February 27, 2008

Supreme Court Says "Me Too" Evidence May Be Admissible

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

February 22, 2008

Supreme Court Won't Stand in the Way of San Francisco's "Fair Play" Ordinance

In 2006, San Francisco's Board of Supervisors passed an ordinance with an arguably noble purpose: Ensuring that most workers in the city have health insurance. The San Francisco Health Care Security Ordinance required most employers within the city to make minimum health care contributions on behalf of their employees.

The plan was met with some opposition. The Golden Gate Restaurant Association ("GGRA") argued successfully before a U.S. District Court that the plan is preempted by the federal Employee Income Security Act of 1974 ("ERISA"), which specifically limits states' ability to enact laws that "relate to" private-sector employee benefit plans . This week, Supreme Court Justice Anthony Kennedy denied a motion by the Golden Gate Restaurant Association to vacate an emergency stay of the district court's judgment granted by the Ninth Circuit Court of Appeals. In effect, this means the ordinance goes into effect until it is given full review by the Ninth Circuit.

As a hot topic in the close race for the Democratic presidential nomination, health care is likely to stay at the forefront of our minds. And the issue of "pay or play" or "fair share" programs, either by state or local bodies, is its own animal. In 2006, a similar Maryland law (dubbed the "Wal-Mart Bill" because Wal-Mart was the only employer affected) was struck down for violating ERISA. Similar bills have popped up in states around the country, sometimes with similar result. How the San Francisco ordinance will fare remains to be seen.

Alayna Schroeder

February 13, 2008

Company Can Fire Employee for Using Medical Marijuana

medicalmarijuana.jpgThe 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.

For more information on drug testing, check out Nolo's article Drug Testing for Job Applicants.

Lisa Guerin

February 12, 2008

Proposed FMLA Regulations Released

Yesterday, the Department of Labor issued proposed changes to the FMLA regulations. These proposed rule changes have been a long time coming; the DOL first announced that it was reviewing the regulations five years ago. The proposed rules include a number of changes, but doesn't go as far as some employer groups hoped -- and some employee advocates feared. (You can read all 100+ pages of the proposed regs here).

Some hotly contested issues were left alone. For example, the proposed rules make only minor changes to the definition of a "serious health condition." The rules also continue to allow employees to take intermittent FMLA leave in the smallest increments of time tracked by the employer's recordkeeping system, something many employer groups protested.

The most significant changes appear to be to the notice and medical certification requirements, including:

Notice:


  • Employers now have to provide more information when employees request leave and when an employer designates time off as FMLA leave; the time limit for providing this information has been extended from two days to five.



  • Employees still don't have to say that they are requesting "FMLA leave," but they can't just call in "sick." Employees must indicate that they have a condition that renders them unable to perform their job functions (or renders a family member unable to perform daily activities); how long they expect to be out; and whether the employee or a family member is getting care from a health care provider.



  • Employees must comply with the employer's usual notice and procedure requirements for taking time off (for example, calling in) absent unusual circumstances. If the employee could have followed the employer's rules but didn't, FMLA leave can be delayed or denied.



  • Employees still have to give 30-days' notice of foreseeable leave, but now an employee who doesn't give this much leave must explain why.


Medical Certifications. The form got longer, and the rules for unclear and incomplete certifications were changed:

  • Employers would be allowed to contact health care providers directly to clarify and authenticate the certification.



  • If an employer finds the certification to be incomplete or insufficient, the employer must tell the employee, in writing, what additional information is necessary and give the employee at least seven days to fix it.



  • Although the proposed rules say that employees can't be required to waive their right to privacy in their medical records, they also say that FMLA leave can be denied if the certification is inadequate (after the employee has had an opportunity to fix it) and the employer can't straighten things out by talking to the health care provider.


There are no rules proposed for the new military family leave provisions; instead, the DOL raised a number of questions about how to implement the new requirements and sought comments from the public.

