Lou Michels and Rod Satterwhite are partners in the Labor & Employment group at McGuireWoods LLP. Both handle employment litigation on behalf of employers, and advise companies on employment issues regularly.

Religious Discrimination Guidance from Our Friends at the EEOC

    The Commission just this week issued a so-called "Fact Sheet" on religious discrimination under Title VII.  It's a pretty vanilla document, but it contains discussions on some typical flashpoints that we've discussed here in the blog. 
    For one thing, the Commission has the same problem defining a "religion" as the courts do, noting that "whether a practice is religious depends on the employee's motivation."  Now that's an easy and relatively stable standard for evaluation.  In my experience, the employee's motivation is usually to get out of work, regardless of the nature of the religious observance. 
     On the issue of accommodation, the Commission notes that cooperation and flexibility are the key to the search for a reasonable accommodation.  Unfortunately, courts interpret the term "flexibility" in an somewhat inflexible way.  Specifically, a reasonable accommodation is only reasonable when it meets all of the employee's demands regarding religious observance.  In other words, a reasonable accommodation is not one that keeps an employee from working on a Sabbath 98% of the time.  The solution must prevent Sabbath-based work 100% of the time.
    The Commission specifically states that an employer has to accommodate only "those religious beliefs that are religious and 'sincerely held' ..."  The Commission then says that if an employer has a bona fide doubt about the basis for an accommodation request, it is entitled to make a limited inquiry into the employee's claim that the practice at issue is religious and sincerely held.
    Not so fast, buckaroo.  I suggest that these types of inquiries are fraught with potential problems.  Simply asking people whether they really believe that God is telling them to dye their hair green, as the Commission explains later, can generate a valid charge of discrimination.  Moreover, even if an employer can show that the employee acts in a manner that is inconsistent with the "religion" at issue is not dispositive of the issue of sincerely held belief.  I would strongly counsel against any type of inquiry like this, even if the Commission thinks it's okay to do it under limited circumstances.
    If an employer can't establish that it's offered a reasonable accommodation, the employer's defense is that offering such an accommodation would pose an undue hardship under the statute.  The Commission tries hard to show what "undue hardship" means, but, in truth, the term is almost as vague as "sincerely-held belief."  It's clear that the Commission believes that an accommodation that requires violating a seniority system or collective bargaining agreement is an undue hardship but one that results in complaining coworkers, mandatory job swaps and scheduling changes is probably not.  To give you a flavor of who really has the burden here, the Commission specifies that an employer should bear the cost of having to pay premium wages for a substitute employee, at least while it waits for a more permanent accommodation.  Yikes.
    In the area of dress and grooming standards, the Commission's guidance is particularly difficult.  The Commission almost universally opposes dress and grooming standards that are based on establishing an "image" for the marketplace.  In other words, notwithstanding your "professional appearance" standard, you may have to allow chest-length beards, or an animal rights activist to go without make-up, as an accommodation.  If that reduces your customer base, or the rest of your employees all start growing beards (at least the male ones), tough.
    Finally, the Commission states that employers should be prepared to tolerate a certain amount of prayer, proselytizing, posters, and other types of religious expression in the workplace, especially if the activity is part of the religious observance of the affected employee.  Just what you need to increase productivity--dueling deities on cubicle walls.
    The talking paper doesn't really provide much help.  You're likely to do just as well reading this blog for this kind of advice.
posted Thursday, July 24, 2008 4:07 PM by Lou Michels with 0 Comments

Signs of the Times

The Atlanta Public Works Department, after receiving complaints from the editor of PINK magazine, agreed earlier this month to change all its road signs from "Men Working" to "Workers Ahead."  Read the full story here.  Although, in fairness, half the workers in the department are female, there was no indication that the old signs failed to adequately notify drivers that workers were, indeed, working in the road - regardless of gender.  The new gender neutral signs will cost an extra $144 a piece, but hey, that's a small price to pay for political correctness, right?  The real question:  what does this mean for my favorite 80's band Men at Work?

Employers:  next time you stroll around your office or facility, be on the lookout for insidious sinage that might be Exhibit A (more like B or C) in your next gender case.

 

posted Thursday, July 24, 2008 9:11 AM by Rod Satterwhite with 1 Comments

Policy Language Creates FMLA Rights for Ineligible Employee

The Seventh Circuit just handed down a doozie. In Peters v. Gilead Sciences, 2008 U.S. App. LEXIS 14894, the court ruled that an employee who was statutorily ineligible for benefits under the FMLA may nevertheless be entitled to a leave of absence and a guaranteed return to work because of inartful language in the employer’s FMLA policy and correspondence to the employee. In other words, the employer’s own policy actually created an entitlement to leave, even though the FMLA did not apply.

