Boardman Law Firm

LEGAL AND LEGISLATIVE UPDATE ON EMPLOYMENT LAW

Bob Gregg
December, 2009

LEGISLATIVE AND ADMINISTRATIVE ACTION

LEGISLATION

Genetic Information Nondiscrimination Act (GINA) is in effect. The GINA is now in effect. All old federal workplace posters should be replaced with new versions containing the GINA information (as well as the new FMLA Military Care Leave modifications).

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).

Executive Pay Back

CEO must pay back $6.8 million in salary for fiduciary disloyalty. A former CEO has been ordered to repay all pay he received over a five-year period. A state law provides for forfeiture of pay on a finding of "disloyalty" to one's duty to the welfare of a company. The issue began with an investigation of a sexual harassment complaint by the CEO's secretary. The investigation quickly also discovered a number of financial misdeeds over a five-year period, including ongoing use of corporate funds for family and personal trips, yachts, home additions, female escort services and $16,000 in legal fees he billed the company to fight a $66 speeding ticket. He then attempted to mislead and thwart the investigation. Harassment and financial impropriety are a breach of an executive's duty of loyalty and warranted the return of all pay he received during the entire period of that disloyalty. Astra Zeneca USA, Inc. v. Bildman (Mass. S.Ct., 2009).

Standing to Sue

The legal term "standing" means whether or not one has the status to sue under a particular law. For example, sometimes a parent can "stand in the shoes" of a child and sue on their behalf. Usually, though, one must stand in their own shoes and sue on their own behalf. The plaintiff must also fit into the law's specific definition of who is qualified and eligible to bring suit. The following cases are about standing.

Dog has no standing to sue. The 10th Circuit Court of Appeals has dismissed an ADA claim. The owner of an assistance animal (a pit bull) brought suit on behalf of herself, and on behalf of the dog, due to not being allowed to bring the dog into the building. The court dismissed the dog's case because only people are allowed to sue under the ADA. The disabled person's case was remanded in order for her to revise the suit to state a valid ADA claim for herself. People can sue for denial of their use of assistance devices such as wheelchairs, service animals, etc. Lewis, et al. v. Burger King (10th Cir., 2009). [See September 2009 Legal Update for case awarding damages to a person due to injuries caused to her service animal. The employer attempted to categorize the case as the animal being the plaintiff, but the court rejected that argument. Archived Legal Updates can be found at http://www.boardmanlawfirm.com in the Reading Room under Employment Law.]

Volunteer police officer is not an employee and has no right to sue under Title VII. A volunteer cannot sue for employment discrimination because he is not an employee. A volunteer reserve officer sued under Title VII, claiming he was subjected to a sexually hostile work environment. The court dismissed the case, without addressing any of its facts or merits, ruling that volunteers have no standing to sue under the employment laws. Holder v. Bristol (N.D., Ind., 2009).

Independent contractor is not an employee, but can sue under §1981. An African American independent sales agent sued a company for race discrimination. Her sales agent contract was terminated following an argument with a company manager in which he allegedly used racial slurs. She sued under 42 U.S. Code §1981, which prohibits racial discrimination in contracting. Though she was not an employee, she had signed an Independent Contractor Agreement, placing her within that law's coverage. Brown v. J. Kaz, Inc. (3rd Cir., 2009). [Employees can also use §1981 because the courts have recognized employment as a "contractual relationship" between worker and employer. Section 1981 creates a more powerful case than standard discrimination claims because it can have a four-year statute of limitations instead of 300 days and there are not the same "caps" on liability as under Title VII, ADA and ADEA.]

Discrimination

Evidence/Judicial Sanctions

Executive wins $9.2 million when court voids company's defense due to fabricated evidence. An AME Financial Corp. female executive sued, alleging that she was sexually harassed and assaulted by the company CEO (who owned 50% of the corporate stock). She sued the company under Title VII, and the company CEO personally under state law for sexual assault, assault and battery, false imprisonment and invasion of privacy. The company and CEO mounted a strong defense, denying the allegations. However, the court found that the defense had presented forged witness affidavits in the summary judgment phase. The court ruled that there was no adequate sanction for this fraud upon the court, except to strike all of the defenses and prevent the defendants from presenting any evidence at all to challenge the plaintiff's allegations. The jury was instructed to accept all of the plaintiff's allegations as true and to rule accordingly. Forsberg v. Pefanis (N.D. Ga., 2009).

