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April 2008 Legal & Legislative Update |
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LEGISLATION and ADMINISTRATION ACTION House passes mental health parity bill. The House of Representatives passed a bill requiring the same insurance benefits for mental as well as physical illnesses. Fully insured plans would not be able to limit mental health treatment or set any different financial or eligibility requirements than for other medical conditions. The Senate version of the bill passed last year. Now the differences in the two bills will have to be reconciled before it can become law. LITIGATION The Legal Update includes new developments and matters of interest throughout the United States. Be aware that our various federal circuit courts reach somewhat differing conclusions. So a decision in another part of the country, and especially in a different state, may not be quite “the law” in your jurisdiction. Some courts lead the way; others lag behind. The Legal Update lets you see the overall trends and compare them with your jurisdiction. Wisconsin is part of the Federal 7th Circuit (Wisconsin, Illinois and Indiana). In this month’s Legal Update, the most relevant cases for Wisconsin are LaRue v. DeWolff, Boberge & Associates, Inc., Duncan v. Fleetwood Motor Homes and Dewitt v. Proctor Hospital.
U.S. SUPREME COURT ALLOWS INDIVIDUALS ERISA generally allows retirement plan participants to sue for overall harm to the plan but not for individualized damages. In LaRue v. DeWolff, Boberge & Associates, Inc. (2008), the U.S. Supreme Court has changed that. An individual claimed that his employer did not follow his directions regarding his individual retirement savings plan, causing a $150,000 loss. The court ruled that an individual can sue over “fiduciary breaches that impair the value of plan assets in a participant’s individual account.” Fair Labor Standards Act Joint employment contract workers. A staffing agency must pay overtime to its workers, even though it opposed the extra work and its policies prohibited overtime. A staffing agency supplied temporary nurses to hospitals. The supervisors at the hospitals had the nurses work overtime. The Department of Labor and the court found that the overtime was worked, so the nurses should be paid. If a staffing agency places it workers under the control of another company’s supervisors, then it should work with the leasee company to set limits; the leased nurses’ pay should not be caught in the middle between the two sets of contradictory management directives. Chao v. Gotham Registry, Inc. (2nd Cir., 2008). DISCRIMINATION Retaliation Timing is everything. A plaintiff usually has the burden of proving a case. In Mickey v. Zendler Tool and Die Co. (6th Cir., 2008), the court placed that burden on the defendant. The company fired the plaintiff one day after learning he had filed an age discrimination charge with the EEOC. The court held that “where an employer fires an employee immediately after learning of protected activity, we can infer a causal connection.” The company now has to solidly rebut that inference of retaliation. Age and National Origin Fired executive shows pretext. A fired CEO won his age and national origin case. He alleged that the Swiss-owned company had a bias against age and against Americans. The company refuted the charges by stating a non-discriminatory reason, poor performance, for the discharge. The executive overcame the defense. Among other evidence was testimony by the company’s auditors that the fired CEO ran the company well and profitably, and that the Swiss owners were well aware that the “problems” cited in the discharge were not under the CEO’s control. A jury awarded $555,000 plus $250,000 in attorney fees. Imwalle v. Reliance Medical Products, Inc. (6th Cir., 2008). Employer’s inconsistencies send age discrimination case to trial. In Duncan v. Fleetwood Motor Homes (7th Cir. 2008), the federal appellate court that governs Wisconsin ruled that a demoted employee was entitled to go to trial on his claim of age discrimination. The employee, who had been injured on the job, never missed a day of work during seven months of work restrictions, had no documented work performance problems, and was meeting the job’s performance expectations by the employer’s own admission. Nevertheless, the employer told the employee he could no longer work in his job and replaced him with a significantly younger employee. During this time frame, the employee overheard a production manager stating that older employees cost the company a lot of money. The Court ruled that the employer could not on the one hand admit that the employee was meeting job expectations and at the same time argue that he could not physically perform the job. Employers: beware that your reasoning in taking a job action must be legitimate, legal and grounded in provable facts. Race Anti-Semitic bias warrants §1981 race case. 42 U.S. Code §1981 prohibits racial discrimination in contracts. It is a powerful law because it has a four-year time limit to file (rather than Title VII’s 300 days), it allows personal liability, and there is no cap on damages. Employment is a contract (so are dealerships, franchises and supplier contracts). This case is important because it shows that some religions have historically been treated as “racial” to the extent that §1981 applies. For example, Hitler’s “racial purity” program was directed against the Jewish religion, no matter what the nationality of the person. Discrimination against Muslims from the Middle East has been seen by the courts as “racial” as well as religious. In the case of Furman v. Daimler-Chrysler Corp. (S.D. Ohio, 2008), a supplier alleged that its contract was cut due to the anti-Semitic bias of a Daimler-Chrysler’s manager toward the supplier’s Jewish executives. The managers allegedly made anti-Semitic statements and urged the plaintiff to see Christian movies, re-examine his Jewish faith, and raise his children as Christians. When these advances were