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![waivers. Prior to this decision, the enforceability of such waivers was often
challenged. The California Supreme Court previously held that a consumer
arbitration agreement prohibiting class arbitrations was unconscionable. In
Concepcion, the Court found it improper for a court to impose class
arbitration where an agreement expressly prohibited it. State law rules such
as these, the Court concluded, ran counter to the FAA’s objectives of
enforcing arbitration agreements in accordance with their written terms.
Further, the Court noted, class arbitration is inconsistent with the main goal
of arbitration, i.e., to “facilitate streamlined proceedings.” Another key
feature of arbitration, the Court recognized, is “that parties may agree to limit
the issues subject to arbitration … and to limit with whom a party will
arbitrate its disputes.” The “informality of arbitral proceedings is itself
desirable, reducing the cost and increasing the speed of dispute resolution.”
Imposing class arbitration upon unwilling parties interfered with that goal.
D. Plaintiffs Will Find It More Difficult to Certify Employment Class
Actions.
Wal-Mart, Inc. v. Dukes, 131 S. Ct. 2541 (2011). A nationwide class of
approximately 1.5 million female employees of Wal-Mart brought a Title VII
action against the company alleging sex discrimination and seeking
injunctive and declaratory relief, back pay, and punitive damages. The
employees claimed that local managers exercised discretion over pay and
promotions disproportionately in favor of men which had an unlawful
disparate impact on female employees, and that Wal-Mart’s refusal to control
its managers’ authority constituted disparate treatment.
At issue in the case was whether the lower courts properly granted the
plaintiffs’ class certification. Rule 23(a)(2) of the Federal Rules of Civil
Procedure provides the requirements that plaintiffs must meet to obtain class
certification. One requirement is that plaintiffs show that the class has
common “questions of law or fact.” As the Court recognized, this
requirement is “easy to misread, since ‘[a]ny competently crafted class
complaint literally raises common ‘questions.’” Rather, the Court ruled,
“claims must depend upon a common contention – for example, the assertion
of discriminatory bias on the part of the same supervisor. That common
contention, moreover, must be of such a nature that it is capable of classwide
resolution – which means that determination of its truth or falsity will resolve
an issue that is central to the validity of each one of the claims in one stroke.”
In the Dukes case, the Court observed, the plaintiffs sued Wal-Mart based on
millions of employment decisions at once. “Without some glue holding the
alleged reasons for all those decisions together, it will be impossible to say
that examination of all the class members’ claims for relief will produce a
common answer to the crucial question why I was disfavored.”
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601](https://image.slidesharecdn.com/2012mseclegalupdate-120515093116-phpapp02/75/2012-MSEC-Legal-Update-4-2048.jpg)
![• Limit access to personal data to the extent practicable and provide
training to staff who handle personal data;
• Ensure third parties receiving personal data are subject to and apply
appropriate security measures;
• Prepare for security breaches involving personal data;
• Maintain accuracy of the personal data collected and processed; and
• Monitor compliance with all applicable data protection laws and
regulations, as well as any safe harbor and contractual requirements
adopted by the company.
C. EEOC Issues New Guidance On The Application Of The ADAAA To
Veteran’s Employment.
On February 28, 2012, the EEOC issued new guidance respecting disabled
veteran’s employment rights which incorporates the changes made by the
Americans with Disabilities Act Amendment Act (“ADAAA”). According to
the guidance, “as a result of changes to the ADA made by the [ADAAA], it is
now much easier for individuals with a wide range of impairments to
establish that they are individuals with disabilities and entitled to the ADA’s
protections. For example, the term “major life activities” includes not only
activities such as walking, seeing, hearing, and concentrating, but also the
operation of major bodily functions, such as functions of the brain and the
neurological system. Additionally, an impairment need not prevent or
severely or significantly restrict performance of a major life activity to be
considered substantially limiting; the determination of whether an
impairment substantially limits a major life activity must be made without
regard to any mitigating measures (e.g., medications or assistive devices,
such as prosthetic limbs) that an individual uses to lessen an impairment’s
effects; and impairments that are episodic or in remission (e.g., epilepsy or
PTSD) are considered disabilities if they would be substantially limiting
when active.”
In addition, the EEOC issued the following specific guidance:
1. It is illegal for an employer to refuse to hire a veteran because he has
post-traumatic stress disorder (“PTSD”), because he was previously
diagnosed with PTSD, or because the employer assumes he has PTSD.
2. An employer may not refuse to hire a veteran based on assumptions
about a veteran’s ability to do a job in light of the fact that the veteran has a
disability rating from the U.S. Department of Veterans Affairs (VA).
3. Some service-connected disabilities, such as deafness, blindness,
partially or completely missing limbs, mobility impairments requiring the use
of a wheelchair, major depressive disorder, and PTSD, will easily be
concluded to be disabilities under the ADA.
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601](https://image.slidesharecdn.com/2012mseclegalupdate-120515093116-phpapp02/75/2012-MSEC-Legal-Update-12-2048.jpg)
![the facility in accordance with Catholic principles, it engaged in numerous
religious exercises and practices, such as conducting daily facility-wide
prayers and maintaining the employee handbook, which confirmed St.
Joseph’s Catholic identity. However, the plaintiff was not Catholic, but a
member of the Church of the Brethren.
The Brethren practice at issue in Kennedy is the requirement for women to
wear modest, long dresses or skirts and to wear a prayer covering, such as a
veil, over their hair. At some point during the plaintiff’s employment, the
Assistant Director of Nursing Services allegedly told the plaintiff that her
long dresses, skirts, and head covering were inappropriate for a Catholic
facility and were making patients and their families uncomfortable. The
plaintiff also alleged that the Assistant Director continually told her she
needed to adhere to a more traditional mode of dress. The plaintiff then
communicated to the Assistant Director that her religious beliefs mandated
that she continue wearing such attire. As a result, St. Joseph’s terminated the
plaintiff’s employment on May 17, 2007, and the plaintiff then filed suit
under Title VII, alleging religious harassment, retaliatory discharge, and
discriminatory discharge on the basis of her religion.
Title VII contains an exemption for religious employers: “[Title VII] shall
not apply to . . . a religious corporation, association, educational institution,
or society with respect to the employment of individuals of a particular
religion.” Courts have interpreted this language to only mean hiring and
firing decisions. However, according to the 4th Circuit, “employment” also
includes conduct occurring during the employment relationship. Thus, the
Court held that “employment” was synonymous not only with employment
decisions like hiring and firing, but also must incorporate the entire
relationship between an employer and employee. On this basis, the court
denied all of the plaintiff’s claims.
The Fourth Circuit’s decision raises the possibility that other circuits will
adopt this holding if they are faced with a similar issue. It is also possible
that this case will discourage plaintiffs’ attorneys from bringing these types
of claims in other circuits because Kennedy is the first case of this kind and a
notable flag for defense counsel to raise and wave on summary judgment.
However, Kennedy is not a license for a religious employer to harass or
retaliate on the basis of religion. Although the plaintiff in this case brought
only Title VII claims, there are several tort claims (such as intentional or
negligent infliction of emotional distress) that could be part of a lawsuit
based on alleged harassment or retaliation. Therefore, it is still important to
maintain a policy and train your employees on anti- harassment and anti-
retaliation issues, including religion-based harassment and retaliation.
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601](https://image.slidesharecdn.com/2012mseclegalupdate-120515093116-phpapp02/75/2012-MSEC-Legal-Update-17-2048.jpg)
![desk audit (and, plaintiff’s supervisors had requested desk audits for other
similarly situated, non-disabled co-workers), because “an employee who does
not formally apply must make every reasonable attempt to convey his or her
interest in the job to the employer before he or she may prevail on a
discrimination claim.”
Plaintiff also admitted that, in addition to not requesting a desk audit herself,
she did not ask her supervisors to request a desk audit on her behalf. She also
admits that she never complained to the company that she was performing
duties above her grade level and that she should be reclassified.
This case is an important reminder for employees who believe they are not
getting ahead in their jobs because of sex, race, disability, age or other
factors: unless an employee actually applies for - or at the very least,
expresses interest in - a promotion, the employee may not have a claim for
discrimination. Such an application (or expression of interest) is an
important step to preserving an employee’s rights, even if the employee
thinks the outcome is preordained
B. Employer Must Have Evidence Of Poor Performance Before Employee
Engages In Protected Conduct.
Pye v. Nu Aire, Inc., No. 10-2243 (8th Cir. June 17, 2011). In this case, a
newly-hired black employee filed a complaint claiming that he overheard the
company’s payroll administrator mutter the words “n*****r goon” under her
breath, in response to his request for help on a form. The complaint was
investigated by the Director of Human Resources, but the employee reported
that his interview with the Director was adversarial. For example, the
employee claimed that the Director began by telling him that she did not
believe his allegation that the payroll administrator had referred to him as a
“n[******]r goon,” and stated that she had known the administrator for many
years and that he was not a racist. In addition, the Director suggested that the
employee’s claim was for money, a promotion, and a company-car, to which
the employee responded that he “wanted the matter handled in the usual
manner.”
Following the meeting, the Director reported to a Vice President, who made
the decision to terminate the employee. When the employee asked why he
was terminated, the Director told him that “he was terminated for attempting
to obtain a promotion and/or money and a company car through coercion or
intimidation.” However, in the course of litigation, the employer insisted that
the decision was based on poor performance.
The Eighth Circuit held that there was no evidence that the company had any
concerns regarding the employee’s performance before he engaged in
protected conduct. The Vice President who made the decision to terminate
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
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![Taking the position that the firing constituted government action, Glenn sued
under the Equal Protection Clause of the Fourteenth Amendment, claiming
that Brumby discriminated against her on the basis of her sex, including both
her gender identity and her failure to conform to the male sex stereotype.
After Glenn obtained summary judgment in the District Court for the
Northern District of Georgia, Brumby appealed to the Eleventh Circuit,
which affirmed, holding that Brumby violated the prohibition of sex-based
discrimination in the Equal Protection Clause by terminating a transgender
employee because of her gender nonconformity. Specifically, the Court held:
A person is defined as transgender precisely because of the
perception that his or her behavior transgresses gender
stereotypes. “[T]he very acts that define transgender people as
transgender are those that contradict stereotypes of gender-
appropriate appearance and behavior.” There is thus a
congruence between discriminating against transgender and
transsexual individuals and discrimination on the basis of
gender-based behavioral norms. Accordingly, discrimination
against a transgender individual because of her gender-
nonconformity is sex discrimination, whether it’s described as
being on the basis of sex or gender.
The Court found sufficient direct evidence of discrimination based on
Brumby’s deposition testimony that he fired Glenn “because he considered it
‘inappropriate’ for her to appear at work dressed as a woman and that he
found it ‘unsettling’ and ‘unnatural’ that Glenn would appear wearing
women’s clothing.” Brumby further admitted that the “decision to fire Glenn
was based on ‘the sheer fact of the transition.’” Significantly, the Court held
that were this a Title VII case, the analysis would end there. However, under
the Equal Protection Clause, the Court was required to examine whether
Brumby could show an “exceedingly persuasive justification,” for the
decision. The Court held Brumby could not, rejecting Brumby’s purported
concern, based purely on speculation, that women in the office might object
to Glenn’s use of the women’s restroom.
Although the case was decided under the Equal Protection Clause, the
reasoning of the Court’s decision, including its specific reference to the Title
VII analysis, lays the groundwork for similar claims against private
employers under Title VII. As a result, employers should examine anti-
discrimination policies and practices with a view that taking adverse
employment action against transgender workers raises the risk of liability for
sex discrimination.
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601](https://image.slidesharecdn.com/2012mseclegalupdate-120515093116-phpapp02/75/2012-MSEC-Legal-Update-25-2048.jpg)
![B. California Law Cracks Down on Worker Misclassification with New
Law.
Consistent with the increased litigation employers are facing in the federal
arena, the states are also stepping up enforcement over the potential
misclassification of employees as independent contractors. In September
2011, the California legislature passed a bill that bans willful
misclassification of independent contractors and imposes civil penalties
ranging from $5,000 to $15,000 per violation. The bill also makes it illegal to
charge fees or make deductions from compensation paid to misclassified
workers. Each deduction or fee charged could be counted as a separate
penalty. Moreover, any employer found to have engaged in a “pattern or
practice” of misclassifying employees will face increased penalties of
$10,000 to $25,000 per violation. Governor Brown subsequently signed the
bill into law, which became effective January 1, 2012.
C. California Employers Paying Commissions Face New Requirements.
California has passed a new commission contract law, which will take effect
January 1, 2013. Under AB 1396, employers who pay commissions to their
employees are required to enter into written commission contracts with
employees. The contract must describe the method by which commissions
are computed and paid. Employers must also provide a copy of the signed
contract to each employee, and get a signed receipt from each employee. In
addition, when a contract governing commissions expires without being
replaced but the employee continues work, the terms of the “expired”
contract will apply to commissions until the parties sign a new agreement or
until the employment is terminated. As a result, it will be important for
employers to get new commission contracts in place before or when the old
ones expire.
COLORADO
New Case Law
A. Colorado Joins Majority of Courts Finding Promise of Continued
Employment Suffices as Consideration to Support Non-Compete.
