Jottings By An Employer's Lawyer

Tuesday, July 27, 2004

Setting Goals - Creating Risks of Unethical Behavior?


Goal setting is normally viewed as a positive thing and a common business motivator. Given our recent history, the academic research showing the "dark side" of goal setting may be worth thinking about. Check out the full paper, Goal Setting As A Motivator of Unethical Behavior, or if you prefer, the executive summary.

And why might it belong in an employment law blog? For just one example, note the number of claims of wage and hour violations where it is alleged employees are being made to work off the clock. Behind those allegations, one wonders how many goals or targets, supervisors might be struggling to meet?


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Sunday, July 25, 2004

Venture Capital Funds - Meet the WARN Act


Nothing is more important to a plaintiff than having a solvent defendant, and in the aftermath of the dotcom meltdown, that certainly meant looking beyond the employer, who often was nothing more than a fond memory and a pile of expensive, not overly used office furniture. But behind many of those burst bubbles were venture capital funds, which while perhaps less solvent than before, were at least still around. And more importantly, as pointed out in an article [pdf] from the Venture and Technology group at Nixon, Peabody, a target defendant for former employees left holding the bag. Two district courts considering potential WARN Act liability both used the 5 factor test contained in the WARN act regulations to determine whether or not a venture capital fund could be liable.  As set out in 20 C.F.R. § 639.3(a)(2):
Some of the factors to be considered in making this determination are (i) common ownership, (ii) common directors and/or officers, (iii) de facto exercise of control, (iv) unity of personnel policies emanating from a common source, and (v) the dependency of operations.
And in the two cases which gave the green light to at least proceed, the most important factor seemed to be de facto exercise of control. Something which many entrepreneurs would be quick to agree is often vested with the VC's, particularly when it comes to pulling the plug.




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Tuesday, July 20, 2004

Want A 'Get Out of Malpractice Free' Card? And Other Reasons To Love This Practice


Then be a lawyer hired by the union to represent a grievant in an arbitration proceeding, at least in the 3rd Circuit, and according to the opinion in Carino v. Stefan (3rd Cir. 7/19/04) [pdf] every other circuit which has decided the question. The specific holding, succinctly put:
This appeal presents a question of first impression for our Court, namely, whether an attorney hired by a union to perform services on behalf of a union member in connection with an arbitration hearing conducted pursuant to a collective bargaining agreement is immune from suit for malpractice by that member. We conclude that the LMRA bars such a suit.
The silver bullet is the expansive reading given §301(b) of the Labor Management Relations Act which restricts liability to a labor organization and not its individual members.

Here, the ruling while certainly good for counsellor Stefan, shortcut what almost certainly would have been an interesting factual discussion, or perhaps the basis for a Soprano's episode.  Among Ms. Gisela Carino's allegations were that 2 days before her arbitration, she received a call from her union provided lawyer asking to meet her at a hotel. At that meeting her counsel allegedly told her the venue had been changed to that hotel, that the company (Prudential) and the FBI were currently interviewing witnesses who would testify against her, they were prepared to take her to jail and that it would cost $100,000 to get out.
 
Asked by her counsel what she wanted out of the arbitration she replied she only "wanted her employment record cleared of Prudential's false charges; the FBI investigation closed; a promise that Prudential would not sue her for attorney's fees; and her pension reinstated." To which, her counsel supposedly replied, "No problem." After agreeing to withdraw her grievance in return for those terms, her hired defender then suggested that they repair to the bar to wait for the "arbitrating judge." After an hour of waiting (no details about the allegations of whether any alcohol was consumed) her counsellor told her they could leave and call it a mutual agreement. Then, according to her suit, "he presented her with various forms, including a two-page document entitled 'Grievance Release,' and asked her to sign them. He did not explain what the forms were or why she had to sign them. After she signed them, Stefan said he would meet with Prudential and obtain its agreement to what she wanted without any problem."

Amazingly [to no one who is with me so far], Ms. Carino later alleges she discovered that "the documents she had signed made no reference to Prudential's concessions in return for her withdrawal and release. She contacted Stefan and his firm to complain, but heard no reply. In fact, she never heard from them again."
 
How could you make this stuff up? You got to love it.  Although undoubtedly given the time and expense, Counsellor Stefan would have loved someone else to have been the target of these allegations, notwithstanding the cold water ultimately poured on them by the 3rd Circuit.


