Jottings By An Employer's Lawyer

Thursday, January 27, 2005

Smokers Ok - But What About Those On the Heavy Side of Life

Thanks to a reader for a tip to the story on the CNN website, Quit smoking or quit your job, company says detailing the efforts of Howard Weyers owner of Weyco, Inc. a Michigan claims handling company. Now that he has dealt with smokers, Weyers is turning his attention to the overweight in his workforce.

But he is helping not just demanding, by bringing in an eating disorder therapist to speak to workers, provided eating coaches, has created a point system for employees to earn health-related $100 bonuses and plans to offer $45 vouchers for health club memberships. And recognizes that if you are obese, you might have a legally protected status. The 71 year old Weyers (and fit) also has a recommendation for fellow business owners caught up in the ever increasing cost of insurance:
Quit whining about health care costs and set some expectations; demand some things.
Interesting prescription. Stay tuned for more.

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Wednesday, January 26, 2005

Priest as Harasser in the Employment Law Context

I had often wondered when the sexual misconduct of a priest would show up in the context of an employment law case. There may well be others, but Legrand v. Area Resources for Community and Human Resources (8th Cir. 1/20/05) [pdf] is the first that I can remember. Fortunately for the employer the 8th Circuit relied on its relatively high bar for establishing the last element of a prima facie case of hostile environment sexual harassment, that the harassment affected a term, condition or privilege of his employment.

The plaintiff worked as a facilitator for a social services agency that was involved in urban renewal. Father Nutt was a parish priest within the area where the agency was located and was a board member. The plaintiff alleged that on three occasions over 9 months, Father Nutt harassed him. The first instance occurred after Father Nutt gave him a tour of his church and then asked him to "watch pornographic movies with him and 'to jerk off with him' to relieve stress." An invitation, LeGrand declined. When he reported the incident to his superiors they suggested that LeGrand seek counseling through the agency's EAP which he did.

Five months later LeGrand encountered Father Nutt at the Agency's offices. There was a repeat of the behavior, although this time Nutt:

(1) mentioned the pornographic movies again; (2) suggested LeGrand would advance in the company, if he watched “these flicks” and “jerk[ed Father Nutt’s] dick off”; (3) “kissed [LeGrand] in the mouth”; (4) grabbed LeGrand’s buttocks; and (5) “reached for [LeGrand’s] genitals.
Father Nutt himself conceded "hugging and kissing LeGrand, but Father Nutt believed the “peck on the lips” was “mutual.” Father Nutt also admitted to “brush[ing LeGrand’s] crotch with the back of my hand [, . . . b]ecause it seemed that [LeGrand] was stimulated by the hug.” The final incident was when Father Nutt gripped Legrand's thigh while each were seated at a table in the Agency's office.

After LeGrand filed a charge of discrimination with the EEOC, the Agency requested and received Father Nutt's resignation, and disciplined LeGrand's supervisors for not following the Agency's sexual harassment problem. (Presumably for sending the victim to counseling, rather than resolving the issue.)

Although the litigation was doubtless embarrassing for the Agency, at least it was successful as first obtained summary judgment which has now been affirmed by the 8th Circuit:

Viewing LeGrand’s claim in light of the demanding standard set by the Supreme Court and by Duncan and its progeny, Father Nutt’s behavior did not rise to the level of actionable hostile work environment sexual harassment. None of the incidents was physically violent or overtly threatening. There can be no doubt Father Nutt’s actions, admitted and alleged, ranged from crass to churlish and were manifestly inappropriate; however, the three isolated incidents, which occurred over a nine-month period, were not so severe or pervasive as to poison LeGrand’s work environment. Therefore, we hold LeGrand failed to establish the existence of a trialworthy question of fact on his hostile work environment claim.
Crass and churlish? That may well be the understatement of this New Year.

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Rape or Consensual Sex? A Delicate Issue for the Courtroom

I have spoken recently on the topic, How Employers Make Juries Mad - And Pay For It With Big Verdicts and one of the issues I mention is the theme of the case. There are some themes that are riskier than others, although sometimes you don't have a choice. One of those very difficult themes - rape v. consensual sex - was played out in a federal court trial in Fresno last week. The danger to the employer is that if the jury does not believe that the admitted sexual conduct was consensual, the employer has also (in the juries' mind) lied to them and impugned the integrity of the plaintiff, who they believe was telling the truth. It is what I call a "shoot at the king" defense; great if it works, but with magnified risk if it fails.

The headline from the Fresno Bee tells you all you need to know about how it played out in this particular case, Jury awards field worker nearly $1m. Most cases of this nature, particularly the ones that are tried, are really very close questions. But the choice is binary, either it was consensual or it was rape, and once that decision has been made, the very vigor with which the opposing argument was made is often reflected in the jury award.

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Tuesday, January 25, 2005

Setting One Up for the Supremes - 4th Cir. Takes Broad View On Its Jurisdiction Under FAA

More use of arbitration means more litigation about arbitration and the 4th Circuit authors an important chapter in Discover Bank v. Vaden (4th Cir. 1/24/05) [pdf]. The issue -- when does a federal court have jurisdiction over a petition to compel arbitration? The Court divined two existing lines of precedent, the so called Westmoreland view, which "holds that for a district court to have federal question jurisdiction over a suit compelling arbitration, the federal question must be evident on the face of the arbitration petition itself." The second, broader, view allows the court to "look through" the arbitration request to the underlying controversy between the parties to see if it presents a federal question.

The 4th Circuits opinion lays out a well reasoned argument why the Westmoreland doctrine is not valid, including an attempt to justify it based on the well-pleaded complaint rule. In fact you could almost envision the opinion standing as the brief for those supporting a broad view of jurisdiction when this issue is submitted to the Supreme Court for review.

The underlying case is not an employment case, but a consumer dispute, and the 4th Circuit sent most of the substantive questions back to the district court for further determination. But the Court clearly staked out its position on the broader interpretation of federal court jurisdiction to enforce an arbitration request.

What this means for employment law practitioners in those circuits that ascribe to the broader view, now clearly including the 4th Circuit, is that if the underlying controversy is founded in federal law, such as Title VII, the FMLA, the FLSA etc., an action to enforce arbitration will now lie in federal court. For those faced with hostile state courts, an important distinction.

For now it's a circuit by circuit call, but the tenor of this opinion makes me think the matter is ripe for review.


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Monday, January 24, 2005

It Could Have Been A Big Deal, But New Tax Law Relieves the Pain In the Future

The importance of the section of the Jobs Creation Act which dealt with how contingency fees are reported and dealt with in employment cases came to full fruition today. This morning a unanimous (minus Justice Rehnquist) Supreme Court held that in cases before the effective date of the Act, the entire amount of a settlement, including the portion to be paid to the attorney under a contingency fee agreement is included in the gross income of the plaintiff for the year of the payment. While the plaintiff is entitled to a deduction it often does not remove the pain because of the alternative minimum tax. Commissioner of Internal Revenue v. Banks (1/24/05) [pdf]. Here is my earlier comment with a link to the applicable section of the new tax law which would have provided aid and comfort to Mr. Banks if only it had come in time, or been made retroactive.