Lucht’s Concrete Pumping v. Horner, No. 09SC627 (Co. Sup. Ct. May 31,
2011). Reversing a judgment in favor of a suing employee, the Colorado
Supreme Court has found that the promise of continued employment is
sufficient consideration to support a non-compete agreement entered into by
an at-will employee. Specifically, the court recognized that “[b]ecause an
employer may terminate an at-will employee at any time during the
employment relationship as a matter of right, its forbearance constitutes an
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601](https://image.slidesharecdn.com/2012mseclegalupdate-120515093116-phpapp02/75/2012-MSEC-Legal-Update-37-2048.jpg)
More Related Content
2012 MSEC Legal Update
- 1. Morris, Manning &Martin, LLP 2012 MSEC LEGAL UPDATE Jason D'Cruz Partner, Executive Compensation and Employment Morris, Manning & Martin, LLP 404.504.7601 [email protected]
- 2. UNITED STATES SUPREMECOURT Employment Cases Decided by the United States Supreme Court A. States May Mandate Employer Participation in E-Verify. Chamber v. Whiting, 131 S. Ct. 1968 (2011). On May 26, 2011, the Supreme Court upheld an Arizona law that mandates employer participation in E-Verify and provides for the suspension or revocation of business licenses of employers who knowingly or intentionally employ unauthorized workers. In a 5-3 opinion, the Court held that federal immigration laws do not preempt the Arizona law and upheld the statute as constitutional. E-Verify is a computerized employment eligibility verification system that the federal government implemented in 1996. The federal Illegal Immigration Reform and Immigrant Responsibility Act grants employers who use E-Verify to confirm a worker’s eligibility a rebuttable presumption that the employer did not hire undocumented workers in violation of federal law. The employer can raise this rebuttable presumption in court as a defense to charges that the employer violated federal law prohibiting the hiring of unauthorized workers. In 2007, Arizona enacted the Legal Arizona Workers Act (LAWA) which prohibits employers from knowingly or intentionally hiring undocumented workers to perform services in Arizona. Employers who violate the law may have their business license suspended for the first offense, and face the mandatory revocation of their license for the second offense. LAWA also makes the use of E-Verify mandatory for employers doing business in Arizona. An employer who does not use E-Verify forgoes the rebuttable presumption that it did not knowingly or intentionally hire an unauthorized worker. Several other state legislatures, including Georgia, have also implemented their own laws imposing sanctions for employing unauthorized workers and mandating the use of E-Verify by employers. The Court’s decision in Chamber gives all states the “go ahead” to enact separate legislation similar to LAWA, aimed at penalizing employers for employing undocumented workers. Whether Congress will attempt to unify states’ approach – possibly through a nationwide mandate on E-Verify – remains an open question. Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 3. B. Oral Complaints Are Sufficient Under the FLSA’s Anti-Retaliation Provision. Kasten v. Saint-Gobain performance Plastics Corp., 131 S. Ct. 1325 (2011). On March 22, 2011, the Court held that that anti-retaliation provision of the Fair Labor Standards Act (FLSA) included oral, as well as written, complaints. The FLSA provision at issue in Kasten prohibits an employer from discharging or in any other manner discriminating against an employee because he has “filed any complaint” or instituted any proceeding under or related to the FLSA. Prior to the Court’s decision, there was a split in the circuits concerning the following issues: (1) whether the term “filed any complaint” includes complaints to the government only or internal complaints to the employer as well, and (2) whether “filed any complaint” requires that the complaint be in writing. The plaintiff in Kasten worked at a manufacturing plant. He claimed that his employer issued him warnings and suspended him in retaliation for a complaint he had made, i.e., he told his supervisors and a human resources generalist that the location of the time clocks was illegal because it prevented employees from being paid for time spent donning and doffing their required protective gear. On review, the Court held that oral complaints are protected activity under the FLSA’s anti-retaliation provision. Still, the Court found, the term “filed any complaint” contemplates “some degree of formality, certainly to the point where the recipient has been given fair notice that a grievance has been lodged and does, or should, reasonably understand the matter as part of its business concerns.” Thus, the Court held that a complaint is “filed” when “a reasonable, objective person would have understood the employee to have put the employer on notice that the employee is asserting statutory rights under the Act.” The Court stated that it expressed no view as to whether the FLSA’s anti- retaliation provision protected only complaints filed with the government or also encompassed internal complaints made to the employer. The Kasten decision likely will result in increased retaliation claims under the FLSA. Because the Court did not decide whether internal complaints are covered by the anti-retaliation provision, the most conservative approach is to assume that internal complaints concerning potential FLSA violations are protected and to update policies and complaint procedures accordingly. C. California Class Action Arbitration Waiver Enforceable. AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011). In a 5-4 decision, the Court upheld the enforceability of class action arbitration Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 4. waivers. Prior tothis decision, the enforceability of such waivers was often challenged. The California Supreme Court previously held that a consumer arbitration agreement prohibiting class arbitrations was unconscionable. In Concepcion, the Court found it improper for a court to impose class arbitration where an agreement expressly prohibited it. State law rules such as these, the Court concluded, ran counter to the FAA’s objectives of enforcing arbitration agreements in accordance with their written terms. Further, the Court noted, class arbitration is inconsistent with the main goal of arbitration, i.e., to “facilitate streamlined proceedings.” Another key feature of arbitration, the Court recognized, is “that parties may agree to limit the issues subject to arbitration … and to limit with whom a party will arbitrate its disputes.” The “informality of arbitral proceedings is itself desirable, reducing the cost and increasing the speed of dispute resolution.” Imposing class arbitration upon unwilling parties interfered with that goal. D. Plaintiffs Will Find It More Difficult to Certify Employment Class Actions. Wal-Mart, Inc. v. Dukes, 131 S. Ct. 2541 (2011). A nationwide class of approximately 1.5 million female employees of Wal-Mart brought a Title VII action against the company alleging sex discrimination and seeking injunctive and declaratory relief, back pay, and punitive damages. The employees claimed that local managers exercised discretion over pay and promotions disproportionately in favor of men which had an unlawful disparate impact on female employees, and that Wal-Mart’s refusal to control its managers’ authority constituted disparate treatment. At issue in the case was whether the lower courts properly granted the plaintiffs’ class certification. Rule 23(a)(2) of the Federal Rules of Civil Procedure provides the requirements that plaintiffs must meet to obtain class certification. One requirement is that plaintiffs show that the class has common “questions of law or fact.” As the Court recognized, this requirement is “easy to misread, since ‘[a]ny competently crafted class complaint literally raises common ‘questions.’” Rather, the Court ruled, “claims must depend upon a common contention – for example, the assertion of discriminatory bias on the part of the same supervisor. That common contention, moreover, must be of such a nature that it is capable of classwide resolution – which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” In the Dukes case, the Court observed, the plaintiffs sued Wal-Mart based on millions of employment decisions at once. “Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question why I was disfavored.” Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 5. One way inwhich plaintiffs may connect all of the decisions at issue is to provide “significant proof that Wal-Mart operated under a general policy of discrimination.” However, the Court found, such proof was entirely absent. Wal-Mart’s policy forbids sex discrimination, and the company imposes penalties for denying equal employment opportunities. The only corporate policy that the plaintiffs established is Wal-Mart’s “policy” of giving local supervisors discretion over employment matters. This, the Court reasoned, “is just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices. The Court also recognized that delegating decision- making authority is a “very common and presumptively reasonable way of doing business.” The Court found that the plaintiffs failed to identify “a common mode of exercising discretion that pervades the entire company,” and concluded that “it is quite unbelievable that all managers would exercise their discretion in a common way without some common direction.” In an attempt to make such a showing, the plaintiffs relied on evidence of statistical disparities between pay and promotion rates for men and women across multiple job groups and locations. On the other hand, Wal-Mart highlighted the absence of any disparity at most individual locations. The Court rejected the plaintiffs’ statistical evidence, concluding that disparities at the regional and national level did not establish disparities at individual locations. Further, even if the plaintiffs established pay or promotion disparities at all of Wal-Mart’s 3,400 stores, they still could not identify a “specific employment practice” that caused the disparities. The Court also rejected the plaintiffs’ reliance on anecdotal evidence to establish commonality because they had only provided statements from about one in every 12,500 class members relating to 235 out of Wal-Mart’s 3,400 stores. In addition to meeting the requirements of Rule 23(a), the class must also be certified under one of the categories set forth in Rule 23(b). The Court concluded that the plaintiffs’ individualized claims for backpay were improperly certified under Rule 23(b)(2). According to the Court, Rule 23(b)(2) applies “only when a single injunction or declaratory judgment would provide relief to each member of the class.” It does not apply when each individual class member would be entitled to a different injunction or declaratory judgment against the defendant, or to an individualized award of monetary damages. Rather, plaintiffs’ individualized monetary claims belonged in Rule 23(b)(3) which contains additional procedural safeguards that plaintiffs could not meet. Thus, the Court’s ruling in Dukes will make it more difficult for plaintiffs to certify employment class actions where the decisions of multiple supervisors and managers are at issue. Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 6. NATIONAL LABOR RELATIONSBOARD A. Mandatory Arbitration Clause Not Applicable To Class Actions. In a decision issued on January 3, 2012, in D.R. Horton & Michael Cuda, Case 12-CA-25764 (dated Jan. 3, 2012), a two-member panel of the NLRB held that an employer violates the National Labor Relations Act (“NLRA”) when it requires employees covered by the NLRA (i.e., most non-supervisory and non-managerial employees of most private sector employers, whether unionized or not) to agree, as a condition of employment, to binding arbitration of any disputes or claims arising out of their employment if the arbitrator is restricted to hearing only an individual claim, not a class or collective action. The Board found that a compulsory waiver of a class or collective action unlawfully restricts the rights of employees to engage in concerted activity for their mutual aid and protection, notwithstanding the provisions of the Federal Arbitration Act. D.R. Horton appears to conflict with Supreme Court and federal case law precedent on the matter. However, if upheld, it may affect employers that have not considered themselves vulnerable to the NLRB’s reach in at least three significant respects: First, the decision is not restricted to assessing “protected concerted activity” in terms purely within the NLRA. Rather, it transcends the NLRA to examine whether there has been interference with the exercise of employee rights under the Fair Labor Standards Act, a statute interpreted and vigorously enforced by the Department of Labor but not the NLRB. Second, it may presage even greater interest by the NLRB in matters that have been regarded as the exclusive province of other administrative agencies charged by Congress to interpret and/or enforce legislation, including the assertion of substantive rights and protections against retaliation. Third, D.R. Horton stands to affect all employers covered by the NLRA – even if none of the employer’s employees are represented by a union. What Employers Should Consider Now Employers should note that the NLRB decision only affects employees covered by the NLRA (whether they are union-represented or not). While “covered employees” can include individuals in addition to members of a collective bargaining unit, the term does not cover supervisors or certain other employees in an organization. Thus, even if the D.R. Horton panel decision stands, employees who are who are not covered by the NLRA could still be required as a condition of employment to agree, in writing, to use only individual arbitration proceedings to pursue employment claims. Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 7. Following are someconsiderations for an employer’s covered employees: • As a precaution in the event of challenge to a mandatory individual arbitration policy, some employers may decide to include specific language in their arbitration agreements to allow individual binding arbitration to go forward under the terms of the agreements should a ban on class and collective arbitration be found unenforceable. Nevertheless, this position could be rejected by the NLRB unless there is a shift in its prevailing view. • Employers may wish to act in consonance with D.R. Horton but attempt to rewrite their arbitration agreements for covered employees to be as procedurally restrictive as possible, such as in defining the standards for a class. However, great caution would be required, as such measures as shifting expenses for class and collective actions to the parties seeking class status, or adding damage restrictions that could minimize exposure to large awards, might contravene the procedural safeguards required by courts for enforcement of arbitration clauses covering statutory employment rights and remedies. Employers may wish to bide their time, hoping for a reversal of D.R. Horton by a federal appellate court. B. Employers Required To Post A New Notice For Employees. A new rule issued by the NLRB requires that all employers subject to NLRB jurisdiction post a notice, both physically and possibly electronically, advising employees of their rights under the NLRA. The content of the Notice can be found at https://www.nlrb.gov/poster. The date when the Notice was required to be posted was November 14, 2011; following legal challenges it has been postponed to April 30, 2012. C. Easier For Unions To Organize Small Groups Of Employees. In a decision released on August 30, 2011, the NLRB signed off on a decision making it easier for unions to organize small groups of employees. Specialty Healthcare & Rehab. Ctr., 357 NLRB No. 83. The Board’s decision states that when a group of employees or union petitions for an “identifiable” group of employees, that unit should be an appropriate unit unless the employer (or another interested party like another union) demonstrates that excluded employees in a larger unit share “an overwhelming community of interest with those in a petitioned for unit”. The NLRB is signaling that a union’s expressed desire to represent some subset of the employee population - such as one job classification, or one Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 8. department - shouldcontrol absent overwhelming evidence that the requested unit would constitute a “fractured” unit. D. Second Social Media Report Issued By General Counsel’s Office. Cases related to social media continue to confront the NLRB. On January 24, 2012, the acting General Counsel of the NLRB issued a second social media report to help provide further guidance to practitioners and human resource professionals. The report is important because, ultimately, it is the NLRB General Counsel who decides which employee charges of unfair labor practices to prosecute. The report reiterated two main principles set forth in an earlier report issued by the General Counsel’s office: 1. Employer policies should not be so broad such that they prohibit, discourage or chill activity that is protected by Section 7 of the National Labor Relations Act (“NLRA”) (e.g., discussion of wages or working conditions). Specifically, the report made clear that: • Specific examples of the type of conduct prohibited should be included in any social media policy (i.e., do not disclose “trade secrets”, as opposed to do not post “sensitive information” about the company). • The policy should carefully carve out and protect employee’s specific rights under NLRA; a general saving clause is insufficient. • The policy should not use vague terms like “appropriate” or “professional” without providing clear definitions for those terms. 