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Monday, July 19, 2004

And For Those Who Might Have Missed It (As I Did) Happy 2nd Birthday To Jottings


A little embarrassing when you overlook your own initial publishing date, but that is what I did last week end when I failed to note that on July 17, 2002, the first note appeared in Jottings By An Employer's Lawyer. Hopefully over the past two years, for those who have had occasion to check in, some regularly I am pleased to say, it has proved of some value.
 
 



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Don't Gamble On Complying With the Fair Credit Reporting Act


If you have thoughts about whether or not you really need to comply with ALL of the requirements of the Fair Credit Reporting Act, such as actually notifying applicants/employees before taking an adverse act based on the information you obtained, you might check out the Consent Decree  signed by the Imperial Palace casinos in Nevada and Mississippi, which came with a hefty $325,000 price tag.  
 
In addition to writing the initial check, there  is also an injunction against future violations, and some of the other things that employers hate having to do,  such as getting a signed acknowledgement from anyone currently (or who is hired in the next five years)  who handles consumer reports that they have received a copy of the Consent Decree and injunction. Talk about salt in the wound. And of course there is the publicity,  such as the article in the industry trade publication, Gaming News, not to mention the Federal Trade Commission's own press release.
 
Notice that the link is to the FTC website, which is the enforcing agency, and also note that based on the injunction it appears the casinos had done the first compliance step of obtaining the consent of applicants to obtain consumer reports.  Although this did actually involve "credit reports," remember that phrase no longer appears anywhere in the FCRA. Now the operative word is "consumer report", which as explained in this FTC letter extends the requirements which were (allegedly) violated here to a much broader range of information than an individual's credit history.


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Fear and Loathing In the Workplace, Not By Hunter S. Thompson


The gonzo journalist of Fear and Loathing fame has not written this one. Instead its yet another anti-bullying story from across the pond. This one from the Guardian, Fear and loathing in the workplace. Chalk this up as yet another in the ongoing bullying watch, where I hope to immunize the country before it spreads here as a cause of action. Actually, in fairness to this article, it gives hints on how to resolve issues without "resorting to the law." I am not for bullying in the workplace or elsewhere, but fear for what happens when the following [alleged] conduct could become the source of lawsuits:
He would take credit for her achievements and criticize her to colleagues when she left the room. He made unfounded attacks on her work and gave her lengthy projects that, at the last minute, he would suddenly decide were unnecessary.
If we ever go there ... well, "surely,"  he said hopefully, "we won't."

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Saturday, July 17, 2004

Retaliation? Make Sure There Is Protected Activity, 1st Circuit Did


Protected activity is not always a simple question as a plaintiff who was terminated for his refusal to sign invoices which reflected improper payments under the FLSA found out. Claudio-Gotay v. Becton Dickinson Caribe, Ltd. (1st Cir. 7/13/04). Since his job as Safety/Environment Process Engineer required him to supervise the contract with the provider of the guard service and the employer's policy required him to report any possible violation of mispayment to their employees, when he first reported the possible problem he was not acting adverse to his employer's interests, the sine qua non for retaliation, at least in the 1st Circuit. After making the report,
Claudio attended a meeting with Becton's management discussing the guards' overtime pay. At the meeting, Becton's lawyer concluded that the guards were not employees of Becton and therefore that Becton was not responsible for paying the guards' overtime. As a preventive measure, however, Becton's management decided to send a letter informing CM Express that it might be violating the FLSA. Claudio, who was present during this meeting, heard the recommendation of the lawyer, was informed that Becton was not responsible for paying the guards overtime, and knew that Becton was taking action nonetheless. Claudio was also specifically directed to approve the invoices.
When he refused he was terminated. His refusal was not protected either. Turning a nice phrase, the Court held it "occurred after the whistle had been blown and after corrective actions were being taken to remedy any FLSA violations." Finding at that stage it was neither complaining or providing information about substandard practices, it was also not protected.

But if retaliation is not always simple, the employer was also reminded that neither is summary judgment. Although prevailing on the FLSA retaliation claim, summary judgment on plaintiff's COBRA claim for failure to send timely notice was reversed.  As the court noted:
The issue in this case is not whether mailing a letter via certified first class mail constitutes adequate notice. Rather, the issue is whether there was evidence, sufficient to require summary judgment, that the letter was mailed. The district court held that there was evidence that the letter was mailed because Becton's custodian of records stated in a sworn declaration that the company complied with COBRA's notice requirements. The district court erred by relying on this alleged sworn declaration because, as Becton has conceded on appeal, no such sworn declaration exists.
Ouch.




