avoid” disruption or hardship. The employer must further allow the employee “to choose, with the employer’s approval, a single day off within the year after the Veterans Day on which the employee worked as a replacement for Veterans Day to honor the employee’s service.”
  • Employers may require direct deposit of wages for Oregon employees. Until now, Oregon law required employers to obtain an employee’s consent before paying her via direct deposit. House Bill 2683 abolished the consent requirement. Beginning on January 1, 2014, “[a]n employer may pay wages without discount through direct deposit of wages due to an employee into the employee’s account in a financial institution . . . in this state.” Note the emphasis; employers may not charge employees a fee for the direct deposit service. Employers must pay employees by paper check “upon the written or oral request of the employee.”
  • Oregon’s employment discrimination statutes cover unpaid interns. In June 2013, Governor Kizthaber signed House Bill 2669, which extends Oregon’s existing employment discrimination laws to unpaid interns and which took effect immediately. The key question facing employers to whom the law might apply involves the definition of “unpaid intern,” for which the law states three requirements. First, the employer must “not [be] committed to hire the person performing the work at the conclusion of the training period.” Second, the employer must obtain an “agree[ment] in writing that the person performing the work is not entitled to wages for the work performed.” Third, the intern’s work must:

1.      “Supplement[] training given in an educational environment that may enhance the employability of the intern;”

2.      “Provide[] experience for the benefit of the person performing the work;”

3.      “[N]ot displace regular employees;”

4.      Be “performed under the close supervision of existing staff;” and

5.      “Provide[] no immediate advantage to the employer providing the training and may occasionally impede the operations of the employer.”

  •  Victims of sexual assault, domestic violence, and related offenses need not meet a minimum length-of-employment threshold before taking leave. House Bill 2903 eliminated the requirement that victims of domestic violence, harassment, sexual assault or stalking work an average of 25 hours per week for 180 days prior to requesting leave. It also requires covered employers to post summaries of ORS 659A.270-659A.285 and of related rules promulgated by the Oregon Bureau and Labor and Industries (BOLI). Note that the statute makes both victims and the parents or guardians of minor victims eligible for leave. The law takes effect on January 1, 2014.
  • Oregon’s definition of “disabled” depends on the abilities of “most people in the general population.” House Bill 2111 revised the standard for determining whether an individual is substantially limited in a major life activity for the purposes of Oregon disability law. The old statutory definition required merely that the condition “materially restrict[] one or more major life activities of the individual.” The 2013 revision deleted the word “materially.”  The statute now provides that the condition must impair a major life activity “as compared to most people in the general population. An impairment need not prevent, or significantly or severely restrict, the individual from performing a major life activity in order to be considered substantially limiting.” 

If that definition sounds overbroad, never fear – the legislature included an illuminating, one-sentence caveat to the new standard: “[n]onetheless, not every impairment will constitute a disability within the meaning of this section.” It declined, however, to suggest what types of impairments might fall within that caveat. The new law takes effect on January 1, 2014.

New Seattle Job Assistance Ordinance Limits Employers' Reliance on Criminal Records

Seattle employers are about to become much more restricted in their ability to inquire into or act upon the criminal records of applicants and employees. On November 1st, the Seattle Job Assistance Ordinance, SMC 14.17, takes effect and will apply to positions that are based in Seattle at least half of the time. The Ordinance does not apply to governmental employers (with the exception of the City of Seattle) or to positions involving law enforcement, crime prevention, security, criminal justice, private investigation, or unsupervised access to children under the age of sixteen or to vulnerable or developmentally disabled adults.

The Ordinance imposes the following new restrictions on the hiring process:

  • Advertisements for positions cannot state that applicants with criminal records will not be considered or otherwise categorically exclude such applicants;
  • The employer cannot implement any policy or practice that automatically excludes all applicants with criminal histories;
  • The employer must complete an initial screening process to weed out any unqualified candidates before the employer can question applicants about their criminal histories or run criminal background checks on applicants;
  • The employer cannot refuse to hire an applicant solely because he or she has an arrest record (as opposed to a conviction record); and
  • The employer cannot refuse to hire an applicant solely because of his or her conviction record, conduct underlying his or her arrest record, or pending criminal charges unless the employer has a legitimate business reason to do so.

