Jottings By An Employer's Lawyer

Tuesday, September 30, 2003

Possible House Vote To Instruct Conferees on Overtime Regs


Workplace Fairness is reporting on a possible vote tomorrow in the House of Representatives to instruct the House conferees to agree with the Senate's inclusion of an amendment prohibiting the Secretary of Labor from moving forward with the modernizing regulations to the white collar exemption regulations. The possibility exists because of the narrow defeat (3 votes) in the House when it was first considered. If it does pass, the only hope for the regulations would be a presidential veto, and even though that has been threatened, it seems highly unlikely given the heating up of the presidential race.

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Ding, Dong - Dare We Say It Once Again? Duffield is Dead!


Knowing what the en banc decision in EEOC v. Luce, Forward, Hamilton & Scripps (9th Cir. 9/30/03) [pdf] is about, once you see that Judge Reinhardt has dissented you know that the 9th Circuit has finally joined with all of its fellow brethren to hold that employers may require that employees arbitrate Title VII claims. Duffield, the 9th Circuit now says, was wrongly decided. Of course, Governor (for at least 7 more days) Davis can still sign AB 1715 which bars arbitration of employment law claims, setting up an interesting clash between California law and the Federal Arbitration Act, but we will leave that for another day, and for now celebrate unity in the law of arbitration, all across the land.

But of course it being the 9th Circuit, it would not be fair to totally absolve the employer. As the majority notes in its penultimate paragraph:
At least on the surface, it would appear that, if an employer can compel its employees to submit all claims arising out of their employment to arbitration, no retaliation would be involved in an employer’s exercise of such right, because an employee opposing such a practice would not be engaged in any protected activity. At oral argument, however, the EEOC advanced a novel theory why, even assuming our overruling of Duffield, an employer’s adverse action against an employment applicant for his or her opposition to compulsory arbitration would still amount to retaliation under the Civil Rights Acts. Because this argument was not fully developed on appeal, we leave it to the district court to address on remand.

And we should also give notice for the reprise of the best biblical analogy by a union leader, found again in Judge Pregerson's dissent, just as it was in his dissent to the original panel decision:
More than three-quarters of a century ago, Andrew Furuseth, then president of the International Seaman’s Union of America, said in opposition to the Federal Arbitration Act as originally proposed: “Will such contracts be signed? Esau agreed [to give up his first birthright], because he was hungry. . . . With the growing hunger in modern society, there will be but few that will be able to resist.” Proceedings of the 26th Annual Convention of the International Seaman’s Union of America 203-04 (1923).

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According to 5th Cir. Plan To "Balance Workforce" Can Create Adverse Impact Claim and Be Direct Evidence of Discrimination As Well


Learning that in the 1990's a major American employer had drafted a plan setting annual targets based on government workforce data for the purpose of insuring that all racial and gender groups were proportionately represented at all levels of the company, one would have said nothing more than this was another government contractor dutifully complying with Executive Order 11246. However, when the data showed that minority groups were over-represented and the employer allegedly moved forward to bring the workplace in balance, one has a formula for a potential disaster. Although delayed originally by a district court's summary judgment, it exploded today in the 5th's Circuit decision in Frank v. Xerox Corp. (5th Cir. 9/30/03) [pdf]. While affirming some claims as time barred and holding that the existence of such a plan alone was insufficient to establish a hostile work environment, with little discussion, the Court found that the statistics presented by the plaintiffs showing the reduction of minorities in the workforce, allegedly in accordance with the Balanced Workforce Plan, was sufficient to establish a fact question under an adverse impact theory. Apparently, the Balanced Work Force plan was the neutral business practice which may have adversely impacted minority employees.

Even more amazing, for the disparate treatment claims which were not time barred, the Court reversed the district court, finding it had improperly applied the burden shifting analysis of McDonnell Douglas. In what is the money quote, perhaps literally, to the pockets of the plaintiffs, the Court found:
We find that the existence of the [Balanced Work Force] program is sufficient to constitute direct evidence of a form or practice of discrimination. See Bass v. Bd. of County Comm’rs, Orange County, Fla., 256 F.3d 1095, 1110 (11th Cir. 2001). "The existence of an affirmative action plan," the Eleventh Circuit has written, "when combined with evidence that the plan was followed in an employment decision is sufficient to constitute direct evidence of the unlawful discrimination." Id. at 1111. Here, in the BWF summary reports, Xerox candidly identified explicit racial goals for each job and grade level. The reports also stated that blacks were overrepresented and whites were under-represented in almost every job and grade level at the Houston office. Senior staff notes and evaluations also indicate that managers were evaluated on how well they complied with the BWF objectives. A jury looking at these facts could find that Xerox considered race in fashioning its employment policies and that because Plaintiffs were black, their employment opportunities had been limited. (Emphasis added)


Although there is always more to the story than a simple recitation of facts in an opinion can purvey, one has to feel even more sympathetically for the employer when you look at the details of the claims of the individuals bringing the suit.

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Changing Places


For those of you who have checked out the "About Me" link on the side of this page, to see who or what was responsible for Jottings By An Employer's Lawyer, you would have been taken to a link at Haynes and Boone, LLP where I was happy to be a partner for almost 16 years. But today, if you check it out (and I hope you will), you will be taken to a link to Ogletree, Deakins, Nash, Smoak & Stewart, P.C. which I joined as a shareholder in mid-September. (Yes, it has taken me two weeks to figure out how to change the link.)

At Ogletree, Deakins, I truly am at a firm of "employer's lawyers." We specialize exclusively in the representation of management in all types of employment-related legal matters. And for those who think of all management labor and employment lawyers as completely heartless, you should know that more than 180 of us now practice at a firm founded on Valentine's Day, 1977. From the original offices in Atlanta and Greenville, the firm has grown to sixteen offices extending from Los Angeles to the Virgin Islands, with four in Texas, including its newest in Austin, where I practice.


