Nolo’s Employment Law Blog

According to the Labor Department, the unemployment rate rose to 6.5% last month, the highest in 14 years. In the first ten months of this year, 1.2 million jobs have been lost in the U.S., more than half of them in the last three months. More than 10 million Americans are unemployed, and another 6.7 million are involuntarily underemployed -- working part time when they'd rather be working full time. (Check the grim data for yourself here.)

Lots of good information is out there for companies that have to conduct layoffs and employees faced with layoffs. And certainly, people who've lost their jobs deserve most of the attention, sympathy, and assistance.

But what about the employees who are left after the layoffs -- those who are expected to do the same amount of work (or more) with fewer resources and less help; who are anxious, sad, perhaps even angry about who was laid off or how it was handled; who may have had to make sacrifices of their own, such as pay cuts or loss of benefits; and who may be torn between their loyalties to the company and their need for job security? A great article in the most recent issue of HR Magazine (published by the Society for Human Resource Management) gives employers tips on how to help these employees -- and how to convince the best of them to stay the course. (SHRM members can find it here.)

The article explains that employees who are not laid off are likely to become more risk averse, concerned that failure could lead them to be next on the chopping block. This understandable concern leads to a more conservative approach to the development of new products, markets, and customers -- not the best outcome for a company in the throes of a downturn. The article also discusses the "survivor guilt" that can overcome remaining employees, as well as the long-term stress on employees who have to do more work to make up for missing colleagues. Statistics presented in the piece indicate that turnover -- in the form of employees leaving voluntarily -- increases dramatically at companies that have laid workers off. On average, companies that laid off .5% of their workforces sustained a 2.5% increase in turnover, which means that these companies lost five employees for every one they laid off.

So what can companies do? The article presents a number of valuable tips, including being honest and "overcommunicating" with employees who remain, making sure layoff and restructuring decisions are perceived as fair, allowing employees to vent, and giving remaining employees a reason to stay -- preferably with plausible details, such as careful plans to turn things around and timelines for improvement.  

Lisa Guerin

Giving references for an employee your company fired can be a very tricky business. If your company goes beyond the standard "name, rank, and serial number" approach -- typically, confirming only the dates the employee worked for the company, positions the employee held, and perhaps salary information -- you might be worried about a lawsuit from the former employee. Even though many states have laws that protect former employers from defamation claims based on a good-faith reference, you have to be careful not to go beyond information you know or reasonably believe to be true.

But courts are finding that it's just as bad to give a falsely positive reference for an employee who is actually dangerous. More than ten years ago, for example, the California Supreme Court found that an employer that chooses to give a detailed reference for a former employee has a duty not to misrepresent the facts. In that case, a female student at a California middle school claimed she was sexually molested by the vice principal, and sued his prior employer based on its glowing letter of recommendation; in fact, he had been accused of sexual misconduct and impropriety with students in his former job, as well. The Court allowed the case against the former employer to go forward.

A recent case from the Fifth Circuit Court of Appeals has facts that are similarly dreadful -- and a similar outcome. In that case, an anesthesiologist was fired for abusing Demerol on the job; his termination letter stated that his employment had been terminated for cause for reporting to work in an impaired condition and putting patients at risk. Nonetheless, he received positive reference letters from two of the doctors in the partnership that had fired him, stating that he would be an asset to any anesthesia service, was an excellent clinician, and was recommended highly. No mention was made of his drug abuse.

In his new position, the anesthesiologist failed to resuscitate a patient who was in for routine surgery; the family of the patient -- who ended up in a permanent vegetative state -- sued the new employer. The new employer, in turn, sued the former employers for misrepresentation. The Court of Appeals found that the former employers had no stand-alone duty to disclose the employee's drug abuse; once the doctor-owners provided a reference, however, they had a duty not to affirmatively misrepresent the facts. Because their referral letters were false and misleading, they could be partially liable for the patient's injuries.