Mr. Peters suffered an injury and took leaves of absence to recover. His employer, Gilead Sciences, sent him letters at the beginning of each leave period which outlined their FMLA policy. The letters and the policy discussed the eligibility requirements for taking a leave of absence, including the fact that employees must have worked at least one year for the employer, and at least 1250 hours in the past year. The letters were silent, however, on the eligibility question associated with the employee’s work location. (Under the FMLA, employees are only eligible if they work at a location with at least 50 employees within a 75 mile radius. ) By now, you can probably see where this is going. In addition to the letters, Gilead’s handbook stated: “a request for family and medical care leave will be granted for all employees employed by the Company for at least twelve months and who have worked 1,250 hours during the twelve months preceding the commencement of leave.” I suspect many of you have the similar language in your own handbooks. Before you scurry off to check, read on.

Before Peters returned from leave, Gilead filled his job with another employee. When he did return, the company offered him a demotion, he declined, and was terminated. He sued under both the FMLA and under the Indiana state law theory of promissory estoppel. The court upheld dismissal of the FMLA claim itself, because it was undisputed that Peters did not work in an office with at least 50 employees within 75 miles. Thus, he was statutorily ineligible for FMLA leave. However, and this is a big however, the court allowed the promissory estoppel claim to go forward, on the theory that Peters had relied on the letters and handbook when he took the leave, and he was therefore equitably entitled to leave: “Gilead’s employee handbook promised 12 weeks of medical leave – the equivalent of the leave guaranteed by the FMLA – and Gilead repeated these promises in its letters to Peters. It is not clear whether this is sufficient to establish a binding contract under Indiana law. . . . In the absence of a binding contract, however, Indiana permits enforcement of Gilead’s promises to the extent of Peters’ reliance damages.”

A couple of takeaways from this case: First, Gilead really didn’t behave all that badly under the FMLA. This isn’t like some prior decisions in which the employers actively misled the employee about his FMLA eligibility. The company here simply drafted a policy and sent correspondence (as it is required to do under FMLA). There was no evidence of any intent to mislead the employee. This means the language in your policies and correspondence to employees must be crystal clear, and should spell out all conditions of eligibility. Second, don’t make your policy and other language absolute. Saying “all employees will receive 12 weeks of leave” is very different from saying “employees who qualify under applicable law may be eligible to receive 12 weeks of leave” or some other less “promissory” language. Finally, even though this was decided under specific state law, Indiana is not the only state that recognizes the concept of promissory estoppel.

It’s of course unclear how far-reaching this case will be, but given that it came out of a federal appeals court, it at least justifies looking at policies, handbooks and correspondence templates to make sure the eligibility language is sufficiently specific.

posted Wednesday, July 23, 2008 7:53 PM by Rod Satterwhite with 3 Comments

Paradise Lost; Injunction Found

In sorting out a dispute between two federal contractors, a district court recently issued a ruling (Science Applications International Corporation v. CACI-Athena, Inc., 2008 U.S. Dist. LEXIS 37849 (E.D. Va. 2008)) that may impact numerous other trade secrets and non-compete cases for employers.  In a nutshell, the court ruled that the loss of a specific business opportunity – here the opportunity to bid on a specific federal contract – constitutes irreparable harm warranting an injunction.  Interestingly, this decision departed from prior cases that had reached nearly the opposite conclusion.

The case actually involved three federal contractors that provided services to the U.S. Government for the Counter Improvised Explosive Device Targeting Program ("CITP").  (The name of the program is wholly irrelevant to the holding, but the program title was just too cool not to mention.)  Difficulties arose when one contractor (“Athena”), which had been working cooperatively with another (“SAIC”) on the CITP, was acquired by a competitive organization.  For continuity reasons, the parties agreed to try to continue their cooperative efforts on the project.  Unfortunately, when the Government issued a RFP seeking bids for additional CITP work (worth about $60 million), the cooperation ended and Athena indicated its intention to cooperate, not surprisingly, with its new owner instead of SAIC.

On May 2, 2008, SAIC filed an Emergency Temporary Restraining Order (“TRO”) seeking an order requiring that Athena honor its contract with SAIC and preventing it from assisting any other contractor in biding on the CITP work.  SAIC contended that it could not submit a competitive proposal to the Government without Athena as its subcontractor as most of the employees on the proposal would have been Athena employees.   

The court granted the request and issued a TRO.  The decision is noteworthy for several reasons.  First, the court held that "the loss of the opportunity to bid on a specific contract constitutes irreparable harm."  In distinguishing the prior precedent, the district court pointed to several other circuits holding that "a lost opportunity to compete on a level playing field for a contract is a sufficient basis for finding irreparable harm."  Employers pursuing former employees for trade secret violations should find this aspect of the case particularly useful, especially where lost business may be a factor.

Second, the district court agreed with SAIC's contention that money damages would be too difficult to quantify.  While the court noted that there is a general reluctance toward preliminary injunctions where harm can be remedied by an award of monetary damages, in the present case, the court found that "SAIC's alleged injuries cannot be undone through monetary remedies and that it would incur irreparable harm without a TRO."  This language was also a departure from most courts in a lost contract expectancy fact pattern, since usually one can quantify the amount of damages when the quantity is spelled out in a contract.  Again, potential fodder for the employer’s cannon.