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Monday, September 29, 2003

8th Cir. - Epilepsy With No Showing of Current Seizures Not Enough for ADA Claim


An employee alleged his discharge was because of his epilepsy and because the employer perceived he had a limiting disability, his emotional instability. The Court quickly cut through the first claim, finding that his epilepsy was well enough controlled that before he was terminated he had been returned to a hazardous position on the basis of his doctor's findings and recommendation. Brunke v. The Goodyear Tire and Rubber Company (8th Cir. 9/29/03) [pdf].

The second ground got even shorter shrift. In the money quote, the Court said:
Where there is no medical evidence of a mental or psychological disorder, as in this case, an employee does not establish a prima facie case of ADA “regarded-as” disability simply because he or she was disciplined or discharged for failure to get along with co-workers or supervisors. Likewise, the fact that Goodyear told Brunke to seek professional anger-control assistance after one confrontation does not establish that he was regarded as being disabled. “Employers need to be able to use reasonable means to ascertain the cause of troubling behavior without exposing themselves to ADA claims . . . . [cite omitted]."
It is good when courts understand the realities of the workplace.

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Woman On A Highway Crew - Loses Gender Claim Because She Didn't Check the Box


A failure to check 'sex' as a basis of discrimination on her EEOC charge dooms a female highway worker's suit based on the actions of her fellow crew members. Sitar v. Indiana Dept. of Transportation (7th Cir. 9/29/03).

She was more successful with her retaliation claim. The Court upheld the trial court's summary judgment on the transfer aspect of her claim, not because a transfer could not ever be the type of adverse action that will support a retaliation claim, but because there was no showing of protected activity. Although she complained to her supervisor about her treatment, she never mentioned it was because of her sex. While magic words are not required, there has to be something to indicate gender is an issue. She did succeed in reversing the trial court's summary judgment on her termination claim. Following filing a formal complaint with the department's Affirmative Action group, she was suddenly discharged when her supervisor learned that her charge had been supported and he was to be 'informally counseled'.

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An Interesting Note on the Intersection of Insurance and Employment Law and Florida's View Of Privacy


The May It Please The Court note has all the links to thoroughly check out the recent Florida Supreme Court decision holding that improper touching does not constitute an invasion of privacy. Interestingly though it was not in a direct action of the touchee against the toucher, but a joint action between the toucher and touchee in an attempt to get into the pockets of an insurance carrier. Reminiscent of a similar attempt in Texas several years ago where the Texas Supreme Court refused to recognize negligent infliction of emotional distress in a suit by the victim and culprit of a taping (and showing) of sexual activities, against an insurance company. Boyles v. Kerr, 855 S.W.2d 593, 597 (Tex. 1993) (op. on reh'g).


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Sunday, September 28, 2003

Advice for Helping Your Client and Witnesses With the Emotional Side of Employment Law Litigation


Dr. Joni Johnston's article An Emotional Defense: Guiding Your Defendant Through Employment Litigation on the ABA litigation website offers some advice covering an area that doesn't get a lot of attention. Most experienced management lawyers will nod knowingly as they recognize many of the client responses Johnston describes. One that particularly surprised me, less so now, is how little many business people know about the legal system and all that is involved in litigation. Upon reflection, it actually is not so surprising since absent having been through it, probably more than once, there is no real mechanism for an executive to get that information.


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Saturday, September 27, 2003

The Thorny Issues Related To Taxation On the Settlement of an Employment Law Case


As rules have tightened on the taxation of settlements of employment law cases, the latest fight is over taxation to the plaintiff of a separate payment of attorneys fees. A decision by a federal district court in Connecticut prompts a story pointing out this is an issue which has split the courts of appeal almost evenly. Thomas Scheffey of the Connecticut Law Journal has the story reprinted at law.com. Senior District Peter Dorsey found that the employee must pay tax on the attorneys fees, even where the settlement agreement required them to be paid separately to his attorney.

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Employee's Lawyer Offers Tips For Those Being Fired


Although I might disagree with some of the particulars such as the 'rule of thumb of one month's salary for every $10,000' in severance, overall good advice. See Michael Triplett's article on the Gay Financial Network website here.

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MDV: San Antonio County Court Jury Awards $1.3 in Age Claim


One of San Antonio's venerable employers was tagged with a $1.3 million verdict Friday finding Steve Brite, a former fraud investigator for USAA, had been laid off because of his age. He was awarded $185,000 in backpay and $1.1 in punitive damages, which will be reduced because of the damage cap under the TCHRA. The San Antonio Express News has the story.

Update: The Texas Supreme Court threw out the verdict on February 2, 2007 because the case was filed in the wrong court. See MDV Update: Judgment Goes Away -- Case Filed in the Wrong Court. The original story link is dead, but here is one to the San Antonio Business Journal, Jury awards former USAA employee $1.3 million.

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Deception During Arbitration - Caught (Finally) In A Lie - Could Lead To Award Being Set Aside


If you happened to be near Waterloo, Iowa on the night of June 1, 2001, you might be unnerved to know that the sole employee responsible for monitoring a facility that held millions of gallons liquid natural gas had turned off more than 40 monitoring and safety devices and departed the facility for more than 3 hours. He purposely took a company van so he could leave his car parked and escape detection. Fortunately for those in Waterloo, an anonymous caller reported to his supervisor a van was being driven about town, and the supervisor getting no answer when he called the plant, discovered his absence leading to his termination. Being covered by a collective bargaining agreement, he grieved and the arbitrator issued an award that many will find all too familiar. He had testified that he had received a call from his wife that his son had been possibly injured in gang activity. Although finding his conduct egregious, the arbitrator noted his long, previously unblemished service and the fact that he had at all times admitted his guilt and wrongdoing and reinstated him without backpay.

Following the award, there was yet another anonymous phone call, intimating that the company should contact a certain individual who might have knowledge of his whereabouts the night in question. That individual was contacted, and later testified in her deposition that she had been having an extramarital affair with the grievant and he was with her on the night of June 1.

Armed with this duplicitous behavior, the company sought to vacate the award on grounds of public policy and that the award had been obtained by fraud. The trial court granted summary judgment on both grounds.