White troopers can sue for collateral damage. Twenty-seven African Americans and eight White state police officers can sue for wage discrimination under Title VII. The state police district at King of Prussia, Pennsylvania had a majority of African American officers. It stood out as the only such state police district. It also stood out as the only district in which officers' overtime was curtailed. After the officers filed and won a grievance, the state police then adopted a limit on overtime for all districts, but proceeded to enforce it only on the King of Prussia unit, allowing the majority White districts and officers to regularly exceed the limit. There was also evidence of racial statements at the administrative level regarding the overtime enforcement such as "its about time they were put in their place." The eight White King of Prussia officers were also subject to the effect of no overtime pay. The court allowed their claim, finding that they were either collateral victims of racial discrimination and entitled to relief, or were direct victims if evidence showed the state police intentionally included the White officers for negative treatment in order to help "cover over" the discrimination against African Americans. Carter v. Commonwealth (E.D. Pa., 2009).

Half million dollar verdict to worker for interracial dating. A White health care worker had good performance evaluations until she began dating an African American employee. During one evaluation, she was told verbally that it was not in her best interest to continue seeing the African American man. She continued dating him. Her next two evaluations were unsatisfactory, and she was fired. During this time, she was also subject to other negative comments regarding her interracial relationship. The evidence of poor performance was found to be pretextual; other employees were not criticized for the same issues. A jury awarded $130,000 in back pay and the remainder in compensatory/punitive damages. Bergerson v. N.Y. State Office of Mental Health (N.D., NY, 2009).

Sex

"Please don't do anything" does not mean don't do anything. In Conner v. Lancaster County (E.D., PA, 2009), a county employee was subjected to overt, sexually offensive conduct from her co-worker, including chasing her and repeatedly exposing himself. She told her supervisor, but then asked him to please don't do anything, and take no action because she was afraid of the consequences. The co-worker made frequent threatening references to the gun he kept in his car. So, the supervisor did nothing. The harassment continued. Several months later, the employee told the Director of Training about the ongoing incidents, but no action was taken. The harassment continued for two years until the co-worker began overtly sexually grabbing yet another woman. The employee then reported this incident, along with her own long period of harassment, to the County Executive. She was discharged two weeks later. She filed suit, but the county sought dismissal on the grounds that since the harassment had begun several years earlier, most of it was outside the statute of limitations. The court disagreed. It ruled that the harassment constituted a "continuing violation" and each hostile act was "part of a whole"; none of the incidents had to be separated out of the case. She could claim damages for the cumulative effect. The county should have acted to address the harassment on the first report. An employer cannot use "please don't do anything" as a defense when the "don't do anything" plea is due to the employee's fear of violent retaliation. That sort of plea by an employee enhances the employer's obligation to do something, and do so promptly.

Employee's own conduct can refute claim of hostile environment. A State Supreme Court upheld a jury verdict in favor of a company in a sexual harassment case. The plaintiff appealed that the trial court had improperly allowed evidence of her own workplace behaviors. That evidence included her sexual banter, provocative clothing style and other participation in the behaviors which she then claimed in her suit to be a "hostile environment." The court ruled that such evidence was relevant as to whether a plaintiff actually found the work environment to be sexually hostile or not. The jury could validly consider that evidence. Dahms v. Cognex Corp. (Mass. S.Ct., 2009).

No restroom is no excuse. A foundry claimed that it did not hire a female job applicant because it did not have adequate women's restroom facilities at that time. The court rejected this, stating that rejecting or delaying consideration of female applicants "due to the lack of women's facilities does not strike us as a particularly weighty non-discriminatory reason for passing on an applicant." Peck v. Elyria Foundry Co. (6th Cir., 2009). [Similar arguments have also been rejected in ADA cases. Providing an accessible workplace, including restrooms, is a fundamental principal of non-discrimination.]

Two million dollar verdict to female Wal-Mart pharmacist. The Massachusetts Supreme Court upheld a jury verdict of $1 million front pay and $1 million punitive damages, concluding that Wal-Mart's treatment of female pharmacists was "outrageous and reprehensible." The female plaintiff had been paid less than male pharmacists who were less qualified than she. Wal-Mart even paid more to an unlicensed male pharmacist. The female complained about the pay and was fired the next day. At trial, male pharmacists testified that they had never been disciplined nor critiqued for doing the same or worse "infractions" used as the reason for firing the female. Haddad v. Wal-Mart Stores, Inc. (Mass. Sup. Judicial Ct., 2009).