In addition, the Ordinance provides that an employer cannot take tangible employment actions against a current employee - such as termination, discipline, demotion, or denial of a promotion -- solely because of that employee’s arrest record. Nor can the employer take tangible employment actions against a current employee solely because of that employee’s conviction record, conduct underlying his or her arrest record, or pending criminal charges unless the employer has a legitimate business reason for doing so.

A “legitimate business reason” is considered to be circumstances in which the employer believes, in good faith, that a conviction will negatively impact the individual’s fitness or ability to perform the job at issue or will be likely to result in harm to people, property, business reputation, or business assets. The employer is required to consider the following factors in making the determination that a legitimate business reason justifies the employment action:

  • The seriousness of the underlying criminal conviction or pending criminal charge;
  • The number and types of convictions or pending criminal charges;
  • The time that has elapsed since the conviction or pending criminal charge;
  • Any verifiable information related to the applicant’s or employee’s rehabilitation or good conduct;
  • The specific duties and responsibilities of the job at issue; and
  • The place and manner in which the position will be or is performed.

Once the employer reaches the determination that a legitimate business reason supports action on the basis of an applicant’s or employee’s criminal record, the employer is required to notify the individual of the specific records or information on which the decision is based and hold the position open for at least two business days in order to provide the individual with the opportunity to explain or correct that information.

Affected Seattle employers should evaluate and revise their policies, application materials, and hiring practices to ensure compliance with the new Ordinance.

Chasm Continues To Widen, For Now, Between NLRB and Federal Courts On Enforceability Of Class Action Waivers In Employment Agreements

Just last week, in the case GameStop Corp., a National Labor Relations Board (NLRB) administrative law judge applied recent Board precedent and ignored contrary cases from federal courts to find an employer’s arbitration agreement was unenforceable because it waived the right of employees to bring class or collective actions.  While the decision has yet to be approved by the NLRB itself (parties can appeal ALJ decisions to the NLRB), it illustrates the continuing tension in this area between the NLRB (which disfavors class action waivers in employee arbitration agreements) and the federal courts (which favor them). 

As we have reported, U.S. federal courts continue to hold that employees may enter into arbitration agreements in which they waive the right to file class or collective action claims.  The U.S. Supreme Court put its stamp of approval on such waivers in 2011 in the blockbuster case AT&T v. Concepcion, holding that the enforceability of arbitration agreements was governed by the Federal Arbitration Act (FAA), which preempted any state law purporting to regulate arbitration agreements, including arbitration agreements with class action waivers.  Building on a decades-long line of cases steadily increasing support for the concept of arbitration and similar alternative dispute resolution (“ADR”) methods for resolving litigation, Concepcion also held decisively that arbitration agreements could include waivers by the parties of the right to bring lawsuits as class actions.  The U.S. Supreme Court has re-affirmed Concepcion in subsequent decisions.

The NLRB Picks A Fight With the U.S. Supreme Court.  Who Do You Think Will Win?

Concepcion was a consumer class action case involving a class action waiver in a cell phone service agreement between a customer and cell phone provider.  But the Court’s reasoning left little doubt among employment law experts that the decision could apply to employment arbitration agreements as well. One employment expert did take exception to Concepcion, however: namely, the NLRB.  In early 2012, the NLRB issued its controversial opinion in the case D.R. Horton, which held that, despite Concepcion, a class action waiver in an employment agreement was unenforceable because it violated federal labor laws that protect employees’ right to engage in concerted or collective action to advocate for the improvement of working conditions.  While such “concerted action” typically has meant the right to form labor unions, in D.R. Horton, the NLRB held that filing class action discrimination or wage and hour lawsuits was a form of “concerted action” that could not be infringed upon or waived in an arbitration agreement. 