The 8th Circuit rejected the grounds of public policy, finding no specific statutory violation which would clearly establish public policy and that the arbitrator had clearly allowed him to be reinstated to a position where he would be directly supervised. It also reversed the grant of summary judgment on the issue of fraud in the arbitration, agreeing with the union that at this point there was merely a disagreement in the testimony. MidAmerican Energy v. IBEW Local 499 (8th Cir. 9/25/03) [pdf].

However, the Court went on to specifically disagree with the union's argument that the lie, if it proved to be that, was not relevant to the arbitrator's decision, saying clearly the perceived truthfulness of the grievant had made a difference. While it reversed the summary judgment, it sent it back to the trial court for further proceedings. Leaving little doubt in my mind as to the ultimate outcome. Two cheers for anonymous phone calls.

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Friday, September 26, 2003

Sarbanes Oxley Goes Criminal - Accountant Charged With Destroying Documents


Thanks to the Virtual Chase for their pointer to this law.com story on one of the first indictments under the provisions of Sarbanes Oxley prohibiting the destruction of documents. The indictee, a former Ernst & Young partner, apparently was caught in part due to emails. I heard someone describe emails the other day as the cockroaches of litigation: they only come out in the dark, they are hard to destroy, and no matter what you do, you can't kill all of them. A good thing to remember before hitting the send button.

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Another Chapter On Joint Employer Law By the 11th Circuit


Following its decision last month in Martinez-Mendoza v. Champion International Corp., (11th Cir. Aug. 5, 2003) [pdf], the Court upheld a district court's determination that employees of a Farm Labor Contractor were not jointly employed by the company which had hired them to plant seedlings on its forest lands. Gonzalez-Sanchez v. International Paper (11th Cir. 9/25/03) [pdf]. Running through the 7 factors it identified in Champion, the Court found while there might be slight differences, they were not enough to make International Paper a joint employer.


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Wednesday, September 24, 2003

Just Having The Law Books Is Not Enough To Protect Oneself From the FMLA


Or at least that could be what you surmise based on the lack of success of that famous purveyor of law books, West Publishing in their run in with a discharged sales representative advancing a claim under the FMLA. In a classic example (perhaps) of no good deed goes unpunished, West's decision to terminate the rep for misdeeds, but waiting until after the Christmas holidays, also left them in the position of having to terminate him while on the medical leave he had taken beginning Christmas day. Unfortunately, West was unable to convince a jury that the decision was already made, and thus the jury's finding of a violation of the FMLA was upheld both by the trial court and the 6th Circuit. Arban v. West Publishing Co. (6th Cir. 9/24/03). West probably did not help itself by insisting that he perform work in the form of providing an extensive list of sales leads while he was on medical leave. And making matters worse the Court reversed the district court's denial of liquidated damages and remanded for further review on that matter, but leaving little doubt that they believed such damages would be in order. Yet another example of how the FMLA can be a dangerous statute for employers, even those with unlimited access to the law books.

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A Plea For the Workplace Religious Freedom Act


Charles Haynes, a senior scholar at the First Amendment Center makes his case for passage of the Workplace Religious Freedom Act in an article on the Center's website. S. 873 sponsored by senators on the opposite ends of the political spectrum, Senator Rick Santorum, a conservative from Pennsylvania, and Senator John Kerry, a liberal from Massachusetts along with 18 others, still has not garnered much traction. Its main purpose would be to reverse the limited meaning of undue hardship in Title VII's obligation of religious accommodation as interpreted by the Supreme Court in Trans World Airlines, Inc. v. Hardison. Haynes recounts a number of religious groups who have experienced repeated problems in the workplace. The WRFA would replace Hardison's requirement that an employer is not required to provide an accommodation if its cost is more than de minimis, with a requirement that the accommodation be made unless it requires a “significant difficulty or expense.”

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Profile of Microsoft HR Vice President


The Seattle Post Intelligencer has a feature on the first outsider to head Microsoft's Human Resources department, Ken DiPietro.


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Tuesday, September 23, 2003

Even In the Post Enron Era Accusing the Bank President of Fraud Can Get You Fired


And legally too, or at least that is what happened to a former bank employee who had complained that the bank president was engaged in a fraudulent scheme to allow friends to obtain SBA loans. Plaintiff's allegations that he was really terminated for his age was not supported by any evidence, either under the traditional Burdine shifting analysis or the Costa mixed motive analysis Trammel v. First Bank of Searcy (8th Cir. 9/23/03) [pdf]. All that plaintiff showed was that younger employees took over some of his work; he did not show that a similarly situated younger person was treated differently.


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Monday, September 22, 2003

Dismal News For Employers - Employee Satisfaction At An All Time Low


According to a survey done for The Conference Board, America's workers satisfaction at their employment has hit an all time low, with less than 50% saying they are satisfied. The story in the Houston Business Journal doesn't help those of us in Texas either, as the two regions with the most dissatisfaction are New England and the West South Central states, Arkansas, Louisiana, Oklahoma and Texas. You can check out an executive summary at The Conference Board's website.

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TCHRA 180 Days Is From Communication Not Day Noted In Company's File


The Supreme Court of the United States long ago made it clear that the statute of limitations begins to run when an employee is told he will be terminated, not the actual day of termination. Now an unusual Texas case answers the same question in reverse. An employee's claim for constructive discharge was barred when it was untimely as measured from the day she told her employer that she was leaving, not the actual date that the manager she told reported it to HR, or the date of termination contained in the HR file. Cooper-Day v. RME Petroleum Co. (Tex. App. - Fort Worth 9/18/03) [pdf].