Third, in balancing the harm of both parties, the court concluded that Athena would not suffer any harm because it would simply be required to perform its obligations under the existing contract with SAIC.  The court said "an injunction that merely commands a party to perform its contractual obligations does no harm to that party."  While not really a new ruling, this language may well be used in other injunction settings where a party is attempting to enforce a non-compete against an individual or group of individuals.

Fourth and finally, it is noteworthy that the hearing and opinion were issued less than one week after the case was first removed to federal court, demonstrating once against that the U.S. District Court for the Eastern District of Virginia’s reputation as the “Rocket Docket” is well deserved.

In short, while not as juicy as some of our other reported cases, the SAIC decision may have some ongoing usefulness for employers, especially given the growing trend in trade secret and non-compete litigation that we always see in a struggling economy.

 

A special thanks to our colleague David Greenspan for his contribution to this post.  Accordingly, if you disagree with any aspects of our analysis, blame him.

posted Thursday, July 17, 2008 10:40 AM by Rod Satterwhite with 0 Comments

Age Discrimination Gets Easier to Prove

    The Supreme Court recently made its contribution to what will likely be an increasing trend -- class action age discrimination lawsuits.  With an aging workforce and economic downturn, companies are going to find themselves laying off employees or adjusting their workforce to conform to the new economic realities of tighter credit and higher energy prices. 
    In the latest pronouncement by the Supremes, the Court looked at a reduction in force occurring in a nuclear power company.  Specifically, Knolls Atomic Power Laboratory ("KAPL") was ordered to reduce the size of its workforce that the government uses to service nuclear reactors on warships.  The company tailored its reduction by having managers score subordinates on their job performance (as measured in their annual evaluations), "flexibility", and "critical skills", and points for each of these three criteria, along with points for years of service were used to rank order the employees.  KAPL faced a particular problem in that it had a fairly senior workforce -- 1203 of the 2063 salaried employees were at least 40 years old, and 179 of the 245 at risk of involuntary lay-off were 40 or over.  Of the 31 employees selected for lay off, all but one were 40 or over.  Twenty-eight of them sued, alleging that the company's use of such subjective factors as flexibility and critical skills was either a pretext for covering up age discrimination, or resulted in a disproportionately high termination rate for older employees. 
    I might note here that one factor that the Supreme Court was not considering was the issue of age-banding.  I don't know whether there was a cluster of older employees in the the forty-and-over group.  This could be significant, because a cluster of employees selected for termination between the ages of 45 and 50 would seem to indicate that the age issue was simply coincidental.  But the court was not looking at the reliability of the statistical evidence here. 
    The plaintiff's expert determined that flexibility and critical skills were the two most important factors that caused individuals to be selected for lay off.  In other words, those with the lowest scores in those two areas were the most likely to be laid off.  The company asserted that the two factors were so-called "reasonable factors other than age" ("RFOA") that provided an exception to a disparate impact age discrimination claim.  At the initial trial of the case, the jury rejected this (no surprise here, jurors are almost universally sympathetic to age discrimination claimants, especially in a lay off situation like this) and the case moved through several different layers of appeal before finally reaching the Supreme Court last year. 
    Most of the employers in this audience are thinking, "Those factors seem to be pretty reasonable to me."  In fact, the company defined these factors for the managers, and it is clear from these definitions and the process that what the company was trying to do was select people who would be best qualified for the work that remained after the government altered the nature of its contract with the company.
    The Supreme Court determined first of all that the burden of producing evidence and persuading a jury that RFOA were the basis for the layoff decision falls squarely on the employer.  This is not really a surprising result given the EEOC's similar position and the court's decisions in recent years.  The court's discussion of the RFOA argument is extremely useful because it distinguishes the RFOA factors from the so-called "bona fide occupational qualification" ("BFOQ") factor so familiar to Title VII practitioners.  In an RFOA case, the employer just has to establish that its choice of criteria (which must be age neutral on their face) is "reasonable".  There is no obligation to show that an alternative practice or evaluation standard might have a smaller impact on older employees; the employer simply must have a logical justification for its position that is consistent with its business evidence.  I was somewhat skeptical of the effect of such a requirement since jurors will rarely find a practice that puts Grandpa out on the street to be reasonable, but I was heartened to read that the lower court of appeals here showed no hesitation in finding that KAPL prevailed in its RFOA defense.  So at least there is hope that courts can keep this concept from spiraling out of control and being virtually impossible to prove at trial.
    A second important point from the court's decision is that a plaintiff in a case like this cannot simply say that the RIF decision is discriminatory -- he must point to a specific employment practice that is responsible for any observed statistical disparity.  In this case, the plaintiffs did so by having their statistical expert identify the two key factors used in the evaluation process that allegedly caused the selection of older employees for layoff.  But as the Court pointed out, this is not an easy thing to do and the requirement will dispose of many of these cases before they get to trial. 
    So, for employers dealing with older workforces and layoffs, it is absolutely essential that the criteria used to set up such a system are vetted so that a human resources professional can articulate clearly why the criteria were put in place, and the evaluators using them can articulate exactly how they were used and how the decisions were made with regard to the affected individuals.  Actually, that's good advice for any reduction in force.
 