 

D.R. Horton put the NLRB directly at odds with the U.S. Supreme Court and put employers in a difficult spot.  On the one hand, the U.S. Supreme Court approved of the use of class action waivers in arbitration agreements, and many employers were eager to use them in employment agreements to help reduce the exposure to costly class action litigation, especially wage and hour class actions, which have been steadily on the rise over the past decade.  On the other hand, according to the NLRB, such waivers constitute a violation of federal labor law.

 

Right Answer: The U.S. Supreme Court.

 

Many employment law experts believe that D.R. Horton was based on shaky legal reasoning and would likely eventually be overturned by the federal courts.  In fact, lower federal trial courts have almost uniformly ignored D.R. Horton, and relying on Concepcion and related cases have continued to find that employment agreements with class action waivers can be fully enforceable under the FAA.  Employers got an additional boost over the past few weeks, when Ernst & Young’s employee class action arbitration waiver was upheld by both the Second and Ninth Circuits.  See Sutherland v. Ernst & Young LLP, 2013 U.S. App. LEXIS 16513 (2d Cir. N.Y. Aug. 9, 2013) Richards v. Ernst & Young, LLP, 2013 U.S. App. LEXIS 17488 (9th Cir. Cal. Aug. 21, 2013).  Those cases follow another similar decision from the Eighth Circuit in January of this year in Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. Mo. Jan. 7, 2013) (affirming enforceability of class action waiver precluding FLSA collective action lawsuit and finding D.R. Horton “carries little persuasive authority.”)

So while the NLRB may be sticking to its guns for the moment in GameStop Corp., time may be on the side of employers hoping that Concepcion will carry the day.  It is unlikely that the NLRB's GameStop Corp. decision or D.R. Horton will continue to stand for long in light of the overwhelming and growing body of contrary law in the federal courts, which for most purposes trump the NLRB in the federal judicial pecking-order.  (The D.R. Horton decision itself is being reviewed by the Fifth Circuit Court of Appeals, with a decision expected soon.)  While employers should be aware of the continuing tension and flux over the enforceability of class action wavers in employee arbitration agreements, the developing weight of the law continues to shift in favor of enforceability.  Employers who wish to lower the risk of exposure to very costly and time-consuming class action litigation, particularly wage and hour collective or class actions, may wish to consider using arbitration agreements with appropriate class action waivers.

Maryland Federal District Court's Dismissal of EEOC v. Freeman Provides Guidance for Employers on Background Check Rules

As we’ve blogged about before, the EEOC has become more aggressive over the past few years in scrutinizing employer use of criminal background and credit checks.  While federal anti-discrimination laws do not expressly prohibit employers from performing background checks or similar screening methods on employees or applicants, their use can be unlawful where the practice has a “disparate impact” on protected classes of employees under Title VII.  Recently, the EEOC has issued Guidance documents focusing on disparate impact cases involving criminal history and credit checks, all as part of its interest in “systemic” forms of discrimination.  In addition to issuing guidance limiting when and how employers can use criminal and credit history background checks in employment, the EEOC has been actively investigating specific employers, as some readers of this blog are undoubtedly all too aware.  In some cases, the EEOC has even initiated lawsuits challenging employers’ use of background checks.  For example, the EEOC has filed suit just a few weeks ago against Dollar General (EEOC v. Dollar General, No. 1:13-cv-04307, Illinois) and BMW (EEOC v. BMW Manufacturing Co., LLC, No. 7:13-cv-01583-HMH-JDA, South Carolina).