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Sunday, September 21, 2003

7th Cir. Cuts Through Muddle - Allows Promotion Claim To Continue


Regardless of how you feel about their decisions, one has to appreciate the writing in many opinions from the 7th Circuit. Volovsek v. Wisc. Dept. of Agriculture (7th Cir. 9/18/03) is no exception:
We start with some threshold questions about the scope of Volovsek's suit. Unfortunately we have to spend considerable time addressing this issue because the parties appear to have simply collected the sum total of all the unpleasant events in Volovsek's work history since 1991, dumped them into the legal mixing bowl of this lawsuit, set the Title VII blender to puree and poured the resulting blob on the court.
Having done so, the Court reverses the trial court's summary judgment for the employer on her claim of failure to receive a promotion, and affirms the dismissal of all other claims. The promotion claim survived because of plaintiff's affidavit that just after she received the news that she was not receiving a desired promotion, she overheard her two supervisors' comment that women should be "barefoot and pregnant". The timing of the comment removed this from the unrelated stray remark category and allowed the promotion claim to survive. One could not help but get the feeling that with more carefully drawn briefing, this is a case where plaintiff might have been totally dumped.

It did provide a forum for Judge Cudahy to make some other observations concerning various types of evidence. One is a description of how plaintiffs may prove intentional discrimination:
Volovsek can prove intentional sex discrimination and retaliation directly or indirectly. The direct method may employ either of two types of evidence: direct evidence and circumstantial evidence. The inevitable confusion of using the word "direct" to mean two different things aside, direct evidence is evidence, which, if believed by the finder of fact, "will prove the particular fact in question without reliance upon inference or presumption." [cite omitted] This evidence of the I-am-not-promoting-you because-you-are-a-woman type is understandably rare. There is no evidence of this kind in the present case. The more common type of evidence is circumstantial evidence that allows a jury to infer intentional discrimination or retaliation. Rogers v. City of Chicago, 320 F.3d 748, 753 (7th Cir. 2003). Circumstantial evidence comes generally in three flavors: (1) suspicious timing, ambiguous statements, behavior towards other employees and so on; (2) evidence, but not necessarily rigorous statistical evidence, that similarly situated employees were treated differently, or (3) evidence that the employee was qualified for the promotion and passed over and the employer's reason for the difference in treatment is a pretext for discrimination. Troupe v. May Dep't Stores, 20 F.3d 734, 736 (7th Cir.1994). The third category bears an eerie similarity to the evidence required under the indirect method. See Huff v. UARCO Inc., 122 F.3d 374, 380 (7th Cir. 1997).
And also to comment on the sometimes sufficiency of "self serving statements":
Volovsek's affidavit in which she recounts what she overheard is not, as the [employer]claims, conclusory or self-serving, as that term is commonly used in the context of summary judgment. She is relating facts of which she has personal knowledge in support of her claim of discrimination. Payne v. Pauley, __ F.3d __, 2003 WL 21540424, *5 (7th Cir. 2003) ("Provided that the evidence meets the usual requirements for evidence presented on summary judgment including the requirements that it be based on personal knowledge and that it set forth specific facts showing that there is a genuine issue for trial; a self-serving affidavit is an acceptable method for a nonmoving party to present evidence of disputed material facts.")

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6th Cir. Upholds Board Ruling Allowing Offsite Employees Access At Separate Facility


An unfair labor practice filed in 1995 finally gets its review by an appellate court, and by a 2-1 decision the 6th Circuit enforces the Board's decision that the employer's act of barring an employee from access to a facility where he did not work for purposes of exercising Section 7 rights in an organizing drive, violates the NLRA. First Healthcare Corp. v. NLRB (6th Cir. 9/18/03). The Board had first found that the rights of the non-facility employees were direct, not derivative of the on-site employees. Secondly, while the Board did recognize that there was a difference in the employer's property rights when dealing with employee's who worked at the facility in question and employees coming from other facilities, it found that the employer's rights in this case were adequately protected. Although the majority opinion agreed, the dissent would not have given deference to the Board's position on the balancing of the employer's property rights versus those of the employees from another facility.

Obviously, this holding expands the role of employees from unionized facilities in organizing drives at non-union locations of a company. A fact not lost on Local 1999 of SEIU, the union involved in the decision. In one of its on-line publications shortly after the Board's decision headlined "Local 1111 Members Visit Satellite Plants" it noted
The Rockwell organizers were able to take advantage of a recent National Labor Relations Board ruling ... that permits employees of a company to have access to non-production areas, such as parking lots, at other company locations.

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Government Employer Challenged For Reverse Discrimination - Wins in 6th Cir.


Government employers are often thought of as being bureaucratic in their processes. Thankfully for the Michigan Treasury Department, this time it paid off when two of their management promotion selections were challenged by white applicants, who lost the positions to minorities. Using statistics comparing the number of positions held by minorities to the size of the qualified minority workforce, at least one of the potential candidates was able to show a question as to whether this was the "unusual employer" who discriminated in favor of the minority against the majority. Fortunately, the rather laborious (sounding at least) selection process, which involved pre-selection written questions, an oral interview and interviews with each of the applicants supervisors', all of which involved both structured questions and model answers, plus a scoring of past performance appraisals defeated any finding that there was discriminatory intent. Sutherland v. Michigan Dept. of Treasury (6th Cir. 9/18/03).


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Wednesday, September 17, 2003

Sarbanes Oxley Cases Beginning To Hit The Courts


TXU would probably just as soon have passed on being one of the first corporate defendants in a Sarbanes Oxley case filed in federal court. However, William J. Murray, a discharged TXU executive fired in August 2002, the month after Sarbanes Oxley was passed, had a differing point of view. The Fort Worth Star Telegram has the story.

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Sarbanes Oxley Resources From A Corporate Perspective


Mike O'Sullivan at the Corp Law Blog has a note with references to several overviews of Sarbanes Oxley that he has found helpful.

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Privacy At Work - Best and Worst Employers


Top 5 and Worst 5 lists are superficial almost by definition, and this one by Wired magazine is no different. However, it does have some interesting anecdotes about various privacy policies and actions of some larger and well known employers. Thanks to beSpacific for the pointer.


