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March 2009 Legal & Legislative Update |
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LEGISLATION AND ADMINISTRATION ACTION COBRA Supplementation: American Recovery and Reinvestment Act of 2009. Effective March 1, 2009, terminated eligible employees will receive a 65% discount of COBRA insurance continuation. All those terminated since September 2008 are eligible. The employer pays the 65% then recovers it from the IRS by an offset against tax withholdings. Notice forms are being developed by the government and will be available this month, but the 65% employer payments—or reimbursements—start now. [For a more detailed article on this issue, contact Bob Gregg (rgregg@boardmanlawfirm.com) or Jeff Storch (jstorch@boardmanlawfirm.com).] Department of Labor issues guidance on accessibility for electronic job applications. All federal contractors and subcontractors must assure accessibility for disabled veterans and other disabled job applicants. The DOL Office of Federal Contract Compliance Programs (OFCCP) has given seminars and a directive on accessibility. Among the issues are systems for the visually impaired and speech-activated systems for those who cannot use a keyboard. Easy-to-use information on alternative ways to apply—and assistance to do so—should also be available to disabled job seekers. Software updates and assurance that reasonable accommodation systems actually work as designed are also crucial. [For more information, contact the Job Accommodation Network at http://earnworks.com.] 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 federal court decision in another part of the country, and especially a different state’s court decision, may not quite be “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 Seventh Circuit (Wisconsin, Illinois and Indiana). Trends—Layoffs Layoffs are an increasing reality for many organizations. Reduction in force is often essential for effective operation or survival. Most employers are aware of the need to comply with WARN Acts, ERISA, COBRA and the Older Workers Benefit Protection Act, but layoffs have many other legal aftereffects: Increase in FLSA claims. The statute of limitations on wage and hour claims is up to three years. Employees who were silent while employed often raise these issues with the Department of Labor after a layoff. Complaints regarding overtime pay, and especially regarding misclassification or improper pay practices with exempt salaried employees, have significantly increased. The DOL process allows anonymous complaints, which can trigger an audit of across-the-board pay practices. The DOL can order back pay for an entire class of employees (including former employees), not just the complainant. Employers should double-check for proper pay practices and correct use of exempt status. The aftermath of incorrect practices can cost more than the layoff saved. Fair Labor Standards Act Largest settlement in history ― $640 million. Wal-Mart has agreed to settle 63 class action wage and hour suits in state and federal courts. The $640 million is the largest settlement of wage and hour issues ever. (In 2007, the U.S. Department of Labor received only a total of $181 million in its enforcement and settlement actions.) This settlement is in addition to several other FLSA cases Wal-Mart has recently settled ($54 million in a Minnesota case in December 2008). In addition, there are continuing cases in California, Massachusetts and Pennsylvania. Wal-Mart states that the settlements are not an indication of any wrongful practices, and that its practices and systems are designed to pay for all hours worked and to provide proper rest and meal breaks. Privacy Executives’ privacy objection to workplace search and seizure of corporate records—the difference between large corporations and small family-owned corporations. IRS agents showed up with a warrant, then searched and seized a wide variety of paper and electronic records at the corporate headquarters of a health care company. Criminal charges were then filed against the corporate executives, alleging health care fraud and tax evasion for the billing of work and studies that were never performed. The charged company executives objected to the use of seized evidence as violating their 14th Amendment rights to privacy regarding search and seizure. The claim was that executives have control over the corporate office premises, and have an expectation of privacy as to the premises and the records therein. The court analyzed this issue based on the size of the company. Executives of small or family-owned companies do have more expectation of privacy and control over corporate headquarters. They usually also own the building; the premises are smaller; and the executives exercise more personal control over the property and contents. There is also a greater expectation of personal privacy. A large, multi-stockholder corporation is different. Executives are not personal owners or family members; they are hired employees. They are often in larger facilities that they do not own. The executives of larger companies have a personal privacy interest only in their own office, desk or computer, not in the records or property kept in the rest of the building or system. So, the court in this case ruled against the executives and allowed use of the seized evidence. United States v. SDI Future Health, Inc. (9th Cir., 2009). Small business owners be aware: this case does not imply a blanket protection of company records from the authorities. It just means a bit more consideration of privacy rights can be asserted by the executives. The police or IRS can obtain most records they seek using more detailed warrants and subpoenas. School teacher fired for posting nude photos on Internet. A school district received complaints that a tenured elementary teacher had multiple pictures of herself undressed or nearly so on multiple public access Internet dating service sites. The school board terminated her contract. She sued for violating the contract and also violating her right to engage in legal activities on her private time. The arbitrator ruled against the teacher. Teachers can be held to a higher standard. Her photos were easily accessible by the public, as opposed to private access sites. The photos were disruptive to the educational process and efficient operation of a school system. They were not expressions of public concern which might qualify for Constitutional protection. In re Phoenix City Bd. of Education (2009). This decision is in accord with a number of others which hold teachers, police officers and other public officials to a higher standard of off-duty conduct than the average employee. Personal Liability Court orders $660,103 fee payments divided among frivolous plaintiffs. A court found race/retaliation cases brought jointly by twelve county employees to be frivolous. It found no basis for the claims and dismissed the cases, finding all the plaintiffs and their attorney “jointly and severally liable” to pay $660,103 in costs and fees incurred by the county to defend the case. Jointly and severally liable means that any one of the individuals can be held liable for the whole amount; the county does not have to go after all; it can pick or choose. The plaintiffs appealed, asking the court to apportion the award against them. The court agreed, abrogating the “joint liability” and remanding the issue to the trial court to decide how much each individual should be required to pay. Garner v. Cuyahoga County (6th Cir., 2009). Discrimination Age Physical fitness is not a discriminatory requirement for police officer. A 59-year old federal police officer claimed that implementation of a more rigorous physical fitness training program constituted age discrimination because it had an adverse impact on older officers. The court ruled that “the ADEA does not prohibit employment decisions based on factors that sometimes accompany advancing age, such as declining health or diminished vigor” even though more older employees may be unable to pass physical standards than younger employees. The fitness was job related; employees of all ages were required to meet the standards; it did not single out older officers; and, especially after the 9/11 national focus on increased security standards, there was a rational basis to emphasize greater fitness. Summers v. Winter and Dept. of the Navy (11th Cir., 008) Sex
Bankruptcy court approves $20
million settlement for male job applicants.