2. Employee comments on social media networks generally are not protected if those comments are mere complaints about or general dissatisfaction with the job (e.g., “I hate my job!” or “My boss is mean!”). According to the report, the comments will be protected if they are associated with an expression of shared concern, such as a dialogue about how bad the work environment is and what employees can do to fix it in response to a single employee’s wall post about the job. FEDERAL LAW DEVELOPMENT A. Record Number of EEOC Charges Filed In 2011. For the fiscal year ending on September 30, 2011, the EEOC reported a record number of charges filed with the Commission. Following is a summary of the statistics reported by the EEOC for 2011: Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 9. • The EEOC received a record 99,947 charges of discrimination, the highest number of charges in the agency’s 46-year history. • EEOC staff also delivered historic relief through administrative enforcement, totaling more than $364.6 million in monetary benefits for alleged victims of workplace discrimination. This is also the highest level obtained in the Commission’s history. • 5.4 million individuals in both the private and federal sectors benefitted from changes in employment policies or practices in their workplace during the past fiscal year because of the EEOC’s enforcement programs. • Public outreach and education programs reached approximately 540,000 persons directly. • EEOC field legal units filed 261 lawsuits: 23 of which involved allegations affecting large numbers of people; 61 had multiple victims (less than 20); and 177 were individual lawsuits. • The EEOC’s private sector national mediation program obtained more than $170 million in monetary benefits for complainants, and secured the highest number of resolutions in the history of the program - 9,831. This is five percent more than the number of resolutions reported in fiscal year 2010. • In the federal sector, the EEOC resolved a total of 7,672 requests for hearings, securing more than $58 million in relief for parties who requested hearings. It also resolved 4,510 appeals from final agency determinations. The statistics are a stark reminder that a poor economy may contribute to an increase in discrimination-based lawsuits. Employers should protect themselves by implementing policies and procedures that are compliant with federal, state, and local law, and providing discrimination training for managers, supervisors, and other relevant personnel. B. Maintaining Employee Privacy for Multi-State Employers. Employers should be aware of their obligations and restrictions regarding the collection, storage, use, and transfer of an employee’s personal information. However, for multi-state employers, the laws, rules, and regulations can be difficult to navigate because requirements may vary from state-to-state. Following is a summary of some of the basic rules that all multi-state employers should follow: Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 10. 1. Protected Employee Information. As a general rule, personally identifiable information (commonly referred to as “personal data” or “personal information”) is given special status and protection by privacy laws. This type of information typically includes data that identifies or is linked to an identifiable living individual, such as a name or Social Security number, or that, when combined together, could reasonably identify an otherwise unknown individual, such as a birth date, gender, and postal code taken together. Most privacy laws exempt personal data that has been encrypted. However, certain types of “sensitive data” may be given enhanced protection, including, but not limited to, race, ethnicity or national origin, political opinions or associations, union membership, sexual orientation, marital status, health-related information, and criminal history. Note: Generally, privacy laws are not restricted to protecting active employee information, but may require the employer to protect such information for a stated period of time (e.g., 1 year, 3 years) after the employee’s employment has terminated. In addition, the privacy laws may protect not just employees, but applicants (regardless whether the applicant is hired or retained), consultants, and independent contractors. 2. Applicable Law. Most U.S. states and territories have enacted data breach notification laws in some form. Many of these laws are identity-theft protection measures that generally impose an obligation to protect Social Security numbers and similar personal data against unauthorized use or disclosure and require secure destruction of such data. The laws of each state may vary, sometimes significantly. For example, since March 1, 2010, Massachusetts requires most companies to adopt a written security policy that meets certain standards to protect a broad range of personal data collected from customers and employees who reside in the state. A compliant plan requires not only security measures, such as encryption of personal data stored on portable devices, but also training and oversight of vendors who have access to the data. In addition, a few U.S. federal statutes protect specific types of personal information. The most important of these for employers are the (1) Health Insurance Portability and Accountability Act, covering certain health-related information (although employers that do not provide health services are not generally covered by the HIPAA rules, they may nevertheless be subject to the act’s restrictions in their capacity as administrators of a health plan); (2) the Genetic Information Nondiscrimination Act, which applies specifically to Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 11. genetic information; and(3) the Fair and Accurate Credit Transactions Act (“FACTA”), designed to protect consumer credit information. Note: FACTA is an amendment to the Fair Credit Reporting Act that allows consumers to request and obtain a free credit report once every twelve months from each of the three nationwide consumer credit reporting companies (Equifax, Experian and TransUnion). 3. Other Considerations. Employers should consider all legal requirements, whether local, state, or federal, that may impact their data privacy policies and procedures. For example, employee record-retention rules, “whistleblower” statutes, and restrictions on monitoring or surveillance of employee activities and communications. In addition, certain processing or handling of personal data, and changes to a company’s privacy policies, may require disclosure to and/or consultation with unions representing affected employees. 4. Penalties And Compliance. Many data privacy laws explicitly provide affected parties with personal rights of action for statutory violations. Civil fines are also common, and some laws permit criminal prosecution for egregious cases. For example, fines for a HIPAA privacy violation range from $100 to over $50,000 per violation, up to an annual cap as high as $1.5 million, depending on the level of culpability, but offenses committed knowingly can result in criminal prosecution. Further, employers whose employees’ identities are stolen due to knowing violations of FACTA may be held responsible for minimum statutory damages of up to $1,000 per employee, plus punitive damages and attorney’s fees, and can be subject to civil fines of up to $2,500 per employee in enforcement actions brought by the Federal Trade Commission and additional amounts from state authorities. 5. Minimizing The Risk. Companies seeking to minimize their exposure from legal violations and security breaches involving employee personal data should: • Consider adopting data privacy and protection best practices that aim to limit the amount of personal data they collect, process, transfer and store; • Secure personal data collected, in all formats in which it is kept; Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 12. • Limit access to personal data to the extent practicable and provide training to staff who handle personal data; • Ensure third parties receiving personal data are subject to and apply appropriate security measures; • Prepare for security breaches involving personal data; • Maintain accuracy of the personal data collected and processed; and • Monitor compliance with all applicable data protection laws and regulations, as well as any safe harbor and contractual requirements adopted by the company. C. EEOC Issues New Guidance On The Application Of The ADAAA To Veteran’s Employment. On February 28, 2012, the EEOC issued new guidance respecting disabled veteran’s employment rights which incorporates the changes made by the Americans with Disabilities Act Amendment Act (“ADAAA”). According to the guidance, “as a result of changes to the ADA made by the [ADAAA], it is now much easier for individuals with a wide range of impairments to establish that they are individuals with disabilities and entitled to the ADA’s protections. For example, the term “major life activities” includes not only activities such as walking, seeing, hearing, and concentrating, but also the operation of major bodily functions, such as functions of the brain and the neurological system. Additionally, an impairment need not prevent or severely or significantly restrict performance of a major life activity to be considered substantially limiting; the determination of whether an impairment substantially limits a major life activity must be made without regard to any mitigating measures (e.g., medications or assistive devices, such as prosthetic limbs) that an individual uses to lessen an impairment’s effects; and impairments that are episodic or in remission (e.g., epilepsy or PTSD) are considered disabilities if they would be substantially limiting when active.” In addition, the EEOC issued the following specific guidance: 1. It is illegal for an employer to refuse to hire a veteran because he has post-traumatic stress disorder (“PTSD”), because he was previously diagnosed with PTSD, or because the employer assumes he has PTSD. 2. An employer may not refuse to hire a veteran based on assumptions about a veteran’s ability to do a job in light of the fact that the veteran has a disability rating from the U.S. Department of Veterans Affairs (VA). 3. Some service-connected disabilities, such as deafness, blindness, partially or completely missing limbs, mobility impairments requiring the use of a wheelchair, major depressive disorder, and PTSD, will easily be concluded to be disabilities under the ADA. Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 13. 4. A private employer may give preference in hiring to a veteran with a disability over other applicants. The EEOC’s guidance underscores the expansive effect of the ADAAA and the increased administrative impact it will have on employers. D. Personal Liability For Employment Decisions Under the FLSA and FMLA. Many officers, managers, and supervisors believe that they cannot be held personally liable for employment related claims brought by employees or former employees. However, individuals can be sued along with the employer for money damages. The Federal Fair Labor Standards Act (“FLSA”) and Federal Family Medical Leave Act (“FMLA”) both provide that individuals may be held liable for certain employment related decisions. And, the FLSA and FMLA are strict liability statutes. Thus, no wrongful intent is required and individuals can be liable for honest mistakes made under these laws. Under the FLSA and FMLA an “employer” includes an individual executive, officer, Manager, and supervisor and other individuals who act directly or indirectly in the interest of an employer and therefore may be held liable for their acts. What does this really mean? An individual who, for example, makes a determination under the FLSA that a particular employee is exempt from the overtime provisions of that law can be held personally liable to that employee if it is later determined that the individual is not exempt and must be paid 1.5 times their regular rate of pay for all hours worked in excess of forty (40) hours in any workweek. Similarly, an individual who denies a request for FMLA leave based upon an innocent belief that an employee does not have a serious health condition may also find himself or herself on the wrong end of an FMLA claim. These situations provide only examples of what can go wrong when FLSA and FMLA decisions are made. These statutes are among the most complex and difficult to administer. Thus, those individuals who have authority to make personnel decisions must ensure compliance with these laws. Although individuals can be held liable for many employment decisions, steps can be to avoid such liability: 1. Know the law. HR personnel should be well versed in labor and employment law and be a resource to line management. If you are unfamiliar with the law or the matter may lead to litigation, consult outside counsel who specializes in labor and employment law for employers. Remember that ignorance of the law is not a defense. Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 14. 2. Ensure that the organization has current and adequate HR policies and procedures. 3. Train supervisory personnel in EEO compliance and harassment in the workplace. 4. Organizations should have well publicized complaint and grievance procedures. 5. Thoroughly document all employment decisions. 6. Enforce HR policies on a uniform and consistent basis. Note: other employment laws provide for personal liability, but are not covered herein. FEDERAL CASE LAW 2ND CIRCUIT. A. Second Circuit Clarifies 90-Day Limitation On EEOC Claims. A claimant has 90 days from receipt of a right-to-sue letter to file an EEOC claim. There is a presumption that a mailed document is received three days after its mailing, absent sworn testimony or other admissible evidence from which it could reasonably be inferred either that the notice was mailed later than its typewritten date or that it took longer than three days to reach her by mail. In Tiberio v. Allergy Asthma Immunology of Rochester, the claimant, Tiberio, filed a disability discrimination claim in the district court on February 28, 2011, 96 days after the right-to-sue letter was issued. Three months later, the district court dismissed Tiberio’s claim as untimely, and declined to exercise supplemental jurisdiction over her remaining state law claim. On appeal, the Court rejected Tiberio’s argument that the date her attorney received the right-to-sue letter should control the limitations decision. The Court found that Tiberio’s interpretation of the 90-day limitation would afford a claimant represented by counsel an unfair extension of time beyond her own receipt of an EEOC notice, simply by delaying delivery to her attorney. To avoid future confusion regarding the issue, the Court explicitly stated that the 90-day period to file equal employment claims begins to run on the date Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 15. that a right-to-sueletter is first received either by the claimant or by counsel, whichever is earlier. Since the court presumed Tiberio received the right-to- sue letter 93 days before she filed her disability discrimination claim, her claim was time-barred. B. 2nd Circuit Disagrees with 9th Circuit: Pharmaceutical Reps Do Not Fall Under The Outside Sales Exemption. On Wednesday, January 25, 2012, Novartis, the second largest pharmaceutical sales company in the world, agreed to pay $99 million to settle the claims of a class of its pharmaceutical sales representatives (“pharma reps”) who alleged that they were denied overtime pay. The Novartis case is one in a series of cases brought by pharma reps around the country. Pharma reps are employees tasked with visiting doctors and providing information about their company’s drugs in order to convince the doctors to prescribe the drugs to their patients. They may hand out information about clinical studies, answer questions about insurance coverage, and/or leave samples. However, pharma reps do not actually sell pharmaceutical products to the doctors because such sale of drugs is against the law. Pharma reps’ days can be long, consisting, for example, of nine hour days out in the field and occasional evening work. The pharmaceutical industry has until now generally taken the position that it need not pay its pharma reps overtime pay under the Fair Labor Standards Act (“FLSA”) or the state-law counterparts because they are “outside sales” people and/or “administrative” employees who are exempt from the requirements of those laws. The Second Circuit rejected this position in Novartis. See In re Novartis Wage & Hour Litig., 611 F.3d 141 (2d Cir. 2010). The Court held that pharma reps do not fall under the outside sales exemption because they do not actually make sales. In addition, the Court also held that the administrative exemption did not apply to the Novartis pharma reps because they were not allowed to exercise either discretion or independent judgment in the performance of their duties. In a similar case against GlaxoSmithKline last year, however, the Ninth Circuit held that pharma reps do fall under the outside sales exemption despite not making any actual sales. See Christopher v. SmithKline Beecham Corp., 635 F.3d 383 (9th Cir. 2011). The Supreme Court has granted certiorari and agreed to review the split between the Second and Ninth Circuit decisions. The issue is currently being briefed in the Supreme Court and will be heard this Term. Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 16. C. Increased Work Scrutiny Is Not Enough To Support Retaliation Claim. Tepperwien v. Entergy Nuclear Operations, No. 10-1425 (2nd Cir. Oct. 31, 2011). In this case, at the district court level, the jury had before it two claims: male-on-male sex harassment by a supervisor, and retaliation for complaining about the harassment. The jury found in favor of the employer on the first claim. However, the jury found in favor of the employee on the second claim because, in their view, increased scrutiny at work, including a disciplinary letter that was later withdrawn, constitutes a “materially adverse action” for a claim under Title VII’s anti-retaliation provision. The jury awarded $500,000 in punitive damages, but zero in compensatory damages. On post-trial motions and despite the jury verdict, the district court directed entry of a verdict for the employer on retaliation, holding that all of the employer’s behavior added together was not great enough to deter a reasonable employee from complaining about harassment. In particular, the employer opened fact-finding investigations following several of plaintiff’s complaints. In addition, in the midst of plaintiff’s complaints about the alleged harasser, plaintiff was issued a counseling letter for failing to account for a piece of equipment that went missing which was subsequently rescinded after another employee admitted to liability, and plaintiff was investigated for his use of sick time, both of which plaintiff complained were retaliatory actions. Notwithstanding, the Second Circuit affirmed the directed verdict as a matter of law, holding that the employer did not recklessly disregard the employee’s Title VII rights and took affirmative steps to correct incidents that he complained about during the year before his resignation. In addition, the Court held that an employer opening up an investigation, one that does not cause the employee any expense or harm to his employment status, does not subject itself to retaliation liability. It cites in particular the circumstances of this case, that (1) fact-finding investigations “were not disciplinary in nature,” (2) there was good reason for the company to initiate the fact-finding investigations, and “thus no reasonable employee would have found them to be materially adverse or stigmatizing,” and (3) “while the fact-finding investigations certainly could lead to disciplinary action, they did not here.” 4TH CIRCUIT. A. Title VII’s Religious Exemption Expanded. Kennedy v. St. Joseph’s Ministries, 2011 U.S. App. LEXIS 18936 (4th Cir. Sept. 14, 2011). In this case, St. Joseph’s Ministries, a tax-exempt organization operating under the principles and beliefs of the Roman Catholic Church, manages a nursing care facility. It employed the plaintiff as a geriatric nursing assistant from 1994 to 2007. Because St. Joseph’s operates Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 17. the facility inaccordance with Catholic principles, it engaged in numerous religious exercises and practices, such as conducting daily facility-wide prayers and maintaining the employee handbook, which confirmed St. Joseph’s Catholic identity. However, the plaintiff was not Catholic, but a member of the Church of the Brethren. The Brethren practice at issue in Kennedy is the requirement for women to wear modest, long dresses or skirts and to wear a prayer covering, such as a veil, over their hair. At some point during the plaintiff’s employment, the Assistant Director of Nursing Services allegedly told the plaintiff that her long dresses, skirts, and head covering were inappropriate for a Catholic facility and were making patients and their families uncomfortable. The plaintiff also alleged that the Assistant Director continually told her she needed to adhere to a more traditional mode of dress. The plaintiff then communicated to the Assistant Director that her religious beliefs mandated that she continue wearing such attire. As a result, St. Joseph’s terminated the plaintiff’s employment on May 17, 2007, and the plaintiff then filed suit under Title VII, alleging religious harassment, retaliatory discharge, and discriminatory discharge on the basis of her religion. Title VII contains an exemption for religious employers: “[Title VII] shall not apply to . . . a religious corporation, association, educational institution, or society with respect to the employment of individuals of a particular religion.” Courts have interpreted this language to only mean hiring and firing decisions. However, according to the 4th Circuit, “employment” also includes conduct occurring during the employment relationship. Thus, the Court held that “employment” was synonymous not only with employment decisions like hiring and firing, but also must incorporate the entire relationship between an employer and employee. On this basis, the court denied all of the plaintiff’s claims. The Fourth Circuit’s decision raises the possibility that other circuits will adopt this holding if they are faced with a similar issue. It is also possible that this case will discourage plaintiffs’ attorneys from bringing these types of claims in other circuits because Kennedy is the first case of this kind and a notable flag for defense counsel to raise and wave on summary judgment. However, Kennedy is not a license for a religious employer to harass or retaliate on the basis of religion. Although the plaintiff in this case brought only Title VII claims, there are several tort claims (such as intentional or negligent infliction of emotional distress) that could be part of a lawsuit based on alleged harassment or retaliation. Therefore, it is still important to maintain a policy and train your employees on anti- harassment and anti- retaliation issues, including religion-based harassment and retaliation. Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 18. B. Plaintiff Need Not Identify Harassment As “Sexual” To Sustain A Retaliation Claim. Okoli v. City of Baltimore, No. 08-2198 (4th Cir. Aug. 8, 2011). In this case, the plaintiff was an executive assistant to a department head named Stewart, the alleged harasser. Over the space of four months, “her boss forcibly kissed her, fondled her leg, propositioned her, asked sexually explicit questions, described sexual activities he wished to perform, and then, after she spurned the advances and filed a harassment complaint, fired her.” Four months into the alleged harassment, the plaintiff made her first complaint to the city. Although the harassment ceased, the city took no apparent efforts to correct or discipline the harasser. The plaintiff then filed a complaint with the Mayor’s office. As soon as Stewart learned about the complaint, he fired her. The Court found that plaintiff had engaged in a protected activity when she complained of harassment, even though she did not expressly state “sexual harassment.” According to the Court, “it was enough for plaintiff to twice complain of “harassment,” even if it might have been more ideal for her to detail the sexual incidents she later relayed.” Relying on D.C. and 11th Circuit opinions, the court stated that employees need not use “magic words” to bring attention to concerns of sexual harassment, and that plaintiff’s repeated reference to “harassment” and “degrading” behavior should have been sufficient for the city to infer the seriousness of her complaint. Okoli is another reminder that employers need to be vigilant and thorough. If an employee complains about harassment, an employer should immediately look into the matter. 5TH CIRCUIT. A. A Memorable Case: Hostile Work Environment Based on Age And Religion. Dediol v. Best Chevrolet Inc., No. 10-30767 (5th Cir. Sept. 12, 2011). In this case, Dediol, a Christian aged 65, alleged that a co-worker – a used car sales manager - routinely threatened and cursed at him in the workplace. For example, (1) the manager ripped off his shirt at work and told Dediol, “You don’t know who you are talking to. See these scars. I was shot and was in jail,” (2) when Dediol sought to take July 4 off to volunteer at a church- related event, Dediol alleges that the manager told him, “You old mother******, you are not going over there tomorrow” and “if you go over there, I’ll fire your f*****g ass,” and (3) when Dediol arrived at work early on July 4, Clay put his shoes on Dediol’s desk and stated: “Do you see these shoes? Your God did not buy me these shoes. I bought these shoes.” Dediol Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 19. resigned, and fileda lawsuit claiming age discrimination and constructive discharge. The Court held, for the first time, that in the Fifth Circuit a plaintiff may bring a hostile-work-environment claim for age (under the ADEA), as well as religion (under Title VII). According to the Court, “a plaintiff advances such a claim by establishing that (1) he was over the age of 40; (2) the employee was subjected to harassment, either through words or actions, based on age; (3) the nature of the harassment was such that it created an objectively intimidating, hostile, or offensive work environment; and (4) there exists some basis for liability on the part of the employer.” The holding is significant because, in contrast to Title VII - which recognizes and compensates emotional distress as an element of damages - the federal ADEA has no provision for such relief, and thus an ADEA harassment claim without a constructive discharge claim (which can be compensated with back pay) would be practically valueless. 6TH CIRCUIT. A. An Employee On Legal Prescription Medication May Be Fired For Safety Reasons As Long As The Employee Is Not “Disabled.” In a unanimous decision, the Sixth Circuit held that section 12112(b)(6) of the Americans with Disabilities Act (ADA), which prohibits employers’ use of tests that tend to screen out disabled individuals does not protect employees who are not disabled. In Bates v. Dura Automotive Systems, Inc., decided November 3, 2010, the Court held that, although non-disabled individuals may bring claims under some provisions of the Act, the plain text of subsection (b)(6) concerning “impermissible medical examinations” only covers individuals with disabilities. In this case, plaintiffs were seven former employees of a Tennessee company called Dura Automotive, which manufactures glass windows for motor vehicles. The employees performed a wide range of jobs at Dura: driving tow motors, assembling windows, painting primer on frames, and trimming and performing water testing. The company became concerned over what it viewed as a higher than normal rate of accidents, and banned the use of several legal drugs that it believed had a negative impact on safety, company property or job performance. Working with an independent lab, the company screened employees for twelve substances, including those found in many legal prescription drugs such as Xanax, Lotab, and Oxycodone. The plaintiffs all tested positive for these types of drugs but had legitimate prescriptions. The Company gave each employee the opportunity to transition to other drugs but refused to consider notes from the employees’ Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 20. doctors indicating thatthe drugs would not impact their work performance. Eventually, the employees were terminated when they refused to stop taking the drugs they had been prescribed. The employees filed a lawsuit alleging that the company’s actions constituted an “impermissible medical examination” under the Americans with Disabilities Act (ADA). However, the Sixth Circuit held that Section 12112(b)(6) of the Americans with Disabilities Act (ADA), which prohibits employers’ use of tests that tend to screen out disabled individuals, does not protect employees who are not disabled. The decision in Bates is significant because attorneys for employees would now seem more likely to take the approach that the employee’s need for legal medications makes the employee “disabled.” It then becomes an issue of fact and the employer is free to present expert testimony at trial to show that the employee’s need for medication does not make him or her “disabled.” This is much less desirable, and more costly, for employers to litigate. 8TH CIRCUIT. A. Employee Cannot Claim Discriminatory Failure To Promote Unless The Employee Applies For The Position. Culpepper v. Vilsack, No. 10-2627 (8th Cir. Dec. 28, 2011). In this case, plaintiff, who had a disability, claimed that the district court erred in denying her failure to promote claim. Plaintiff admitted that she did not formally apply for the job, but argued that this formal step ought to be excused under the doctrine of “futility,” given what the plaintiff claimed was a continuing pattern of discrimination - and because of the allegedly discriminatory inclusion of explanatory language in the job announcement referring to “successful activity/experience in listening.” Rather than take on the question of whether the job announcement suggested a discriminatory animus against plaintiff because of her hearing disability, the Court found that the employee more likely had a different reason for not applying for the promotion: “the district court found credible the testimony of plaintiff’s co-worker that plaintiff told her that she did not apply for the loan specialist position because of the recent death of her father. . . . We see no clear error in the district court’s finding of fact that the death of plaintiff’s father caused her failure to apply for the loan specialist position, and we affirm the district court’s determination that Culpepper’s failure to apply for the position was not excused for futility.” On a separate claim, the Court held that the employer’s failure to reclassify plaintiff at a higher pay grade was not discrimination, even the promotion process could be initiated by either an employee or a supervisor requesting a Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 21. desk audit (and,plaintiff’s supervisors had requested desk audits for other similarly situated, non-disabled co-workers), because “an employee who does not formally apply must make every reasonable attempt to convey his or her interest in the job to the employer before he or she may prevail on a discrimination claim.” Plaintiff also admitted that, in addition to not requesting a desk audit herself, she did not ask her supervisors to request a desk audit on her behalf. She also admits that she never complained to the company that she was performing duties above her grade level and that she should be reclassified. This case is an important reminder for employees who believe they are not getting ahead in their jobs because of sex, race, disability, age or other factors: unless an employee actually applies for - or at the very least, expresses interest in - a promotion, the employee may not have a claim for discrimination. Such an application (or expression of interest) is an important step to preserving an employee’s rights, even if the employee thinks the outcome is preordained B. Employer Must Have Evidence Of Poor Performance Before Employee Engages In Protected Conduct. Pye v. Nu Aire, Inc., No. 10-2243 (8th Cir. June 17, 2011). In this case, a newly-hired black employee filed a complaint claiming that he overheard the company’s payroll administrator mutter the words “n*****r goon” under her breath, in response to his request for help on a form. The complaint was investigated by the Director of Human Resources, but the employee reported that his interview with the Director was adversarial. For example, the employee claimed that the Director began by telling him that she did not believe his allegation that the payroll administrator had referred to him as a “n[******]r goon,” and stated that she had known the administrator for many years and that he was not a racist. In addition, the Director suggested that the employee’s claim was for money, a promotion, and a company-car, to which the employee responded that he “wanted the matter handled in the usual manner.” Following the meeting, the Director reported to a Vice President, who made the decision to terminate the employee. When the employee asked why he was terminated, the Director told him that “he was terminated for attempting to obtain a promotion and/or money and a company car through coercion or intimidation.” However, in the course of litigation, the employer insisted that the decision was based on poor performance. The Eighth Circuit held that there was no evidence that the company had any concerns regarding the employee’s performance before he engaged in protected conduct. The Vice President who made the decision to terminate Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 22. the employee admittedthat he had no information regarding the employee’s work performance when he made the decision. Further, viewed in the light most favorable to the employee, the evidence showed that his termination was a direct result of his complaint of discrimination and his suggestions of remedies, prompted by the Director’s leading questions. This case is a reminder that employees assigned to conduct an investigation must remain impartial, and not presume any facts. 9TH CIRCUIT. A. Employers’ Remedies for Data Misappropriation Limited. U.S. v. Nosal, Case No. 10-10038, (9th Cir. April 10, 2012). The federal government prosecuted David Nosal for violations of the Computer Fraud and Abuse Act (CFAA), a federal statute that permits private parties to bring a civil cause of action for theft or misappropriation of electronic information and to recover compensatory damages and obtain injunctive or equitable relief. Specifically, the CFAA permits a private right of action against a person who accessed a protected computer “without authorization” or who “exceeds authorized access” to a computer knowingly and with the intent to defraud. The CFAA differs from trade secret misappropriation statutes in that employers do not need to prove that the stolen information is a “trade secret.” The District Court dismissed the CFAA charges against Nosal, holding that employees do not violate the CFAA unless they lack the authority to enter or use the portion of the computer network at issue. Here, Nosal left his employer and then encouraged his former coworkers to download source lists, names and contact information from his old work computer for the purpose of allowing Nosal to establish a competing business. The former coworkers were authorized to access the source lists on the database, though the employer had a policy preventing disclosure of confidential information to third parties. The Ninth Circuit agreed, determining that the statute should be read restrictively and that all ambiguities in the act should be resolved in Nosal’s favor. In particular, the Court concluded that without any allegations that Nosal’s co-conspirators lacked the employer’s authority to access the information on his employer’s computer, he could not be liable. The Court articulated that a broad reading of the CFAA would enable employers to make any access on a computer that is not specifically authorized and work related an actionable crime. Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 23. 