rebuffed, the contract was cut. The court found evidence that the manager could hold a bias against the entire Jewish “race” due to a belief that the “race” had been responsible for the death of Christ. The court found sufficient evidence to allow the case to proceed to trial on the basis that the alleged statements and treatment could constitute a discriminatory bias against the entire Jewish “race.” Behavior, not race, resulted in attorney’s discharge. A newly-hired African-American law school graduate with stellar Ivy League academic credentials was hired, then quickly fired by a law firm. She challenged this as racial discrimination. The court granted summary judgment dismissing the case. It found a “serious problem working with others,” including overt refusal to take assignments and yelling at partners of the firm. The firm gave opportunities to correct, and offered to hire a coach to help her with interaction issues, but she refused. The court found that “no reasonable trier of fact could conclude that race was a motivating factor in the termination.” Morisseau v. DLA Piper (S.D. NY, 2008). Sex Body presses were battery as well as harassment. A jury awarded $5.3 million for sexual harassment and battery. It found that a realty developer repeatedly body pressed a female employee against a wall, touched her, and propositioned for sex, including offering $1million to have a sexual relationship with him. The developer’s wife also allegedly propositioned the employee several times. The employee declined, was eventually fired, then sued. Myers v. Central Florida Investments, Inc. (M.D., Fla., 2008). First trial under Illinois Equal Pay Act results in a $12,000 award. In the first court case under the Illinois Equal Pay Act, the court ordered payment of $12,000 and penalties against a liquor store for paying a female sales clerk less than a similarly-situated male clerk. The State Department of Labor took the case to court after the employer refused to follow the administrative order to pay the wage difference. Illinois v. Main Liquors, Inc. (Ill. Cir. Ct., 2008). Disability State Department changes HIV policy before trial. The U.S. State Department has changed its policy of refusal to hire or assign HIV-positive foreign service officers due to the fact they might be stationed in remote locations with inadequate medical care. This policy was challenged in Smith v. Dept. of State (EEOC Admin., 2008) and Taylor v. Dept. of State (D., DC). Preliminary evidence in both cases showed no overall medical validity for the policy. In an individualized medical assessment, as required by the Rehabilitation Act and ADA, most HIV-positive individuals could easily receive needed testing and treatment during the routine leaves provided to Department employees on foreign assignment, no matter how remote the assignment. The Department changed the policy to one of individualized assessment prior to the upcoming trial in the Taylor case. Nurse with Sick Husband may Pursue ADA Claim Against Employer. In Dewitt v. Proctor Hospital, the Seventh Circuit Court of Appeals ruled that a nurse who was fired after her supervisor confronted her about the cost of her husband’s rising medical claims could pursue her claim for discrimination based on “association with a disabled person.” The ADA protects employees from discrimination on the basis of being related to or associated with someone with a disability. In this case, the nurse’s husband had prostate cancer and had undergone expensive medical treatment for several years. The hospital was self-insured, and directly paid for an insured’s medical costs up to $250,000 per year. Six months before the nurse, who received glowing evaluations, was fired, her supervisor asked her about her husband’s treatments and stated that the claims would be reviewed because they were unusually high. The Court ruled that there was significant evidence tying the termination directly to concerns over the costs of the husband’s medical care. This case demonstrates a trend we are seeing: employees claiming that the employer took adverse action against them due to health care costs. FAMILY AND MEDICAL LEAVE ACT FMLA does not require inability to function. A company fired an employee for abuse of FMLA leave. He was observed working in his yard after calling in to report he had taken Percocet for a migraine headache and needed FMLA because the company policy prohibited him from working his machine job if he had taken a prescription narcotic. An arbitrator awarded reinstatement and back pay. The evidence was that the Percocet alleviated the migraine, so there was no reason the employee could not do household functions. The company’s own policy prohibited the person from coming to work while the medication was still in his system, so even though he could function, he could not do his job. The investigator did not see the employee driving or operating machinery, so there was nothing inconsistent with his claim to have taken medication. In fact, the video showed him moving slowly and gently as he did non-strenuous tasks. FMLA requires that a person cannot do their regular job; it does not require one to stay in bed all day. Many FMLA situations render people unable to do the job, but still able to do basic life and household functions. In re Bud Industries, Inc. (2008). NATIONAL LABOR RELATIONS ACT Mob of union stewards was not protected activity. Union stewards at a hospital were frustrated when a manager would not address an employee’s concerns. Five stewards stormed a children’s cardiac unit, bypassing the reception area, shouting and yelling at the manager. They were disciplined for this, and grieved the discipline. The arbitrator found that the stewards’ behavior interfered with hospital operations, disrupted treatment, and created a health issue for the patients. The arbitrator ruled that the five stewards were lucky to have only been disciplined; their behavior clearly would have warranted immediate discharge. In re Stanford Hospital (2008).
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