OSHA Fines Employer $1.2 Million for Exposing Workers to Asbestos Hazards

AMD Industries, Inc.of Cicero, IL discovered asbestos containing materials on its heaters, boilers and connected pipes. Allegedly, they used their own workers, who were untrained and not issued proper protective clothing and equipment, to remove the asbestos and thereby exposed the workers to this hazard. AMD was prosecuted under OSHA's newly created "Severe Violators Enforcement Program," which targets recalcitrant employers who have previously been cited for multiple OSHA violations in the past. DOL press release.

Mexican Restaurant fined $1.2 million for violations of FLSA

A federal court has issued a judgement for $1.2 million for back wages and damages against the owner and the manager of two Mexican restaurants in Decatur, Illinois based on the court's finding of pervasive violations of the FLSA. The U.S. DOL had investigated the pay practices of these restaurants and found innumerable violations of the FLSA with respect to how the wait staff and kitchen staff were paid by the restaurant.

Voluntary Disclosure of Medical Information does not Create Employer Liability Under the ADA

A truck driver voluntarily informed his company's human resources manager that he was HIV-positive. Several months later, the driver decided to become a driver-trainer for the company. The company's HR manager expressed some concerns regarding the driver's ability to work as a trainer because of his HIV-positive status. The company and the driver discussed the matter, and ultimately decided that the driver's HIV status would be disclosed to those he trained via an acknowledgement form informing trainees that the driver suffered from HIV. Ultimately, the relationship between the driver and the company deteriorated significantly, and the driver's contract was terminated. The EEOC filed suit against the company on the driver's behalf, raising a number of claims. Included among these was a violation of Section 102(d) of the Americans with Disabilities Act ("ADA"), which governs medical examinations and inquiries. Ultimately, the Tenth Circuit held that Section 102(d) only prohibits the disclosure of confidential information obtained through an authorized medical examination. It does not, the court held, protect information that is voluntarily disclosed by an employee outside of an authorized employment-related medical exam or inquiry. This opinion recognizes an important limitation on Section 102(d), which could otherwise rapidly devolve into a strict-liability provision that creates liability for any disclosure. Such a result would negatively impact the ability of employers and employees to develop creative solutions to difficult situations, like the one presented here. Nevertheless, employers must tread with extreme caution whenever disclosing confidential employee information, as doing so could lead to litigation not only under the ADA, but under state tort laws as well.

EEOC v. C.R. England, Inc., Nos. 09-4207, 09-4217 (10th Cir., May 3, 2011)

OSHA Public Outreach: Private Employer Survey

OSHA has announced that it will send a survey to 19,000 private employers to get input concerning workplace safety & health management practices. The goal is to obtain information to help guide future rules, compliance and outreach efforts. As we mentioned earlier this month, the EEOC is also engaging in a public outreach effort to assist reviewing its regulations.

No Violation of Bankruptcy Code for Refusing to Hire Applicant due to Bankruptcy Filing

An applicant for a project manager position with an information technology employer was interviewed and offered the position, pending a background check. The background check revealed that the applicant had filed for bankruptcy in 2002, and the applicant was not hired because of that filing. The applicant sued, alleging that the employer had violated the U.S. Bankruptcy Code’s anti-discrimination provision when it decided not to hire him based on his debt history. The U.S. Court of Appeals for the Third Circuit rejected the applicant’s claim, finding that the Bankruptcy Code does not prevent a private employer from considering a bankruptcy filing in the hiring process. While the Bankruptcy Code states that a public employer may not “deny employment to” an individual based on a bankruptcy filing, it does not extend that prohibition to private employers. Rather, the Bankruptcy Code only creates liability for private employers who “terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor . . .” While this case indicates that private employers may consider an applicant’s debt history when making hiring decisions, employers must be aware of state laws that do not allow such considerations. For example, Illinois employers must now abide by the Employee Credit Privacy Act, which prohibits employers from discriminating against applicants based on their credit history.

Help us, Help you: EEOC asks for Input on Regulation Reforms

In a piece of beauracractic master craftsmanship, the EEOC has asked for input on possible regulatory reform by soliciting "Public Comment on Plan for Retrospective Analysis of Significant Regulations." From what we can discern from the press release, the agency is taking a serious look at stream-lining and improving the regulations covering the enforcement of six employment nondiscrimination laws: More ›

New DOL app Tracks work Hours

Our friends at the Department of Labor have gone Steve Jobs on us. Check this out:

Having trouble keeping track of your hours at work? The U.S. Department of Labor has an app for that! More ›

U.S. Supreme Court Reinstates Army Reservist’s “Cat’s Paw” Bias Claim Under USERRA