10TH CIRCUIT. A. A Migraine Is Not Necessarily A “Disability” Under The ADA. Allen v. Southcrest Hospital, No. 11-5016 (10th Cir. Dec. 21, 2011). The Tenth Circuit indicated that courts do not regard the 2008 amendments to the Americans with Disabilities Act (“ADA”) as a basis to declare every ailment or condition to be a “disability” under federal law. In this case, the plaintiff, a medical worker in a private practice, claimed that on days when she suffered migraines - even if she went to work - she “crashed and burned” when she got home, taking medication and falling asleep almost immediately. The plaintiff relied on this “crash and burn” argument, claiming that her migraines limited her ability to care for herself in the evening, as she was “compelled” to go to sleep, due to her migraine medication. However, the Court did not accept the “crash and burn” argument, holding that an allegation of “sleep disturbance” was not sufficient, in and of itself, to prove a disability. In addition, the Court addressed whether the migraines had substantially limited the plaintiff’s ability to “work.” However, plaintiff’s admission that she only suffered from migraines when she was working for one particular doctor in the practice was fatal to her claim. The Court stated that to be disabled in the major life activity of “working,” “an employee must be significantly restricted in the ability to perform either a class of jobs or a broad range of jobs in various classes.” While this language was eliminated in the EEOC’s May 2011 regulations, there was no indication that the new regulations were to have retroactive effect, and, therefore, the Court applied the earlier version of the regulations. This decision is a reminder that there is no such thing as an “automatic disability,” and an employer should never assume that an employee who has an impairment that is listed as a potential “disability” in the 2008 amendments to the ADA is indeed “disabled” under the law. Even under the arguably looser definition of a disability created by the amendments, the question of whether someone is “disabled” is a fact-intensive inquiry, which depends on the effect the impairment has on the individual employee. In order to demand the protections of the ADA, the employee must prove that the impairment “substantially limits” them. B. Plaintiff First Must Exhaust Administrative Remedies To Pursue A Title VII Lawsuit. McDonald-Cuba v. Santa Fe Protective Services Inc., No. 10-2151 (10th Cir. May 09, 2011). The Tenth Circuit upheld the long standing rule that a Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 24. plaintiff must firstexhaust his or her administrative remedies before filing a Title VII lawsuit. In this case, plaintiff sued her employer until Title VII. The employer filed counterclaims against the plaintiff, which were later voluntarily dropped by the employer. Subsequently, the plaintiff amended her complaint alleging that the counterclaims were retaliatory, but failed to file a new or amended charge of discrimination with the EEOC prior to asserting the new claim. The 10th Circuit held that conduct occurring after an employee filed a Title VII complaint in federal court involving discrete retaliatory actions required the filing of a new EEOC charge. In addition, the Court determined that the fact that the retaliation plaintiff alleged was a part of the district court proceeding did not distinguish the case, so she must exhaust administrative remedies as to discrete acts of alleged retaliation that involve the filing of a counterclaim. This decision is reminder that courts will not make exceptions for plaintiffs that do not first exhaust their administrative remedies in connection with a Title VII claim. ELEVENTH CIRCUIT New Case Law A. Court Upholds Summary Judgment in Favor of Plaintiff On Transgender Plaintiff’s Sex Discrimination Claims. Glenn v. Brumby, 663 F.3d 1312 (11th Cir. 2011). The Eleventh Circuit’s decision to affirm summary judgment on transgender plaintiff Elizabeth Vandiver’s sex discrimination claims under the Constitution’s Equal Protection Clause paves the way for potential sex discrimination claims against private employers under Title VII. At its core, the decision holds that discrimination on the basis of a person’s failure to conform to gender stereotypes is sex discrimination. In 2005, the Georgia General Assembly’s Office of Legislative Counsel hired Glenn, who at the time presented himself as a man named Glenn Morrison. Approximately a year later, Glenn told her supervisor that she was a transsexual, and showed up to an office Halloween party dressed as a woman. In 2007, Glenn announced to her employer that she would be transitioning from a male to a female, and would come to the office dressed as a woman from then on. Following that announcement, Sewell Brumby, the head of the Office of Legislative Counsel, terminated Glenn’s employment. Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 25. Taking the positionthat the firing constituted government action, Glenn sued under the Equal Protection Clause of the Fourteenth Amendment, claiming that Brumby discriminated against her on the basis of her sex, including both her gender identity and her failure to conform to the male sex stereotype. After Glenn obtained summary judgment in the District Court for the Northern District of Georgia, Brumby appealed to the Eleventh Circuit, which affirmed, holding that Brumby violated the prohibition of sex-based discrimination in the Equal Protection Clause by terminating a transgender employee because of her gender nonconformity. Specifically, the Court held: A person is defined as transgender precisely because of the perception that his or her behavior transgresses gender stereotypes. “[T]he very acts that define transgender people as transgender are those that contradict stereotypes of gender- appropriate appearance and behavior.” There is thus a congruence between discriminating against transgender and transsexual individuals and discrimination on the basis of gender-based behavioral norms. Accordingly, discrimination against a transgender individual because of her gender- nonconformity is sex discrimination, whether it’s described as being on the basis of sex or gender. The Court found sufficient direct evidence of discrimination based on Brumby’s deposition testimony that he fired Glenn “because he considered it ‘inappropriate’ for her to appear at work dressed as a woman and that he found it ‘unsettling’ and ‘unnatural’ that Glenn would appear wearing women’s clothing.” Brumby further admitted that the “decision to fire Glenn was based on ‘the sheer fact of the transition.’” Significantly, the Court held that were this a Title VII case, the analysis would end there. However, under the Equal Protection Clause, the Court was required to examine whether Brumby could show an “exceedingly persuasive justification,” for the decision. The Court held Brumby could not, rejecting Brumby’s purported concern, based purely on speculation, that women in the office might object to Glenn’s use of the women’s restroom. Although the case was decided under the Equal Protection Clause, the reasoning of the Court’s decision, including its specific reference to the Title VII analysis, lays the groundwork for similar claims against private employers under Title VII. As a result, employers should examine anti- discrimination policies and practices with a view that taking adverse employment action against transgender workers raises the risk of liability for sex discrimination. Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 26. B. Private Employers May Deny Employment Applicant Because of a Prior Bankruptcy. Myers v. TooJay’s Mgmt. Corp., 640 F.3d 1278 (11th Cir. 2011). According to the Eleventh Circuit, the Bankruptcy Code does not make it unlawful for a private employer to deny employment to an individual on the grounds that the individual is or has been in bankruptcy. In this case, the employment applicant applied for a managerial position at a restaurant in Florida, and authorized a background check, including a review of his credit history. The applicant was not told that his employment was conditioned upon a clean credit history. Notwithstanding, the applicant successfully completed a 2-day, compensated on-the-job evaluation with the restaurant. Soon thereafter, he received a letter from the restaurant informing him he would not be hired because of “a financial matter.” The applicant contacted the HR department at the restaurant and was told that his bankruptcy filing was the only reason he was not hired, and that it was company policy not to hire people who had filed for bankruptcy. The applicant filed a lawsuit, claiming that the restaurant had discriminated against him in violation of 11 U.S.C. §525(b) of the Bankruptcy Code by refusing to hire him because of his bankruptcy filing. The district court granted summary judgment to the restaurant on the grounds that Section 525(b) does not prohibit a private employer from refusing to hire someone because of a bankruptcy filing. The 11th Circuit affirmed, holding that discrimination protection under 11 U.S.C. §525 depends on whether the employer is a “governmental unit” (subject to Section 525(a)) or a “private employer” (subject to Section 525(b)). The earlier-enacted Section 525(a) provides that a governmental unit “may not … deny employment to, terminate the employment of, or discriminate” against a person based on that person’s bankruptcy filings. In contrast, the later-enacted Section 525(b) provides that a private employer may not “terminate the employment of, or discriminate” against a person based on that person’s bankruptcy filings; this section says nothing about denying employment because of bankruptcy. Accordingly, the Eleventh Circuit found that the applicant had no claim because the restaurant was a private employer. The Eleventh Circuit’s decision is important for 2 reasons: (1) While a private employer may lawfully adopt a rule that it will not hire applicants who have prior bankruptcy filings, a private employer should not apply that rule to an existing employee; the statute expressly bars termination from employment because of a bankruptcy filing; and (2) Any private employer should uniformly follow any rule that it adopts against hiring applicants with bankruptcy filing histories; failing to apply the Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 27. rule uniformly maylead to pretext claims (e.g., an applicant may cite non- uniform application in support of a claim that race or gender, not bankruptcy, was the reason for non-hire). C. FLSA: Attorneys Fees Avoided if Employer Tenders Overtime Pay. Dionne v. Floormasters Entrs., Inc., 667 F.3d 1199 (11th Cir. 2012). The sole issue in this case is whether an employer, who denies liability for nonpayment for overtime work, must pay attorney’s fees and costs pursuant to 29 U.S.C. § 216(b) of the Fair Labor Standards Act (“FLSA”) if the employer tenders the full amount of claimed overtime pay, moves to dismiss the claim as moot, and the employee concedes the claim should be dismissed as moot. The Eleventh Circuit held that “under such circumstances, the dismissal of the employee’s complaint, without an award of attorney’s fees, is not erroneous pursuant to § 216(b) because the District Court did not award judgment to the employee as the prevailing party.” On February 10, 2012, the Middle District of Florida followed the Dionne decision, and ruled in favor of the employer in Gilliam vs. WalMart Stores East, LP, Case No. 2:11-cv-454-FtM-29SPC (M.D.Fla. Feb. 10, 2012). In Gilliam, the employee sought a total of $583.50 plus liquidated damages for unpaid overtime compensation under the FLSA. The employer did not admit liability and tendered payment of $1,167.00, which included the liquidated damages amount claimed. Thereafter, the court granted the employer’s request to dismiss the Complaint with prejudice. The court reasoned that the employee was never awarded judgment as the “prevailing party” so as to trigger the attorney’s fees provision of the FLSA. For employers, the Dionne and Gilliam decisions are important because they indicate that employers should immediately engage in an assessment of an employee’s claim of unpaid overtime compensation and, if valid, tender payment. Under these circumstances, an employer may be able to avoid payment of attorneys fees, which ultimately could prove substantial depending on the size of the claim. D. Pre-Eligible Request for Leave Under the FMLA Protected. Pereda v. Brookdale Senior Living Communities, Inc., 666 F.3d 1269 (11th Cir. 2012). According to the Eleventh Circuit in Pereda, an employee’s Family Medical Leave Act (“FMLA”) request made before she is eligible is protected when the requested leave would take place after she becomes FMLA-eligible. Plaintiff alleged she informed her employer that she would be requesting FMLA leave after the birth of her child. However, at the time, she was not yet eligible under the FMLA because she had not been employed for at least Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 28. 12 months. Theplaintiff expected to give birth after the expiration of the requisite 12-month period. Nevertheless, the employee was fired during her eleventh month of employment. After being terminated, the employee filed a lawsuit alleging the employer interfered with her FMLA rights and retaliated against her for requesting FMLA leave. The Eleventh Circuit concluded that without protecting against pre-eligibility interference, a loophole would be created whereby an employer has total freedom to terminate an employee before he/she can ever become eligible. According to the Eleventh Circuit, such a situation is contrary to the basic purpose of the FMLA: to balance work and family life by allowing employees to take unpaid leave for certain periods of time for specific medical and family related reasons. To hold otherwise would have allowed employers to terminate employees who had a foreseeable medical condition and gave employers notice of such condition. In light of the Eleventh Circuit’s holding, when considering requests for FMLA leave, employers must consider not only whether the employee is eligible for leave at the time of the request, but whether the employee will be eligible at the time the leave period will commence. Employers should exercise caution when electing to terminate or take an adverse action against an employee that has made a request for FMLA leave or indicated their intention to make a future request for FMLA qualifying leave. E. Employee’s Failure To Utilize Harassment Policy Aids Employer Victory In Harassment Case. Leeth v. Tyson Foods, Inc., 449 Fed.Appx. 849 (11th Cir. 2011). The Eleventh Circuit affirmed summary judgment for Tyson Foods on an employee’s sexual harassment and retaliation claims based on the employee’s failure to take advantage of the employer’s anti-harassment policy, and because the employer presented legitimate, non-retaliatory, and non- pretextual reasons for taking alleged adverse employment actions against the employee. In 2005, Leeth sued Tyson Foods alleging that her shift superintendent had sexually harassed her over a period of 20 years, from the time she began employment in 1985 until the filing of her EEOC Charge in 2005. Her allegations included that the superintendent made repeated sexual advances, both in person and over the telephone, and tried to touch her inappropriately. However, on the only two occasions when Leeth allegedly complained about the harassment, her complaints were vague, and she specifically asked that the employer not pursue the matter. The Eleventh Circuit affirmed the District Court’s finding that the alleged harassment was not sufficiently severe or pervasive to alter the terms and Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 29. conditions of employmentand create a hostile work environment. “Certainly, Leeth was annoyed by Bailey’s actions, but there is no evidence of threats, quid pro quo offers, and overt sexual actions other than a few insinuating comments.” More significantly, the Court found that Leeth failed to take advantage of the employer’s anti-harassment policy, because she failed to provide specifics regarding the alleged harassing conduct, and specifically requested that the employer not investigate the matter. “We have held ... that if the plaintiff did not want the harassing behavior reported or acted upon, then the employer would not have been placed on proper notice of the harassment.”