Here's the Supreme Court's take on the going forward aspect of this decision:
[A]fter these cases arose Congress enacted the American Jobs Creation Act of 2004, 118 Stat. 1418. Section 703 of the Act amended the Code by adding §62(a)(19). Id., at 1546. The amendment allows a tax-payer, in computing adjusted gross income, to deduct "attorney fees and court costs paid by, or on behalf of, the taxpayer in connection with any action involving a claim of unlawful discrimination." Ibid. ... These deductions are permissible even when the AMT applies. Had the Act been in force for the transactions now under review, these cases likely would not have arisen. The Act is not retroactive, however, so while it may cover future taxpayers in respondents' position, it does not pertain here.
My emphasis added.

The case got to the Supreme Court in the first place because of a split in the circuits. Which means that if the IRS decides to go after tax revenue from past settlements, today's decision could have real consequences for those plaintiffs whose claims were settled prior to the effective date of the new Act (October 22, 2004), particularly in circuits which had previously held that the attorney fee portion of the settlement was not gross income.

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Friday, January 21, 2005

7th Circuit Pearl of Wisdom on What Is NOT Direct Evidence In Retaliation Case

Buried in an otherwise legally unremarkable opinion is good language by the 7th Circuit on what is NOT direct evidence in a retaliation case. The distinction between direct evidence, which proves a fact in question without reliance on inference or presumption, and indirect evidence is critical in determining whether the McDonnell Douglas burden shifting analysis is used.

In Mannie v. Potter (7th Cir. 1/20/05) [pdf], a postal employee alleged discrimination under the Rehabilitation Act and argued she had direct evidence of retaliation. The "direct evidence" was proof that her supervisors knew of her protected activity and took a "dim view" of it. It is not a stretch to think that such evidence would be available in many retaliation cases. Think for a moment about the deposition of a supervisor charged with being a racist in an EEOC charge and this hypothetical exchange:

Q: Did it make you happy when the plaintiff filed an EEOC charge claiming you did not promote her because she was black?

A: Well, I could not say it made me happy.

A dim view of the protected activity?

Even if it is, it does not get a plaintiff into the more favorable land of a direct evidence claim, at least it won't in the 7th Cir according to Mannie:

But even if we accept that Mannie’s supervisors “took a dim view of her complaining of discrimination,” this is not direct evidence because it requires the inference that her supervisors’ negative view of her discrimination charges caused them to take an
adverse employment action.

This may be remarkable only because it would have been so significant if it had gone the other way, but sometimes it is helpful to have a nice statement of the law on what seems like a simple proposition.

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Thursday, January 20, 2005

MDV: Reverse Discrimination Award Nets Fired Policemena $1.6 Million

Only in LA? Not likely, but that is where a jury awarded a white policeman, terminated following a widely publicized video of him slamming a 16 year old onto a squad car and punching him in the jaw after a routine case, $1.6 million. The Houston Chronicle headlined the story, Officers in beating case awarded $2.4 million. The extra $810,000 went to his partner, Bijan Darvish also white, who was suspended for 10 days. The rub -- and the basis for the cause of action, a black officer who was present at the scene was only suspended for 5 days. For a photo of the incident that ultimately led to this check out the London Times Story, The policemen disciplined for this beating have just been awarded $2.4m.

Reverse discrimination? Bingo, or at least so the jury said. This is one of those verdicts which, on the surface at least, does not seem to make a lot of sense, and my guess is that it will be a substantially smaller amount, if anything, that is ever paid. But it reminds us all who reside on the defense side of the docket that powerful and unpredictable forces exist not only in nature, but in the jury box.


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Wednesday, January 19, 2005

No Minimum Wage in the Hoosegow

That's according to Judge Posner and compatriots on the 7th Circuit, deciding an "issue of some novelty, but little difficulty." Bennett v. Frank (7th Cir. 1/19/05) [pdf]. The issue, a suit by prisoners at a private prison under contract with the Wisconsin Department of Corrections claiming that they were entitled to the minimum wage under the FLSA. Just not so, according to Judge Posner, although he does concede "this is so only because of presumed legislative intent and not because of anything in the actual text of the FLSA." The simple facts are:

People are not imprisoned for the purpose of enabling them to earn a living. The prison pays for their keep. If it puts them to work, it is to offset some of the cost of keeping them, or to keep them out of mischief, or to ease their transition to the world outside, or to equip them with skills and habits that will make them less likely to return to crime outside. None of these goals is compatible with federal regulation of their wages and hours. The reason the FLSA contains no express exception for prisoners is probably that the idea was too outlandish to occur to anyone when the legislation was under consideration by Congress.

I need to remember the "it was too outlandish to be considered" argument when faced with a sticky legislative history issue in the future.


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Is Nothing Sacred? Age Discrimination at the Weather Channel

Or at least that is what 41 year Marny Midkiff claims following her termination from the Weather Channel. According to the Career Journal story, A Former Weathercaster Files Charges of Age Bias, Exhibit A will be a staff meeting, videotaped for the convenience of those who could not be there. Among the comments of the programming chief, now recorded for all time:
Mr. Connelly cites market research suggesting that female viewers find the network's female meteorologists to be "matronly," "dowdy," "bland" and "nun-like." He tells women who appear on-camera, "you are in the television business, and you should understand. ... you will be picked apart far more than a male. ... women pick apart women. They kind of just accept men the way they are." The bulk of the hourlong meeting shows Mr. Connelly and a consultant discussing standard on-camera appearance issues, including wardrobe pointers. He explains that in the past, the channel had wanted "the Brooks Brothers look." Standing in front of a poster labeled "diversity," Mr. Connelly pans an outfit worn by a female newscaster on Fox News. "I would bet she is in her early 30s, and she looks late 40s," he says. "That's what clothes can do to you. Do you want to look old?"
The television industry has seen its share of similar litigation over the years, but the weather channel?

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Hostile Environment in the Kitchen - 7th Cir. Sends Restaurant Sexual Harassment Case to Trial

Disagreeing with the trial court's grant of summary judgment, the 7th Circuit has held that 3 incidents over two years, combined with other testimony showing continuing problems in the workplace, is enough to require a jury sort out whether a restaurant should be held liable for sexual harassment. Loughman v. Malnati Organization, Inc. (7th Cir. 1/18/04) [pdf]. The EEOC has made harassment of teens a special priority, see their specific web site, This decision provides a good example of why employers in the industry should beware.

Loughman, who started as a food runner at age 17, and worked for more than three years complained within her first three weeks of inappropriate comments from the kitchen staff ("do you like to have sex?" "would you have sex with me?"), but it was three physical confrontations that were the basis of her sexual harassment suit.

The first occurred after she was on the job for five months, when a kitchen employee caught up with her in the freezer as she was putting food away, "put his arm around her waist, pushed her into a room on the other side of the hall, and tried to kiss her. Loughman pushed him away and walked out, but [the kitchen employee] again caught up to her and blocked her path to the stairs for several minutes before relenting." After she complained to a restaurant manager the next day, the kitchen worker was told he would be fired if he ever touched her again. That warning worked and he did not bother Loughman again.