A group of employees who participated in their employer’s 401(k) plan invested a portion of their account in their employer’s stock. They sued their employer under the Employee Retirement Income and Security Act (ERISA) when the price of their employer’s stock dropped. The employees alleged that their employer had failed to disclose sufficient information about a bad business transaction that the employer had entered into and to monitor the conduct of the plan fiduciaries. Initially, the U.S. Court of Appeals for the Seventh Circuit dismissed a claim of an employee bringing suit who had previously signed a severance agreement with the employer waiving all claims against the employer, including those under ERISA. The employee argued that he could still pursue his claim against under the plan because ERISA prohibited plan fiduciaries from being released from their fiduciary responsibilities. The court held that nothing in ERISA prohibits a fiduciary from obtaining a release for potential claims that had already accrued. It went on to find that the fiduciaries did not violate ERISA in initially selecting their own stock as an investment option under the plan because: (1) the fund was one of many among which the participants could choose; (2) the plan repeatedly warned against the risk of not diversifying their investment choices; and (3) the employer’s stock had never performed badly enough to make it an imprudent investment choice. Additionally, the court held the employer and plan fiduciaries were protected under the “safe harbor” provision of Section 404(c) of ERISA against the employee’s claims that the employer had failed to disclose information about certain business decisions and to monitor plan fiduciaries. The Section 404(c) safe harbor provision provides protection for plan fiduciaries in certain instances where participants direct the investment of their accounts in a 401(k) plan. The purpose of the Section 404(c) safe harbor provision is to relieve the fiduciary of responsibility for choices made by someone beyond its control. The court held that the plan fiduciaries had no duty to provide plan participants with real time updates on business decisions or to review all business decisions of the company. Based on the court’s findings in these cases, employers should ensure they are in compliance with Section 404(c) of ERISA, as it provides protection to 401(k) plan sponsors if their fiduciary decisions are questioned. However, they should be aware that Section 404(c) does not provide protection for the initial fund selection. Additionally, employers should ensure that all severance agreements are well-drafted.

Howell v. Motorola, Inc., Case No. 07-3837 (7th Cir. Jan. 21, 2011)
Lingis v. Dorazil, Case No. 09-2796 (7th Cir. Jan. 21, 2011)

Store Manager Covered by FLSA Exemption Despite Performing Primarily Nonexempt Work

A store manager working 50 to 65 hours per week sued her employer, seeking overtime compensation on behalf of herself and other similarly situated store managers under the Fair Labor Standards Act (FLSA). For FLSA overtime purposes, the employer deemed store managers to be exempt executives. Although the store manager performed significant amounts of nonexempt tasks, the U.S. Court of Appeals for the Fourth Circuit found that she carried out managerial and nonmanagerial tasks concurrently and that her nonexempt functions served the employer’s managerial goals of customer satisfaction and store profitability. Despite the fact that the store manager was performing nonmanagerial tasks 100 percent of the time, the court concluded that ultimately she was the only individual responsible for running and managing the store. Accordingly, the court held that the store manager was exempt from the FLSA’s overtime requirements. Without a viable individual claim, the court further held that the store manager could not proceed with overtime claims on behalf of others whom she alleged were similarly situated. Employers should be aware that a managerial employee may properly be designated as exempt under the FLSA where he or she is given sole responsibility for the management of a facility, even in circumstances where the employee is also performing nonexempt work.
 
Grace v. Family Dollar Stores, Case No. 09-2029, (4th Cir. Mar. 22, 2011)

Employers Should be Aware of State Laws Prohibiting Marital Status Discrimination

Although no federal law prohibits discrimination by private employers based on marital status, a number of state laws include such status as a protected class. The Minnesota Supreme Court recently considered a case where a husband and wife worked for the same employer. The husband, employed as the company’s president, offered to resign his employment. The wife, employed as a sales and marketing coordinator, was terminated shortly thereafter. The company’s CEO told the wife that he would like to terminate her because “she would be uncomfortable or awkward remaining employed” after her husband left the company. The CEO also told her that her position was going to be eliminated because she would likely relocate with her husband. The wife then sued the employer, alleging marital status discrimination in violation of Minnesota law. The employer argued that a claim for marital discrimination must be supported by a finding that the termination was an act “directed at the institution of marriage” and claimed that the employee had been fired for legitimate business-related reasons. The Minnesota Supreme Court held that a claim for marital discrimination does not require that an employee prove a direct attack on the institution of marriage. The Court instead determined that “marital status” includes “protection against discrimination on the basis of the identity, situation, actions, or beliefs of a spouse or former spouse.” Importantly, this means that an anti-nepotism policy prohibiting employment of married couples by a company is illegal in Minnesota. Many other states, including California, Florida, Illinois and Wisconsin, also prohibit marital status discrimination. This decision is a reminder that all employers, and especially national employers, should review and update their anti-nepotism and anti-discrimination policies to ensure compliance with state laws.

Taylor v. LSI Corporation of America, Case No. A09-1410 (Minn. Apr. 13, 2011)