(quoting Nurse BE v. Columbia Palms West Hosp. Ltd. Partnership, 490 F.3d 1302, 1310 (11th cir. 2007)) As a result, the employer asserted a successful affirmative defense under Faragher v. City of Boca Raton, 524 U.S. 775 (1998) and Burlington Indus., Inc. v. Ellerth, 524 U.S. 742 (1998). Under Faragher/Ellerth, if the plaintiff has not suffered an adverse, tangible employment action as a result of the alleged harassment, the employer may establish an affirmative defense by demonstrating “(a) that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (b) that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.” Moreover, Tyson established legitimate nonretaliatory reasons for its subsequent decision to (1) temporarily transfer Leeth to a different job, because of staffing shortages and Leeth’s relevant experience as compared to other employees, and (2) suspending Leeth for refusing to perform the work requested, because although Leeth may have had legitimate medical reasons for refusing to do the work, suffering from tendinitis, as she claimed, “is not a protected activity under Title VII.” The Court specifically noted that “Leeth’s attempts to demonstrate pretext are little more than conclusory statements to the effect that the actions were retaliatory because they were obviously done in retaliation.” With no specific evidence of pretext, the Court found no basis for a fact finder to question Tyson’s legitimate, nondiscriminatory reasons for its actions. GEORGIA New Case Law A. Georgia District Court Strikes Portions of New Immigration Law as Preempted. Georgia Latino Alliance for Human Rights, et al. v. Deal, et al., No. 1:11- CV-1804-TWT (N.D. Ga. June 27, 2011). Determining parts of Georgia’s new immigration law (HB 87) were preempted by federal law, U.S. District Judge Thomas W. Thrash, Jr., issued a preliminary injunction against two sections of the state law. First, the court enjoined enforcement of Section 7, Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 30. which prohibits individualswho have previously committed a separate criminal offense from: (1) knowingly and intentionally transporting or moving an illegal alien to further the illegal’s stay in Georgia; (2) knowingly concealing harboring or shielding an illegal alien from detection in Georgia; and (3) inducing, enticing, or assisting an illegal alien to enter Georgia. Second, the court enjoined enforcement of Section 8, which authorizes local law enforcement officers to verify the immigration status of any suspect if the officer has probable cause to believe the suspect has committed a criminal violation. Both of these sections were to take effect on July 1, 2011. The State has appealed the ruling to the 11th Circuit, where it remains pending. The rest of the law’s provisions remain intact. Significantly, the ruling does not affect requirements that businesses in Georgia register with and begin using the federal E-Verify program and check the legal status of new hires. Businesses with 500 employees or more must begin using E-Verify on January 1, 2012. Businesses with 100 to 499 employees must begin on July 1, 2012, and those with 11 to 99 employees must begin on July 1, 2013. B. Court Finds Exotic Dancers are Employees, Not Independent Contractors. Clincy v. Galardi Ents, Inc., 1:09-CV-2082-RWS (N.D. Ga. September 17, 2011). The court granted plaintiffs’ motion for summary judgment and denied defendants’ cross motion, holding that plaintiffs- exotic dancers or strippers- were employees of the defendant club owners, not independent contractors. Accordingly, plaintiffs were entitled to minimum wages and overtime pursuant to the Fair Labor Standards Act. In reaching its determination, the court found significant that the defendants set the prices for tableside dances and how much of their gross receipts dancers were required to turn over in the form of “house fees” and disc jockey fees. The court also noted that the defendants set specific schedules for the dancers, created rules of conduct, disciplined, and had the dancers check-in and check-out procedures and otherwise controlled the method and manner in which plaintiffs worked. Finally, the court recognized that several other courts had concluded that exotic dancers were employees, not independent contractors. Thus, the court rejected defendants’ arguments that the dancers were contractors because they were required to sign independent contractor agreements, were paid directly by customers, because the club purportedly did not profit from the dancers, and because the dancers did not necessarily drive the club’s business. Although not a novel decision, Clincy is significant because the majority of strip clubs around the country continue to disregard court decisions that have held that most strippers, employed under circumstances similar to those in the case, are actually employees. Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 31. C. Georgia Court of Appeals Rejects Application of Trade Secrets Act to Investor Lists. Sutter Capital Management LLC v. Wells Capital Inc., No. A11A0649 (Ga. Ct. App. July 13, 2011). In a decision clarifying the ambit of Georgia’s trade secrets law, the Georgia Court of Appeals reversed the grant of summary judgment to Wells Capital Inc. and Wells Partners L.P. in their action against Sutter Capital Management LLC and Sutter Opportunity Fund 3 LLC, holding that the plaintiffs’ investor lists did not constitute trade secrets. The plaintiffs maintained that the defendants misappropriated a confidential list of the plaintiffs’ investors in contravention of the Georgia Trade Secrets Act. In finding that the investor lists did not constitute trade secrets, the court found that the plaintiffs failed to show that the lists “derived economic value, either actual or potential, from not being generally known to, and not being readily ascertainable by proper means, by other persons who could obtain economic value from their disclosure or use,” as required by the Act. Employment Law News A. Georgia’s Governor Signs Garnishment Reform Bill. On February 7, 2012, Governor Nathan Deal signed legislation immediately repealing a court-imposed mandate that companies use lawyers to handle garnishment responses filed in Georgia courts. Last year, the Georgia Supreme Court ruled that responding to a garnishment constitutes the practice of law, and thus requires a lawyer. The passage of this legislation, however, means that effective immediately, employers may resume the practice of relying on in-house human resources or payroll employees to handle garnishments. “Reducing the amount of unnecessary legal fees is just one step in making Georgia the No.1 place to do business,” Deal said in a statement. B. Georgia Lawmakers Pass Illegal Immigration Reform and Enforcement Act. Signed by Governor Deal in May 2011, the Georgia Illegal Immigration Reform and Enforcement Act (the “Act”) substantially resembles Arizona’s controversial Senate Bill 1070 and “creates new requirements for many Georgia businesses to ensure new hires are eligible to work in the United States and empowers police to investigate the immigration status of certain suspects.” Among the new regulations is a requirement for Georgia businesses with more than 10 employees to use the federal E-verify program, which helps companies confirm whether their new hires are eligible to work in the United Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 32. States. The Actgives companies found to have committed a “good-faith” violation of the E-Verify mandate 30 days to comply with the law. The Act also: Empowers local and state police to arrest illegal immigrants and transport them to state and federal jails; (see Georgia Latino Alliance for Human Rights, et al. v. Deal, et al.) Punishes people who use fake identification to get a job in Georgia with up to 15 years in prison and up to $250,000 in fines; Penalizes people who – while committing another crime – knowingly transport or harbor illegal immigrants or encourage them to come to Georgia. First-time offenders would face imprisonment for up to 12 months and up to $1,000 in fines; (see Georgia Latino Alliance for Human Rights, et al. v. Deal, et al.) Establishes a seven-member Immigration Enforcement Review Board to investigate complaints about local and state government officials not enforcing state immigration-related laws; Directs the state Agriculture Department to study the possibility of creating Georgia’s own guest worker program. Some Georgia employers have complained the federal government’s guest worker program is too burdensome and expensive. Note that, although the law became effective in Georgia on July 1, 2011, two particular provisions have been enjoined by a federal district court, subject to the review of the Eleventh Circuit Court of Appeals. (See “Georgia District Court Strikes Portions of New Immigration Law as Preempted” above.) Georgia Restrictive Covenant Law News A. The Georgia Restrictive Covenants Act Signed Into Law. On May 11, 2011, Governor Nathan Deal signed into law the Georgia Restrictive Covenant Act (the “Act”), which immediately took effect and is codified at O.C.G.A. §13-8-50 et. seq. The Act dramatically changes the enforceability of restrictive covenants in employment agreements and corporate contracts entered into on or after the Act’s May 11, 2011 effective date. The Act changes current case law in five key areas by: (1) expressly permitting restrictive covenants, including noncompete covenants; (2) relaxing certain standards under existing case law for drafting enforceable Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 33. covenants; (3) grantingGeorgia courts the power to “blue pencil” (i.e. judicially modify) restrictive covenants; (4) defining common terms which expands the permissible scope of certain covenants under existing case law; and (5) establishing presumptively reasonable time limits for restrictive covenants. The Act is not a replacement for existing case law, which will still govern covenants entered into prior to the effective date of the new Act. Furthermore, the Act does not necessarily apply to all employees. The Act specifically limits its application to covenants executed by certain employees, including: • Directors, officers, managers, supervisors or key employees. • Research and development personnel or others (including independent contractors) in possession of confidential information that is important to the business of the employer. • Those in possession of selective or specialized skills, learning or abilities; or customer contacts, customer information or confidential information who has obtained such skills, learning, abilities, contacts or information by reason of having worked for the employer. • Franchisees, distributors, lessees, licensees or parties to a partnership agreement; or sales agents, brokers or representatives in connection with franchise, distributorship, lease, license or partnership agreements. The Act not only applies to employment agreements, but will also affect other corporate contracts and agreements between or among: • Distributors and manufacturers; • Lessors and leesees; • Partnerships and partners; • Franchisors and franchisees; • Sellers and purchasers of a business or commercial enterprise; and • Two or more employers. Employers with employees in Georgia should consider whether to implement new contracts with employees designed to comply with and extract maximum benefit from the act. Employers should evaluate which of their employees are subject to broader restrictions under the new act. New contracts should include covenants that (1) restrict a broader scope of activity, including a possible non-compete restriction from appropriate employees, (2) are Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 34. susceptible to judicialmodification, if necessary, (3) rely on updated definitions, and (4) remain applicable for the maximum statutory time periods post-termination. CALIFORNIA New Case Law A. California Supreme Court Ruling Expands Overtime Pay to Residents of Other States. Sullivan v. Oracle Corp., 541 Cal. 4th 1191 (2011). A group of Oracle employees who resided in Colorado and Arizona but worked in California argued that they should be entitled to overtime pay according to California’s overtime pay laws. In particular, the employees, who traveled around the U.S. to train Oracle customers on software applications, claimed that they were misclassified as exempt employees under federal law and were, therefore, entitled to overtime pay under all applicable laws. Oracle argued that the laws of the employee’ home states should follow them wherever they worked and that allowing California’s laws to apply to visiting employees would present undue burdens on California employers. However, the court concluded that non-exempt employees who are residents of Colorado and Arizona, who work for a California-based company, and who spend whole days or whole weeks working in California are eligible for California’s overtime pay while working in California. Although the ruling technically applies only to residents of Colorado and Arizona, it could have broader implications for employers across the U.S. and, in particular, California-based technology companies like Oracle. Non- exempt employees from states beyond Colorado and Arizona could attempt to recover overtime wages under California law if they spent time working in California - particularly if California overtime law is more favorable than the law of their home state. B. California Court Determines that Employee Discharged for Absenteeism Caused by Disability Was Unfairly Discriminated Against. Gonzalez v. ATI Sys. Internat’l, No. B223 779, 2011 WL 1902582 (Cal. Ct. App. 2d Dist., May 20, 2011). Roland Gonzalez, a corporate tax department employee of ATI Systems, was diagnosed with an aeortic aneurism in 2008. He had exhausted his 12 weeks of leave as provided under ATI’s policy and guaranteed under the California Family Rights Act and the Family and Medical Leave act when he requested six (6) months of additional leave for treatment related to his medical condition. Although his supervisor approved the leave, in June 2008, ATI notified Gonzalez that all of his leave had Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 35. expired and terminatedhim when he failed to return to work. Nonetheless, ATI invited him to reapply when “circumstances” allowed. Gonzalez sued ATI claiming disability discrimination and failure to accommodate under the Fair Employment Housing Act and Ca. Gov’t Code § 12640. ATI claimed that it would have been a hardship to leave Gonzalez’s full-time, specialized position open indefinitely and that there was no one else in the department who could perform his work in the interim. While the trial court granted ATI’s motion for summary judgment, the appeals court reversed, finding that “where an employer discharges an employee for conduct that is caused by the employee’s disability, such as absenteeism, the employer has terminated the employee because of his or her disability.” Additionally, the appeals court found a triable issue of fact as to whether the additional six months of leave would have been a reasonable accommodation or whether it would have presented an undue hardship for ATI. The court agreed with Gonzalez’s argument that ATI had not considered the financial cost of granting additional unpaid leave and that the financial cost was not a factor in his termination. C. California Courts Finds that “Me Too” Evidence is Admissible in Hostile Work Environment Claim. Pantoja v. Anton et al., No. F058414, (Cal. Ct. App., 5d Dist., Aug. 2011). A California appeals court reversed the trial court’s ruling that evidence that the alleged harasser had previously harassed and/or discriminated against other female employees was inadmissible. While the trial court concluded that this evidence did not concern facts that took place while the Plaintiff was working with the harasser and did not impact her working environment, the appeals court found the evidence to be relevant for two reasons. First, the plaintiff could have used the evidence to show the alleged harasser’s intent when he yelled at or touched his employees. Additionally, the evidence could be used to refute the defense’s argument that the law office of the alleged harasser ran maintained a strict anti-harassment policy. D. Court Decides Employers Must Relieve Employees of All Duty During Meal Periods But Need Not Ensure They Perform No Work. Brinker Restaurant Corp. v. Superior Court, S166350 (Cal. Sup. Ct. April 12, 2012). The putative class action, brought on behalf of 6,000 cooks, stewards, bus persons, wait staff, and other hourly restaurant employees, alleged that the Brinker Restaurant Corporation failed to provide rest and meal periods in accordance with California legal requirements and required its employees to work off-the-clock during meal periods. The Supreme Court faced two specific issues on appeal. First, does an employer have an obligation to ensure that a meal period is taken and thus Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 36. violates the lawif the employee does not in fact take a 30-minute duty-free break? The Supreme Court concluded that the employer does not have this obligation and, instead, satisfies its meal period obligations by relieving the employee of all duty for the period and relinquishing all control over the employee’s activities. Second, the court addressed whether meal periods must be scheduled so that an employee is not working more than five hours before or after the meal period. The court also answered this question in the negative, concluding that there is no limit on the number of hours that can be worked after the meal period. Instead, employees must be provided a first meal period at some time before the end of the fifth hour of work. Also, employees who work 10 or more hours must be provided a second meal period at some point before the 10th hour of work. Employment Law News A. California Restricts Use of Credit Reports for Employment Purposes. Effective January 1, 2012, California joined Hawaii, Washington, Oregon, Illinois, Maryland and Connecticut, and the federal government in restricting the discretion of employers to use consumer credit reports for hiring and personnel decisions. California has amended the state Labor Code and the Consumer Credit Reporting Agencies Act (“CCRA”) to restrict the instances in which the use of such reports is permissible (e.g. only where the applicant/employee will work in a managerial position, for the State Department of Justice, in a law enforcement position, etc.) and also provides specific notice requirements. As with the Fair Credit Reporting Act, the California law requires: (1) advance notice from the individual to order the credit report; (2) notice to the individual of the intended use of the report; and (3) notice to the individual if the report’s contents negatively impact his or her employment opportunities through means such as an “adverse action letter.” The California law imposes the additional requirement, however, that the employer notify the individual in writing of the basis for permissibly using the consumer credit report (e.g. because the individual is applying for a managerial position, etc.). “Negligent” and “willful” violations of the CCRA could result in the employer being liable to the aggrieved individual for actual damages, attorney’s fees and costs, and punitive damages of up to $5,000.00 for willful violations. Because of the increasing number of states restricting the use of consumer credit reports and because of the spike in class action litigation under the federal law, employers should continue to monitor this area of the law and evaluate their compliance with both state and federal credit reporting requirements. Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 37. B. California Law Cracks Down on Worker Misclassification with New Law. Consistent with the increased litigation employers are facing in the federal arena, the states are also stepping up enforcement over the potential misclassification of employees as independent contractors. In September 2011, the California legislature passed a bill that bans willful misclassification of independent contractors and imposes civil penalties ranging from $5,000 to $15,000 per violation. The bill also makes it illegal to charge fees or make deductions from compensation paid to misclassified workers. Each deduction or fee charged could be counted as a separate penalty. Moreover, any employer found to have engaged in a “pattern or practice” of misclassifying employees will face increased penalties of $10,000 to $25,000 per violation. Governor Brown subsequently signed the bill into law, which became effective January 1, 2012. C. California Employers Paying Commissions Face New Requirements. California has passed a new commission contract law, which will take effect January 1, 2013. Under AB 1396, employers who pay commissions to their employees are required to enter into written commission contracts with employees. The contract must describe the method by which commissions are computed and paid. Employers must also provide a copy of the signed contract to each employee, and get a signed receipt from each employee. In addition, when a contract governing commissions expires without being replaced but the employee continues work, the terms of the “expired” contract will apply to commissions until the parties sign a new agreement or until the employment is terminated. As a result, it will be important for employers to get new commission contracts in place before or when the old ones expire. COLORADO New Case Law A. Colorado Joins Majority of Courts Finding Promise of Continued Employment Suffices as Consideration to Support Non-Compete. Lucht’s Concrete Pumping v. Horner, No. 09SC627 (Co. Sup. Ct. May 31, 2011). Reversing a judgment in favor of a suing employee, the Colorado Supreme Court has found that the promise of continued employment is sufficient consideration to support a non-compete agreement entered into by an at-will employee. Specifically, the court recognized that “[b]ecause an employer may terminate an at-will employee at any time during the employment relationship as a matter of right, its forbearance constitutes an Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 38. adequate consideration tosupport a non-competition agreement with an existing at-will employee.” B. Colorado Court of Appeals Issues Ruling Favoring Employer Regarding Medical Marijuana Use. Beinor v. Industrial Claim Appeals Office, No. 10CA1685, (Co. Ct. App. Aug. 18, 2011). The Colorado Court of Appeals recently issued an important decision that could clarify how permissible medical marijuana use impacts employment law. Colorado first passed amendments to the state Constitution in 2000, which protect medical marijuana users from criminal prosecution. In 2009, U.S. Attorney General Eric Holder also announced that the Drug Enforcement Agency (DEA) would end raids on state-approved marijuana dispensaries. Since then, the number of dispensaries and individuals seeking medical marijuana in Colorado has increased dramatically. Simultaneously, Colorado employers have been left without guidance on how to handle employees’ use of medical marijuana. Benoir was terminated from his position after a random drug test revealed the presence of marijuana in his system. Benoir claimed that he used the marijuana to mitigate his headaches as a result of a recommendation from his doctor. When Benoir applied for unemployment benefits, the hearing officer denied his claim. The Industrial Claim Appeals Office affirmed, finding that Benoir was disqualified from receiving benefits because he had been found to have “not medically prescribed controlled substances” present in his system during working hours. The Colorado Court of Appeals affirmed the ICAO’s denial of benefits, despite Benoir’s claim that his conduct was protected by the Colorado Constitution. The court found that although the Colorado Constitution may preclude a claimant from being criminally prosecuted for using marijuana for medical purposes, “it does not preclude him from being denied unemployment benefits based on a separation from employment for testing positive for marijuana in violation of an employer’s express zero-tolerance drug policy. ”Although Beinor deals with the denial of unemployment compensation benefits, it is the first case reviewed by an appellate court in Colorado regarding medical marijuana in the employment context, and it provides a favorable result for employers. Employment Law News A. Colorado Minimum Wage Increases to $7.64 an Hour. Effective January 1, 2012, Colorado's minimum wage increased from $7.36 per hour to $7.64 per hour (for tipped employees, from $4.34 to $4.62). This Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 39. increase brings Colorado’sminimum wage to $0.39 greater than the federal minimum wage of $7.25 per hour. The new minimum wage requirement is set forth in Colorado Minimum Wage Order 28 now in effect. The increase represents the 3.8% increase to the Denver-Boulder-Greeley Consumer Price Index (CPI) from 2010 to 2011. Colorado is one of eight states with a minimum wage tied to inflation. The other states include Arizona, Florida, Montana, Ohio, Oregon, Vermont, and Washington. DISTRICT OF COLUMBIA Employment Law News A. D.C. Mayor Signs Law Prohibiting Discrimination on Unemployment Status. On March 19, 2012, the Mayor of the District of Columbia signed the Unemployment Anti-Discrimination Act of 2012 (the “Act”), which prohibits employers from discriminating against job applicants based on their unemployed status. The law is significant because it represents the nation’s first law to ban even consideration of an applicant’s unemployment status in adverse hiring decisions. The only other similar in effect is in New Jersey, but that law only applies to job advertisements. Oregon’s legislature passed a bill similar to New Jersey’s law, but that bill has not yet been signed by Oregon’s governor. FLORIDA New Case Law A. Florida Courts Split Over State Pregnancy Discrimination Relief. Constable v. Agilsys, Inc. No. 8;10-cv-01178-EAK-TGW, 2011 WL 2446605 (M.D. Fla. June 15, 2011); Du Chateau v. Camp Dresser & McKee, Inc. F.Supp. 2d, 2011 WL 4599838 (S.D. Fla. Oct 4, 2011). Florida District Courts recently addressed whether the Florida Civil Rights Act (Fla. Stat., §§ 760.01-760.11) (“FCRA”) supports a claim for pregnancy discrimination. While Title VII of the Civil Rights Act of 1964, as amended 42 U.S.C. § 2000e-2, was amended in 1978 to prevent discrimination on the basis of pregnancy, the FCRA, which has generally been construed in line with Title VII, has never been similarly amended. Thus, it has never been clear whether pregnancy discrimination claims are recognizable under the FCRA. Two conflicting rulings were handed down from Florida’s state courts in 1991 and 2008, respectively. See O’Loughlin v. Pinchback, 579 So. 2d 788 (Fla. 1st DCA 1991); Carsillo v. City of Lake Worth, 995 So.2d 1118 (Fla. 4th DCA 2008). The two district court rulings have complicated the state of the law Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 40. further, with thefirst court in Constable finding that the FCRA does provide for a pregnancy discrimination right of action, while the second court in Du Chateau court concluded just the opposite. For employers, the issue is significant because if an employee can file a pregnancy discrimination claim under the FCRA, the damages limitations applicable to Title VII would not apply, thus making the scope of employer liability greater. Employment Law News A. Florida Law Amended to Impose Greater Requirements on Florida Workers Seeking Unemployment. Effective January 1, 2012, Florida’s unemployment law (Chapter 443 of the Florida Statutes) will face several significant amendments. First, unemployment claimants must now document that they have contacted at least five potential employers per week as part of a bi-weekly certification process. Second, the length of time that a claimant may receive benefits has been reduced from 26 weeks to 12 to 23 weeks, based on the average rate of unemployment in the third calendar quarter of the previous year. Finally, for purposes of determining whether an employee has been terminated for “misconduct” and thus ineligible for unemployment benefits, employers must now merely show that that a terminated employee acted with “conscious disregard of an employer’s interest,” rather than “willful and wanton disregard.” Misconduct is also specifically defined to include tardiness and violations of an employer’s rules under certain circumstances. B. Florida Legislature Passes Bill Permitting Random Drug Testing For State Agency Employees. In March 2011, the Florida Senate passed legislation allowing state agency heads to randomly test employees for illegal drug use. House Bill 1205 has already been passed by the House and will be sent to Governor Rick Scott, who is expected to sign it. The legislation would permit up to 10 percent of a state agency department’s employees to be randomly tested for alcohol and other substances. Tests could be conducted every 90 days. Employees would be selected through the use of a third-party, computer-generated, random sample of departmental employees. Employees who test positive for alcohol or illegal drugs could be disciplined or discharged. Disciplined employees may be referred to an employee assistance program or a rehabilitation program paid for either by the employee or a health insurance plan. The agency would then determine whether such employees could safely and effectively perform their job duties Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 41. while in theprogram. If the employee could not safely or effectively perform his/her job while in treatment, the legislation would require the employee to either be transferred to another position or placed on leave. ILLINOIS New Case Law A. Clarification and Confusion in Enforcing Covenants Not to Compete. Reliable Fire Equip. Co. v. Arredondo, No. 111871, (Ill. Sup. Ct. Dec. 1, 2011). The Illinois Supreme Court reaffirmed that, contrary to a recent Illinois Court of Appeals decision, the long-established requirement that a covenant not to compete must serve a “legitimate business interest” still applies. However, the opinion also shifted away from the established recognition that only two discernable “business interests” would support a non-compete or other post-employment restriction: confidential information acquired through employment and long-standing, near-permanent customer relationships. Instead, the Supreme Court announced that a “totality of the circumstances” test would be used to evaluate the legitimacy of the business interest. No one single factor would be weighted as more than any other. Moreover, the three previous decades of Illinois case law outlining confidential information and near-permanent customer relationships would now only survive as “nonconclusive examples.” While Reliable Fire makes clear that a legitimate business interest is required to enforce a covenant not to compete in Illinois, the decision muddies what was previously understood to be a “legitimate business interest.” Employment Law News A. Fines for Illinois Equal Pay Act Violations Doubled. Illinois has doubled its maximum civil penalty for employers who violate the Illinois Equal Pay Act of 2003 (the “Act”). Like the federal Equal Pay Act, the Illinois law prohibits an employer from discriminating in pay to otherwise equal employees on the basis of gender. Effective January 1, 2012, any Illinois employer that violates an individual’s rights under the Act or discriminates against an individual who has exercised his or her rights under the Act will be subject to a maximum penalty of $5,000 for each violation and for each employee affected. These penalties are in addition to any damages for unpaid wages, interest, costs, and attorneys’ fees available to the employee under the Act. Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 42. MARYLAND Employment Law News A. Maryland Bans Employers From Workers' Social Media Accounts. Amid much controversy, employers across the country have increasingly undertaken the practice of asking employees and job applicants to provide their social media site passwords. On April 9, 2012, Maryland became the first state to pass legislation banning employers from demanding passwords to popular social media sits, including Facebook and Twitter. The law also prohibits employers from taking or threatening to take disciplinary action against employees or applicants who refuse to disclose this information. Citing concerns of employee privacy, legislatures in the states of Washington, New Jersey, and California have also introduced or plan to introduce similar legislation. On the federal level, United States Representatives from Colorado and North Carolina have stated that they are working on legislation that also addresses the issue. Employers should pay close attention to this developing area of the law, as many jurisdictions may follow Maryland’s lead in prohibiting similar practices regarding accessing employees’ social media accounts. MASSACHUSETTS New Case Law A. Massachusetts Extends Wage Statute to Protect Out-of-State Employees. Dow v. Casales, et al. (C.A. No. 10-1243-BLS1) (Sup. Ct. Bus. Lit. Session) (2011). The Business Litigation Session of the Massachusetts Superior Court recently held that out-of-state employees with “significant contacts” with Massachusetts, as related to their employment, may enforce the minimum wage statute. Examples of significant job-related contacts cited by the court include use of a Massachusetts business address, telephone, facsimile number, a large Massachusetts customer base, regular visits to Massachusetts, and frequent telephone contact with executives at Massachusetts business headquarters. The ruling, although made at only the trial court level, could have significant implications for employers’ pay practices. Employment Law News A. Massachusetts Legislature Passes Transgender Equal Rights Bill. Joining fifteen other states offering similar protections to transgendered individuals, Massachusetts passed a law effective July 15, 2012 which Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 43. precludes Massachusetts employersfrom making decisions based on a person’s “gender identity.” The law defines that phrase as: “a person’s gender-related identity, appearance, or behavior, whether or not that gender- related identity, appearance or behavior is different from that traditionally associated with the person’s physiology or sex at birth . . .” Evidence used to prove “gender identity” may include medical history, uniform assertion of the gender identity, or any other evidence that the gender-related identity “is sincerely held.” On the law’s effective date, Massachusetts’ Anti-Discrimination Statute will also be revised to include “gender identity” as a protected category, along with race, color, religious creed, national origin, sex, genetic information, and ancestry. Accordingly, before July 12th, Massachusetts employers should revise their employee handbooks, policies, and postings as necessary to include “gender identity” as a protected category. B. New Requirements for Using Criminal Background Information. On May 4, 2012, Massachusetts employers will face several new obligations affecting their ability to obtain and use criminal background information from applicants and current employees. The state’s 2010 criminal offender record information (“CORI”) law created a new method and database for employers to access criminal records, which allowed many employers access to the database for the first time. New requirements effective May 4th include: • Written CORI Policy – Employers who obtain CORI records must have a written policy explaining how they intend to use the records. • New State Criminal Record Database – Employers will have access to a state-run CORI database. Employers, however, still may obtain criminal background information from third-party vendors who obtain information through the CORI database or county checks. • New Requirements for Obtaining CORI Information – Whether an employer obtains CORI information directly or through a third-party consumer reporting agency, that employer will have to comply with certain new rules to obtain CORI information. The new rules include an obligation to provide applicants and employees with copies of their CORI information and specific recordkeeping and destruction requirements. • New Requirements for Tracking the Dissemination of CORI Information – Employers who obtain CORI information generally Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 44. will have totrack its dissemination and maintain that information for auditing purposes. • The “ban the box” provision of the new law went into effect on November 4, 2010. That provision prohibits questions on “initial written employment applications” seeking information about an applicant’s criminal record or criminal history. MINNESOTA New Case Law A. Minnesota Appeals Court Defines Those Liable for “Aiding and Abetting” Human Rights Act Violations. Matthews v. Eichorn Motors, Inc. (Minn. Ct. App. 2011). Recently, the Minnesota Court of Appeals limited the application of the “aiding and abetting” provisions of the Minnesota Human Rights Act. Minn. Stat. §363A.14. In that case, the plaintiff asserted a sexual harassment claim against her employer, the owner, Justin Eichorn, and his father, Mitch Eichorn. The plaintiff claimed that the general manager, who was not a party to the litigation, engaged in a pattern of sexual harassment, including sexually offensive comments and overtures. Finally, on a day that Mitch Eichorn was visiting the business, the plaintiff complained to him about the General Manager’s conduct. The plaintiff believed that Mitch Eichorn was still an owner at the time. Ten days after she complained, the plaintiff was terminated from employment, allegedly for failure to follow proper procedures. Subsequently, she sued the company, Mitch