Nearly a year later, two kitchen employees followed Loughman into a walk in cooler,"turned off the light, and closed the cooler door. Hernandez grabbed Loughman, pinned her against the wall, grabbed her chest, and tried to put his hands down her pants. Loughman screamed and swung her arm, hitting Siffuentes. Siffuentes fell back into the cooler door, opening it. At that point, Hernandez backed away, and Loughman ran out of the cooler." When this incident was reported, a manager supposedly told her:
[T]his is the kind of stuff that's going to happen and something [Loughman] should expect?; "being nice to [the Hispanic kitchen workers] is like playing with fire"; "this is in their culture"; "most Mexicans are pigs"; and that Loughman should "be a bitch to them."
The manager denies making that statement, but for purposes of summary judgment, the Court accepted that it was made.

The third incident was in August 2002, almost 2 years after the attempted kiss, Loughman was talking to a customer on the phone and a driver "walked up behind her, ran his hands through her hair, slid one hand up her shirt, wiggled his fingers on her stomach, giggled and ran away." Two days later, a district manager apologized to Loughman and began investigating the first two incidents that he claimed he had just learned about. (That evidence was disputed as well.) As a result of the investigation, Hernandez, one of the two employees involved in the walk-in cooler incident was fired.

In reviewing the basis for the trial court's grant of summary judgment the appeals court found it relied on the facts that:
[The employee who tried to kiss Loughman] did not bother her after the first incident, that Malnati's eventually fired Hernandez, and that [the driver who stuck his hand up her shirt] apologized to Loughman and was transferred to another store, and concluded "Malnati's not only had a sexual harassment policy in place but had an effective one."
The 7th Circuit view -- a terse, "We're not convinced."

Noting that it was not just physical comments that Loughman was complaining about, but physical assaults, the mere fact that no employee committed two assaults was not sufficient to get the restaurant off the hook. Even testimony that a manager had talked to the kitchen staff 10 to 20 times about their comments to female workers was a double edged sword. The employer arguing it showed diligence in enforcing the policy, the Court noting perhaps it meant at some point the restaurant should have taken a different approach. And the comments about the nature of the kitchen staff, "not helpful." The ultimate determination - let the jury decide.

Anyone who has worked in, represented or probably even been a customer at fast food restaurants could easily envision the events above. No doubt when the whole story is told at trial (assuming one ever takes place) Loughman herself may be implicated in the conduct, the timing and content of her reports will be disputed, in short there will be multiple shades of grey. But where the cost of preparing for and going through a multi-day jury trial and the risks of a runaway jury often drive the decision on settlement, there is little doubt of the impact of this decision on the parties involved.

Many restaurant and fast food franchise owners, which not atypically have young workers and often barely older supervisors, may well think today, that could be me. The remedy -- aggressive training and no tolerance for any inappropriate behavior. A prescription easier carried out in theory than the real world of high turnover and low margins.

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Tuesday, January 18, 2005

Discriminating Against Your Partner? - Sidley & Austin Sued By EEOC

Although I am not sure that many in the world outside big law firms are concerned, you can be sure there is keen interest among the large law firms, and probably their partners/shareholders, over a suit filed last week against Chicago based Sidley & Austin by the EEOC. (Although be sure and check out fellow blogger, Carolyn Elefant's thoughtful comments over at My Shingle, Big Firm Partners: Not Much More Than Small Time Employees.)

The Commission press release has the details from its viewpoint, EEOC Charges Sidley & Austin With Age Discrimination. The basic legal question is simple -- when does a partner ( and probably equity shareholder, in firms that are professional corporations) have so little say in the running of the firm, that they are for purposes of the discrimination laws just another employee.

In an earlier decision, partially enforcing an EEOC subpoena which preceded the filing of last week's complaint, Judge Posner lays out the arguments and issues in EEOC v. Sidley Austin Brown & Wood, 315 F.3d 696 (7th Cir. 2002). Although clearly only deciding a preliminary issue, it is hard to read the opinion without coming to the conclusion that Sidley & Austin may have an uphill battle on the initial legal question. Of course overcoming the hurdle of the partnership is only the first step.

The second step to ulimate liability would be determining if actions were taken against "partners" because they were over 40. Although brought on behalf of "31 partners" who were impacted by actions in 1999, according to today's story ($ subscription) in the National Law Journal the original complaint came from a 'confidential government informer from within Sidley.' The article also identifies one of the affected partners as David Alan Richards, now co-managing partner of the New York office of McCarter & English.

The second part of the issue, a fight over partners' performance would be at best a messy one, and allow a look into the privacy of the firm that I am sure many would prefer not happen. This all may be a mountain out of a molehill as I would think not that many lawyers are going to want to wade into this thicket. On the other hand when six figure incomes are at stake, one should never underestimate the wave of litigation that could be forthcoming should the gates be thrown open.

Not bad.
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Monday, January 17, 2005

Do You Have Truckers? Vendors With Truckers? Might Want To Consider the Longer Term Impact of the New Rules

Hint, think $. The Federal Motor Carriers Safety Administration's rules setting new operating rules for truckers have just turned one year old, and are meeting with mixed reviews, particularly from the industry which fears a looming shortage of truck drivers. If trucking plays a role in your business, and it almost certainly does, even if you never see a truck, you should check out, Federal trucking rules roll out to mixed reviews, in the Atlanta Business Journal. For more background check out the FMCSA's page devoted to the Revised Hours of Service Regulations.

The new rules of service as summarized in the Business Journal are:
drivers may not drive more than 11 hours following 10 hours off duty, beyond the 14th hour after coming on duty after 10 hours off duty and after 60 hours in seven days or 70 hours in eight days. A driver may restart a driving period after taking 34 consecutive hours off.
Actually, that is a bit of oversimplification, as there are a fair number of exceptions, check out the FMCSA's page or a summary at the Trucker's Report for more details, but it does give you a feel as to the juggling issues transportation companies are now dealing with.

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Sunday, January 16, 2005

Employer's Conduct As A Bar To Challenge Right to FMLA Leave

When Charles Sorrell's wife developed an eye condition he decided to retire to spend more time with her. Announcing his retirement, his replacement was selected and he helped train him. After he had quit working, but was still on the payroll using up accrued vacation, he learned that he might be entitled to take leave under the FMLA to care for his wife. Asking his employer, he found that he was eligible for such a leave and ultimately submitted a request for leave and a medical certification. The employer raised no questions about the certification or the basis for the leave and approved it.

When Sorrell's leave was up and he sought to return, he was told that there was a hiring freeze. When he raised the specter of the FMLA with its reinstatement rights, the company offered him another sales position, but unlike his old job he would have to travel overnight. Sorrell asked for his old position. When he did not receive it, he sued under the FMLA.

The employer challenged his right to the FMLA leave, claiming that his wife did not have a serious health condition and that he did not "care for her" as required by the FMLA. Sorrell countered that the employer was estopped from now challenging his right to the leave since it had not raised an objection at the time. The District Court, without reaching either of those arguments, held instead that Sorrell had relinquished his right to the specific job, or any job, by his announced retirement.