Many employers and employment attorneys who have argued that appropriate use of background checks can be important and necessary believe the EEOC is going too far.  Those employers have complained that the EEOC’s aggressive position presumes the use of criminal or credit background checks is per se unlawful and amounts to a de facto ban on their use under any circumstances, regardless of whether or not they result in an unlawful disparate impact.  If you are one of those raising such concerns, federal judges may be listening.  A few weeks ago, a federal  judge in the U.S. District Court in Maryland issued an opinion granting summary judgment dismissal in another of the EEOC’s enforcement lawsuits, EEOC v. Freeman (No. 1:10-cv-2882, Maryland).  The scathing opinion by U. S. District Court Judge Roger Titus held that the EEOC’s evidence was unreliable and failed to raise a question of fact or show Freeman’s background check policies created a disparate impact in violation of Title VII.

Court Holds Background Checks Can Be “Important” and “Essential” Tools for Employers

The court also went out of its way to note as a general matter that employer use of criminal and credit background checks, absent an actual unlawful disparate impact, was not only lawful but an “important” tool for employers.  In so doing, the court cast doubt on the EEOC’s Guidance on this subject, which many believe presumes background checks are inherently discriminatory.  Speaking specifically about the use of criminal background checks, the court noted:

“Because of the higher rate of incarceration of African-Americans than Caucasians, indiscriminate use of criminal history information might have the predictable result of excluding African-Americans at a higher rate than Caucasians.  Indeed, the higher incarceration rate might cause one to fear that any use of criminal history information would be in violation of Title VII.  However, this is simply not the case.  Careful and appropriate use of criminal history information is an important, and in many cases essential, part of the employment process of employers throughout the United States * * *.  Thus, it is not the mere use of any criminal history or credit information generally that is a matter of concern under Title VII, but rather what specific information is used and how it is used.  Because of this, it is simply not enough to demonstrate that criminal history or credit information has been used.  Rather, a disparate impact case must be carefully focused on a specific practice with an evidentiary foundation showing that it has a disparate impact because of a prohibited factor.”

The court went on to describe the important goals that properly applied background checks serve, such as reducing employee theft and protecting the company from negligent hiring lawsuits that could result if a known violent individual injured coworkers or customers.  Indeed, Freeman was able to score easy points by showing that the EEOC itself requires passing criminal background checks as a condition of employment for over 90% of its positions!  (Interesting side note: the tables were also turned on the EEOC in the Kaplan case, where a federal judge required the EEOC to disclose information about its policies in discovery. See EEOC v. Kaplan Higher Education Corp., No. 1:10-cv-2882, 2012 U.S. Dist. LEXIS 54949 (N.D. Ohio Apr. 18, 2012) (granting employers’ motion to compel discovery into EEOC’s background check policies, in part because the information was relevant to company’s defense that EEOC should be estopped from suing employers over practices that it condones itself).)

“Winning” a Pattern and Practice Case Against the EEOC Can Be a Pyrrhic Victory

Freeman is undoubtedly a stinging rebuke of the EEOC’s (over?)zealous enforcement of its Guidance regarding background checks.  The opinion will certainly be cited liberally by employers involved in lawsuits alleging their use of background checks is discriminatory under Title VII.  But employers should be cautioned about reading too much into Freeman.  For example, the court did not hold that the EEOC could never succeed in such a case.  And despite the court’s general approval of background checks, it did not even find that the EEOC’s Guidance was overbroad or otherwise invalid.  The bulk of the court’s analysis focused instead on the inadequacies of the EEOC’s evidence and expert reports, which the court held were statistically unreliable and failed to show statistical evidence of disparate impact in that case.  It is certainly possible that the EEOC could prevail in another case, with either different evidence or better expert testimony.

Further, defending against pattern and practice cases like this can be very expensive, even where, like Freeman, the employer “wins” by getting the case dismissed at summary judgment.  The EEOC filed its lawsuit against Freeman in September 2009, and the company only just won summary judgment in August 2013.  The trial court’s opinion detailed the “period of contentious discovery” and “flurry of motions activity” that occurred during the nearly four years of litigation that preceded this month’s dismissal of the case—code for what was undoubtedly time-consuming, costly, and stressful litigation. Indeed, pattern and practice cases by their nature entail extensive expert and class action-type discovery into many company policies and hiring practices.  For example, the court in Freeman noted that the company had disclosed information related to nearly 59,000 applicants during the course of discovery!