Eichorn, and Justin Eichorn, claiming that they were liable for aiding and abetting the General Manager’s sexual harassment. The owner and his father moved for summary judgment, which was granted by the lower court. The plaintiff appealed. The Court of Appeals reviewed the prior decisions regarding aiding and abetting, nothing that neither the statute itself nor prior court decisions interpreting it actually defined “aiding and abetting.” The court then affirmed the lower court, holding that to establish an aiding and abetting claim, a plaintiff must establish that the person (accused of aiding and abetting) knew that the conduct of the person (accused of harassment) constituted a violation of the Minnesota Human Rights Act and Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 45. gave substantial assistanceor encouragement to the harasser’s conduct. An individual who merely has knowledge of the alleged sexual harassment, but takes no action, should not be held to have aided or abetted the harasser. Employment Law News A. Mediation Requirements Imposed by Minnesota Department of Human Rights. In November 2011, the Minnesota Department of Human Rights (MDHR) announced that it is requiring mediation for every charge of discrimination filed with the Department. Previously, the MDHR only offered mediation for early resolution when both parties agreed. The MDHR's new policy requires the parties to mediate after the employer files its response to the charge, but before any investigation begins. The service will be free to the parties. While the rule could foster settlement in some cases, it is unlikely to have a broad impact. The Minnesota Human Rights Act, unlike federal discrimination laws, does not require a claimant to file a charge with the MDHR before filing suit. Therefore, many individuals who have strong discrimination claims in Minnesota never file with the MDHR, but instead retain counsel and proceed directly to court. As a result, the vast majority of charges that are filed with the MDHR ultimately are dismissed with a finding of "no probable cause." Because most Minnesota employers are aware of this procedure, the employers will have little incentive to settle, realizing that the charge is likely to be dismissed anyway - particularly once they have already spent the time and money to respond to a typical charge. NEW JERSEY New Case Law A. Employee Handbook Not a Binding Agreement Requiring Confidentiality. Metropolitan Foods, Inc. d/b/a Driscoll Foods v. Kelsch, Civil Action No.: 11-3306 (D. NJ Feb. 12, 2012). A New Jersey federal district court recently held that an employee handbook provision could not be enforced as a valid confidentiality agreement between a company and a former employee. Kelsch, a former employee of Driscoll Foods, was accused of soliciting orders for his new employer while still working for Driscoll. Driscoll sued Kelsch under a number of causes of action, including breach of contract. Driscoll based its claim on a provision in the Driscoll employee handbook stating that employees may “not disclose to unauthorized persons, including Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 46. subsequent employers, DriscollFoods’ confidential information.” The case is interesting, therefore, because it provides an example of an employer - and not the employee- seeking to sue on an employee handbook provision. Because the Driscoll handbook was full of disclaimers and statements that the handbook was “not a contract,” however, the court found that Driscoll did not have a viable breach of contract claim. While Driscoll had other valid causes of action to sue Kelsch, such as, breach of the duty of loyalty, the court held that the handbook provision concerning confidentiality could not be enforced as a valid contractual provision. The case highlights the need for employers to have employees with access to sensitive company information enter confidentiality agreements, separate from an employee handbook. Employment Law News A. New Jersey Adopts State Trade Secrets Act. New Jersey has joined the majority of United States jurisdictions by enacting its own version of the Uniform Trade Secrets Protection Act, effective January 9, 2012. The New Jersey Trade Secrets Act (“NJTSA”), provides additional protections to New Jersey employers who have experienced actual or threatened misappropriation of their trade secrets. The NJTSA defines a “trade secret” as a “formula, data compilation, procedure, or process” that: 1) derives “independent economic value from not being generally known and readily ascertainable” and 2) is the subject of the employer’s reasonable efforts to maintain secrecy. Under the Act, courts are authorized to enter injunctive relief, as well as award punitive damages, attorneys’ fees, and costs to a prevailing party in cases of “willful and malicious” misappropriation. B. “Current Employment” Prohibited as an Advertised Job Qualification. Joining several other states that have passed laws intending to prevent discrimination against unemployed individuals, as of June 2011, New Jersey law now prohibits in-state employers from publishing job advertisements that include “current employment” as a job qualification. While New Jersey employers are prohibited from excluding unemployed individuals applying for a job opening, they may advertise that a position is limited to those applicants who are currently employed by that same employer. Employers who publish ads “knowingly and purposefully” excluding the unemployed from consideration could face civil penalties of up to $10,000. Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 47. NEW YORK New Case Law A. Settlement of “Skimming” Lawsuit Against New York Chef Provides Warning Signal to Restaurant Owners. World-famous Celebrity chef Mario Batali settled a class action lawsuit filed by employees of his various New York City restaurants for a whopping $5.25 million. In addition to claiming violations of the minimum wage and overtime provisions of New York Labor Law and the FLSA, the employees alleged that Batali and his business partner Joseph Bastianich unlawfully confiscated up to five percent of the employees’ tips for their own profit. Both Batali and Bastianich were named in the employment dispute, initiated two years ago by a waitress and kitchen runner at New York City's Babbo restaurant. The staffers alleged they were forced to share tips with persons who were not legally entitled to the money. The settlement, reached last October, is reported to be the largest of its kind. It is currently pending approval by a Manhattan federal judge and will be distributed proportionally to nearly 1,100 employees based upon the number of hours worked. Employment Law News A. New York City Law Requires Greater Accommodations to Employees’ Religious Practices. Until recent revisions, the New York City Human Rights Law (NYCHRL) had no definition for “undue hardship” as that term relates to required religious accommodations, relying instead on Title VII’s relatively pro- employer definition (“more than a de minimis cost or burden” to the employer). Following the August 2011 effective date of the Workplace Religious Freedom Act (WRFA), which amended the NYCHRL, the definition of “undue hardship” has been shifted to the opposite end of the spectrum and is defined as “an accommodation requiring significant expense or difficulty.” The WRFA also imposes on the employer the burden of proving that an undue hardship exists. B. New York’s Wage Theft Prevention Act Requires New Notices to Employees. Employers with operations and employees in New York State should by now be aware that the first notice to all employees regarding their pay status, required by the N.Y. Wage Theft Prevention Act (WTPA), must be given by Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 48. January 31, 2012,and annually from now on. The information employers are required to include in the notice: • The rate or rates of pay and basis for those rates (hour, shift, day, week, commission, etc.); • the employee's regular hourly rate and overtime rate of pay (for non- exempt employees under New York Labor law); • allowances, if any, claimed as part of the minimum wage, including tip, meal, or lodging allowances; • the regular pay day designated by the employer in accordance with New York Labor law; and • certain contact information of the employer. This information must also be provided to newly-hired employees at the time they are hired. Moreover, the employer must have the employee sign the notice, acknowledging receipt and retain a copy of that signed notice for six years. SOUTH CAROLINA New Case Law A. South Carolina Supreme Court Brings Blow to Enforceability of Liquidated Damages Provisions. Foreign Academic & Cultural Exchange Svcs. v. Tripon, 394 S.C. 197, 715 S.E.2d 331 (2011). Non-compete agreements frequently incorporate liquidated damages clauses to deter breaches and facilitate establishing damages in the event of a breach. In South Carolina, a liquidated damages provision will be stricken as an unenforceable penalty if it is not proportionate to the probable damages resulting from a breach. In Foreign Academic, the court further challenged the enforceability of liquidated damages clauses by holding that liquidated damages of $36,000 were unenforceable where tied to the amount of money the company spent to train the employee. The court reasoned that the company’s investment in the employee was a “sunk cost” unrelated to the company’s damages. While the court did not specify how the company’s damages could have been predicted, the case does provide the warning that South Carolina employers should not base liquidated damages provisions solely on the investment in the employee. Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 49. Employment Law News A. South Carolina Illegal Immigration Reform Act Adds New Verification Requirements. On January 1, 2012, a new bill took effect which requires employers to use the new E-verify system to verify am employee’s work status soon after hire. Specifically, all private employers in South Carolina must (1) Participate in E-Verify. State drivers’ licenses and other documents are no longer valid for this purpose; (2) Verify an employee’s work authorization status within three days of hire, even if that employee was terminated within three days of employment; and (3) Maintain all business and other licenses required by South Carolina and any local governments. Violations of the new law may result in required quarterly reports to the South Carolina Department of Labor, Licensing, and Regulating (“LLR”), probation, and suspension or revocation of the employer’s South Carolina business license. TEXAS New Case Law A. Texas Non-Competes Get Teeth. Marsh USA, Inc. v. Cook, No. 09-0558 (Tex. June 24, 2011). Expanding the enforceability of non-compete agreements, in June 2011, the Texas Supreme Court found a non-compete contained in a stock option purchase plan was enforceable. This decision halted Texas courts seeming unwillingness to expand the enforceability of restrictive covenants to “ancillary agreements” aside from confidentiality agreements. Previously, Texas courts required that a valid non-compete in an ancillary agreement must “give rise” to the employer’s interest in preventing the employee from competing. In Marsh, however, the Texas Supreme Court concluded that the “otherwise enforceable agreement” - here, the stock option purchase plan - merely had to be “reasonably related” to the interest the employer seeks to protect. The ruling is a helpful one for Texas employers because it means they will have greater options when drafting non-compete provisions and will no longer be restricted to making them part of confidentiality agreements. Employment Law News A. Texas Employees Permitted to Bring Firearms onto Company Premises. In September 2011, a new Texas law became effective which prohibits employers from banning guns and ammunition in their employees’ locked Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 50. personal vehicles oncompany parking lots. The new law limits an employer’s liability for incidents involving a firearm or ammunition unless the employer is grossly negligent. However, the employer remains open to liability arising from negligent hiring theories and liability for any gun- related incidents occurring in the workplace. Now that employees are permitted to keep weapons in close reach in employers’ parking lots, employers also face new safety and security issues. B. Hospital’s Practice of Banning Obese Employees Could Be Legal. Last year, the Citizen’s Medical Center in Victoria, Texas instituted a policy requiring potential employees to have a body mass index (“BMI”) of less than 35%. This measure represents a person who is roughly 5’5” tall and weighs 210 pounds. In passing the policy, the hospital suggested that patients have certain “expectations” regarding the hospital employees’ appearance. While courts have not ruled on the issue, an attorney with the Equal Employment Opportunity Commission recently opined that the practice may not be entirely prohibited by the Americans with Disabilities Act. Under the ADA, only the “morbidly obese” are recognized as having a covered impairment. In other words, there could be employees or applicants who have a BMI higher than that permitted by the hospital but lower than necessary to constitute the “morbid obesity” covered by the ADA. If the EEOC attorney’s assessment is correct, the odd result would be that declining to hire a morbidly obese individual would be unlawful discrimination, while failing to hire a less overweight person would be permissible. Significantly, only the state of Michigan and a handful of cities have enacted laws explicitly prohibiting weight discrimination. WISCONSIN A. A Trap for the Unwary: Wisconsin Family and Medical Leave Laws. In many instances, the Wisconsin Family and Medical Leave Act (“WFMLA”) is more stringent than the federal Family and Medical Leave Act (“FMLA”). Unbeknownst to some employers, they are required to follow the WFMLA - not the federal FMLA – when the WFMLA provides rights to employees that are greater than those provided by the federal FMLA. Following is a summary of some of the more important differences between the two laws: 1. Employee Eligibility. Eligibility for leave is calculated differently under Wisconsin and federal law: Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 51. (1) To beeligible for leave under the FMLA, employees must meet a threshold of 1,250. Under Wisconsin law, the threshold is only 1,000 hours. (2) Under the FMLA, eligibility is determined by calculating the number of hours worked by employees during the previous 12 months. Under the WFMLA, however, eligibility is determined by the number of hours for which the employee received pay during the previous 52 weeks. Accordingly, an employee may be eligible for WFMLA leave if he or she worked less than 1,000 hours but used other paid time off from work. 2. Types of Leave Available. • Placement of foster children. An employee may take leave for the placement of a foster child under the FMLA, but not under the WFMLA. • Care for an in-law. An employee may take WFMLA leave to care for a parent-in-law, but he or she may not take FMLA leave for such a purpose. • Service member leave. Under the FMLA, but not the WFMLA, employees are entitled to 12 weeks of leave for a “qualifying exigency” related to a call to military duty and up to 26 weeks of leave during a single 12-month period for leave to care for an ill or injured service member. 3. Domestic Partners. Wisconsin employees are eligible for WFMLA leave to care for a domestic partner with a serious health condition. In addition, employees may take WFMLA leave to care for the parent of a domestic partner. The WFMLA, however, specifically excludes from coverage employee leave to care for the child of a domestic partner. To complicate matters, the FMLA does not provide covered leave to care for a domestic partner who is ill, but a 2010 Department of Labor Administrator’s Interpretation effectively ensures that nontraditional caretakers, such as same-sex partners, may take leave to care for their partner’s child under the in loco parentis provision of the federal regulations. Accordingly, if an employee provides financial support or provides day-to- day care for his or her domestic partner’s child, such employee is eligible for leave under the federal law (but not the WFMLA). 4. Amount of Leave Available. Under the FMLA, an employee is entitled to up to 12 workweeks of unpaid Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 52. leave during a12-month period for any covered reason. The WFMLA, however, apportions the amount of leave that an employee may take for a particular reason. Under the WFMLA, an employee is entitled to 10 workweeks of unpaid leave during the calendar year as follows: • six weeks for the birth or placement for adoption of a child. • two weeks to care for a seriously ill child, spouse, domestic partner or parent (includes parents-in-law). • two weeks for the employee’s own serious health condition. The different apportionment of leave will require administrators to track WFMLA and FMLA leave entitlement separately, and there may be occasions when leave cannot be concurrently designated as leave under both laws. 5. Intermittent Leave. With the exception of family “bonding” leave that is taken in association with the birth of a child, FMLA leave may be taken intermittently when the leave is deemed medically necessary by a health-care provider. Bonding leave may only be taken intermittently at the discretion of the employer. This means that employers retain the discretion to deny federal intermittent leave if the leave is not medically necessary. However, the WFMLA permits intermittent leave at all times, subject to the reasonable scheduling requirements of the employer. Accordingly, parents may take their six weeks of WFMLA leave on an intermittent basis. Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601
- 53. Jason D'Cruz Partner, Executive Compensationand Employment Morris, Manning & Martin, LLP 404.504.7601 [email protected] Jason D’Cruz Morris, Manning & Martin, LLP [email protected] (404) 504-7601