And the answer? To be decided -- as the 6th Circuit Court sends it back to the trial court to resolve the questions that it did not address. Sorrell v. Rinker Material Corp., (6th Cir. 1/14/04) [pdf] . While giving the trial court free rule to decide the issues as it wishes, the Court nevertheless pointed the specific areas to be addressed, and also pointed out how other courts had decided those questions. The issues (and suggested answers) -- was the employer estopped from now challenging the leave since it had granted it without raising any questions (other courts have so held) and was the employer precluded from challenging the leave because it failed to comply with certain procedures under the Act, particularly 29 C.F.R. § 825.305(d) which obligates an employer to advise an employee if a medical certification is incomplete and give them a chance to comply (other courts have held this as well.)

Although it does not specifically say so, the Court's decision would seem to imply that if the employer was barred from challenging the leave, the employee would have been entitled to the leave and re-instatement to his old position. But before we know the final answer - it's back to the district court.


Well I totally agree to that decision – if the employer had disputed the leave in the first place, then they would have a leg to stand on. As it is now, they should have no leg to stand on. Regardless of the employee's announcement of retirement, the employer should be held liable to keep him employed under his previous position because the employer never made any noises about his leave in the first place.

This is a typical situation of a corporate saying one thing and doing another. Clearly, they wanted him out of there, and thought the leave might buy them some time. At the very least, they could have called him while he was on leave and told him that they were thinking of filling his position. If I were a judge, I'd rule this in his favor straight away and tell the company to go get some decent values and ethics.
As far as I understand it, a person who has already filed his leave and has been granted such leave shall enjoy such privilege regardless of the hiring status. I think the company is after its own interests. In order to refuse what the employee has to receive some companies would often create a stir by investigating on the some personal matters in the life of the employee and use it in order to win back the service of the employee. That itself is against any human rights.
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Wednesday, January 12, 2005

Impact of New White Collar Regulations? That Debate Continues

Over at Workplace Fairness you can check out an extended discussion of the the fight over the new white collar exemptions under the FLSA. Among the comments mentioned is my earlier post that the fuss was really much ado about nothing. Actually, my comment, with a twist, became the headline: Much Ado About Nothing? Just Look at Your Next Paycheck.

The author thought my view was based on the lack of post-election controversy by those opposed, a jump of "faulty logic." Actually that was not the basis for my comment. Instead it was based on my conversation with numerous employers asking how many had reclassified workers since the new regulations. The answer -- quite a few. But the most important question was whether they were taking employees who had been considered non-exempt under the old regulations and making them exempt (thus depriving them of overtime, which is was the argument made by those opposing the regulations) or vice versa. The overwhelming response of those that had changed the status of employees was to move them from exempt to non-exempt. The opposite of what the opponents of the regulations argued would happen.

To really know how workers were impacted by the change we will have to wait for some objective studies to determine how many employees gained and how many lost the opportunity for overtime. My guess based on my conversations is that substantially more will have gained overtime opportunities than lost them, but I am happy to wait for the non-anecdotal evidence.

At the end of its article, Workplace Fairness is eliciting its own poll, unfortunately it doesn't ask the question whether employees lost (or gained) the right to overtime. Instead it asks about what it calls "The Income Gap." But with no question even related to the impact of the change in the white collar regulations, it is hard to see what it will do to provide data of any type for this debate. Maybe I missed the logic.


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Illinois Joins the Ranks of States Prohibiting Sexual Orientation Discrimination

Although both sides had predicted victory, both houses of the Illinois legislature have now passed, S.B. 3186, which prohibits discrimination on the basis of sexual orientation, which it defines as meaning:
actual or perceived heterosexuality, homosexuality, bisexuality, or gender-related identity, whether or not traditionally associated with the person's designated sex at birth. "Sexual orientation" does not include a physical or sexual attraction to a minor by an adult.
The St. Louis Dispatch story, House Passes Gay-Rights Measure, has the details of the final legislative hurdle. As reported in the Southern Illinoisan story, Governor Vows to Sign Gay Rights Legislation, the Governor's signature will be forthcoming :
This truly is a landmark day in Illinois. This legislation sends a clear message that we will not allow our citizens to be discriminated against. I look forward to signing this bill.
Absent a successful court challenge (which has been promised), Illinois will become the 14th state (plus the District of Columbia)to prohibit discrimination on the basis of sexual orientation on the effective date of the legislation, July 1, 2005.

A similar bill has been introduced for this session of the Texas legislature, see my post on H.B. 143 here, but the chances of Texas becoming the 15th state to ban sexual orientation discrimination strike me as remote, at best.

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Tuesday, January 11, 2005

Opening Day at the Texas Legislature - Welcome Back

Today was opening day of the 79th regular session of the Texas legislature. Although this session appears likely to be dominated by school finance and other fiscal matters, legislators have been filing proposed legislation since November. Below are (generally) employment related bills which could effect private sector employers. Although it is a not a large number, don't worry, bills can be filed in the first 60 days of the legislative session.

H.B. 131 Thompson (D - Houston). Permits a parent staying home with a new born child to draw unemployment if certain criteria are met.

H.B. 143 Farrar (D - Houston). Prohibits employment discrimination on the basis of sexual orientation or gender identity, or discrimination against an individual based on the sexual orientation or gender identity of persons with whom the individual is believed to associate or to have associated.

H.B. 149 Pena (D - Edinburg). Places certain restrictions and procedures on the use of evidence of an alleged victim's past sexual behavior or alleged sexual predisposition in civil cases.

H.B. 237 Menendez (D - San Antonio). Not technically labor and employment law bill except so many practitioners are wed to their cell phones and this would make it illegal to use one in a motor vehicle unless it was stopped or you were using a hands free device. The companion bill is S.B. 139 Ellis (D - Houston).

H.B. 243 Goolsby (R - Dallas). May be the first bullying bill introduced into the Texas legislature, this one would allow students to be placed in disciplinary alternative education for engaging in bullying defined as: engaging in written or verbal expression or physical conduct that: (1) the student knows or reasonably believes will cause significant emotional distress to another student; (2) causes significant emotional distress to another student; and (3) would cause significant emotional distress to a reasonable person under the same circumstances. This sounds very similar to the tort of intentional infliction of emotional distress, which has had a checkered history at best. See also H.B. 283 Hope (R - Conroe) would allow the transfer of a student who was the victim of bullying.

H.B. 248 Goodman (R - Arlington). Would give courts continuing jurisdiction for the purposes of correcting or clarifying QDRO's and requiring them to be submitted to plan administrators to determine whether they meet the requirements for a QDRO.

H.B. 251 Eissler. (R - Magnolia). Would allow the release of additional workers compensation claim information to insurance companies who have established an anti-fraud program.

H.B. 269 Keel. (R - Travis) Would prohibit the use of an expunged criminal record for any purpose and permit a person to deny an arrest and expunction order.

H.B. 299 McClendon (D - San Antonio). FMLA type bill for employers with more than 10 employees would require up to 1 hour per month for attendance at certain school activities.

H.B. 330 Berman (R - Tyler) Makes Health Savings Accounts exempt from attachment or execution by creditors.

H.B. 334 Burnam (D - Fort Worth) Would establish $6.15 as the minimum wage.

S.B. 41 Zaffirini. (D - Laredo). An FMLA type act that would give time off from work to participate in certain activities of the employee's child. Would define employer as any employer with 10 or more employees and would provide up to one hour a month of unpaid time for meeting with teacher or attending other school function.