posted Monday, June 23, 2008 2:15 PM by Lou Michels with 0 Comments

Oddball Gender Discrimination Issues

    A couple of odd fact situations make for interesting results in two gender discrimination cases out of Ohio and Pennsylvania, respectively. 
    A female crane operator gets a trial on her state and federal sex discrimination claims, in part on a unique disparate impact theory that I simply couldn't pass up noting.  Johnson v. AK Steel Corp., No. 07-cv-291 (S.D.Ohio, May 22, 2008).
    The policy creating the disparate impact?  That crane operators remain on the job for 12 hours at a time, suspended above the work area in their cabs.  The crane in question operated in and over something called a slab yard of a steel processing facility, in which hot slabs of steel were unloaded from trains and placed in line to be pushed into the furnaces. 
    When the female plaintiff was assigned to the job, she was advised of the 12-hour shifts and, apparently quite innocently, asked about bathroom breaks.  The Yard Manager allegedly told her that there were no crane operators available to give her a break, and that if she needed to use a bathroom, she would have to urinate off the back of the crane, like the "guys" did.
    The woman, quite reasonably in my opinion, thought the manager was joking and went to the other yard foreman, who confirmed that she was supposed to relieve herself above and over the work area.
    We'll stop here for a second.  One of the reasons the company was on 12-hour shifts at this time was because it was having trouble getting employees to work there during an ongoing labor dispute.  Somehow, I don't find it surprising that people might not want to work at a place where a walk through the worksite might result in your being splattered with something even worse than pieces of hot metal.  And where was the "just basic common sense" of the management team?  Apparently, the human resources policy was that operators took a break when they "had a chance to take a break."  In other words, when there was no work to be done, i.e., never.  This was a department practice; other managers who testified were unaware that the crane managers instituted this policy.
     The plaintiff, not being, shall we say, "equipped" to follow this policy, refused the work and ultimately left the job.  The court had little difficulty in finding that the bathroom policies at the yard had a disparate impact on women, even though they were, on their face, gender neutral.  I should note that the supervisors denied telling the plaintiff that she had to go "over the side," but at this stage of the proceeding, the court found enough evidence to go forward to trial.  Moreover, I'm pretty sure the court was analyzing the plaintiff's claims under the "you just can't make this stuff up" standard -- what she testified to was so weird that it was likely true. 
     So, for those of you in the crane business, figure out some way to either provide bathroom breaks, or astronaut diapers for your female employees.  Actually, make that for all your employees.  It will probably improve their morale, as well as the productivity of the people beneath them.
     The Pennsylvania case is a little more trivial, but does sketch out some of the boundaries for acceptable office behavior in the context of gender discrimination.  A woman was hired as a part-time receptionist and data entry clerk at a sales and supply company.  She was the only receptionist and was supervised by men. 
     One of the receptionist's duties was to prepare and provide coffee to office guests and to her supervisors when requested.  Although she agreed to do this for her bosses once or twice, she testified at her deposition that she found the request demeaning and embarrassing and believed that the company was reinforcing gender stereotypes.  She also testified that the office was a hostile work environment because a vice president noted in his interview of her (in his notes, no less, not to the plaintiff) that she "looks nice" and "dresses well."  She also was dissed by a male coworker inviting her to lunch in an email and saying to her that he felt bad that she had been working at the company for a few weeks and that they had not gotten to know each other yet.  The employee testified that she was very offended by the invitation, stating that there was "no reason why a man and a woman should go out to lunch together without any other party around.  To me, that's a date."  She also was upset when she walked into an office where two men were whispering and laughing over a joke that they would not share with her.
     Wow.  This place sounds like the kind of male chauvinist hellhole that just cries out for federal intervention.
     The plaintiff finally refused to serve coffee to her supervisors by sending an email to one of them saying that she did not expect to "serve and wait" on him by serving coffee and that if she had known that, she would never have taken the job.  The company responded by terminating her employment approximately nine minutes later. 
     A federal judge had no trouble dismissing this case at summary judgment.  The main reason was that there was absolutely no evidence that getting coffee was somehow related to the plaintiff's gender.  The plaintiff was not asked to perform any other acts conforming to traditional gender-specific stereotypes and that the other things that offended plaintiff were, in fact, innocuous and did not support her claim of harassment.
     The plaintiff's lawyers tried to argue that requiring a woman to get coffee for her male supervisors and firing her when she refused, if not exactly a quid pro quo discrimination case, was a "quasi" quid pro quo claim.  In my experience, trying to win your point with the judge by saying the conduct is almost discriminatory normally doesn't fly, and it didn't here, either.
                (My thanks to Kristin Case of the Case Law Firm in Chicago for pointing out the Pennsylvania case to me).
posted Monday, June 23, 2008 2:09 PM by Lou Michels with 0 Comments