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Monday, September 15, 2003

9th Cir. - Air France Not A Joint Employer For Purposes of FMLA


The first words of the opinion are clearly on the mark. This is necessarily a fact specific appeal. And after that fact specific review, the Court agreed with the district court's ultimate conclusion that Air France was not a joint employer of ground service employees that it utilized from Dynair, the food preparation company that supplied its meals, or a cargo handling company which handled and warehoused cargo that it transported. The detailed review provides a good summary of the joint employer law under the FMLA as it will be applied in the 9th Circuit. Moreau v. Air France (9th Cir. 9/15/03) [pdf]. According to the Court's research, this is the first circuit court to address the issue of 'joint employer' under the FMLA.

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Sunday, September 14, 2003

Oregon Allows Common Law Claim Against Lab For Negligent Drug Test


A Delta flight attendant's urine sample was found by a lab to be altered. Delta treated this as a refusal to test and fired her. The split sample when retested, saved the day for the attendant who was rehired by Delta and paid $68,920 in back pay and benefits. The first lab had either erroneously truncated or rounded the readings, either of which made a difference between an acceptable and unacceptable sample in this case. The Court rejected the lab's argument that her state negligence claim was pre-empted by federal law. The lab also sought to avoid paying the jury's award of $68,000 in back pay since it had been paid by Delta. Wrong again said the Court invoking Oregon's collateral source rule. Ishikawa v. Delta (9th Cir. 9/12/03) [pdf].

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6th Cir. - Union Has Fiduciary Duty With Respect To Life Insurance Policy


When American Airlines life insurance policy seemed too expensive, the union for many of its employees, the Transportation Workers Union, stepped in and selected an alternative policy that it made available through union meetings. Unfortunately, the Union or the broker that placed the coverage emphasized that the rates would never go up, or if they did, only a few pennies. What they did not mention was the company's right to cancel if the group were less than 50. When the company exercised its rights and canceled, the members were left with a revised plan that was much more expensive than the 'promised version.'

Upset, they sued the Union, its president and vice-president, as ERISA fiduciaries. The District Court granted summary judgment to the defendants. The 6th Circuit reverses, noting that the duties of an ERISA fiduciary are the highest known to law. It first found that the defendants reliance on an independent expert was misplaced since the expert was really a broker, who was not charged with looking out solely for the interests of the employees. Furthermore, when the Union President who signed the policy admitted that he had not read it during his deposition, the Court somewhat sarcastically noted, that while being a fiduciary didn't require becoming an expert in employee benefits, it did not seem too much to ask the person signing it to at least have read the policy. A stronger argument for the defendants, supported by case law from other Circuits, was that this was a welfare not a pension plan, and thus did not vest, so that it was always subject to amendments. Thus the defendants argued they had not breached their duty. Distinguishing the other cases, the 6th Circuit held that although they were not required to disclose certain information, when they voluntarily chose to do so, they could not provide misleading information, which is what they had arguably done here. Gregg v. Transportation Workers Union (6th Cir. 9/11/03) [pdf].

Somewhat ironically, on the same day the Court refused to create a common law cause of action under ERISA on behalf of a union that had received misinformation from a third party administrator about the amount of insurance coverage which would be obtained by a specified increase in the employer's contribution which it used in negotiating a collective bargaining agreement with the company. When the error was disclosed it was too late to correct. Although acknowledging issues with respect to standing and the failure of ERISA to provide a cause of action for negligence in making such disclosures, the Union sought to overcome both by having the Court create a common law cause of action. An invitation which the Court declined. Local 6-0682 v. National Industrial Group Pension Plan (6th Cir. 9/11/03) [pdf].

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Evidence of Sexual Harassment To Others Than Plaintiff Permitted


In a case that provides a good insight into the problems that can arise during the course of litigation, the 1st Circuit also indicates that testimony by a female employee about sexual harassment she suffered may be admissible in the case of another female to show liability on her employer for a pattern of knowing toleration of harassment by its subordinates. Bandera v. Quincy (1st Cir. 9/12/03) [pdf]. However, her testimony was not proper on what she thought about the impact of the harassment on the plaintiff, since it was improper opinion testimony by a lay witness.

Among the various problems was whether or not there was a settlement after plaintiff fired her first counsel and whether or not the defense counsel's general objection preserved error on the question of lay opinion testimony. The Court ended up sending the case back for further action and suggesting it was in everyone's interest to have it settled. But in a short comment that is sure to make trial lawyers at least feel a little better, the Court showed it remembered what it was like to try a case, when it noted that the failure to preserve error by the general objection was "not a criticism of counsel. Trials are a rough and ready business; snap judgments as to unexpected testimony have to be made all the time." Amen.

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Violence At Work - But What One Community is Doing About It


According to the Wakefield, Massachusetts chief of police, it will never escape the deadly roll call of cities that have been touched by a workplace killing, following 7 deaths at Edgewater Technology almost three years ago. However, the city has been taking active steps to make sure it doesn't happen again. The Christian Science Monitor has a story on its Workplace Violence Pilot Program, which includes among other components the extension of community policing to the workplace.


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Friday, September 12, 2003

If You Believe All Is Fair in Love and War And That Labor Relations Is War, Read On


For some union bragging about campaign tricks that work. The story is in dollars & sense, but taken from the aptly titled Troublemakers Handbook.


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Thursday, September 11, 2003

Winners and Losers from Sarbanes Oxley - Some Interesting Thoughts


Dwight Klingenberg has a survey of the winners and losers from the fall out of the first year of Sarbanes Oxley. Some surprises, like private companies being on the loser list, even though they aren't covered, and have you heard of the Treadway Commission? One of the winners. Check out his article here. Not surprisingly, one of the tips is to stay on top of the HR issues caused by Sarbanes Oxley.

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5th Cir. Affirms Lower Court's Striking of Punitive Damages Ban to Make Arbitration Agreement Enforceable


The Fifth Circuit remains a court that is favorably disposed to arbitration as a condition of employment. In Hadnot v. Bay, Ltd. (5th Cir. 9/11/03) [pdf] the arbitration agreement banned the arbitrator from awarding exemplary and punitive damages. Since such a claim would be permitted under Title VII, the basis for the suit, Hadnot argued that the agreement should not be enforced. Rather than disallowing arbitration, the district court struck the ban on the arbitrator's authority and ordered that the case be arbitrated. The Fifth Circuit upheld the action, finding that now that punitive damages were authorized, there was no reason not to require arbitration.