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Going to the Company Picnic This Weekend?


Or perhaps more appropriately for likely readers of this blog, sponsoring one? You might want to check out the post, Company Outings -- Compensable fun? from Jon Coppelman at Lynch Ryan's, The Workers Comp Insider.

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Failure To Provide Accommodation Can Lead To Constructive Discharge


Constructive discharge seems to be getting a fair amount of attention from the courts these days. The Supreme Court dealt with it last month, holding in Suders, discussed here, that it would not automatically prevent the assertion of the Ellerth/Faragher affirmative defense in a sexual harassment case. This week, the 6th Circuit answers the question of whether the refusal to provide a requested accommodation under the Rehabilitation Act, could rise to the level of constructive discharge. The answer --  yes. Smith v. Henderson (6th Cir. 7/15/04) [pdf].

The district court granted summary judgment solely on plaintiff's failure to establish a prima facie case, since without constructive discharge there was no adverse employment action. Finding sufficient evidence to raise questions about whether: 1) plaintiff was a qualified individual with a disability, 2) she had asked for an accommodation, and 3) the requested accommodation was unreasonable, the Court took the next step in its holding: "Assuming that Smith was denied a reasonable accommodation that forced her to work well in excess of her medical restrictions, a jury reasonably could infer that the USPS (through Mullin) knew that Smith’s working conditions would become intolerable to a reasonable person suffering from her particular disability." Since such a finding could support constructive discharge, thus establishing a prima facie case, the summary judgment was improper.

Of interest, Judge Sutton who was strongly opposed for confirmation by disability advocacy groups, see the statement of People for the American Way, was a member of the panel.





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Monday, July 12, 2004

5th Circuit Rejects Arbitrary and Capricious as Review Standard Under the FAA


Although not an employment case Brabham v. A.G. Edwards & Sons, Inc. (5th Cir. 6/28/04) [pdf] deals with the important question of what standard of review is available under the FAA to set aside the award of an arbitrator. The parties had not availed themselves of the opportunity to set their own standard, so the court was left only with review under the FAA. Reversing the District Court's reversal of the arbitrator's award, the Court held that while "manifest disregard of the law" is an appropriate FAA review standard, "arbitrary and capricious is not." The latter it notes is a case of first impression in the 5th Circuit.

The Court also had occasion to review the state of law on this issue in its sister circuits. In one of the longer footnotes in recent memory it noted:
The other circuits are in disarray on this question. Cf. George Watts & Son v. Tiffany & Co., 248 F.3d 577, 580 (7th Cir. 2001) (recounting confusion in the Seventh Circuit and commenting that “[t]he law in other circuits is similarly confused, doubtless because the Supreme Court has been opaque”). The Eleventh Circuit has accepted that an award may be vacated as arbitrary and capricious. See Lifecare Int’l, Inc. v. CD Med., Inc., 68 F.3d 429, 435 (11th Cir. 1995). The Eleventh Circuit, however, stands alone. See Larry E. Edmondson, 1 Domke on Commercial Arbitration § 39:10 (3d ed. 2003) (characterizing the idea that an award may be vacated as arbitrary and capricious as a “construct of the Eleventh Circuit”).

The Fourth, Seventh, and Tenth Circuits have implicitly rejected the Eleventh Circuit’s position by enunciating accepted grounds for vacatur and rejecting all others. See, e.g., Sheldon v. Vermonty, 269 F.3d 1202, 1206 (10th Cir. 2001); IDS Life Ins. Co. v. Royal Alliance Assocs., 266 F.3d 645, 650 (7th Cir. 2001); Apex Plumbing Supply, Inc. v. U.S. Supply Co., 142 F.3d 188, 193 (4th Cir. 1998). (However, these three circuits do not agree on what those accepted
nonstatutory grounds for vacatur are. The Fourth Circuit accepts only manifest disregard. Apex, 142 F.3d at 193. The Seventh Circuit accepts only a limited version of manifest disregard. See IDS, 266 F.3d at 650. The Tenth Circuit accepts manifest disregard, violation of public policy, and denial of a fundamentally fair hearing. See Sheldon, 269 F.3d at 1206.)

The First, Second, and D.C. Circuits have neither accepted nor rejected arbitrariness and capriciousness but have emphasized that vacatur is available only in very limited circumstances. See, e.g., Greenberg v. Bear, Stearns & Co., 220 F.3d 22, 27 (2d Cir. 2000); Morani v. Landenberger, 196 F.3d 9, 11 (1st Cir. 1999); Al-Harbi v. Citibank, N.A., 85 F.3d 680, 682 (D.C. Cir. 1996).

