November 2009 Archives

November 16, 2009

Refusing to Hire Based on Bankruptcy

The economic downturn has caused a lot of numbers to decline, such as take home pay, retirement savings, bank account balances, and home equity. But at least two numbers have been skyrocketing recently: the unemployment rate, which is higher than it's been in more than 25 years (10.2%), and the number of personal bankruptcies filed, which surged past the one million mark for the first three quarters of this year, and is expected to exceed 1.4 million by the end of 2009.

Considered together, these numbers mean that more job seekers are likely to have a bankruptcy filing on their record. Bankruptcy discrimination is illegal, according to 11. U.S.C. Section 525. However, this protection includes a large exception that leaves most job seekers out in the cold. Although government employers may not discriminate in hiring, firing, or other aspects of employment against those who have declared bankruptcy, private employers have more leeway. They may not fire employees because they have declared bankruptcy, but the statute doesn't explicitly prohibit refusing to hire someone who has declared bankruptcy. Nearly every court to interpret this statute has found that private employers may legally reject an applicant solely because of a past bankruptcy.

Plaintiffs who bring these cases don't have much chance of winning -- unless they can prove that they were actually hired. If the applicant manages to become an employee before the employer rejects him or her, that employee may have a viable case.

A case decided last month by a federal district court in Florida is a good example. In Myers v. TooJay's Management Corporation, Eric Myers claimed that he was denied employment by TooJay's once the company received his credit report and learned that he had filed for bankruptcy. Both parties in the case filed for summary judgment, and Myers lost his claim for discrimination in hiring. The judge found that the statute doesn't prohibit refusal to hire based on bankruptcy, so Myers couldn't win on that allegation.

However, the judge found that Myers was entitled to continue to trial on his claim that he was actually hired by TooJay's, then fired once the company learned about his bankruptcy. Everyone agrees that Myers interviewed for the position, then spent two days in an on-the-job evaluation. When the evaluation ended, Myers was told that he had performed well and was asked to sign a number of documents, including a W-4 form, an I-9 form, an order form for an employee uniform, a nondisclosure agreement, and acknowledgment forms for the company's sexual harassment policy and employee handbook. Myers said the manager he spoke to made him an unconditional offer of employment and discussed his start date, hours, and salary range. The manager denied making these statements, and said that he told Myers any offer of employment was contingent on passing a background check. (Myers signed a consent to the background check along with the other forms.) After Myers gave notice at his old job, he received an adverse action form from TooJay's, stating that the company was rescinding its employment offer because he had filed for bankruptcy.

Based on these facts, the judge decided that a jury could find that Myers had been hired, and was therefore an employee protected from bankruptcy discrimination. So, Myers will have his day in court. TooJay's apparently has an official policy of not hiring anyone who has filed for bankruptcy. This seems overly punitive, given the many legitimate reasons why someone might declare bankruptcy, especially in this economic climate. But no matter where you come down on this issue, there's a lesson for everyone here: If you believe you haven't yet hired someone, don't ask that person to sign employment forms. Save the first-day paperwork for the first day of work.   

For more information on firing employees, see Nolo's Firing Employees & Employee Resignations area.

November 9, 2009

Congress Considers Legislation to Overturn Age Discrimination Ruling

Last term, the Supreme Court decided a controversial age discrimination case called Gross v. FBL Financial Services, Inc. You can read my blog post about it here, including my prediction -- which has now proven accurate! -- that Congress would try to overturn the holding in the case. (In fairness, I wasn't alone; plenty of others made the same prediction.)

The Gross case held that employees alleging age discrimination have to do more than show that their age was a "motivating factor" in the decision they're complaining about. They must show that their age was what lawyers call the "but for" cause of the decision -- in other words, that the decision would not have been made if not for their age.

This standard is different than the one used for other types of discrimination. In Title VII cases, if the employee can show that a protected characteristic (such as race or national origin) was a motivating factor in the employer's decision, the burden of proof then shifts to the employer, who must prove that the same decision would have been made regardless. The logic behind this procedure is that any consideration of a protected characteristic is improper and illegal. So, for example, if the employee can prove that the employer was motivated, even in part, by the employee's race, the employer bears the responsibility of defending its actions and proving that race was ultimately not the deciding factor. The employer bears this burden because the employer is already at fault for taking race into account at all.

The Gross decision is just the latest indication that age discrimination is treated differently than other kinds of discrimination. In part, that's because age discrimination is prohibited by a different statute, which uses slightly different language than Title VII. But it's also due to our societal belief that age discrimination just isn't as bad as other types of discrimination. (For an interesting take on the reasons that might motivate this belief, check out this editorial from The New York Times this weekend.)