No Percentage in Paybacks

    Recent Supreme Court rulings on retaliation, found here (CBOCS West, Inc. v. Humphries) and here (Gomez-Perez v. Potter), raise real concerns for both private and public sector employers in discrimination cases. 
     The Humphries case extended the reach of Section 1981 of the Civil Rights Act of 1866 in a major way, allowing anyone who complains about an employer's act of alleged racial discrimination to sue for an adverse employment action.  This kind of claim, normally reserved for Title VII cases which have caps on damages and a 300-day administrative statute of limitations, can now be filed up to four years after the adverse employment event.  In addition, because Section 1981 claims are not capped on damages, plaintiffs can recover substantially more than the $300,000 punitive cap in place under Title VII.
    Practitioners know that retaliation cases are generally easier to prove and harder to defend than a plain race discrimination charge.  The case law is replete with situations where a jury rejects the underlying charge of discrimination, but finds that the employer retaliated, even though it did not discriminate.  So in situations where a potential race discrimination claim exists, employers have to try tread especially carefully now.
    In Potter, the Court continued its habit of expanding retaliation rights even though the statute in question (the Age Discrimination in Employment Act) does not contain a retaliation provision.  What's interesting about Potter is that the ADEA expressly provides for a retaliation claim against private employers, but is silent as to such claims against a federal employer.  Normally, this would be more than enough evidence of Congressional intent to support a finding that there is no retaliation right for federal employees.  However, the Court seems hell-bent on expanding retaliation rights where there are none and did so in this case.
    This court's proving not to be nearly as employer friendly on a number of fronts (ERISA, retaliation, disparate impact analysis) as was once hoped.  How this will affect the upcoming legislative session, perhaps with a new Chief Executive, remains to be seen.
 
posted Monday, June 23, 2008 10:12 AM by Lou Michels with 0 Comments

Having an Abortion Creates a Protected Status

  What could be a important case out of the Third Circuit Court of Appeals holds that an employer may not justify termination of an employee based on her decision to have an abortion.  This is a first for the Third Circuit, although the EEOC has maintained since 1986 that the Pregnancy Discrimination Act covers all pregnancy-related medical conditions, which would include abortion.

     The facts of the case are relatively straightforward.  A female employee (unidentified in the case, presumably for privacy concerns) was fired five days after she terminated her pregnancy because of severe deformities detected in an ultrasound, and on advice of her physician.  The district court granted summary judgment for the employer, but the Third Circuit reversed, sending the case back for trial. 

     The employee was terminated when she failed to call in to report her need for time off following the abortion.  This was allegedly consistent with company policy, but the office administrator testified that there was a separate set of rules for each employee regarding leave and attendance, and that there were no uniformly enforced rules on vacation or sick time.  Moreover, there were several examples of employees who did not have to call in to request additional time off from work.  This administrative sloppiness undercut the employer's ability to argue that the actual reason it terminated the plaintiff was because she failed to call in. 

    The evidence that the Court of Appeals used to support its decision that the abortion could have been the reason for the employee's termination consisted of the short period of time between the abortion and the termination (in an incredibly bad bit of timing, the employer notified the employee of her termination on the day that she buried the aborted fetus), and a remark by the supervisor to the effect that the employee "did not want to take the responsibility."  This remark was in an admittedly confusing conversation, but the court determined that it could raise an inference of discriminatory animus. 

     Other than a need to be aware that abortion is a protected factor, I'm not sure this case tells us a lot about managing gender discrimination or pregnancy discrimination claims.  An employer who doesn't consistently treat its employees the same on matters of vacation and leave of absence is simply asking for trouble.  It's really no surprise that the Court reversed on this case.

 

posted Monday, June 23, 2008 8:37 AM by Lou Michels with 0 Comments

They Should Have Used White-Out

    In what can only be characterized as a Lemony Snickett circumstance ("a series of unfortunate events"), supposedly redacted documents turned out to be not, in a particularly ugly sexual harassment / discrimination case filed by one of GE's former internal lawyers.  The case started as a class action seeking damages of $500 million and named the CEO, the General Counsel and numerous other senior GE executives as individual defendants. 
    Many of the allegations are apparently egregious enough that the parties agreed to file them under seal, putting only redacted, "blacked out" versions of the pleadings on the publicly available federal court electronic filing system.
    Unfortunately, the plaintiff's documents were redacted in a manner that didn't quite protect the information.  Specifically, pages and pages of blacked-out documents were easily readable by the simple expedient of copying blacked-out portions into a Word document and altering the color of the highlighting. 
    Neither the plaintiff's firm nor the company's lawyers picked up on the problem until someone pointed it out.  But it underscores, again, the extremely permanent nature of electronic data and the requirement that people dealing with it understand that "what you see isn't always what you get."  Just because something is not visible on a screen does not mean that the text is inaccessible.  Some websites employ a "white on white" process that uses a white font to enter text on a white page.  The text is still present, but is effectively invisible at first glance.  Actually, it's invisible on second glance, too.  But a simple change in font or highlighting color makes the text visible to anyone. 
    Companies passing documents around that they believe are properly secured with redaction should be aware of this issue and make sure that the people responsible for covering up or removing the information are doing it in a secure way.
 
 
posted Wednesday, May 28, 2008 2:05 PM by Lou Michels with 1 Comments

Military Leave Mishandled

    We're seeing a lot of commentary about USERRA in the press these days, and not just on the employment law list serves and blogs.  NPR actually ran a story on it over Memorial Day weekend, and if it made it to NPR, then the odds are that service member's employment rights are going to get a lot more attention from the mainstream media (which seem to run in tandem with NPR on a lot of stories).