The Third, Eighth, and Ninth Circuits have recognized that an award may be vacated as completely irrational. See, e.g., Schoch v. InfoUSA, Inc., 341 F.3d 785, 788 (8th Cir. 2003), cert. denied, 124 S. Ct. 1414 (2004); G.C. & K.B. Invs. v. Wilson, 326 F.3d 1096, 1105 (9th Cir. 2003), cert. dismissed, 124 S. Ct. 980 (2004); Roadway Package Sys., Inc. v. Kayser, 257 F.3d 287, 292 n.2 (3d Cir. 2001). This test is “similar in nature in thrust to the ‘arbitrary and capricious’ test of the Eleventh Circuit.” 1 Domke, supra, § 39:11. Some cases from these Circuits, however, suggest that “complete irrationality” is simply a subset of a statutory ground for vacatur. See, e.g., Kyocera Corp. v. Prudential-Bache Trade Servs., 341 F.3d 987, 997 (9th Cir. 2003) (en banc) (“We have held that arbitrators ‘exceed their powers’ [under section 10(a)(4) of the FAA] not when they merely interpret or apply the governing law incorrectly, but when the award is ‘completely irrational’ or exhibits ‘manifest disregard of law.’”) (internal citations omitted); Mut. Fire, Marine & Inland Ins. Co. v. Norad Reinsurance Co., 868 F.2d 52, 56 (3d Cir. 1989) (considering in context of challenge under § 10(a)(4) whether award was completely irrational).
The court viewed the rejection of the arbitrary and capricious standard as called for by the judicial deference required by the FAA to an abitrator's decision. Given the footnote however, one wonders it if might not also have been a call to the Supreme Court to take a look at where the law stands in this important area.

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Sexual Harassment Restrictions Get Tougher in the Aloha State


Last month the Hawaiian Supreme Court extended liability for sexual harassment even further than protection under Title VII. The Pacific Business News has the story about the consequences of Arquero v. Hilton Hawaiian Village, LLC(Hawaii 6/10/04). Now in the land of paradise a single incident of unwanted touching may be sufficient to establish sexual harassment, and the requirements for employers to have a truly strict no tolerance policy has become paramount. The latter according to fellow Management & Labor Employment Roundtable member, David Banks. Without saying so specifically, the article points out this could become a great union organizing tool. When workers are terminated based on a single, one time incident, it would be nice to have a union collective bargaining agreement to at least give the protection of a 'just cause' standard. More headaches for employers, but at least in an idyllic setting.


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Sunday, July 11, 2004

Elder Care - Employers Newest Challenge


Since people spend so much time on the job, it is not surprising that workplace issues often mirror what is impacting society. The Boston Globe story, Stresses of elder care hitting the workplace makes just that point. What is often a family crises, can become an employment one, although if the $30 billion a year figure cited in the story is accurate I would be surprised.

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Rx For Violence In the Workplace - Let Them Pack Heat


Responding to the latest mass workplace murder at a Kansas ConAgra meat packing plant (six dead including the shooter), this Daily Texan opinion piece has an unusual prescription, Handguns at work would protect employees. Not to worry that the Daily Texan has strayed from its normal liberal views, the opinion piece is authored by Austin Kinghorn a religious studies senior and a former chairman of the Young Conservatives of Texas. But at least they gave him the space.

Kinghorn certainly has a valid point that we should be looking for some alternative solutions. A group approaching it from an opposite point of view, Handgun Free America issued a press release reporting 26 serious workplace shooting in the first half of 2004 as compared to 5 in the comparable period in 2003. It tells you something that the same group now has a website that allows you to keep track of workplace shootings, cleverly named Terror Nine to Five, which also contains a link to their May 2004 report [pdf] on workplace related shootings over the past 10 years.

Clearly, something is not working. I am just not too sure that many employers will feel that comfortable with Kinghorn's idea of relying on 'armed employees' to protect others when someone goes off the deep end.

Comments:
Would also help to keep those "bosses from -bleep-" in check - wouldn't be such right -bleep-ards if they knew that all their employees were packing.

I know >I'VE< had a few bosses where the whole office would've been puttin' a few holes in his office door as a reminder of what we all thought of him.
 