The Fifth Circuit also rejected Hadnot's contention that there was no consideration, relying on the famous language in Light v. Centel Cellular that a promise which depends on continued employment is illusory, so that no employment at will agreement can support a contract. The Fifth Circuit holds it is In Re Halliburton not Light which controls. The agreement was made at the time of hiring, and both parties were bound no matter how long or short the employment might be.

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Wednesday, September 10, 2003

Academic Study - 1991 Civil Rights Act May Actually Hurt Those It Was Intended to Help


The 1991 Civil Rights Act which added increased clout for those bringing discrimination claims, including the right to compensatory and punitive damages and jury trials to name just two items, may actually have resulted in making it harder for minorities to be hired in traditionally white male dominated job markets. At least that is the theses of an article [pdf] by Paul Oyer of Stanford University published in the Summer 2003 issue of Regulation magazine. The Atlantic's Stuart Taylor, Jr. discusses the article in his Legal Affairs column.

Here is the money quote that Taylor takes from Stanford Law Professor John J. Donahue III:
"Once the egregious discrimination is gone," Donohue says, "then litigation-based schemes to bring ever more fairness become more burdensome and of dubious effectiveness. Litigation is a crude weapon;you can't perform surgery with a saber. Unfortunately, Title VII has become a matter of religious dogma for many academics, and certainly for those who benefit;plaintiffs' lawyers and consultants;and therefore immune to any type of critical inquiry."
Those who have toiled in the employment litigation arena know all too well the truthfulnessess of those words. But as today's, at least temporary defeat of an attempt to change outdated wage and hour regulations show, the idea that Congress will ever roll back any benefit it has provided, regardless of the harm that it might be causing, is most unlikely.

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Million Dollar Verdict Close to Home - $1.5 Million by Montgomery County Jury


Healthsouth Corp., which has not been faring well for other reasons, has another bad day with an adverse verdict in an employment law case brought in Montgomery County, Texas, which is just outside Houston. Dr. Helen Schilling, the former medical director at a rehabilitation center claimed she was terminated for refusing to engage in illegal conduct by extending the stay of patients or hospitalize patients who did not need it in order to keep a minimum level of census. HealthSouth argued she was terminated because she was hard to get along with and will ask the court to overturn the jury's award of $465,000 for back pay and mental anguish and $1.05 million in punitive damages. You can check out the story in Yahoo news.

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Cell Phones and Liability For Employers - Cooley Godward Case Goes To Trial


The lawsuit brought by the family of a young girl who was killed by an associate of Cooley Godward who was driving while talking on a cell phone goes to trial next week. Law.com has the story. Although the facts relating to the law firm's liability are complicated by the criminal charges that were brought against the lawyer, it is inevitable that many employers will face this kind of suit in the future.

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Harkin Amendment Passes - Wage & Hour Regulation Change On the Ropes


The Harkin amendment which has the effect of barring the DOL's proposed change to the white collar exemptions has passed the Senate by a vote of 54-45. See the story in US Today. The bill will now go to conference committee with the threat of a Presidential veto if the language is not removed. It will be several months before the ultimate fate is known, but given the coming political campaign this may be an idea where the time for change is long past due, but may still not have come.

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7th Cir. - Calling Employee "Crippled, Disabled and Handicapped" Not Enough To Violate ADA


An employee was hired as a flat bed truck driver, even though he had a severely crushed hand which led to a 20% disability pension from the Army. When he was terminated for violating a safety rule, he claimed that the employer called him "crippled, disabled and handicapped." He sued under the ADA, not claiming he was actually disabled, only that the employer considered him disabled. Accepting for purposes of the ruling that the employer used those words, the Court still found no violation of the ADA. They all fall within "a range of meanings" and are not sufficient to show that the employer thought the employee was so far disabled as to meet the ADA statutory definition. It is that level required to meet the "perceived as disabled" standard. Tockes v. Air-Land Transport Services, Inc.. (7th Cir. 9/9/03) [pdf]. Chief Judge Posner commented that rather than being made in a case where an employee had been hired with an existing disability as here, a perceived disability claim would be more likely where an employee suffered an injury which the employer viewed as disabling when it was not.

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Tuesday, September 09, 2003

11th Cir. Deals With Unusual ADA Retaliation Claim - Individual Liability Under Public Accommodation Section


Political disputes often lead to interesting law issues. That appears to be what happened in Shotz v. City of Plantation, Florida (11th Cir. 9/8/03) [pdf]. Shotz, an ADA expert, surveyed a Community Center at the request of one of the council members and wrote a letter to the council member reporting numerous ways it was not in compliance with the ADA. The council member provided a copy to the Mayor and ultimately others received it as well. Unhappy with the report, an assistant city mayor authorized an investigation into Shotz' background which included hiring a private investigator and authorizing the city attorney to conduct a data base search. Ultimately, information about Shotz' "criminal, credit, and driving records, medical history, involvement in professional disciplinary and other civil proceedings, property ownership, social relationships, including an ongoing conflict with a neighbor, as well as a criminal report involving his wife," were made public.

Shotz sued several individuals under the anti-retaliation provisions of the ADA. Although noting there were numerous cases holding that individuals are not liable for violations under the ADA employment provisions, the Court found that the retaliation provision under the public accommodations section was not so limited. It also raised the question, although not deciding it, whether individuals might be liable under the retaliation provisions even for employment related matters.

Besides making one cautious about doing favors for a council member, the case is also a good lesson for the dangers of investigating someone's background. The regulatory framework is broad enough that some legal problem is almost certain to be created.