     And with cases like this, who can blame the press?  For some inexplicable reason, Pepsi front-line managers decided to begin penalizing one of their employees shortly after he began military service with the Army Reserve.  Specifically, the employee was tagged with his first attendance discipline shortly after he returned from his initial active-duty training in the summer of 2002.  He was hit for three separate actions, several of which Pepsi actually documented as related to his military duties. 

     One more time—it is absolute foolishness to reference someone's protected status in a disciplinary memo or letter of reprimand.  This case just drives that point home, again.

     The employee received attendance points for failing to call in on a designated hotline (a policy which was instituted while he was on active duty and that was never communicated to him) and for missing work after the Army ordered him to report for possible deployment in less than 24 hours.  He was also tagged for leaving work 15 to 20 minutes early to prepare for military-related duties.  Notwithstanding the employee's efforts to resolve these matters, Pepsi allowed the points to stay in his record and never responded to his questions or grievances filed through his union.     

      When the employee threatened to make a public complaint about Pepsi's treatment of service members, the company finally set up a meeting with the human resources management team.  At the meeting, one of the HR managers conceded that the attendance points in the employee's record should be removed.  The employee also raised a question about his entitlement to so-called “bridge pay” under Pepsi's military leave policy.  Under this policy, Pepsi paid compensation designed to make up any pay differential for a period after the employee’s recall to active duty.  Of course, Pepsi had not provided this compensation to the employee, a point that was clear at the meeting.  In fact, the HR manager committed to compensate the employee for the money that Pepsi should have paid during his absences for active duty initial training.

     Pepsi actually deposited more than $10,000 into the employee's bank account after the employee withdrew his complaint of USERRA violations at the Department of Labor.  Inexplicably, Pepsi then took back the amount four days later. 

     At trial for violation of USERRA, as well as for breach of contract and conversion (owing to the failure to pay the so-called bridge pay, and the removal of it after it had been deposited in the employee's bank account), Pepsi tried to argue that the policy for bridge pay was, in fact, only a "draft".  The company also had to explain why its counsel represented that no money had either gone into or come out of the employee's bank account, a clear mistake by the attorney.  The trial judge had little difficulty disbelieving Pepsi’s explanations as to what happened. 

     Pepsi was hit with the $10,000-plus payment, and the court then doubled the actual damages because it found the employer's failure to comply with the provisions of USERRA to be "willful".  The court also determined that Pepsi breached its oral contract with the employee by failing to pay the differential pay (based on the oral statements of the human resources manager that the company would, in fact, pay the employee that amount), as well as upholding the conversion claim.  Finally, the court tacked on an additional $50K in punitive damages on the conversion count.

     Employers, by now, should be particularly sensitized to the difficult attendance issues that roil around a USERRA claim.  In this case, there was very little coordination between the front-line managers, Pepsi human resources managers and, I'm guessing, senior management.  The end result was a mangled decision-making process that actually multiplied the claims against the company, even well after the violation of USERRA was established.

     In short, a USERRA claim should be treated like any other complicated leave of absence issue.  Coordination between the management, human resources, and the legal team is essential so that the kind of false steps that developed here aren't repeated.

posted Tuesday, May 27, 2008 10:47 AM by Lou Michels with 0 Comments

Old, Bold, Pilots, Part II

     Following up on a previous post about the mandatory retirement age for commercial and corporate pilots, a federal court ruled that there is no triable issue of age discrimination when a company forces its pilots to retire at age 60.  EEOC v. Exxon Mobil Corp., No. 3:06-cv-1732 (N.D. Texas April 28, 2008) 

     The employer, Exxon, maintains a fleet of private aircraft, including nine sophisticated jets to transfer its employees and corporate guests worldwide.  At the time the case was filed, Exxon's internal policy barred pilots from flying its aircraft after age 60, and it forced pilots to retire when they reached that age.  The policy mirrored the FAA's age-60 rule, which grounds commercial pilots of passenger aircraft at the same age (Exxon has amended its policy to mirror the recent statutory mandated retirement age of 65.)

     The EEOC sued to invalidate this policy on behalf of six pilots who were forced to retire at age 60.  Exxon asserted a bona fide occupational qualification ("BFOQ") defense, based on its claim that the age limit was reasonably necessary to the essence of its business. 

     Exxon's reliance on the FAA rule to support its policy is justified where the rationale asserted by the FAA for grounding pilots at that age is readily applicable to the world of corporate jet flying.  The EEOC attempted to argue that the duties of commercial pilots and corporate pilots were so different that age could not be a BFOQ for the Exxon group. 