S.B. 70 Shapleigh (D -El Paso). Would provide a preference for potential state vendors for those who provide medical benefits for their employees.

S.B. 74 Shapleigh (D - El Paso). A Texas version of the Equal Pay Act that would be applicable to an employer with four or more employees.

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Steelworkers/PACE Combination to be Larger than UAW or IAM

Not unexpectedly given their existing alliance, the United Steelworkers and PACE International (Paper, Allied Industrial, Chemical and Energy Workers) have announced a formal merger that when completed will be the largest industrial union in the U.S. The combined membership is between 776,000 and 850,000 members according to the NYT story, Steelworkers, PACE Merge Into Union. Between the two, there will be an anticipated organizing budget of over $30 million per year.

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More Grist For the "They Can't Be Fired" Argument

I have noted a couple of times in this new year concerns involving the difficulty and costs of litigation with public employees. See my posts here and here. The ongoing saga of the Grand Rapids police department and two of its former officers does nothing to dispel that concern. First, in 2001 nine female officers including Patricia Denhof and Renee LeClear filed a sexual harassment suit against the department. Some of the claims were dismissed on summary judgment and a state court jury decided in favor of the police department on the rest of the claims, including the claims of Denhof and LeClear. That case apparently remains on appeal.

But following the jury verdict, the Police Chief, based in part on testimony during the trial and comments of the judge who called Denhof's claims "grossly exaggerated," required Denhof and LeClear to submit to fitness for duty evaluations. Found "unstable" they were involuntarily separated from the force.

That action resulted in a federal lawsuit for retaliation, tried this past December. This time the two officers were much happier with the outcome. On December 13, 2004 a jury returned a $5 million verdict in favor of the two officers. TV station WZZM had the story of the verdict on its website. According to one of the attorneys for the two fired officers quoted here:

We asked for $1.7 million each, and the jury nearly doubled that by awarding $2.5 million each. That is unheard of, but the jury was disgusted and was sending a message to the city that 'you were wrong.'

U.S. District Judge Gordon Quist is still sorting out the final judgment, but according to a story at the WOOD TV site, it appears each will receive a million dollars in compensatory damages plus backpay ($128,000 for LeClear, $161,000 for Denhof) and front pay of up to $1.2 each depending on whether they are reinstated.

And as in other cases I have written about, the local press has an opinion. Commenting from the safety of the editorial pages, the Grand Rapids Press offered the following:
This was a management and employee-relations error that could easily have been avoided. The City Commission now must be sure that others within city government don't blunder into the same situation. The employees are due that commitment. So are taxpayers.
File that one in the "beauty of hindsight and unhelpful information" category.

But in the truly useful information category, take note of this comment, "I would much prefer to have a good retaliation case than a discrimination case," said attorney H. Rhett Pinsky, an employment-litigation specialist, who was not involved in either case.

Now that is helpful information.

The two Officers you are referring to were sent to FFDE because they filed original lawsuit. Judge in State case would not let jury hear about adverse job action that was taken therefore the federal case was filed. Might be enlightening to actually get the accurate facts of both cases.
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Sunday, January 09, 2005

Confusing Medical Certification - Employer Survives FMLA Claim

Hoffman v. Professional Med Team (6th Cir. 1/7/05) [pdf] strikes me as an example of the litigation over the FMLA that more employers will soon be experiencing. Lynn Hoffman, an EMT with migraine headaches, had in place a medical certification that allowed her to take intermittent leave due to the unpredictable nature of onset of the headaches. After about a year, the employer (after consulting with counsel) requested an updated form noting her first contained an inconsistency. Hoffman returned the standard DOL approved form (WH-380), answering question 5a that the migraines would cause "intermittent short term disabilities", but answering question 5b, "Will it be ncesary for the employee to take work only intermittently or to work on less than full schedule as a result of the condition?", no.

After further consultation with their counsel, PMT advised Hoffman there was a contradiction between these two answers and asked her to submit a corrected form. When she declined, PMT told her it considered her request for FMLA leave canceled. More than six months later Hoffman missed several days work because of migraines. This resulted in another letter from PMT, "registering ... concern over the 'increasing frequency' of her absences and questioning whether the migraines were interfering with her job duties." It also required that she submit for a fitness for duty examination which she did.

When she brought the doctor's note that she was fit to work without restrictions she waved the note in her supervisor's face with the admonishment to "quit fucking with her." The next day she returned to pick up her pay check and found she had not been paid for the migraine related absences. She went to her supervisor's office to object and again told him to "quit fucking with her" and to "leave her alone." He ordered her to leave the building and suspended her that day. Two weeks later she was fired for using profanity towards her supervisor.

Two years and two months later she sued asserting both that her rights had been interfered with when she was denied a leave, and that her termination was in retaliation for her exercise of rights under the FMLA. After a bench trial, the court found that the employer was reasonable in rejecting her request for leave and did not willfully violate the FMLA when it terminated her. Finding no clear error on either finding, the 6th Circuit affirmed.

The Equal Employment Advisory Commission which filed an amicus brief argued for a ruling that an employer was entitled to rely on a negative certification without taking any further action. Unfortunately, the ruling was not that clear. Instead, the court's decision turned on her failure to bring suit within 2 years, which required that she show her employer willfully violated the FMLA. Joining with other circuits and its own prior unpublished decision, the Court adopted the FLSA standard for willfulness set out in the Supreme Court's Richland Shoe decision.

In resolving her claim, the Court noted part of the problem was a discrepancy between the DOL's regulation and its form (WH-380):
The form tracks the language of the statute and implementing regulations, with one exception: While the regulation requires that intermittent leave applicants establish the medical necessity of “tak[ing] leave intermittently,” question 5.b on the form asks whether it will be medically necessary for the employee to “take work only intermittently or to work on a less than full schedule. . .” Id. § 825.306(b)(2)(ii); Form WH-380.
It was that very language which led the employer to find a contradiction in her certification. Hoffman explained that the reason she did not believe (or want to answer) "Yes" to the question whether she could work only intermittently or less than a full schedule was that she feared PMT would use a "yes" answer to reduce her to part time and ultimately fire her.

Relying on the heightend standard for willfullness, the Court found that the employer's view of being confused by the form and the regulation was sincere, and also cited the employer's consultation with counsel as important in precluding a finding that the employer willfully violated her rights in not allowing her leave. Although the question of whether she was terminated in retaliation for exercising her rights was perhaps a closer question, the appeals court relied on the trial court's role "[a]s finder of fact," finding "[it] was uniquely positioned to sort out these conflicting implications," and its holding was not clearly erroneous.

Although not certain, it seems quite possible if the suit had been filed three months earlier the result would have been different, or certainly a lot closer. This case seems further proof as I noted less than a month ago in this post, that the FMLA is now coming of age, which means more reported decisions, which in turn will lead to more cases. For those employers who have viewed the FMLA primarily as a hassle, not a source of litigation, be forewarned. The FMLA has arrived.