What happens next? The DOL will be accepting comments until April 11, 2008. After reviewing those comments, the DOL will issue final regulations. (It has said that these final rules will probably include provisions on military family leave, too.) However, Congress has a right to weigh in on -- and potentially, disapprove of -- the final regulations. Considering that we are now in the throes of a presidential (and Congressional) election year, will final, binding regulations ever see the light of day? My Magic 8-Ball says "Reply hazy, try again."

emplaw021208.jpg

Lisa Guerin

January 29, 2008

President Signs FMLA Expansion for Military Families

It's official: The FMLA has been amended for the first time in its 15-year history. On January 28, President Bush signed a defense authorization bill that includes new FMLA leave rights. The president vetoed two previous incarnations of this legislation for reasons unrelated to the FMLA provisions.

The new law makes important changes to the FMLA--and leaves significant questions that will have to be answered by the Department of Labor (DOL). Because the law doesn't include an effective date for the new provisions, it looks like they take effect immediately. The law provides for:

FMLA leave for active duty of a family member. In addition to taking leave for their own serious health condition, to care for a seriously ill family member, or for the arrival of a new child, employees are now entitled to FMLA leave for "any qualifying exigency" arising out of a family member's active duty or call to active duty. This leave is part of the regular 12-week entitlement--that is, the employee gets 12 weeks total per year for any qualifying reason, not an additional 12 weeks for issues relating to a family member's military service.

Extended leave to care for injured or ill service member. The law also creates an entirely new entitlement for family members who need to care for an injured service member. These employees can take up to 26 weeks of leave in a year (that's 26 weeks total, not 26 weeks plus 12 weeks of FMLA leave for other reasons). In addition to spouses, children, and parents (the usual family members covered by the FMLA), "next of kin"--defined in the law as a service member's "nearest blood relative"--are eligible for this type of leave. This appears to be a one-time-only entitlement; the law says this 26-week leave will "only be available during a single 12-month period."

Regulations called for. The law leaves a number of issues to be determined by regulations issued by the DOL These questions include:


  • What's a "qualifying exigency" that entitles an employee to leave arising from a family member's service or impending service?

  • What certification can an employer require? This question arises both as to the service member's active duty and as to the employee's status as "next of kin."


And speaking of regulations. Last week, the DOL sent proposed FMLA regulations to the Office of Management and Budget. These regs haven't been made public yet, but news reports say that they address medical certifications, notice and waiver requirements, and when leave may begin. (An official at the DOL has characterized the changes as "modest," but that is, of course, in the eye of the beholder.) Once the OMB has reviewed them -- a process that could take up to three months -- the regs will be published in the federal register. Then, there will be a period for public comment before final, binding regs are issued.

Find out more about these new rules in Nolo's article Family and Medical Leave for Military Family Members.

January 22, 2008

Employment Cases Before the Supreme Court: Part IV

Last week, the Supreme Court agreed to hear a really interesting investigation case, making this one of the busiest dockets for employment cases in recent years. The case is called Crawford v. Metropolitan Government of Nashville and Davidson County, Tennessee, and it raises this question: Is an employee who answers questions as a witness in an internal investigation of sexual harassment protected from retaliation? It amazed me to learn that the Sixth Circuit Court of Appeals said no. The court found that an employer can fire an employee because she participated in an internal investigation. (Click here for links to the briefs and other information about the case, from the excellent resource SCOTUSblog.)

Crawford was a long-term employee who was fired after she was questioned as a witness in an internal investigation of a sexual harassment complaint. After several employees voiced concerns about inappropriate behavior by Dr. Gene Hughes, the employee relations director for the Metro School District, the District investigated. The investigator contacted employees who worked with Hughes, including Crawford, and asked them to answer questions. Crawford told the investigator that Hughes had sexually harassed her and other employees by, among other things, grabbing his crotch, asking to see her breasts, and pulling her head to his crotch.

When the investigation was complete, Hughes was not disciplined. However, three employees who told the investigator that Hughes had acted inappropriately were fired, as was Crawford several months later. (All of these facts are based on Crawford's version of events. Because Metro won on summary judgment, the Court is obligated to view the facts in Crawford's favor.) Crawford filed an EEOC charge and a lawsuit accusing Metro of retaliation.

