Boardman Law Firm

LEGAL AND LEGISLATIVE UPDATE ON EMPLOYMENT LAW

Bob Gregg
November, 2009

LEGISLATIVE AND ADMINISTRATIVE ACTION

National Defense Authorization Act (NDAA) NDAA expands military FMLA provisions. On October 28, 2009, President Obama sighed the NDAA, which includes new FMLA provisions. Exegency leave now covers active duty service members, not just Guard and Reserve. The 26-week caregiver leave now covers care for the veterans whose service-related injury or illness occurred anytime within the five years prior to treatment.

Proposed ADA Amendment Act regulations open for comment until November 23. The EEOC has published the proposed regulations to implement the new ADA Amendments. These will have major effects for employers and employees. Among the regulations is a provision that any impairment lasting six months will, by law, be "regarded as a disability"; however, one does not have to accommodate a "regarded as" person if they are not actually disabled. This creates a potential double bind for employers who may be confused as to whether a six-month condition is a disability or only "regarded as" and what to do? Anyone in business should read these now and provide commentary to the EEOC at www.regulations.gov.

Bill would create automatic changes in minimum wage. The Living American Wage Act (HR3041, Rep. Al Green, Dem-Texas) proposes tying minimum wage to the Poverty Index. It would alter the minimum wage every four years to assure that a person working full time (40 hours a week, 52 weeks a year) earns 15% more than the official poverty level for a family of one adult and one child. Currently, that poverty level is $14,840 a year. If passed, the increase would result in $17,066 annual minimum wage for a single-parent household.

Wage Theft Prevention Act proposes stay of statute of limitations. The proposed WTPA (HR3303, Rep. George Miller, Dem-California) would stop the statute of limitations from running on FLSA wage and hour claims upon filing with the Department of Labor. Currently, the statute runs until there is a court filing. The DOL's notorious delays in investigating has resulted in thousands of claims being rendered worthless as the statute of limitations ran out. This bill would make a filing with the DOL similar to the process of filing with the EEOC under Title VII.

LITIGATION

The Legal Update includes new developments and matters of interest throughout the United States. Be aware that our various federal circuit courts reach somewhat differing conclusions. So a federal court decision in another part of the country, and especially a different state's court decision, may not quite be "the law" in your jurisdiction. Some courts lead the way; others lag behind. The Legal Update lets you see the overall trends and compare them with your jurisdiction. Wisconsin is part of the Federal Seventh Circuit (Wisconsin, Illinois and Indiana).

Liability for Acts of Other Entities

Two corporations were integrated entities for liability. A group of female custodians can sue their direct employer and its parent company for sexual harassment they allege they suffered from male supervisors. Joining the parent company to the case creates a deeper pocket and expands the amount of damages each person can receive under Title VII. Usually the courts recognize the distinction of related but separate corporations and do not allow joinder. In this case, though, there was enough "parent control" over the day-to-day operations of the other company to show an "integrated enterprise." Among the factors were public statements about centralized control of labor and human resources, service agreements between the corporations for the parent to play a significant administrative role and the parent's provision of handbooks, policies and guidelines to the subordinate company. Sandoval v. American Building Maintenance Industries and American Building Maintenance Co. of Kentucky (8th Cir., 2009).

Acts of Agents

Company liable for discriminatory acts of independent contractor. In Halpert v. Manhattan Apartments, Inc. (2nd Cir., 2009), the court ruled that the acts of independent contractors create a liability for the company which contracted them. "If a company gives an individual authority to interview job applicants and make hiring decisions on the company's behalf, then the company may be held liable if that individual improperly discriminates on the basis of age." When the company hired an independent recruiter or search firm (as many companies do), it became liable when the recruiter allegedly rejected an applicant as too old for a sales position.

Discrimination

Sex

Inadequate response to harassment complaints. The EEOC has obtained a settlement of a case alleging ongoing, overt verbal and physical sexual harassment of nine female employees by a male supervisor. When the women complained, the company did not investigate the allegations. Instead, it just showed an anti-harassment video to all employees. The supervisor at issue did not watch the video. The harassment continued. The settlement provides $145,000 to the victims and requires the company to provide effective training for managers and be monitored for compliance by the EEOC for three years. EEOC v. Cal. Psychiatric Transactions, Inc. (E.D. Cal., 2009).

Race

Watermelon remark was not only reason for police officer's discharge. A white transit authority police officer filed Title VII and 42 U.S. Code §1981 race discrimination cases. He alleged that he was fired because he made a "you should all bring watermelon to the next meeting" remark to an all African American group of officers. The white officer alleged that he would not have been fired for this if he had been African American. The court dismissed the case. First, the officer's allegations were pure speculation; he had no evidence of any non-white officer who had ever made any similar remark. Second, he was not fired just for one remark; he had a history of discipline for disregarding rules and regulations, and the remark was just one of the incidents. Lewis v. MARTA (11th Cir., 2009).

Worker loses unreasonable stand on "Jew boy" comment. An employee had an extreme and unreasonable reaction to minor discipline and filed multiple causes of action. He was given a simple written warning for referring to a co-worker as "Jew boy." He grieved the warning. The union arranged to have the warning withdrawn if the worker would simply acknowledge that the "remark was inappropriate." He refused, claiming that this was labeling him as a "racist" and was defamatory. He then sued the union for unfair representation, and sued the union and the company for defamation, fraud, intentional infliction of emotional distress and racially discriminating against him. His wife also sued for loss of consortium. The court dismissed all causes of action for lack of any foundation, finding nothing improper in the actions of the union or company. Courie v. Alcon Wheel&Forge Products and UAW (6th Cir., 2009).