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EEOC Regulation Extending ADEA Protection to Apprenticeships Upheld by 4th Circuit

In 1996, the EEOC changed its course on apprenticeships, including those run by joint labor-management organizations, and held that henceforth they would be subject to the prohibitions of the ADEA. See 29 C.F.R. §1925.21. An apprentice program for the maritime industry, sued by the EEOC has unsuccessfully challenged that regulation. EEOC v. Seafarers International Union (4th Cir. 1/7/05) [pdf].

The case provides an interesting insight into a sometimes overlooked aspect of employment law, the powerful deference given to an agency action. Since the world of employment law is fraught with such alphabet agencies as the NLRB, EEOC and DOL, understanding their power can often be critical in the resolution of a matter. The keystone for understanding judicial limits in reviewing agency's actions is the Supreme Court's opinion in Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984). Following Chevron, when viewing administrative action, courts generally face two questions: has Congress specifically prohibited the interpretation in question; and if not, is it a permissible interpretation of its organic statute.

Here, the EEOC sued the Union and the apprenticeship program which would only accept applicants up to the age of 35. Such limitation clearly contradicts the Commission's 1996 regulation applying the protections of the ADEA to such programs. The union and the program clearly appreciated the power of Chevron deference as they went to great lengths to argue its inapplicability. Unfortunately, each of their arguments - that the question was one of pure law which should be exempt from Chevron deference, that the agency's inconsistent position over time undermines the case for deference, and that since the EEOC had expansively interpreted the boundaries of its own power it was not entitled to deference, all fell short.

Once deference was applicable, the Court rejected the last substantive argument -- that a close reading of Title VII and the ADEA together made it clear that Congress did not intend to cover labor-management apprenticeship programs with the ADEA prohibitions. As is often the case, instead the Court found that in fact a close reading of the two statutes made it clear that the EEOC was left with the power to take the action that it did.

Although the issue decided is of tremendous importance to those who run apprenticeship programs, and to those individuals who later in life than the traditional apprentice seek to learn a new trade, the opinion itself is interesting as a classic example of how a court engages in a Chevron deference analysis and for the judiciary's limited role in policy decisions. The latter was emphasized by the Court in Chevron itself:
When a challenge to an agency construction of a statutory provision, fairly conceptualized, really centers on the wisdom of the agency's policy, rather than whether it is a reasonable choice within a gap left open by Congress, the challenge must fail. In such a case, federal judges - who have no constituency - have a duty to respect legitimate policy choices made by those who do. The responsibilities for assessing the wisdom of such policy choices and resolving the struggle between competing views of the public interest are not judicial ones: "Our Constitution vests such responsibilities in the political branches." TVA v. Hill, 437 U.S. 153, 195 (1978).
The 4th Circuit clearly takes that message to heart. Noting that throughout the proceeding the union and the program had frequently "assailed the wisdom of the EEOC's position", the Court nevertheless concluded:
[Their] arguments may have force. To vindicate them, however, would involve a judicial foray into policies far removed from our mandate under law. In the final analysis, their treatment is for the legislative and executive branches and beyond the province of this court. Congress has already entrusted enforcement of this statute to the EEOC. [cite omitted] Pursuant to this delegation, the agency promulgated a rule, after public comment, that brought age discrimination in apprenticeships within the purview of the Act. We are not authorized to judge the wisdom of this step. We are empowered only to ensure that the agency did not contravene the expressed intent of Congress, nor unreasonably apply its mandate, in reaching the interpretation that this rule reflects. We find that it did neither.
In short, it may well be that it is unwise to apply the ADEA to apprenticeship programs, but the forum for such arguments is in the policy making branches not the courthouse.


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Same Song, 2nd Verse - Support of Fellow Employee's Gender Claim Is Protected

The writers of the recent editiorial in the Las Vegas Review discussed here, One Paper's Opinion - Public Employees Can't Be Fired, would find support for their argument in Friday's decision in Konits v. Valley Stream Central High School District (2nd Cir. 1/7/05) [pdf]. The facts are simple, but the application of the law was not as clear, at least not to the district court judge whose grant of summary judgment was overturned with alacrity.

Konits, a tenured music teacher, filed her first lawsuit against her employer in 1996. The basis of that lawsuit, brought under both Title VII and on her 1st Amendment rights, was that she had been retaliated against for her support of a custodial worker who brought her own discrimination lawsuit against the District. Konits allegedly helped by assisting the employee in filing internal complaints, referring the co-employee to Konits' sister, a lawyer who filed a lawsuit on behalf of the employee, and being listed as a witness in support of her claim. Although the opinion does not say what happened to the custodial worker's suit, Konits was able to defeat summary judgment in her first case, which was settled before trial in 1999.

The second Konits suit, and the subject of Friday's opinion, did not fare as well at the trial court. She alleged that following the settlement she was retaliated against when she was not hired for several band and orchestra positions. Leading to her suspicion that there was a connection with her first lawsuit, the hiring committee for all of the jobs consisted of two individual defendants in the first suit. She also alleged a variety of other hostile and derogatory comments between the settlement and initiating her 2nd suit.

This time she did not bring a Title VII retaliatory claim, but relied on her constitutional claim under the 1st Amendment. That made critical whether her actions were of "public concern." Looking at the trial court's determination that it was not, the Court noted:
When the district court considered Konits’s claim in 1996, it found an issue of fact sufficient to defeat a motion for summary judgment: whether the School District’s adverse personnel action against Konits was in retaliation for her assisting Ms. Kenny. We therefore find curious its conclusion in 2004 that the 1996 lawsuit was not speech on a matter of public concern.
The Court went on to note that "gender discrimination in employment is without a doubt" a matter of public concern. And putting to rest a split that had developed among the district courts within the 2nd Circuit, held:
By our decision today, we resolve this split and hold that any use of state authority to retaliate against those who speak out against discrimination suffered by others, including witnesses or potential witnesses in proceedings addressing discrimination claims, can give rise to a cause of action under 42 U.S.C. § 1983 and the First Amendment.
So back to the trial court for yet another chorus of Konits v. Valley Stream, an apparently long running hit that you just know the school district is ready to end.


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Thursday, January 06, 2005

Age Discrimination at the Highest Levels in Oklahoma

If the suit hadn't been filed last week, we might could have chalked it up to just "the day after" reaction to the Orange Bowl. But we will have to find another reason for Justice Marian P. Opala's federal court complaint against his fellow justices of the Oklahoma Supreme Court alleging they have discriminated against him on the basis of his age by denying him the "ceremonial duties" and slightly higher salary of being Chief Justice. The NYT has the story, Oklahoma Judge, 83, Files Bias Suit Against Colleagues.

Probably better to leave it to the academics, rather than practicing lawyers to expound on the claim. Starting with fellow blogger Professor Volokh to say what many must be thinking about Justice Opala's claim based on the equal protection clause of the U.S. Constitution -- it is "very, very weak." Or there's also Professor Deborah L. Rhode's view, "The court has an interest in ensuring that the role is filled by someone of exemplary judgment, temperament and related capacities. These do not appear in abundant supply in this particular case."

Professor Volokh is at UCLA and Professor Rhode at Stanford. Hmm, two California schools in the Pac 10. Maybe there is an Orange bowl connection after all!