Crawford lost in federal district court and again at the Court of Appeals.  Both courts found that Crawford couldn't prove illegal retaliation, even if she really was fired for being a witness in the investigation. The reason? Title VII prohibits retaliation only against employees who "oppose" discrimination or harassment, or who "participate" in an investigation, proceeding, or hearing regarding discrimination or harassment. Because Crawford didn't file the original harassment complaint, the courts found that she hadn't opposed sexual harassment. The courts also found that Crawford's statements during the internal investigation didn't count as "participation" because no EEOC charge or lawsuit had been filed at the time.

The federal courts of appeal have reached different conclusions on this last issue: Some have held that the "participation" clause doesn't apply unless there is a pending EEOC charge or lawsuit - in other words, unless the official machinery of Title VII is in play. Others have held otherwise, and have protected witnesses in internal investigations from retaliation.

I am, of course, interested to see how the Supreme Court will resolve this dispute, should it take the case. But to me, there's a more compelling issue at play, and it involves the Farragher/Ellerth affirmative defense to harassment claims. Under those cases, an employer can avoid liability or limit damages in certain harassment cases if it can show that it had an effective complaint policy in place, that it promptly investigated claims and took appropriate disciplinary action, and that the employee failed to use this complaint procedure. Arguably, an employer that fires employees for participating in such an investigation would utterly undermine the effectiveness of its complaint procedures by discouraging witnesses from coming forward - and would have to wave goodbye to that affirmative defense.

But wait - there's more. The Farragher/Ellerth cases essentially make filing an internal complaint of harassment a necessary first step in the process of bringing a lawsuit. An employee who doesn't use the employer's internal procedures to complain may never have her day in court. So arguably, an internal investigation has become part of the official machinery of Title VII, much like filing an EEOC charge or a lawsuit. Under this logic, participating in an internal investigation should be protected just as much as participating in an official investigation.

No matter what the Supreme Court decides, smart employers won't fire or discipline employees for participating in an internal investigation. What purpose would it serve? An employer that retaliates against witnesses ties its own hands: If employees fear for their jobs, they won't volunteer information and might not answer questions honestly. The employer then might not know what's actually going on in the workplace and won't have an opportunity to stop it. Even if witnesses can't sue for retaliation, the employee whose complaint started the investigation in the first place can still sue - and the employer's actions in intimidating witnesses could well be Exhibit 1 in a claim for big dollar damages.

If you need to conduct an internal investigation, pick up a copy of my book, The Essential Guide to Workplace Investigations, which includes all of the information, forms, and guidance you need to get to the bottom of workplace problems -- without ending up in court.

January 7, 2008

EEOC Allows Employers to Cut Benefits to Retirees Eligible for Medicare

After several years of wrangling with AARP, the EEOC has at last issued its final regulation allowing employers to offer lesser health benefits -- or even cut off benefits -- to retirees who are eligible for Medicare. The EEOC's rule creates an exemption to the Age Discrimination in Employment Act (ADEA) for benefit plans that reduce, eliminate, or otherwise change the health benefits available to retirees once they become eligible for Medicare. Because eligibility for Medicare is based on age, plans like this would otherwise be prohibited as age discrimination. The EEOC's rule carves out an exception for these plans. The exception does not apply to benefits offered to current employees, only retirees.

The EEOC says that it adopted the rule to remove an incentive for employers to stop offering retiree health benefits altogether. No law requires employers to offer health benefits to retirees -- or to current employees, for that matter. Requiring employers to offer the same benefits to retirees even if they are eligible for benefits from another source (Medicare) makes the benefit program more expensive. In the face of this expense, many employers were simply eliminating retiree health benefits altogether.

The EEOC first proposed this rule in an interim regulation, in 2004. AARP sued right away to prevent the rule from going into effect. After a few years of litigation, the U.S. Court of Appeals for the 3rd Circuit found that the EEOC had properly issued the rule and gave it permission to finalize the regulation, which it now has done.