The Supreme Court is busy these days, issuing its final decisions before beginning its summer recess at the end of this month. Today, the Court announced several employment law cases, including two age discrimination decisions. (The Court also invalidated a California law that prohibited employers who receive state funds from using that money to promote or discourage union organization; I'll write about that case, Chamber of Commerce v. Brown, in a future post).

One of the age discrimination cases, Meacham v. Knolls Atomic Power Laboratory, involved a reduction in force at a government contractor that designs naval nuclear reactors. Managers were asked to score employees for performance, flexibility, and critical skills, and those scores were used to determine which employees lost their jobs. All but one of the 31 employees who were let go were at least 40 years old, and most of them sued for age discrimination.

Among other things, the employees claimed that the scoring system had a disparate impact: Even though it didn't explicitly discriminate on the basis of age, the employees argued that it disproportionately screened out older workers. Knolls countered that its selection criteria for the RIF were "reasonable factors other than age" (RFOA), one of the exceptions to the Age Discrimination in Employment Act, and so were legal.

The argument in this case was over which party -- employer or employee -- ultimately has to prove the RFOA. The Court found that the RFOA is an affirmative defense, which means that the burden is on the employer to prove that its criteria were reasonable. As the Court admits, this case will make it more difficult for employers to defend against disparate impact claims in ADEA lawsuits.

In Kentucky Retirement Systems v. Equal Employment Opportunity Commission, a rare combination of five Justices (Breyer, Roberts, Stevens, Souter, and Thomas) decided that Kentucky's retirement system for employees in hazardous positions (such as firefighters and law enforcement officers) didn't violate the ADEA. This decision is tough to parse, not least because the facts of the case are a bit complicated (and there's math).

Here are those facts in a nutshell: Kentucky's system makes employees eligible to retire when (1) they have 20 years of service, or (2) they have five years of service and are at least 55 years old. Employees who suffer a disability are eligible for immediate retirement. If they haven't met one of the two criteria that usually apply, they are credited with enough additional years of service to qualify them for retirement, up to the number of years they have actually served. Retired employees were paid based on a formula that multiplies their years of service (whether actual or credited after a disability) by a factor of their annual pay when they retired.

The EEOC sued, claiming that the system discriminated against older workers because it allowed younger employees to receive higher payments than older employees with the same length of service. Because employees who were at least 55 only needed five years of service to retire, some younger employees who became disabled had to be credited with more years of service to be eligible for retirement -- which translates into more money. For example, an employee who suffered a disability at the age of 35 after ten years of service would receive credit for an additional ten years of service; an employee who suffered a disability at the age of 50 after ten years of service would receive credit for only an additional five years of service; and an employee who suffered a disability at the age of 55 after ten years of service would be credited with no extra years.

The Court decided in favor of Kentucky and upheld the system. The Court found that Kentucky wasn't motivated by age discrimination, but by a desire to allow those disabled on the job to receive compensation. Because the state's rules were based on pension eligibility rather than on age, the Court found that they should be upheld.

The dissent seems to have the better side of the argument on this one. They point out that the state's pension calculations are explicitly based on age. The state may be able to justify its rules using the equal cost defense, which allows employers to reduce certain benefits to older workers as long as it spends an equal amount on benefits for older and younger workers. But to say, as the majority opinion here does, that the state's system is not age-based seems incorrect. And even if the state has good intentions, as appears to be the case, it doesn't have to disadvantage older workers to achieve its goal of compensating employees who suffer disabilities.

Lisa Guerin

Firing an employee for having an abortion is a form of pregnancy discrimination, the Third Circuit Court of Appeal found in Doe v. C.A.R.S. Protection Plus, Inc. The facts of this case are particularly sad: Doe (a pseudonym) learned there might be problems with her pregnancy in August 2000, several months after she found out she was pregnant and told her employer. After tests showed severe deformities, Doe had an abortion, on her doctor's recommendation. On the day of the funeral ceremony, Doe was fired.