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Employee Holiday Gift Goes Awry

Although the parent company was announcing record profits, some staffers at the Daily Progress, the Charlottesville paper owned by Media General, were less than thrilled with their holiday gift: an $8 holiday fixings gift certificate to Kroger's, not to be used for alcohol or tobacco. The quote that might get your attention for future employmee relations:
"I see where profits come from," says yet a third unnamed staffer. "Human resources is where it comes from. They squeeze it from us."
You can check out the story at The HooK, which appears on first glance to be the alternative counterpart in Charlottesville and one expects could be taking a friendly potshot at its mainstream media competitor. Still, the reaction makes it clear that the mere act of giving to one's employees is not without its own set of risks.

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You Think You Have Problems With Some of Your Employees?

Hopefully, you won't see a headline involving you or your company like the one in today's Miami Herald, Woman found guilty of poisoning her boss. Fortunately, for the boss the employee didn't dump "that much" rat poison into his Dr. Pepper. He recovered after a trip to the emergency room.

The reason for the poisoning -- not that he was such a bad boss, but that he had figured out she had written checks on his account. She just wanted to make him sick enough to go home to give her time to cover her tracks. At the time, she was on probation from having stolen $20,000 from a doctor's office where she had previously worked. The jury's verdict could result in a sentence of up to 30 years in prison. A pretty strong dose, since she turned down a plea that would have resulted in only four years time.

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Self Insured Medical Plans - The Way Out, or the Next Financial Crises?

A study by the Kaiser Family Foundation Employer Health Benefits 2003 Annual Survey showing a continuing increase in coverage of either fully or partially self funded plans (now 52% of all workers in the US) was the springboard for a story in the Charlotte Observer which asks the important question, Are you in good insurance hands?. But the tone of the story, which was published in several papers around the country, seems a lot more ominous than the results of the study. As important as medical insurance is (and as much money is involved in self funding) no one would question the need to stay vigilant to possible problems with those plans, but let's not jump the gun. Perhaps a bigger issue, also highlighted in the study and other articles is the disappearance of employer provided or even supplemented health care for retirees. Perhaps the lead in the Detroit Free Press story, BOOMER BUST: Retiring workers face health cost quagmire says it best: "This is not your parents' retirement."

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Tuesday, January 04, 2005

One Paper's Opinion - Public employees simply can't be fired

That's the view of the Las Vegas Review Journal commenting on the saga of the University of Nevada, Las Vegas and Professor Richard Sutton. The paper was reacting to the Nevada Supreme Court's affirmation of Sutton's latest victory two years ago. The paper had reported the story then, Professor again wins reinstatement.

This weeks editorial, The ultimate job security detailed the trials (truly) and tribulations of the University's efforts to fire him. Twice they tried, and twice he sued successfully. The paper's conclusion:
It's difficult to determine what's more maddening: that an employee with poor reviews was paid for years off the job, or that a branch of government would spend so much public funding on a second trial defeat and appeal. Whether they appear before a boss, jury or arbitrator, the overriding sentiment toward fired public employees seems to be, "It's only taxpayer money."
Enough said.

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Union and Employer Agreement Not Always Enough

Certainly not to deprive an employee of his Section 7 rights. Those rights in case you have not looked at the NLRA lately go both ways:
Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities....
At issue in Lee v. NLRB (4th Cir. 1/4/05) [pdf] was a long standing provision in the collective bargaining agreement between the Communication Workers of America and Bellsouth, which requires certain workers to wear a uniform that has the logos of both Bellsouth and the CWA. Two Bellsouth employees, Gary Lee and James Amburn, who were not union members objected to wearing the union insignia. They filed unfair labor practice charges which were heard, but rejected by the NLRB.

On appeal, the 4th Circuit's approach was like a ping pong:
Employees have a presumptive right to wear union insignia as part of their Section 7 rights to engage in concerted activities related to union organization and collective bargaining.
But, "there is a reciprocal Section 7 right contained in that section’s 'right to refrain' language to choose not to wear union insignia."
However, the right is not unfettered. The Board has held "a company may prohibit display of union insignia where such display unreasonably interferes with its established public image."
Consequently, although not necessary to decide in this case, the Court assumed that an employer, like BellSouth, "may require the display of the union insignia if the absence of the union logo unreasonably interferes with its established public image."
After the back and forth, the issue for decision boiled down to whether the Board's acceptance of the "special circumstances" presented by Bellsouth and CWA justified the restriction on Lee's and Amburn's rights.

In a word -- "no". The rationale presented by Bellsouth seemed reasonable enough:
The display of the union logo on the uniforms signifies a labor-management partnership which makes service interruptions due to labor disputes less likely and represents that their employees are well-trained, well paid, and more experienced with a stable work environment.
The Board agreed. The Court emphatically didn't. Holding instead:
Rather than view the union logo as representing a labor-management partnership which makes labor disputes less likely and a reflection of a stable work environment, the public may view the union logo with suspicion and associate it with service disruptions and labor disputes, [cite omitted] particularly in a right to-work State such as North Carolina.
The argument that the Union has the right to bargain away the rights of those it represents, including non-members, fell on deaf ears as well. True of economic rights, but not rights provided by Section 7.

This is a clear cut victory for the National Right to Work Legal Defense Foundation which represented the two individuals. Although the Board does not always get a lot of respect from the various circuit courts, the rejection here, and so strongly, seems somewhat surprising. Although this is not an issue that is likely to be widespread, it is no doubt one that is important to the CWA and organized labor, which makes me suspect that we have not heard the last of this particular case.

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Something We Do Know About - the Hispanic Workforce

A golfing magazine is not where you would normally turn to find a thoughtful piece about issues relating to a changing workforce, but Peter Blais' article, The New Face of Labor, in the January, 2005 Golf Business magazine is just that. Language classes, cultural issues, H-2B visa's and seminars about all of those are part of the new world of golf course management. And although the article is industry specific, the issues are not. Anyone with a bilingual, bicultural workforce may want to check this out.

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Cold Weather Work - Its Greek to Me

It does occasionally get cold in central Texas, but not so often that many employers in this area have much use for the tips in the story OSHA Regs, Common Sense Dictate Cold Weather Work Guidelines from the Business Ledger, The Business Newspaper for Suburban Chicago. But for readers in more northern climes, I figure folks from Chicago should know cold.

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Why the Tax Code Needs to Be Simplified - Exhibit 1 (of a potential million)

The IRS announcement of a new Code Z for reporting certain income, as quoted in today's Daily Labor Report ($ subscription required):
"This code and other reporting will be used to identify income recognized due to participation in a nonqualified deferred compensation plan that fails to meet the requirements of the Internal Revenue Code section 409A that was added by section 885 of the American Jobs Creation Act of 2004," IRS said. It said the income needs to be reported separately because it is "subject to an additional tax and interest."