Lisa Guerin

December 12, 2007

Salvation Army Lawsuit Brings English-Only Rules Into the Spotlight

salvation-army-2.jpgShould 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

December 10, 2007

Employment Cases Before the Supreme Court: Part III

court_front_med.jpgThis term, the Supreme Court will decide whether a Civil War-era statute prohibiting race discrimination (42 U.S.C. 1981, known as "Section 1981") also prohibits retaliation. What's interesting about this case is that nobody thought this was an open question: Lower courts have uniformly found that retaliation is covered by Section 1981. If the Supreme Court disagrees, however, employees will lose a legal claim that's often more valuable than the similar right granted under Title VII.

Section 1981 was passed in the Reconstruction era as part of the historic Civil Rights Act of 1866, which declared African-Americans to be citizens of the United States, entitled to a series of rights previously reserved for white men. A primary purpose of the law was to undermine the "Black Codes," state laws adopted after the Civil War that restricted the rights of newly freed slaves to own property, make contracts, or leave a job, among other things.

The case before the Court this time around is CBOCS West, Inc. v. Humphries. Humphries, a former associate manager at a Cracker Barrel restaurant, claimed that he was fired because he was African-American, and because he complained of race discrimination. Humphries filed suit under both Title VII and Section 1981, but his Title VII claims were dismissed because he didn't pay his filing fee within the time limit for filing a Title VII lawsuit. The court later threw out his Section 1981 claims as well. Humphries appealed this ruling to the federal Court of Appeals for the Seventh Circuit and won. Cracker Barrel then appealed to the Supreme Court, asking it to find that retaliation isn't prohibited by Section 1981.

Of course, Title VII already prohibits retaliation against those who complain about discrimination. So why is the outcome of this case important? Because it's often easier -- and sometimes, more lucrative -- for employees to sue under Section 1981, for several reasons:


  • Employees can go straight to court. To bring a Title VII lawsuit, an employee must first file a discrimination charge with the Equal Employment Opportunity Commission (EEOC). This is called "exhausting" administrative remedies. Employees don't have to do this under Section 1981: They can file a lawsuit right away.

  • Employees have much more time to sue. Once the EEOC finishes processing an employee's discrimination charge, the employee has only a short period to file a lawsuit: from 90 days to a year, depending on the state. Under Section 1981, an employee has four years to file a lawsuit. As Humphries's lawsuit indicates, this extra time can make a big difference.

  • Damages are unlimited. Title VII allows employees to recover all of the money they actually lost (for example, out-of-pocket expenses, back wages, and so on), but caps how much a successful employee can collect for emotional distress and punitive damages. The cap ranges from $50,000 to $300,000, depending on the size of the employer. In contrast, Section 1981 doesn't put any limit on damages.


Here's another thing I find interesting about this case: Last time the Supreme Court tried to limit the scope of Section 1981, Congress intervened. In 1989, the Court decided that Section 1981 didn't prohibit harassment. The case, called Patterson v. McLean Credit Union, was one of a series of cases limiting employee rights, all of which were overturned by the Civil Rights Act of 1991. This year, legislation has already been introduced to reverse the Supreme Court's decision in Ledbetter v. Goodyear Tire & Rubber Co., the case that limited how much time an employee has to file a lawsuit claiming pay discrimination. If the Court decides that Section 1981 doesn't prohibit retaliation, it could fuel an even livelier showdown on Capitol Hill.

Lisa Guerin

November 19, 2007

Democratic Presidential Contenders Propose FMLA Changes

If you're in the running to be the Democratic party's presidential nominee, you'd better have a proposal to expand the Family and Medical Leave Act (and a health care plan, but that's a story for another day). In recent weeks, the leading democratic contenders--Senator Hillary Clinton, Senator Barack Obama, and John Edwards--have all come out with various plans to expand the FMLA. (The leading contenders who have announced, that is: According to CNN's latest poll, Al Gore is ahead of John Edwards right now.)