National Origin
Polish teacher can sue district.

A bilingual teacher (Polish-English) of Polish origin complained that Hispanic bilingual teachers and students (Spanish-English) seemed to receive more resources and support than did she and the Polish-English bilingual students. Allegedly, her school principal, who was Hispanic, told her that Hispanic students "are better than Polish and deserve more than Polish." Later, the principal allegedly stated, "I brought you to this school and you stupid Polack pushed the other teachers against me." The Polish teacher was reassigned to teach bilingual Spanish-English, for which she was not qualified. She was then given negative evaluations for not successfully teaching. The principal then recommended non-renewal of the teacher's contract, ending the employment. The court rejected summary judgment and found sufficient evidence of national origin discrimination to warrant trial. Darchak v. Chicago Bd. of Ed. (7th Cir., 2009).

Disability

Communication difficulty created direct threat. A hospital had valid reason to remove a medical resident with Asperger's Disorder. The condition caused clarity of communication problems with patients and other staff. The hospital removed him from patient care, but offered the accommodation of a residency in pathology, where there was less interaction and communication. He refused and sued under the ADA and Rehabilitation Act. The court ruled that communication was a clear patient care and safety issue, and the resident's unclarity created a direct threat, warranting the hospital's action. Jacubowski v. Christ Hospital (S.D. Ohio, 2009).

Family&Medical Leave Act

Drunken calls are not proper request for FMLA. There are times in which a serious medical condition prevents an employee from clearly articulating the need for FMLA, and employers are required to grant leave. The type of inarticulate speech may create a "constructive notice" that the employee is suffering from a serious medical condition. However, vague, slurred calls, giving inconsistent reasons for absence from an intoxicated employee do not meet the standard. In Scobey v. Nucor Steel-Arkansas (8th Cir., 2009), a worker missed four days in a row because he was drunk. He called each time, angry, incoherent and with differing reasons for absence. He was demoted due to his absence. He sued, claiming the company should have known from his calls that he was suffering the serious condition of alcoholism, and protected his absences with FMLA. (At the end of the four days, he did check into a treatment facility.) The court ruled for the employer. Dependency treatment is covered by FMLA; intoxicated absence is not. Further, the worker's calls only gave the company notice that he was upset and drunk, not that he had a serious medical condition.

School principal can be personally sued for FMLA violation. The FMLA defines an "employer" as "any person who acts directly or indirectly in the interest of the employer." In Cooley v. Chicago Bd. of Education (N.D. Illinois, 2009), the court ruled that the principal could be sued personally for his alleged violation of the FMLA rights of a school counselor. This case is not unique. It is simply a reminder that all levels of supervision should be aware of the FMLA. It is often line supervisors or lower level managers who are named in cases because they were unaware of the law and had not received training on how to work with Human Resources in handling FMLA situations. [Also, read the article Prevent Punitive Damages: Provide Management Training by Bob Gregg of the Boardman Law Firm, here.]

Failure to relinquish keys and password warrant vice-president's discharge. A vice-president of Information Technology took FMLA leave. The company suspected that he was accessing the computer system from home and deleting certain information. It also discovered evidence of improper use of the company credit card. It asked the VP to return keys to the building and relinquish his computer password during the remainder of his FMLA. However, he refused, claiming that relinquishing keys and password constituted "work," and requesting him to do "work" while on leave violated the FMLA. He was fired for his refusal. In the resulting suit, the court ruled for the company, holding that an employer may terminate employees, even on leave, if there is "misconduct that would justify termination had leave not been taken," and "modest requirements" such as this do not constitute an "intrusion" on FMLA leave. Daugherty v. Wabash Ctr., Inc. (7th Cir., 2009).

Elephant is too big . . . VP wins case for FMLA-related discharge. A vice-president of property management was fired a day after informing the company president of her need for six weeks of FMLA. The court found the company's "poor performance" reason for discharge to be pretextual. There was no prior performance warning, only letters praising her performance, and the company failed to follow its own progressive discipline policy. The court stated, "We note the elephant in the room," the evidence of the timing of the FMLA request and the discharge was just too big for the company to overcome. President ignorant of FMLA. Another significant factor in the decision was the company president's testimony that he was not aware of what the FMLA required at the time of his decision to fire the VP. DeFreitas v. Horizon Investment Mgt. Co. (10th Cir., 2009). [For more information on how courts are now ruling against employers because their executives are ignorant of the laws, read the earlier mentioned article, Prevent Punitive Damages: Provide Management Training.]

FAIR LABOR STANDARDS ACT

Wage complaints must be written in Midwest. The 7th Circuit Court of Appeals (Wisconsin, Indiana, Illinois) has overruled the Department of Labor's guidance on wage-hour complaints. Kaster v. Saint-Gobain Performance Plastics, Inc. (7th Cir., 2009) was a case alleging retaliation against a person who had verbally complained about time clock policies and was then fired. The court ruled that FLSA complaints must be in writing in order to qualify for protection against retaliation. Be aware that DOL is standing by its guidance, and other federal circuits have found verbal complaints to be valid. So, employers with operations outside the 7th Circuit should take this case with caution.

Bankruptcy discharges company, but managers are personally liable for unpaid wages. The FLSA provides for both corporate and personal liability for wage-hour violations or unpaid wages. A company declared bankruptcy, but, now, the president and CEO are being held personally liable for employees' wage claims. In Boncher v. Shaw (9th Cir., 2009), the court ruled that individual managers are liable when the company declares bankruptcy, and can be held personally liable even if the company does not. The court noted that the FLSA's definition of "employer" can extend to any person, at even the lowest level, who has supervisory power over employees. In this case, just the top executives were named and have their personal assets on the line.