Her employer argued that she was fired for failing to comply with the company's procedures for being absent from work. However, Doe presented evidence that her husband had called in to arrange the time off, and that other employees were not required to follow the same rules. Another employee also stated that Doe's supervisor (who fired her) stated that Doe "didn't want to take responsibility," possibly in reference to her abortion. And, Doe was fired only three working days after the abortion. Taken together, the Court found that this evidence was enough to defeat the employer's motion for summary judgment.

At least one other federal Court of Appeals (the Sixth) has found that employers may not discriminate against employees who have had abortions, the same position the EEOC has taken. This precise issue hasn't come up much in court decisions, perhaps because many women keep quiet about having an abortion. Doe's employer knew about her abortion precisely because of the sad facts of the case: that it was a medically recommended termination of an apparently wanted pregnancy.

The term "abortion" does come up with some frequency in pregnancy discrimination cases, but not because the employee alleging discrimination had or even considered one. Instead, the employee sometimes claims that her manager brought up the possibility of an abortion (as in, "why don't you have one"), one piece of evidence that the manager was hostile toward the employee's pregnancy.

Thanks to the Law Memo's Employment Law Blog for alerting me to the case.

Lisa Guerin

There are plenty of stories about employers firing employees for criticizing the workplace on their personal blogs. Then there are the tales of employee blogs getting companies into hot water by revealing confidential company information, or criticizing third parties. But a recent blog saga has an interesting twist: a Burger King executive used his middle school-aged daughter's online identity to attack a farmworkers' advocacy group that was trying to increase pay and improve conditions for tomato pickers. (In another dramatic turn, Burger King also allegedly hired a private investigator who tried to infiltrate the organization.) Though Burger King declined to name the employee, other reports claim that it was Vice President Steven Grover (who, according to a company telephone operator, no longer works at Burger King).

Dealing with employee blogs is a delicate thing. On the one hand, you don't want to overstep legal limits on regulating off-duty conduct; on the other, you do want to keep company secrets. Companies like Dell, IBM, and Cisco require their blogging employees to disclose their identities and company affiliation when blogging about company-related issues. And many companies require bloggers to make clear that their views are their own, not those of the company.

I doubt Burger King had such a policy, but in this case, you'd also doubt that the employee would have followed it anyway. After all, any company executive who will assume his pre-teen's identity (did he really expect to go undetected?) to make disparaging remarks has questionable business acumen. The law related to blogs may be complicated, but it's not that complicated.

Of course, that's my view, not necessarily that of my employer.

Alayna Schroeder

No doubt in response to a sluggish economy, a recent CNN article advises employees facing layoff on how to protect themselves. I appreciate the need for employees to take these steps, but I also think it's an opportunity for HR and other company representatives to show that your interests aren't always so different, either. So here's a summary of advice given by the article, as well as some advice to the employer:

1. Get organized. Employees are advised to print and take home personal files, review project files and update resumes, and think about what to do next and who to use as a reference.

Employer advice: Give employees adequate time to go through their desks, files, and projects to put everything in order, but remind them of their obligation to return and not improperly use company property. Make sure everyone knows company policy on referrals, if there is a policy.

2. Get what's coming to you. Get dental and medical checkups; make sure you get any vacation or holiday pay you're owed.

Employer advice: Know and comply with your state's rules about paying vacation or personal time. Many states require employers to pay for time already accrued. Also follow any company policy that states these will be paid. Finally, make sure you comply with requirements to notify employees of entitlement to continuing insurance coverage.

3. Get connected. Network. Talk to friends, former coworkers, and clients; attend professional association meetings; and talk to recruiters.

Employer advice: Provide information and access to job search resources (resume writing workshops, career fairs and centers, etc.) in the area. Remind employees of any legally valid non-solicitation or non-compete agreements.