     Notwithstanding the fact that flying a corporate jet is frequently even more demanding than flying a larger and more stable passenger airliner, the EEOC tried to argue a distinction based on the differences between the airplanes.  The Commission pointed out the differences in the lavatories on the airplanes, the type of coffee provided on board and the towels used on the plane.  Why on earth the Commission would think that would be convincing evidence in an age discrimination case about flying a jet is beyond me; I suspect what it really did was point out the weakness of their arguments in the areas where it mattered.

     The court would have none of it, noting that there was no material difference, at least for purposes of this inquiry, between the planes used by Exxon and the planes used by commercial airlines.

    The result of this is not surprising; but this is one of the few areas where age may be a BFOQ.  We're going to see more of these kinds of age-related claims as our older workforce begins to push the edge of the envelope in areas like flying, vehicle operation, and the like. 

posted Monday, May 19, 2008 12:12 PM by Lou Michels with 0 Comments

An Armed Workforce Is a Polite Workforce?

    Starting at the beginning of July, managers and employees in Florida will have even less reason to hang around out in the parking lot after shift change.  Florida residents, who typically have to worry about heat during the summer months, will now have to worry about people packing heat, at least in their workplace parking areas. 

     A Florida law that takes effect on July 1 will require most Florida public and private employers to allow employees and customers to bring lawfully possessed guns onto the employer's property.  The only caveat is that your assault rifle has to be locked inside or locked to your pick-up truck of choice in the parking lot.  Even better, employers may not ask their employees (or their customers) whether they are keeping guns in their cars, search the cars for a gun, take action against an employee based on statements from coworkers about the possession of a gun in the parking lot, or take action against anyone who whips out their Beretta, as long as the gun is never exhibited on company property for any reason other than lawful self-defense.

     The new law does not apply to school property, correctional institutions, nuclear power plants, airports or defense contractor facilities, oil refineries, or other places where possession of a gun is prohibited under federal law or federal government contract. 

     I suspect the folks at Disney World, Sea World, and the Universal theme parks around Orlando are perhaps a tad nervous about this legislation.  A similar law was enjoined in Oklahoma recently on the grounds that OSHA preempted it.  Stay tuned. 

posted Monday, May 19, 2008 12:02 PM by Lou Michels with 0 Comments

More Racial Harassment Guidance

    Following up on the slave driver entry below, a case from Pennsylvania, and affirmed by the Third Circuit, provides another example of the limitations on racial harassment or discrimination claims.  In Harris v. Cobra Construction, the court was confronted with a situation that, on its face, appeared to be a likely one for trial instead of disposal by summary judgment.  The owner of a company waved a sawed-off shotgun at two of his black employees, and then pointed it at a union business agent, telling him to get off his jobsite.  The owner then turned to the two plaintiffs and asked, "What are you two black *******s looking at?  Now, get back to work."

     Both the district court and the court of appeals found that the claim could not go forward because there was no evidence that the owner's behavior, including his reference to race, was directed towards the two by-standing employees as a result of racial animosity or with the intention to discriminate against them as a result of their race.  They were not singled out or threatened based on their race, but instead, on their status as witnesses to an argument between the owner and the business agent.  The fact that the owner identified their race in the course of threatening them, without more, did not convert the threat from one of anger to one of racial discrimination.

     The court noted that the case might have been different if the owner had made his racial remarks in the context of discussing the plaintiff's work performance or while hiring, firing, demoting or promoting employees.  Instead, under the circumstances, the remark was, at worst, a stray remark in the workplace that could not support a claim of employment discrimination, or a claim of hostile environment. 

     You have to wonder how much further down the path the employer would have had to have gone in order to get a different ruling.  What if he had pointed a shotgun directly at the two and referred to them using a racial slur, rather than just identifying them as "black"?  In any event, the case again notes that the bar for these kinds of complaints can be higher than people might think initially.

posted Monday, May 19, 2008 12:01 PM by Lou Michels with 0 Comments

Black Sabbath

    A recent case (EEOC v. Texas Hydraulics Inc., No. 06-cv-161 (E.D. Tenn. April 14, 2008)) out of Tennessee federal court should raise some warning flags for employers dealing with religious accommodation issues.  The case contains some troubling language about burdens of proof under Title VII, in the context of an employee who not only refused to work on a Sabbath, but who also claimed that his religious beliefs precluded him from getting anybody else to work in his stead. 

      The employee/plaintiff worked for the employer for some ten years without significant issues.  His religious beliefs prevented him from working from sundown on Friday to sundown on Saturday.  The company was able to accommodate this belief for the most part, although it shifted the employee from one department to another on one occasion so that he would be able to avoid Saturday work.  However, economic circumstances ultimately required the employee to work on a Saturday, and the trouble began in earnest.