Bankruptcy is only a partial shelter against liabilities. In
EEOC v. LA Weight Loss Centers (D. Maryland, 2009), there were
sufficient assets for the court to approve a class action
settlement. The weight loss company was alleged to have engaged in
a nationwide pattern of discrimination against men in hiring for
public presence positions (counselors, trainers, sales, center
managers, etc.). If the company or a successor does resume
operation after bankruptcy, it has also agreed to implement specific
hiring goals for men and EEO training for managers. Woman hires assailant to bolster case against car dealership. An ex-employee of a car dealership has been charged by a U.S. Attorney with federal crimes of conspiracy to defraud and wire fraud. This was due to her alleged efforts to bolster a sex discrimination case so she could demand more money for settlement. United States v. Bernet, indictment 2/24/09 (W.D. Missouri). The ex-employee filed a Title VII case against an automobile dealership over alleged harassment by a co-worker and failure to be promoted to a sales manager position. According to the indictment, she then decided to increase the value of her case by faking a sexual assault so that it would look like retaliation by the company. She offered to pay a man $50,000 (if her case settled for over $1 million) to physically and sexually assault her. She offered to pay another person $20,000 to make a threatening call to her from the dealership. She then was physically and sexually assaulted. She told the police that it was in retaliation for the sex discrimination case and that the threats came from the company. The threatening call was traced to the person who made it, and the scheme rapidly fell apart. Ms. Bernet’s attorneys have withdrawn from the Title VII case. Bernet has been arrested. The car dealership will proceed to defend, claiming the entire case was a fabrication. Discharge for mixed gender dressing was not discrimination. An employee undergoing a male-to-female sex change began transitioning in work appearance as well. He was still physically male, dressed as a man under the company’s “conservative business appearance” policy. [The EEO laws allow gender difference in dress codes, recognizing gender-different styles, as long as they are reasonable and the “burden” on such gender is reasonably equal.] However, the employee wore make-up, eyelashes and jewelry like a female. The company directed that he conform to a one-gender appearance. Until a physical change had actually occurred, he should have a male appearance. He refused, was fired, and sued for Title VII sex discrimination under the theory of “gender stereotyping.” The court dismissed the case. It found no gender stereotyping and ruled “…the dress code and grooming policy in this case doesn’t take male or female mannerisms into account or appear to have a disparate impact on either sex.... Likewise, the policy only applies to physical appearance and doesn’t require an employee to behave in a certain manner. Accordingly, a requirement that male and female employees adhere to grooming standards matching their gender doesn’t discriminate on the basis of sex.” Creed v. Family Express Corp. (N.D. Ind., 2009). Race Can’t blame it on affirmative action––white officer was not discriminated against. A White police officer was on a promotion register for sergeant. The register expired before there were enough openings to reach him. He filed a Title VII race discrimination case alleging that he would have been promoted if he had been African American, under the city’s “early promotion program.” The court dismissed the case due to lack of foundation. The officer could show nothing but his conjecture that “early promotion” was race based. There were African American officers on the expired register who also were not offered “early promotion.” Even if early promotion had been made, the officer had no evidence to prove that he would have been the one to receive it. Finally, the city’s record of using early promotions did not help his racial discrimination claim. Of the four instances of early promotion, three were White officers; only one was African American. Jones v. Springfield, Ill. (7th Cir., 2009). Disability New manager tosses supervisor’s scooter―results in constructive discharge case. A supervisor with no toe joints and a job requiring him to be in all parts of a large plant performed his job using a small battery-powered scooter. He successfully did the job this way for approximately ten years. Then a new manager came in. The scooter was damaged by a forklift while the supervisor was on vacation. The new manager threw the scooter away. When the supervisor returned, the manager allegedly refused to procure another scooter and refused to even discuss the issue with the supervisor. Unable to continually walk the large plant, the supervisor resigned, taking an early retirement. He then sued, claiming constructive discharge (forced to resign) disability discrimination under the state EEO law. The court denied summary judgment to the employer, finding a viable case of (1) failure to engage in the interactive process and (2) failure to reasonably accommodate. Ayzenshteyn v. Rexam Beverage Can Co. (Cal. Ct. App., 2009). National Origin Hostile statement was not by a decision maker. A scientist of Russian origin was denied a tenure track faculty position. His Title VII case alleged that a director in the department had made the statement “there are too many Russians here already.” However, the evidence also showed that the director had no role in the decision of who was appointed to the position. Though the statement certainly showed bias, it could not be tied to the decision, and the case was dismissed. Belyakov v. Leavitt (4th Cir., 2009). |
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