All three are in favor of all of the following, in some form:

Mandatory paid sick leave. Clinton, Obama, and Edwards have all come out in favor of requiring companies to give employees at least seven paid sick days per year. Clinton and Obama are cosponsors of a Senate Bill, the Healthy Families Act, that would enact this requirement; additional cosponsors include presidential contenders and Senators Joe Biden and Chris Dodd.

Support for state-run paid leave programs. John Edwards has proposed spending $2 billion to assist states in developing programs to offer paid family leave; his goal would be for all workers to have access to eight weeks of paid family leave by 2014. Senator Clinton would spend $1 billion, and Senator Obama $1.5 billion, to help states come up with paid leave programs.

Apply the FMLA to smaller companies. Currently, the FMLA covers only companies that have at least 50 employees. All three of the democratic frontrunners support lowering this coverage threshold, so companies with at least 25 employees are covered.

To find out more about the FMLA, check out The Essential Guide to Family and Medical Leave, by me and Deborah C. England (Nolo).

Lisa Guerin

November 12, 2007

Harassment Today: We've Come a Long Way, (Don't Call Me) Baby

1991_02.jpgWith the recent publication of his book, My Grandfather's Son, Clarence Thomas has renewed his attack on Anita Hill, the former employee who nearly derailed his 1991 ascension to the Supreme Court when she alleged he had sexually harassed her (ironically, at the EEOC). In response, Ms. Hill wrote a fiery editorial in the New York Times, pointing out inconsistencies in Justice Thomas' portrayal of her.

I'm not going to get into the middle of the debate. But I am going to thank Ms. Hill for this: we've come a long way, in large part, I believe, because of her very public "outing" of sexual harassment as a pervasive workplace problem. Reflecting on the past 16 years, here are a few highlights that I think benefit employees and employers alike:

Policies. As a matter of course, employers today have antiharassment policies in their handbooks, explaining what's prohibited and how to report harassment. This sets standards of behavior and gives the employer the opportunity to resolve workplace problems before they become lawsuits.

Training. Many employers conduct voluntary training, though few states require it (only California has a comprehensive requirement). Training gives employers the opportunity to reaffirm their polices and helps employees understand the "gray areas"--the real workplace situations--better than a policy alone does.

Affirmative Defenses. Through a line of important cases, the Supreme Court has recognized that an employer can defend itself in many harassment suits by showing it has exercised reasonable care to prevent and correct harassing behavior. This motivates employers to create preventative systems (including training and policies) and motivates employees to use those systems.

Understanding liability. Everyone knows that an employee doesn't have to suffer a "tangible employment action"--like firing or denial of a promotion--to be a victim of sexual harassment. Many definitions have been clarified for us, including what harassment is, how to measure it, and who will be held liable for it.

While sexual harassment claims at the EEOC were down overall last year, claims by males were up. Likewise, there's a growing recognition by both employees and employers that harassment can be based on more than just gender, and can include age, race, national origin, and religion. We've learned a lot so far, but we still have a long way to go.

Alayna Schroeder

November 5, 2007

Strip Club Should Have Had Workers' Comp Coverage

Last month, the Indiana Court of Appeals upheld an exotic dancer's claim for workers' compensation. The dancer, Angela Hobson, was "performing a pole trick" when she "felt a pull in her neck." For the next several weeks, she felt pain and numbness in her neck, shoulder, and arm. She was diagnosed with a herniated disc, for which she underwent surgery. She filed a workers' comp claim against her employer, the Shangri-La.

The Shangri-La argued that it didn't know of Hobson's injury. But the Court wasn't impressed by this claim, especially because the Shangri-La didn't have workers' comp insurance (and wasn't approved as a self-insured employer) and didn't even have procedures in place for keeping track of workplace injuries.

Because the Shangri-La had no insurance, it will have to pay higher damages. In addition to reimbursing Hobson's medical bills, paying her $548 per week for the time when she was totally disabled, and paying her $10,4000 for the permanent impairment caused by the injury, the Shangri-La will have to pay an additional 5% of the total award as a penalty for failing to have coverage. In fact, it could be required to pay twice the total award and all of Hobson's attorney fees as a further penalty.