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Monday, January 03, 2005

Working As A Major Life Activity - the Texas Supreme Court View

Assuming without deciding that work can be a major life activity for purposes of the Texas equivalent to the ADA, the Texas Supreme Court finds there is no evidence to show that Leal who had carpal tunnel syndrome was precluded from doing a broad class of jobs. Haggar Apparel Co. v. Leal (Tx. 12/31/04) [pdf]. In fact, the Court found the record showed the exact opposite:
Shortly before she was terminated, one of her physicians released her to regular duty and another to moderate duty. Leal argues that the evidence showed she was unable to work at assembly line jobs like the one at Haggar, but it shows exactly the opposite: Leal continued to work at Haggar up to the day she was terminated. Even if Leal were correct, she does not argue that she was unable to work in a broad class of jobs. To the contrary, she testified that after she left Haggar she worked for a child care facility and applied to work at the public school.
The Court does nothing more, nor less, than align itself with the U.S. Supreme Court's decision in Toyota Motor Mfg., Kentucky, Inc. v. Williams.


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When Is a Scintilla Not Enough? When the Standard Is Clear and Convincing

On the last day of 2004, the Texas Supreme Court affirms a workers compensation retaliation jury verdict in all respects, except for its finding of punitive damages. Southwestern Bell Telephone Co. v. Garza (Tx. 12/31/04) [pdf]. Under Texas law in order to sustain a finding of punitive damages, there must be a showing of malice based on clear and convincing evidence. The question for the Court: does this heightened standard of proof at trial mean there should be a heightened standard of appellate review?

In answering yes, the Court had occasion to discuss Texas' dearly beloved scintilla rule, which is best summed up in the revered former Chief Justice Calvert's law review article on the topic:

The scintilla rule, although having its origin at a much earlier date, was firmed up in Texas in Joske v. Irvine [44 S.W. 1059 (Tex. 1898)]. The rule may be stated in these words: when the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the evidence is, in legal effect, no evidence, and will not support a verdict or judgment.
But when the standard is clear and convincing, more than a scintilla of evidence is needed. The Court had already decided this issue, albeit in a totally different context. When parental termination decisions were questioned, clear and convincing evidence was the constitutionally mandated standard, and the same test that was applied there should be applied here.

The new test, first conduct the legal sufficiency examination (see opinion for explanation of that process), then: "If, after conducting its legal sufficiency review of the record evidence, a court determines that no reasonable factfinder could form a firm belief or conviction that the matter that must be proven is true, then that court must conclude that the evidence is legally insufficient." Heightened standard at trial, heightened standard of appellate review. Makes sense to me.

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Sunday, January 02, 2005

Hostile Environment Claim Under ADA - Possible

But just showing that some of your fellow employees teased you, even when they did so using mental health terms was not enough to allow a former deputy to defeat the County's motion for summary judgment. Lanman v. Johnson County (10th Cir. 12/30/04).

Although having been a deputy since 1987, Lanman testified that beginning in March 2001 several of her co-workers begin treating her as if she were mentally ill. Among the things that she complained about:
[They would]call her "nuts" or "crazy." ... When someone "hyped up on drugs" or "hostile" would be placed in a special holding cell (1A4), Deputy Judd Brungardt would tell her "Lanman, there is someone like you. Go get your relative out of 1A4. They act just like you." She also testified Deputy Bernie Beletsky made comments like the following approximately once a week: "Oh Lanman, you are going off the deep end again," or "Let's give her some chocolate and let's see her go off the deep end," and "Are you off your medication?," or "Why don't you try a different medication."
After some other incidents and a mistake in classifying prisoners, she was suspended pending a psychological fitness for duty exam, which she passed. She returned and was assigned to another position. On her first day she was suspended for three days after a confrontation over whether she needed to work with a training officer in the new position. When she heard it was announced at roll call that she would be returning and if anyone had any problems with it they should talk to the supervisor in private, she chose to resign.

Her suit claimed all of this created a hostile environment in violation of the ADA. While the Court agreed that such a cause of action existed, it also held that Lanman must first establish that she was disabled before she could bring such a claim. Since she claimed nothing was wrong with her, she was forced to rely on the "perceived as" prong of the disability definition. That required that she show both that the employer believed she had an impairment and that it believed the impairment substantially limited a major life activity. The limited comments of co-workers and even the request for psychological exam were not nearly enough to meet that burden. No disability, no ADA claim, even for a hostile environment.

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Those New Wage and Hour Regulations - Ho Hum

Good to know I am not the only one who felt that when all was said and done, the fuss over the new white collar regulations was really much ado about nothing. At least that's the story (or non-story) behind the press release from the folks at BLR, New Overtime Regulations Brouhaha - What Was the Fuss All About?. Although in most partisan fights there are equal doses of overheated rhetoric, in this case the opponents of the amended regs were far and away the worst offenders.

In fairness, the first version of the regulations put out for comment would have been far more significant, but the protests resulted in a rolling back of almost all the controversial provisions, leaving a milquetoast version of what had once been proposed. The continued protests, particularly at the decibel level they were made, was at best purely partisan sniping, at worst a failure to understand what they were talking about. Or maybe that should be at best a failure to understand, at worse attempting to make an issue where none existed.

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Saturday, January 01, 2005

It's A New Year -- How About a Tax Reminder?

Actually a pretty scary reminder, for anyone who can be deemed a "responsible person" for purposes of ensuring that the wages withheld from employees are turned over to the government. Employers are required to withhold and pay over certain taxes from their employees. While the primary responsibility is the employer's, a penalty for such a failure equal to the unpaid tax can be collected from "[a]ny person" who was "required" but "willfully" failed to pay over the withheld taxes. I.R.C. § 6672 (2000). Last week the 1st Circuit pointed out what we could be talking about:
The jury verdict in this case depends on the legal proposition that someone in Lubetzky's position had to confront top management and quite possibly resign from his position if he wanted to avoid the risk of liability ... This is a harsh dilemma with which to confront someone, and we have found little case law that deals with the issue in such stark terms.
Lubetzky v. USA (1st Cir. 12/29/04).

What was Lubetzky's position? At trial he described himself as a "glorified bookkeeper," who was told which bills to pay by the owners of the company, and felt as if he would have been "stealing" if he paid bills, including the withheld taxes, without permission from management. Unfortunately for him, at one time he became treasurer which under the company's bylaws made him the chief financial officer. But back to the dilemma the court agreed Lubetzky found himself in - resign his job or put himself at risk for the penalty for not paying the taxes. Harsh as it seems, the case law was not on his side:
In Brounstein v. United States, 979 F.2d 952 (3d Cir. 1992), a former salesman who was the (perhaps nominal) president and (clearly actual) assistant treasurer and check-writer was held liable even though the Third Circuit assumed arguendo that Brounstein's effective superior might have told him not to pay--and might have fired Brounstein had he done otherwise. "Instructions from a superior not to pay taxes do not," said the court, "take a person otherwise responsible under [the statute] out of that category." ...
Similar in effect is Roth v. United States, 779 F.2d 1567 (11th Cir. 1986), where the Eleventh Circuit said: In our view, no instruction by the president or the majority owner of [the corporation] could effectively bar an otherwise responsible officer from paying these funds in accordance with the law. .... accord Howard v. United States, 711 F.2d 729, 734 (5th Cir. 1983) ("The fact that Jennings might well have fired Howard had he disobeyed Jennings' instructions and paid the taxes does not make Howard any less responsible for their payment.").
It probably didn't make Lubetzky, who ended up on the wrong end of a judgment in excess of $90,000, feel any better to hear the court refer to the "murky standards for imposing liability."

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