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9th Cir. Holds Diabetic Significantly Limited In Major Life Activity of Eating


Reversing a summary judgment, the 9th Circuit proves how fact intensive ADA cases are by its lengthy discussion of plaintiff's diabetes, which is classified as 'brittle' and which requires a strict monitoring of any food intake, often requiring her to test her blood sugar to ensure proper levels. Fraser v. Goodale (9th Cir. 9/8/03) [pdf]. Under these circumstances, the Court found that eating was a major life activity which was significantly limited. In an effort to ward off claims the Court specifically made clear it was not inviting those on a diet to complain that their major life activity of eating was threatened, but emphasized the unique circumstances of this case.

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Wage and Hour Class Actions - Improper to Combine with State Wage Class Action


At least under the special circumstances laid out in detail in De Ascenscio v. Tyson Foods, Inc. (3rd Cir. 9/8/03). In an opinion that would provide a great exam question for a law school class on federal courts, the 3rd Circuit held that the district court had abused its discretion in exercising supplemental jurisdiction over a class action claim under the Pennsylvania Wage Payment & Collection law, where the primary jurisdiction rested on a collective action under the FLSA.

The opinion also provides a good discussion of the differences between opt-in classes, which have been chosen by Congress as the method for use in FLSA actions vs. opt-out class under Rule 23.

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Management v. Labor - This Time At the EEOC


At least that is the tenor of the story in the Washington Post about yesterday's meeting held at EEOC headquarters on the proposals being discussed to restructure the agency.

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Next Test for Davis - Legislative Reversal of Salazar v. Diversified Paratransit


California legislators have sent another bill to Governor (at least for a little while longer) Gray Davis which labor supports and business strongly opposes. The Sacramento Bee has the story on Assembly Bill 76 which would make employers responsible for sexual harassment of its employees by customers or third parties "if employers -- or their agents or supervisors -- knew or should have known of the harassment and failed to take immediate action to stop it." This would reverse a 2-1 decision of an intermediate appellate court which is currently pending review by the California Supreme Court. I mentioned the original decision here last year, as well as an academic critique.

It seems unlikely that Governor Davis would choose not to sign this bill giving the current make up of his support in next month's recall election.


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Monday, September 08, 2003

1st Cir. Upholds Double Breasted Operation - "No Harm, No Foul"


Basically applying the sports rule of no harm, no foul, the Court rejected the mechanical application of the alter ego rule even where companies are "joined at the hip." It affirmed the district court's finding that where a non-union company set up an installation company to do union work,that the alter ego doctrine should not be applied to make the non-union company contribute to benefit funds when it subcontracted with non-union contractors. The union had argued that the non-union company was in violation of a series of collective bargaining agreements it had with the installation company. Massachusetts Carpenter Central Collection Agency v. A.A. Building Erectors, Inc. (1st Cir. 9/8/03) In the Court's view, the union was never in a position that was worse than before the collective bargaining agreements were made and applying the alter ego rule in this situation would be inequitable.

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Is Pretext Plus Alive and Well in Texas?


Probably not in those words, but the Texas Supreme Court has made clear that mere flaws in an investigation alone are not enough to provide an inference of discrimination on the basis of a protected class. Last week's decision in Wal-Mart Stores, Inc. v. Canchola (Tx. 9/4/03) reversed a jury verdict which had been affirmed in an opinion [pdf] of the Corpus Christi Court of Appeals. A long tenured deli manager, who had been forced to work a reduced schedule because of a heart condition, was accused of sexual harassment. The store manager conducted an investigation and obtained statements concerning the allegations and then terminated the deli manager for violation of the sexual harassment policy. At trial, the deli manager raised numerous questions about the thoroughness and accuracy of the investigation.

The Supreme Court noted that it had a long policy of encouraging employers to conduct investigations before exercising their right to terminate at will employees, by not making them liable if their investigation were subject to challenge as imperfect. Recognizing the slippery slope of trying to draw lines about how good an investigation must be to pass muster, the Supreme Court wisely avoided trying to do so. Instead, the Court noted that the question to be asked was not merely whether there was pretext, but what the pretext was for. In order to support the jury's finding of disability discrimination, the Court held there must be some evidence that there was discrimination on the basis of a disability. Finding none, that claim was reversed.

The Court also reversed the jury's finding of intentional infliction of emotional distress. Noting that while the investigation and termination were undoubtedly unpleasant, an employer must be free to investigate and supervise its employees.


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Sunday, September 07, 2003

A Word On COBRA Compliance


OnQue, a vendor of COBRA administration software, has a message about, surprise, the dangers of failing to administer COBRA correctly. Notwithstanding their bias, they do have a good point in their article dealing with a 3rd Circuit summer decision, Emilien v. Stull (3rd Cir. 7/18/03) [pdf]. The scary thing for lawyers charged with assisting employers comply is that the court is now requiring a 'comprehensible' notice. Law schools may need to radically revise their curriculum.


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Friday, September 05, 2003

Sexual Harassment On the Other Side of the Bench - Texas Judge Ousted (Maybe) For Misconduct


The Corpus Christi Caller News has this story on Judge Terry Canales of the 79th District Court, which covers several South Texas counties. A review by a panel of appellate judges upheld a recommendation that he be removed from office because of misconduct involving sexual harassment. The panel did criticize certain procedural aspects of the Commission on Judicial Conduct's review which led to the recommendation. Judge Canales status while the matter is appealed to the Texas Supreme Court is unclear, although the Judicial Commission "assumes" he will be suspended during the appeal.


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Wednesday, September 03, 2003

5th Cir. Not Always A Haven for Employers; Or Another Bad Day for Haggar - Or Both?


The Plaintiffs bar frequently laments the barriers of the the 5th Circuit, but it is not always a burial ground for employee's complaints. Today, the 5th Circuit re-instated a jury's age discrimination verdict, reversing the trial court's granting of judgment notwithstanding the verdict. The unfortunate defendant in this case was Haggar, which as I noted a couple of weeks ago, has not fared all that well in the court house. In Palasota v. Haggar Clothing Co. (5th Cir. 9/3/03) [pdf], the Court faulted the district court for not giving enough weight to remarks by management relative to age, instead passing them off to stray remarks. It also noted that the court should have given more weight to the EEOC determination of cause based on a 2 1/2 year investigation. All in all, while plaintiffs and their counsel would probably appreciate reversals of summary judgments against them, no doubt they are happy to see that when they do get to trial, and do get a verdict, that the 5th Circuit will be supportive if in fact their is evidence in the record. Of course, learning that same lesson is important for employers and their counsel as well.