4. Get searching. Visit online professional organizations or companies where you'd like to work; look at online job postings.

Employer advice: Compile a list of possible job-hunting websites or online resources to help employees jump start their search.

5. Get an exit strategy. Review company policy on severance; review agreements with legal and financial advisors.

Employer advice: Prepare to deal with confused, frustrated, or saddened employees. Honor any promises of severance pay or other benefits. Show departing employees compassion, respond promptly to inquiries about what will happen next, and take any requests for flexibility or negotiation seriously. Allow employees adequate time to review any proposed arrangements or to meet with professionals.

6. Get fired up. Stay positive.

Employer advice: Where appropriate, be sure to express your gratitude for an employee's past good work. Wish the employee well in future endeavors.

Alayna Schroeder

There was an interesting article by Marcia Coyle in The National Law Journal last week, reporting on a study of court rulings on employment arbitration awards. The study found that federal courts upheld arbitration awards at roughly the same rate, whether the employee or the employer won the underlying arbitration. State courts were a different story, however: State appellate courts confirmed employee arbitration victories only 56.4% of the time, but confirmed 86.7% of employer victories.

Previous studies have looked at how employees fare in arbitration: how often they win, how the costs and fees compare to those paid in litigation, and how large the awards are. The National Workrights Institute has compiled some of this research here. The data they looked at partially contradict the anecdotal evidence -- and gut feeling -- of many lawyers that employees tend to do better in front of a jury than before an arbitrator or panel of arbitrators.

Although the figures in the research they looked at vary, they appear to indicate that employees may win more often in arbitration than in litigation, and that the median arbitration award is comparable to the median award in court. That isn't the whole story, however: The mean award to employees was much higher in litigation than in arbitration. (In case you missed that day, the median is the midpoint of a range of numbers, which means there are an equal number of awards above and below the median; the mean is the average award.) The higher mean for employees in litigation suggests that employees do better in court in the big money cases. However, the study also points out that, because litigation costs more than arbitration, employees who go to court may actually have better cases -- and that the ultimate amount the employee gets is often quite a bit less than the award.

Lisa Guerin

Yesterday, the Supreme Court found that evidence of discrimination against other employees may be admissible in an age discrimination case, depending on the circumstances. In Sprint/United Management Co. v. Mendelsohn, the Court found that whether this type of evidence should be admitted is a "fact-intensive, context-specific inquiry" that should be made by the district (trial) court. That court is in the best position to judge whether the relevance of evidence is outweighed, on balance, by its potential to create prejudice in the minds of the jury, which is the ultimate test for deciding whether evidence can be admitted at trial. (For more on this test and the underlying facts of the case, see my previous post.)

Mendelsohn lost her age discrimination case at trial, after the district court excluded testimony from other employees. The district court found that other employees should be allowed to testify only if they were claiming that Mendelsohn's direct supervisor had discriminated against them, close in time to when Mendelsohn said she was discriminated against. Mendelsohn appealed and won; the Court of Appeals for the 10th Circuit said that the evidence should have been admitted. The Supreme Court found fault with both of the lower courts -- the District Court for failing to adequately explain why it was excluding the evidence, and the Court of Appeals for deciding evidentiary issues that should be left to the District Court. The Supreme Court sent the case back so the District Court could explain itself.

For the parties in this case, the decision was mostly a victory for the employer. Sprint already won at trial, and the Court of Appeals' decision would have forced a new trial with the evidence from other employees included. Depending on what the District Court says in explaining why it kept the evidence out, Sprint may still come out on top.

For everyone else, however, this decision could be a win for employees, mostly because of what the Supreme Court didn't do. The Supreme Court could have made a blanket rule that evidence of discrimination against other employees is never admissible unless the same decision-maker is involved -- but it didn't. Instead, the Court found that this has to be a case-by-case decision, dependent on the facts and the legal theories involved. This means that employees remain free to try to introduce this evidence, and trial courts may not reject it out of hand without taking a close look at the facts. As Linda Greenhouse points out in the New York Times article "A Case-By-Case Ruling on Discrimination," it also may mean that more employees are able to defeat an employer's motion for summary judgment (a request that the judge throw the case out before trial) and get their cases in front of a jury.

