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)

Employee must show “Intolerable” Working Conditions to Establish Constructive Discharge

A pregnant employee used nearly all of her annual paid time off during the first three months of the year, leading the employer to advise her that she could have no more absences. When the employee ignored the warning and began a medical leave on the very next workday, the employer told her that the absence “[wasn’t] going to work.” The employee took this as a termination and chose not to return to work. Instead, she sued the employer for constructive discharge under Title VII of the Civil Rights Act of 1964, as amended by the Pregnancy Discrimination Act of 1978, alleging that the employer had made attendance demands that were impossible for a pregnant woman and did so with the intention of making her quit. The U.S. Court of Appeals for the Eighth Circuit found that while the employee’s work conditions were “unpleasant and unprofessional,” they were not “intolerable,” as required to establish constructive discharge. Further, the employee had failed to establish that the employer intended to make her quit or should have foreseen that she would quit because of its demands. Employers should remember that an employee alleging constructive discharge will have to prove both that work conditions were “intolerable” and that the employer specifically intended to force the employee to quit or should have reasonably foreseen that the employee would quit.

Trierweiler v. Wells Fargo Bank, Case No. 10-1343 (8th Cir. Apr. 8, 2011)

Employee’s Failure to Report Renewed Harassment Fatal to Racial Harassment Claim

A black employee claimed that two of his co-workers started taunting him with racial epithets soon after he was hired. In accordance with the company’s anti-harassment policy, the employee complained to the company owner. The company owner immediately berated the two co-workers and warned that further harassing incidents would result in immediate termination. One of the co-workers continued to use racial epithets. The employee then complained to another worker, but never reported the later incidents to the owner. The employee sued, alleging that the employer violated Title VII of the Civil Rights Act of 1964, as amended (Title VII), for failing to address his co-workers’ continued use of racial epithets. The employee argued that the employer was liable for two distinct failings: (1) inadequate discipline following the initial harassment; and (2) failure to address the later harassment—of which the employer had notice through the employee’s complaints to the other worker. The U.S. Court of Appeals for the First Circuit rejected the employee’s arguments and held that “when co-workers, rather than supervisors, are responsible for the creation and perpetuation of a hostile work environment . . . an employer can only be liable if the harassment is causally connected to some negligence on the employer’s part.” The court ruled that the employer’s response to the initial harassment was “swift and appropriate” and that the employee’s failure to report to the company owner, as ordered, was “fatal to his claim of employer liability.” Employers should adopt an anti-harassment policy that makes clear whom the employee must notify about harassing incidents. By ensuring a swift and initial response to harassment, and a clear directive as to whom employees must notify of current and further harassing incidents, employers will be able to defend against any subsequently filed lawsuit.

Wilson v. Moulison N. Corp., Case No. 10-1387 (1st Cir. Mar. 21, 2011)

Contractor’s Employees Deemed "Statutorily Protected Employees" and Permitted to Handbill Under new "Access Standard"

A group of restaurant employees engaged in handbilling on casino premises as a part of an organizing campaign by Las Vegas unions. Although not employed by the casino itself, the employees worked on casino property and handbilled in front of restaurants operated by their employer on behalf of the casino. The casino asked the employees to cease their organizing efforts. The employees refused, prompting a visit from the police, who issued citations and removed the employees from the premises. The employees alleged unfair labor practices against the casino. The National Labor Relations Board (NLRB) determined that the casino had, in fact, violated the National Labor Relations Act (NLRA) by prohibiting the handbilling and that the restaurant employees were rightfully on the property as they worked regularly and exclusively on it. In reaching its decision, the NLRB developed an “access standard,” which strikes a balance between the rights of the contractor employees and the property owner’s rights. Under the “access standard,” the property owner may lawfully exclude handbilling on its property, but only where the property owner demonstrates that the activity significantly interferes with the use of the property or where exclusion is justified by a legitimate business reason. Here, the NLRB determined that the casino failed to make the requisite showing and thus violated NLRA Section 8(a)(1) when it prohibited the restaurant employees from handbilling on the premises. Employers should be mindful that the right to organize may extend to more than the employer’s own employees, and that the employer’s contractor’s employees may be “statutorily protected” in their organizing activities.