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A Simplified View (Finally) Of Proposed Wage and Hour Regulations


Thanks to my good friend Joe Beachboard for his reference to the HR Policy Association's Simple Guide to Complex White Collar Reform Debate. The Senate could vote on the Harkin amendment which would block reform this week.

For fans of divided and it appears frequently stalemated government, Harkin's proposal is an amendment to the appropriations bill for Health and Human Services, which President Bush has threatened to veto if it has language which would scuttle reform of the wage and hour regulations. This issue was decided by only three votes in favor of reform in the House. Stay tuned for this one.

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Sometimes in Wage and Hour, It's the Little Things That Mean A Lot


Forgetting, or not knowing, that breaks that are shorter than 20 minutes have to be compensated cost hotels.com. HR Next has the report on the results of the DOL investigation into the company's practice of deducting for the two fifteen minute breaks it "gave" its call center operators each day.

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$4 Million Verdict For Nurse Manager Trying To Control OR Environment


An operating room is a place of high drama, and if one can believe what one hears and reads, often a place of high jinks as well. In what may be a story that feels way too close to home to many hospital administrators, it took a Norfolk, VA jury only 90 minutes to award $4 million to a nursing manager who was asked to resign after counseling an OR nurse because of the "sexually charged" environment in the OR. The nurse had been seen kissing and hugging a doctor and massaging his neck, back and legs. The nurse resigned after the counseling and threatened legal action.

Shortly thereafer the nursing manager, Stephanie Denninghoff, was asked to resign and six days later, the nurse was rehired. The Virginian Pilot has the full story. Although not mentioned in the story, my guess is that most administrators are asking themselves what role the physician may have played in all this.

The closing argument that was apparently not in tune with this jury was the hospital's lawyer's explanation of what happens in the tense environment of the operating room:
``You get some relief sometimes through a variety of physical contact,'' he told the jury during closing statements. ``What evidence is there of a sexually charged environment? It was just hugging.''
Evidently, this jury felt there was enough.

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Tuesday, September 02, 2003

What Difference Does A Recall Election Make? CA Arbitration Bill Will Be A Good Test


Forget the campaign of Arnold and others, one interesting question that will be known soon is how Governor Davis has been impacted by the campaign to make him unemployed. As reported here last year, Governor Davis vetoed a bill which would have barred making arbitration of disputes a condition of employment. But now thanks to the efforts of the legislature, he will have another chance. Business Insurance notes last Thursday's passage of A.B. 1715 and speculates that Governor Davis' need for the help of organized labor in next month's recall election may influence the way he views the legislation this time.

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3rd Cir. Affirms Validity of Waiver in Light of Challenge by EEOC Under OWBPA


What a mouthful of initials. However, if you are a regular reader of this site, you probably know what the Older Workers Benefits Protection Act is. Today the 3rd Circuit vacated an earlier decision affirming a release under the OWBPA, after the EEOC joined with the plaintiff in seeking a re-hearing. The basic challenge was that the release was invalid under the OWBPA because it included an agreement not to “file a charge, complaint, lawsuit or other claim against [Lehigh Valley].” Plaintiff and Commission argued that this violated 29 U.S.C. § 626(f)(4), which provides that any waiver will not interfere with the EEOC's right to enforce the Age Act. However, the court held that section is clearly not included in the list of requirements for a valid waiver. It upheld the waiver against that and a number of other arguments. Wastak v. Lehigh Valley Health Network, (3rd Cir. 9/2/03) [pdf].

While this language would seem to give a green light for an employer to include such language, before doing so one needs to pay close attention to footnote 6:
... We note, however, that a regulation that became effective after the incident before us clearly precludes the inclusion of provisions that prohibit resort to administrative process. See 29 C.F.R. § 1625.22(i)(2) (“No waiver agreement may include any provision prohibiting any individual from . . . [f]iling a charge or complaint, including a challenge to the validity of the waiver agreement, with [the] EEOC.”). The presence of such a prohibition in a waiver agreement that is subject to this regulation could certainly lead a court to find, under proper circumstances, that the waiver “ha[d] the effect of misleading, misinforming, or failing to inform” the plaintiff, 29 C.F.R. § 1625.22(b)(4), thus rendering the waiver not “knowing and voluntary,” and, therefore, invalid. But, again, that is not this case.
Short word of advice, review your release in light of not only the OWBPA, but also the EEOC regulations implementing the OWBPA.

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Title VII Prohibits Discrimination On the Basis of Both Race and Color


Which could seem redundant, but this article by Bill Maxwell of the St. Petersburg Times, points out just one way it is not. He focuses on a recent well publicized case where Applebee's was found liable for discrimination against one black employee by another, on the basis of his color. And according to Maxwell, that is not a new phenomenon.

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Congress Is Back In Session - Harkin Amendment Fight is Gearing Up


The Bush Administration's efforts to bring the regulations for white collar exemptions into the modern world would be halted by the Harkin amendment offered by Iowa Senator Tom Harkin. (Any guess how the Presidential Candidate/Senators will vote on this one?) This will be a real battle as both sides look to be inclined to pull out all stops. Organized labor is quick off the mark running advertising in three states with Senators who it thinks would be persuadable, Maine, Missouri and Ohio, and also nationally on CNN. Yahoo News has the story, as well as a link to the new website for those supporting the Harkin amendment, www.saveovertimepay.com. If you just can't wait to see the ad, you can catch a version on the website.

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Data on Employment Lawsuits From Jury Verdict Research


The most recent report from Jury Verdict Research indicates that the median award for employment discrimination cases rose 14% last year to $200,000. Age continues to be the most lucrative claim, with a median award of $266,852. See the Business Wire's story for more information.


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