Lisa Guerin

The California Supreme Court has found that a company can legally fire an employee for failing a drug test, even if that failure is due to the employee's use of medical marijuana as allowed by California law. The employee, Gary Ross, used marijuana to relieve the pain and spasms caused by a back injury he suffered while serving in the Air Force. He was offered a job at Ragingwire Telecommunications, Inc., then fired for failing a drug test shortly after starting work.

Ross sued for disability discrimination and wrongful termination in violation of public policy. He claimed that his back injury qualified as a disability, and that Ragingwire was legally required to accommodate his off-duty use of marijuana to treat his disability. He also argued that firing him for using medical marijuana violated the public policy inherent in California's Compassionate Use Act (CUA), which exempts those who use medical marijuana from state criminal prosecution for possessing or growing marijuana.

The California Supreme Court wasn't persuaded. The Court found that the CUA applied only to criminal prosecution, not to employment. Because marijuana use remains illegal under federal law, it isn't the equivalent of prescription drugs that might be used to treat a disability -- and employers don't have a legal duty to accommodate its use.

The dissent argued that allowing employees to be fired for using medical marijuana put those who suffer from serious illnesses to a cruel choice: treat their chronic pain or other symptoms with medical marijuana and lose their jobs, or keep their jobs and suffer. The dissent said the court should have looked at this as a straightforward disability discrimination case and evaluated whether it would have been an undue hardship for Ragingwire to make an exception to its usual drug testing policy for Ross.

In response to the Court's decision, Assemblyman Mark Leno announced that he will soon introduce a bill in the California legislature protecting employees from being fired for off-the-job use of medical marijuana.

Lisa Guerin

Should employees be required to speak English at work? A recent lawsuit by two former employees of the Salvation Army once again raises this controversial issue. The EEOC filed suit in U.S. District Court in Massachusetts against the Salvation Army, claiming that Dolores Escorbor and Maria del Carmen Perdomo, who spoke very little English, were discriminated against when they were fired for speaking Spanish at work, a violation of the Salvation Army's English-only rule. (Read the complaint here.) Senator Lamar Alexander (R-Tennessee) responded by proposing legislation to prohibit the EEOC from spending any money on the lawsuit, and the politicking took off from there.

Of course, there are plenty of good reasons to require employees to speak English, and the law--and the EEOC--recognize this. Employers can require employees to speak English on the job if there are legitimate business reasons--such as safety concerns, or the need to speak to customers--to do so. What's puzzling about this case is why the Salvation Army required these particular employees to speak English, even though they hadn't required it previously, and even though it didn't seem necessary for their work: sorting donated clothing. Both were hired in 1999--when, presumably, their English language skills were no better than when they were fired years later, and they seem to have competently performed their jobs during that time..

Here's another thing that's odd to me--and more than a little disturbing: This case has been criticized as an example of government regulation run amok, common sense taking a back seat to political correctness, and so on. This rhetoric is aided by a sympathetic defendant (just picture the smiling face you see outside the store during the holiday season, ringing the bell and wishing you a Merry Christmas). But why does "common sense" dictate firing established employees for speaking their native language? And why do so few commentators seem interested in why the Salvation Army wanted them to speak English in the first place?

I'm not claiming that the Salvation Army didn't have a legitimate reason for requiring these employees to speak English at work. But that's the issue here, and we shouldn't lose sight of it. We heard reader sympathy for the 54-year-old former employee who questioned whether Google's true motives for firing him were age-related, and thus violated existing federal law. Not to be a Scrooge, but I think it's fair to hold the Salvation Army to the same standard.

Alayna Schroeder