The outcome of this case didn't really surprise me: If you look beyond the setting, this is a fairly straightforward claim involving an on-the-job injury. What did surprise me was the club's defense. The owner of the Shangri-La has said that it missed a payment on its insurance, and that's why the club had no coverage when Hobson was hurt. I expected the club to raise a different argument: that Hobson wasn't an employee at all, but an independent contractor who isn't entitled to workers' comp benefits. 

Many adult entertainment venues classify their dancers as contractors and require them to pay a fee to use the stage. This means the clubs don't have to pay the minimum wage, chip in for the employee's Social Security, provide employee benefits, or pay for unemployment or workers' comp insurance. A number of class actions and individual cases have been brought to challenge this practice, with mixed results. Often, the issue comes up in precisely this setting: A worker who was classified as a contractor files a claim for unemployment or workers' comp, and the state agency has to decide whether the classification was correct.

Of course, classifying workers as contractors is a two-edged sword, especially when it comes to workers' comp coverage. Although employers don't have to provide workers' comp for contractors, and therefore save money on premiums, they also stand to lose big if the worker files a lawsuit. Unlike employees, who are limited to workers' comp benefits, contractors can sue for personal injuries. If they can show the employer was at fault, contractors can collect damages for pain and suffering, all lost compensation, and even punitive damages. Sort of makes workers' comp premiums look like a small price to pay.

Lisa Guerin

October 25, 2007

Employment Cases Before the Supreme Court: Part II

In early November, the Supreme Court will hear arguments in a case that will decide what constitutes "filing a charge" of age discrimination with the Equal Employment Opportunity Commission (EEOC).

Like other federal antidiscrimination laws, the Age Discrimination in Employment Act (ADEA) requires employees to file a charge of discrimination with the EEOC before suing their employer directly in court. In the case before the Court, Federal Express v. Holowecki, a group of employees claimed that Federal Express had adopted a number of policies and practices that discriminated against older workers. However, there was a dispute as to whether the employees properly filed EEOC charges before proceeding with their lawsuit.

The question the Supreme Court will decide is whether filing an intake questionnaire with the EEOC, along with a four-page affidavit detailing the allegedly discriminatory actions, counts as filing a "charge." (You can find links to the lower court's decision and the briefs of all the parties and other interested groups here.) Federal Express argues that it shouldn't, because the EEOC uses a separate form for charge-filing purposes, which the employee didn't complete. As a result, the EEOC didn't treat the questionnaire and affidavit as a charge, which means Federal Express never had notice of the charge or an opportunity to try to resolve the problem through the EEOC's conciliation efforts. As this is the purpose of requiring employees to file a charge in the first place, Federal Express argues that it isn't fair to allow the lawsuit to go forward.

The employees - and the federal government, which is weighing in on the employees' side - argue that the employee who filed the questionnaire and affidavit (Patricia Kennedy) gave the EEOC all of the information necessary to file a charge. The employee wasn't represented by a lawyer, and her documents give every indication that she wanted the EEOC to act. In the employees' view (and that of the federal Court of Appeals that found in their favor), the EEOC made a mistake by failing to treat the documents as a charge, and the employees should not have to pay for that mistake.

And the EEOC agrees - in fact, the agency has already taken the blame for this one. In a memorandum to local EEOC offices, the EEOC's General Counsel and Director of the Office of Field Programs have said that notice should have been sent to Federal Express in this case, and all but admit the questionnaire was a charge. The EEOC's own Compliance Manual states that an intake questionnaire should be treated as a charge of discrimination if it includes all of the relevant information, which the employee's documents in this case seem to have done. Because the EEOC agrees that the employee's documents meet its definition of a charge, the Supreme Court would have to invalidate the EEOC's internal rules to find against the employees in this case. This wouldn't be unheard of, but it would be a bit of a slap in the face to the agency formerly run by Justice Clarence Thomas.