Background Checks Still Need to Be Individualized and Narrowly Tailored

So obviously, despite the employer’s resounding victory in Freeman, most employers would still be best served by trying to avoid costly EEOC scrutiny over background check policies altogether, if possible.  With that in mind, therefore, perhaps the most useful take-away from the Freeman case is the court’s detailed discussion of the specifics of Freeman’s policy.  The court described that policy approvingly, stating that “[o]n its face, Defendant’s policy appears reasonable and suitably tailored to its purpose of ensuring an honest work force.”  (See Freeman fn 3.) 

Specifically, Freeman’s policy included the following:

  • The application included an express disclaimer stating a conviction was not an automatic bar to employment, and that all the relevant circumstances would be considered, including the nature of the offense, the employee’s explanation, and how long ago the offense occurred.
  • The only absolute bar to employment was if the applicant was untruthful or failed to disclose.
  • Background checks were only performed once the employee received an offer of employment.
  • Any decision to deny employment based on background check results had to be reviewed and approved by senior Human Resources officials.
  • Criminal background checks were limited to convictions in the past seven years.
  • Credit checks were limited only to specific “credit sensitive” positions where employees had access to company credit cards or the authority to enter into contracts with vendors. Of course, watch out for other potential restrictions on use of credit checks, such as under state law (see below). 

Indeed, the Freeman criminal check policy seems to largely comply with the EEOC’s 2012 Guidance on that topic, which states that criminal checks should be job-related, consistent with business necessity, and involve an “individualized assessment” of each employee’s circumstances. The details of Freeman’s policy, which has the stamp of approval of at least one federal judge, should therefore be of particular interest to other employers wishing to craft their own background check policies. (Of course, the fact that Freeman’s policy closely tracked the EEOC Guidance was not enough for that employer to avoid a lawsuit, although presumably after the court’s dismissal, the EEOC may think twice before challenging similar policies in the future.) 

Regarding credit checks, even though the EEOC’s Guidance simply says they should be avoided altogether, Freeman suggests they too can be valid, particularly where they are limited only to “credit sensitive” positions.  Note, however, that employer use of credit checks may be limited by means other than Title VII, such as by state law.  For example, an Oregon statute enacted in 2010, ORS 659A.320, prohibits the use of employee credit checks in all but the most narrow circumstances where employee credit history is “substantially job-related.” (emphasis added)

The debate regarding the appropriate use of employee criminal or credit background information in hiring decisions is far from over.  While Freeman may give the EEOC pause, its other enforcement activities continue, including the ongoing litigation in the BMW  and Dollar General cases.  (The employer in the Kaplan case won summary judgment in early 2013 on the grounds, similar to Freeman, namely that the EEOC’s expert evidence failed to show a disparate impact See EEOC v. Kaplan Higher Learning Education Corp., No. 1:10 CV 2882, 2013 U.S. Dist. LEXIS 11722 (N.D. Ohio Jan. 28, 2013).  Interestingly, the Kaplan case involved the same expert relied on by the EEOC in Freeman.)

As the law continues to develop in this area, employers should continue to review hiring practices to ensure they comply with applicable law, including applicable EEOC Guidance. And even when the policy is facially compliant, employers should nevertheless consider conducting regular audits of hiring data to ensure there are no statistical indicators of a disparate impact affecting a protected class under Title VII.  As Freeman and other cases show, you want to be on solid ground and make sure the numbers back up your policy if the EEOC ever comes knocking.

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

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

 

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:

  1. Always act in good faith and deal fairly with employees.
  2. Consider whether termination of employment is consistent with applicable policies and past practices.
  3. Good documentation demonstrates process (and calm reflection).
  4. 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 hereWe 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.

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)

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

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."
  • 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

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