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Wal-Mart Class Action Sparks Debate, Even Among Non-lawyers


Or real people as I am fond of saying. Although I have not commented on the recent certification of the largest gender discrimination class in history, others are engaging in some interesting discussion. One such person is Jonathan Cobb, who kindly called his comments to my attention. Although not a lawyer, he is interested in the bigger questions posed by the ruling. You can check his view out at the Soapbox a great title for a blog devoted to among other things politics, cooking, technology, parenting and music.

For another look at the court's action and perhaps the suit that could be said to have started it all, check out today's story from the Decatur (Alabama) Daily, which traces the origins back to discovery obtained in a 1996 suit brought by a Santa Fe attorney.


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Friday, July 09, 2004

Sometimes There May Actually Be Fraud In the System


The day after Ken Lay is indicted and John Rigas convicted, it is important to remember that fraud can occur at any level on the continuum of workers, from the highest to the lowest. Although there may well be more suspected than actual abuse in the workers compensation system, it sometimes is true. Or at least that is what you could conclude based on an indictment handed down by a Travis County grand jury. The Austin Business Journal story, Worker indicted for alleged workers' comp fraud might make some thinking about "pushing the line" think twice.

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Arbitrator Should Decide Class Certification Issues - Texas Supreme Court


Following the guide of the United States Supreme Court, today the Texas Supreme Court holds that where all disputes arising out of an agreement are committed to the arbitrator, so is the issue of class certification. In Re Martha Wood, et al (Tx S. Ct. 7/9/04). The underlying dispute is not an employment one, but arises out of a fee agreement between Houston lawyer John O'Quinn and some of the clients he represented in a $2 billion breast implant settlement who objected to a 1.5% charge from their settlement for 'common expenses.' (Yes Virginia, that is billion with a B.) My earlier comment on Green Tree v. Bazzle, which the Texas Supreme Court holds applicable, can be found here.


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Wednesday, July 07, 2004

A 'Wobbly' Picket Line Coming To Your Nearest Starbucks?


Well not likely, but the venerable International Workers of the World, formed in 1905 according to the article in the Seattle Times, Wobblies try to unionize a Starbucks in New York are trying to organize a Starbucks in lower Manhattan. The success will depend on the unit question, a store as the union wants, or a 50 store district as the company argues. My guess is that bourgeois side of BoBo's (from David Brooks, Bobos in Paradise) will win out in case a picket line ever bars any Starbucks. Of course John Kerry won't cross. But will he send some one?


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Tuesday, July 06, 2004

MDV - Beware of the Employee Polygraph Protection Act - $4 Million Reasons Why


Now that WMD (weapons of mass destruction) has become a common conversational term, at least in some circles, hopefully MDV will not. I use MDV as shorthand for a million dollar verdict in an employment case. Verdict is an important part of the phrase, because that reflects the jury award unhampered by caps or further judicial action, both of which frequently come into play. The raw award however is important, not only because it is what hits the headlines, but as a measure of a how incensed jurors can be at an action that generally does not involve physical harm. The latest case in point involves a statute that rarely makes it as far as litigation, the Employee Polygraph Protection Act.

For those who have not dealt with it, the EPPA prohibits the use of lie detectors in the workplace except in very narrow, quite proscribed circumstances. A Philadelphia area employer obviously thought it could wend its way through that thicket when it fired 3 employees who refused to take a lie detector test after money went missing from the premises of the company. The Philadelphia Inquirer headlined the story in Sunday's paper, A.C. firm must pay fired trio $4 million. Ironically, the stolen money (approximately $4,000) belonged to a fellow employee not the company. And for those trial lawyers who think that a prior conviction on an unrelated crime will be devastating to a plaintiff, one of the three here, was actually in prison at the time of the trial. Go figure, and be wary of giving lie detector tests.

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Comments:
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Monday, July 05, 2004

Domestic Partner Benefits - A Survey On What's Happening


A growing trend to provide them, particularly on the West Coast and in the Northeast, according to this story in the Memphis Business Journal. The lagging areas, the Southeast and Midwest.

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Living Wage in Santa Fe - Currently A Mess


Given that the ordinance doesn't set out any details on how it is to be enforced or implemented, it might have been that the Santa Fe City Council was as surprised as anyone when their "living wage" ordinance was upheld by a state district judge last week. According to the story in the New Mexico Business Journal, the ordinance is raising all sorts of issues. My guess is that many eyes will be focused on the New Mexico state capitol since allowing a City Council the opportunity to give all their constituents a pay raise, may prove a temptation for many local politicians looking for that next re-election push.


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