Lisa Guerin

October 16, 2007

54 Is the New "Old Fuddy-Duddy": Google Age Discrimination Trial to Go Forward

A California court of appeal reinstated a fired manager's age discrimination lawsuit against the search-engine giant Google, finding that the trial court shouldn't have thrown the case out before a jury heard the facts. Brian Reid, who was fired at the age of 54, claimed that he was demoted into a dead-end position and later fired because of his age. Google claimed that his position was eliminated. The court of appeal's decision will give Reid his day in court.

Here are a few noteworthy lessons from this case:

Respect your elders. At the grand old age of 54, Reid was referred to as an "old man," an "old guy," and an "old fuddy-duddy," told he was "slow," "fuzzy," "sluggish," and "lethargic," and told that his ideas were "obsolete" and "too old to matter." He was also told that he should replace the CD jewel case that served as his office placard with an LP. Apparently, when only 2% of a company's workforce has celebrated a 41st birthday, those in their 50s start looking like visitors from the Stone Age.

Don't plan the firing by email. Part of the evidence Reid presented were email messages suggesting that Google's managers were trying to get their stories straight. One message said that the company's decision to give Reid no bonus might not be "consistent with all similarly situated performers"; if that wasn't clear enough, the message also suggested giving Reid a bonus and severance package "to avoid a judge concluding we acted harshly." A company vice president asked for guidance on what to say if Reid asked for a position in another department, asking that the HR Director "make sure I am completely prepped" and "get me clear on this" before she had to talk to Reid. After much back and forth, the HR Director concluded, "We'll all agree on the job elimination angle." Even if there was a legitimate reason to fire Reid, this type of evidence sure makes it look otherwise.

Do the math. As a company that's perhaps best known for an algorithm, Google needs to have an answer for the claims of Reid's expert witness, a statistician who reported a statistically significant negative correlation between age and performance rating, as well as age and bonus amount, at Google. For every ten-year increase in age, the statistician found a corresponding decrease in performance rating and a 29% decrease in bonus. Google challenged this evidence on a variety of grounds, but the court of appeal found that those kinds of arguments have to be decided by a jury, not by a judge before trial.

To learn more about age discrimination and the laws that prevent it, check out Nolo's article Avoiding Age Discrimination.

Lisa Guerin

October 11, 2007

Beyond the Collar: Misclassifying Nonexempt Employees

In a recent article entitled "Wage Wars," BusinessWeek magazine highlighted something many employers already know -- failing to pay employees for every hour worked can be expensive. According to the article, lawyers estimate that over the past few years, companies including Starbucks, IBM, and Merrill Lynch have collectively paid more than $1 billion dollars to settle wage and hour claims. The suits are as varied as the employers: workers not being paid for time spent sending work-related emails from home, arriving to the worksite a few minutes early to boot up a computer, or working extra hours to perform the same day-to-day tasks as the employees they supervise.

While the danger of violating the FLSA and state wage and hour laws may seem obvious, the assumptions we make about who is nonexempt may not be. The article highlighted this important and more subtle point--not everyone who wears a white collar is exempt from being paid overtime. Plaintiffs in these cases have included mortgage brokers, pharmaceutical reps, and stockbrokers--people who may never have even considered making such claims because they see themselves as "white collar" professionals. But as Mark Thierman, a prominent attorney representing plaintiffs in these cases, points out, it's not a matter of job title, income, or academic degree, it's a matter of job function.

So don't let your assumptions guide you. Make sure the job description matches the job's actual functions. To determine whether an employee is exempt, always compare the job's functions to the applicable FLSA exemption or your state's exemption requirements. To limit off-the-clock working time or uncontrolled overtime expenses, make sure nonexempt employees--especially those working in office environments or closely with exempt employees--understand your company's rules for working remotely, on weekends or evenings, and the like.

(And, to learn more about job descriptions and hiring, check out The Job Description Handbook, by Margie Mader-Clark (Nolo).