New York, New York Hotel and Casino, 356 NLRB No. 109 (NLRB Mar. 25, 2011)

EEOC Announces Final Bipartisan Regulations for the ADA Amendments Act

Regulations Implement Congressional Intent to Simplify Definition of Disability

WASHINGTON — The U.S. Equal Employment Opportunity Commission’s (EEOC) final regulations to implement the ADA Amendments Act (ADAAA) are now available on the Federal Register website. Like the law they implement, the regulations are designed to simplify the determination of who has a “disability” and make it easier for people to establish that they are protected by the Americans with Disabilities Act (ADA)... (read more)

No Constructive Discharge Under USERRA Where Working Conditions not Objectively Intolerable and Plaintiff Failed to Show Veteran Status Was a Motivating Factor

An employee who was a paramedic joined the Marines and served three tours of duty in Iraq before being discharged from active duty. The employer allowed the employee to return to work at the same position and rate of pay as before he joined the Marines. Subsequently, the employee and his supervisor got into a verbal confrontation not relating to military service and the employee believed the supervisor treated him “dismissively.” The employee claimed to fear that the supervisor would attack him or find some pretext to fire him, but never reported this fear to anyone. The employee later requested time off pursuant to the Family and Medical Leave Act (FMLA) for treatment of his self-reported post-traumatic stress disorder (PTSD), and his employer granted the request. During his time off, the employee also filed a claim for long-term disability benefits for PTSD, which was denied on the basis that the plan did not cover disabilities caused by acts of war. The employee never returned to work, formally resigning more than a year after requesting time off under the FMLA. The employee later sued his employer and supervisor, alleging workplace discrimination and constructive discharge on the basis of veteran status, in violation of the Uniformed Services Employment and Reemployment Act of 1994 (USERRA). The U.S. Court of Appeals for the Eighth Circuit affirmed the dismissal of the employee’s constructive discharge claims because the employee failed to present a prima facie case of constructive discharge. Under USERRA, constructive discharge occurs when an employer deliberately renders an employee’s working conditions intolerable with the intent of forcing the employee to leave the employment. The employee failed to show that the conditions were objectively intolerable or that his status as a veteran was a motivating factor in any constructive discharge. Further, he never gave the employer any opportunity to correct the claimed intolerable condition before he quit; thus, the claim failed as a matter of law. Employers should be mindful that USERRA prohibits discrimination against veterans with respect to any benefit of employment on the basis of their application for membership or their service in the uniformed services, and they should take immediate action to affirmatively address acts of discrimination in the workplace to prevent potential liability under USERRA.

City may Require Physician’s note from Employees upon Return from Leave or Restricted Duty

A city directive required employees from the division of police returning to regular duty following sick leave, injury leave or restricted duty, to submit a copy of their physician’s note, stating the “nature of the illness” and whether the employee was capable of returning to regular duty, “to [his or her] immediate supervisor.” Upset by the mandatory disclosure and funneling of confidential medical information through immediate supervisors, the division of police employees brought a class action lawsuit against the city, alleging that the directive violated the American with Disabilities Act, the Rehabilitation Act, and the privacy provisions of the First, Fifth, and Fourteenth Amendments. The U.S. Court of Appeals for the Sixth Circuit held that the employer’s request for a returning employee to provide information about his or her general diagnosis was not necessarily a question about potential disability, and fell far short of the requisite proof of the employer engaging in discrimination solely on the basis of disability. The court stated that based on the ADA’s definition of “disability” the city’s directive was not a prohibited inquiry as to whether an employee is an individual with a disability because there was no evidence that this inquiry was intended to reveal or necessitated revealing a disability. Therefore, the directive did not trigger the ADA’s protections. The court also rejected the employees’ privacy rights claims, concluding that the directive did not raise an informational privacy concern of a constitutional dimension. This case demonstrates that an employer may institute a carefully crafted policy requiring a returning employee to provide information about his or her general diagnosis and ability to return to work, so long as the policy does not require the employee to reveal (or necessitate an employee revealing) that he or she is an individual with a disability as defined by the ADA.