Disability

Smelly dog may be kept out. A hospital won a case over its banning of a service animal (a Saint Bernard) from the premises. The hospital did not ban all service animals. The particular animal was not properly cared for, nor trained. The dog was unclean, gave off a "putrid odor" and was unruly, getting in the way of staff. The court found the hospital had a valid concern that the dog could spread infection and disrupt staff and the care of patients; it created a "direct threat" to safety of the operation, staff and patients. The ADA case by the animal's owner was dismissed, and the court issued an injunction prohibiting the owner from bringing the dog to the facility. Roe, et al. v. Providence Health System (D. Oregon, 2009).

Overbroad drug test violates ADA. The EEOC has sued a company due to its testing for legal prescription drugs. EEOC v. Dura Automotive Systems, Inc. (M.D. Tennessee, 2009). The company allegedly required all employees to be tested for illegal drugs and seven sorts of prescription medications. If the prescription drug was found, the employee had to reveal to the company the reason (the disability) for which they took the medication and agree to cease the medication. The EEOC alleges that in most instances there was no evidence that the particular medication would have any affect on safety or performance of the specific job. Further, the employer allegedly disclosed the names of those who tested positive to the entire workforce. If true, the alleged acts violate both the ADA's business necessity rule for a medical test and the confidentiality requirements regarding test results and medical information. [Another test issue: The EEOC has indicated that the new ADA Amendments Act will have an affect on drug testing. Conditions such as shy bladder syndrome and enlarged prostate, which hamper production of a drug test specimen, will now be considered "disabilities" and must be accommodated in the testing process.]

Fitness for duty evaluation was an invalid medical test. An employee was required to have a fitness for duty evaluation in order to return from knee surgery. She failed the test, was denied return to work and terminated. She sued under the ADA. The court found the fitness evaluation was too broad in scope. Any test must be "job related and consistent with business necessity." The evaluation in question was invalid under the ADA because it measured elements outside her job duties and sought information about her mental condition, other physical impairments, blood pressure and other medical data unrelated to her knee and her ability to perform the duties of machine operator. Intergard v. Georgia-Pacific Corp. (9th Cir., 2009).

Employer can change essential functions of job. Due to attacks on staff by inmates, the Utah Department of Corrections required all staff with direct inmate contact to pass a training course on self-defense and assisting others in such situations. A physician's assistant with several physical impairments was unable to pass the training. She requested and was denied an exemption from the requirement. She was offered, and she refused, transfer to an equal pay/similar duty job with no inmate contact. She was terminated for not meeting the new requirement. She sued, claiming that no such requirement existed at the time she was hired and should not be imposed upon her. Further, the requirement could not be seen as an "essential function" because such incidents occurred only a small percentage of the actual job time. The court ruled that employers may alter the job duties over time and require all employees to perform the new function; no person's job responsibilities are frozen at the time of hire. Further, safety-sensitive duties can be essential functions even if they arise only infrequently, because the consequences of not being able to perform the function are so severe. Hennagir v. Utah Dept. of Corrections (10th Cir., 2009).

Family and Medical Leave Act

Unauthorized work at home counts toward FMLA eligibility. A part-time salaried employee was denied FMLA leave and subsequently terminated. The company claimed she had not worked the 1,250 hours in a year to qualify for FMLA protection. Her standard at-work schedule did not generate 1,250 hours, and the company claimed it had directed her to not work outside her normal schedule. She, however, claimed that she put in extra hours taking work home, and she presented evidence that she had submitted work from home and been granted some "comp time" to be taken later for that extra work. The company argued that she should not be allowed to use unauthorized hours, worked in disregard of directions, to qualify for FMLA. The court disagreed. The law does not categorize hours as "approved" or not; eligibility is based on hours worked (just as the Fair Labor Standards Act requires pay for all hours worked, even those which are unauthorized). Erdman v. Nationwide Ins. Co. (3rd Cir., 2009). [Work from home has complicated the issue of timekeeping and whether a person is "off the job." Since salaried-exempt employees often do not keep time records, it may be difficult to argue exactly how many hours they did or did not work. This can be important, since the FMLA and FLSA have special rules regarding the ability to deduct from salaried pay for sick leave.]