Anyone who has practiced employment law will tell you that you have to prove a lot to win an age discrimination case. Biased comments that would be the smoking gun in a sex or race discrimination case seem to barely raise an eyebrow. There's a long line of cases dismissing statements about workers being "too old," having "senior moments," or needing to get out of the way to make room for "younger, more energetic" employees as stray comments, not sufficient -- and sometimes, not even considered relevant -- to prove discrimination.

Last month, the "Protecting Older Workers Against Discrimination Act" (HR 3721) was introduced in Congress. Its stated purpose is to overturn the Gross decision. It would require courts to follow the same burden shifting procedure in age discrimination cases as they follow in Title VII cases: Once the employee shows that age was a motivating factor in the decision, the employer would have to show that the decision would have been made even if age had not been considered. 

If this bill passes, it could make a big difference. As our population ages and competition for scarce jobs increases, age discrimination claims are on the rise. In 2008, the EEOC reported that charges of age discrimination increased more than 28% from the previous year, the largest increase of any type of claim.    

To learn more about age discrimination in employment, see The Essential Guide to Federal Employment Laws, by Lisa Guerin & Amy DelPo (Nolo).

November 6, 2009

Emergency Sick Leave Bill: Congress Considers Time Off for the H1N1 Virus

Earlier this week, Representatives George Miller and Lynn Woolsey, both from the San Francisco Bay Area, introduced a bill in the House of Representatives that would require employers to provide five paid sick days per year to workers who are sent home (or asked to stay there) because of a contagious illness, such as the H1N1 flu virus. The bill would apply to full-time and part-time employees; part-timers would receive a prorated number of hours off. The bill also protects employees who are directed to stay home, by providing that their employers may not discriminate or retaliate against them for following these directions.

Lately, the news has been filled with stories of workers who don't get paid time off and can't afford to stay home when they are ill. As the press release for the bill points out, many of the estimated 50 million Americans who don't get paid sick leave work in low-wage jobs, such as food services, hospitality, school work, and health care, where they are likely to have contact with the public. And, the Centers for Disease Control (CDC) has said that every worker who comes to work sick will infect one in ten coworkers.

The CDC has recommended that those who have the H1N1 virus stay home until 24 hours have passed since they last had a fever. (Those in the healthcare field are advised to stay home for seven days after they first get sick, or 24 hours after their symptoms go away.) However, the CDC has also said that those who have been sick may continue shedding the virus (that is, they will continue to be contagious), although at lower levels, for up to ten days. 

The bill, called the "Emergency Influenza Containment Act," would apply only to employers with at least 15 employees. It's intended as an emergency provision, and would sunset (expire) two years after enactment. The House Committee on Education and Labor is scheduled to hold a hearing on the bill in a couple of weeks.




November 3, 2009

Supreme Court Will Hear Case on Two-Member NLRB Decisions

Yesterday, the Supreme Court announced that it has agreed to decide an issue that has had the Courts of Appeals tied up in knots: whether decisions issued by only two members of the National Labor Relations Board (which has five members at full strength) are valid. (The case the Court will decide is called New Process Steel v. National Labor Relations Board; you can find the petition for certiorari -- the brief lawyers must file arguing that the Supreme Court should hear the case -- here.)

The National Labor Relations Board, or NLRB, has had only two members since the end of 2007. President Obama has nominated three new members, who are awaiting a floor vote in the Senate. Meanwhile, the two members of the NLRB have issued hundreds of decisions in representation and unfair labor practices cases. And, now that the Supreme Court has agreed to decide whether two members may act for the NLRB, the outcome of all of those cases may once again be in doubt.

The case turns on the NLRB's authority to delegate its powers to a smaller group, and how large that smaller group must be. The National Labor Relations Act, which created the NLRB, allows the full Board to delegate any of its powers to a group of at least three members (a quorum). The Act also says that two members may constitute a quorum on issues that the full Board delegates to a three-member group. For those of us who skipped the student council and model U.N. meetings, all this talk of delegations and quorums can numb the brain. But the issue boils down to this: Can the NLRB act with only two members or does it need at least three? Or, as the petition for certiorari put it more dramatically, "Does the NLRB exist?"  

The federal Courts of Appeal have split on the issue. In fact, the Seventh Circuit Court of Appeals and the D.C. Circuit issued decisions on the same day, reaching opposite conclusions. The NLRB should be back at full strength by the end of this year, but the Supreme Court's decision will determine whether almost two years worth of NLRB cases should be upheld or thrown out. There's a lot at stake, in other words.