     The key issue here revolves around an employer's duty under Title VII when confronted with a conflict between the employee's religious beliefs and the employer's work requirements.  Specifically, the employer has a burden of showing that it cannot reasonably accommodate an employee without an undue hardship.  The requirement has two elements--what actions the employer took to accommodate the employee's religious beliefs; and whether these proposed accommodations would constitute an undue hardship to the employer.  This case hinged on the first element and the court wrote ominously that "both the reasonableness of an offered accommodation, and the amount of effort that an employer put into determining" whether such an accommodation was possible are factors to be considered. 

     In this case, the employer tried to get the employee to find a replacement.  The court ruled that this was not an attempt at reasonable accommodation because the employee had already indicated that it would be a violation of his religious beliefs for him to make someone else work in his stead on the Sabbath.  The employer also proposed trying to be lenient with the plaintiff's accumulation of absences in the hope/expectation that Saturday work would eventually fade away.  The court rejected this out of hand as a reasonable accommodation, commenting that a "wait-and-see posture is no accommodation at all." 

     The point for practitioners to note is that an employer must deal with the requirement that it offer or at least contemplate accommodations that will pass initial muster as reasonable, before it can get to the undue hardship part of the analysis.  In this case the court said that the employer could have compiled a list of employees qualified to substitute for the plaintiff and asked them if they would be willing to switch shifts or substitute.  The employer could also have posted a notice asking if any employee would be willing to substitute for the plaintiff.  Either one of these things would have constituted a reasonable attempt at accommodation, and would have allowed the employer to get to the much easier part of the analysis regarding undue hardship.  For example, had the employer asked qualified employees if they were willing to switch with plaintiff for his shift and none accepted, then the employer could have readily argued that forcing someone to work in plaintiff's place would have been an undue hardship.  This argument would almost certainly have been sustained by the court.

     Instead, the court found that the employer did not make a good faith effort (or reasonable effort) to accommodate its employee, as required by Title VII.  As a result, this case is headed to trial.  The lesson here:  when someone requests such an accommodation for religious beliefs, do not sit back and propose half-hearted or unworkable solutions.  The employer has an affirmative duty to try to solve the problem with the employee before claiming the solution is simply too difficult.  A failure to do so initially effectively denies the employer a defense down the road.

posted Monday, May 19, 2008 11:53 AM by Lou Michels with 0 Comments

Overseas Whistleblowing?

    A recent case out of the Southern District of New York has serious implications for multi-national corporations with U.S. subsidiaries or anyone with employees working overseas.  In O’Mahony v. Accenture, No. 07-7906 (S.D.N.Y., Feb. 5, 2008), the plaintiff was a partner at Accenture, LLP, a U.S. subsidiary of Accenture Ltd., a Bermuda-based company.  O’Mahony was an Irish national working in the United States.  Accenture moved her to France in 1992.  Foreign employees in France are required to contribute to French social security and O’Mahony told her supervisors that Accenture needed to make those contributions.  At some point, senior Accenture management, located in New York, told her that the U.S. tax partner for the company decided not to make the social security contributions and would effectuate the plan by concealing the length of O’Mahony's assignment in France.  When O’Mahony objected to what she perceived to be tax fraud, an Accenture senior manager, also located in New York, supposedly decided to reduce her level of responsibility, along with her compensation. 

     O’Mahony filed a complaint under the Sarbanes-Oxley Act, claiming that Accenture retaliated against her because of her objections to the tax fraud scheme. 

     Now it gets interesting.  The Department of Labor initially dismissed O’Mahony's complaint on the grounds that each of the elements of her complaint occurred in France and that the DOL lacked jurisdiction over the claim because the whistleblowing provisions of Sarbanes-Oxley do not apply extraterritorially.  The DOL administrative law judge upheld the dismissal on appeal and O’Mahony filed a petition for review with the DOL Administrative Review Board. 

     Probably figuring that the ARB wasn't going to upset the DOL apple cart by reversing its own administrative law judge, O’Mahony pulled the case out of DOL's administrative process and put it into federal court.  This was an option because the ARB couldn't make the six-month deadline for processing claims under the Act.

     Surprisingly, the federal court reversed the DOL dismissal, finding that although the statute does not apply to elements occurring overseas, in this case the alleged adverse decisions were all made in the United States.  In other words, the actual work site or nationality of the employee doesn't matter; it's where the decisions to engage in fraud/Sarbanes-Oxley violations occur that drives the jurisdiction issue.

     This decision could have some real fall-out for multi-national corporations, especially those with operating headquarters in the United States.  There are plenty of places in the world (just about all of the former Soviet Union, for example) where companies must operate in ways that are not exactly compliant with every single local and national ordinance.  An expatriate employee who raises this non-compliance can establish a Sarbanes-Oxley claim simply by alleging that he suffered an adverse employment action resulting from a decision made in the United States.  In other words, moving these kinds of issues up the food chain to higher headquarters, when those higher headquarters are located in the U.S., might not be the best plan of attack for dealing with a complaint that might trigger Sarbanes-Oxley liability. 

 

posted Friday, May 16, 2008 4:50 PM by Lou Michels with 1 Comments