Human Resource Director’s Statements Serve as Direct Evidence of Discrimination

An employee who worked in a law firm’s marketing department took leave under the Family Medical Leave Act (FMLA). The leave was scheduled to begin just before the birth of her child and continue after the birth. While the employee was on leave, the employer decided to eliminate the employee’s position “as part of an organizational restructuring.” When the employee came to the employer’s office to remove her belongings, the employer’s director of human resources allegedly told her that she “was let go because of the fact that [she] was pregnant . . . and took medical leave.” The employee sued, alleging that she was discriminated against based upon her pregnancy, that she was retaliated against for taking FMLA leave, and that the employer interfered with her right to take FMLA leave by failing to reinstate her when her leave expired. The employer argued that the employee had no evidence to support her claims because the director’s statements were “hearsay,” (statements that were made outside of court that may not be considered as evidence). The U.S. Court of Appeals for the Seventh Circuit held that the director’s statements were admissible evidence. While the director’s statements were “hearsay,” the court found that an exception applied to allow them to be considered. Specifically, the exception allowing out of court statements or “admissions” made by a party to a lawsuit to serve as evidence was applicable. The director’s statements were “admissions” attributable to the employer because the director made them within the scope of her employment, which included regular involvement in the elimination of positions and termination of employees. Because the director’s statements were admissible, the employee had direct evidence that she was terminated because of her pregnancy, that she was fired in retaliation for taking FMLA leave, and that the employer unlawfully denied her right to reinstatement after she completed her FMLA leave. Consequently, all of the employee’s claims survived summary judgment. Human resources employees must be aware that statements they make to employees concerning the reasons they were terminated are admissible evidence that could later be used to support a legal claim. Moreover, employers should never terminate an employee because she is pregnant or retaliate against an employee because he or she takes FMLA leave.

Makowski v. SmithAmundsen, LLC, et al., No. 10-3330 (7th Cir. Nov. 9, 2011)

Employer’s "100% Healed" Policy Did Not Support "Regarded as" Disability Claim

A long-haul truck driver requested a transfer to a local driving route for personal reasons. Shortly after transferring, the driver discovered that the increased lifting requirements of the local position aggravated a preexisting back injury. Consequently, the driver requested a transfer back to a long-haul position. His request was denied based on the requirements of the collective bargaining agreement. As a result, the driver went on medical leave. The driver returned with restrictions from his treating physician that prevented him from performing the physical work required as part of the local route and stating that he could only work as a long-haul driver. The employer informed the driver that he could not return to work until he was released without restrictions. The driver sued the employer, alleging that the employer’s “100% healed” policy established that the employer regarded him as substantially limited in the major life activity of working in violation of the American’s with Disabilities Act (ADA). The U.S. Court of Appeals for the Seventh Circuit rejected this argument because the driver failed to establish that the employer believed that he was unable to work in a class of jobs or a broad range of jobs. Absent such a showing, the driver could not establish that the employer regarded him as disabled simply because it required him to establish that he was fully able to perform the specific requirements of the job he was performing for the employer. While implementing a “100% healed” policy may not serve as a per se violation of the ADA, employers must carefully apply such a policy to ensure that it does not trigger liability and should consult with counsel regarding any concerns.

Powers v. USF Holland, Inc., No. 10-2363 (7th Cir. Dec. 15, 2011)

Pension Plan Administrators did not Breach Fiduciary Duty, Despite Allegation of Excessive Investment Fees

Participants in an employer-sponsored defined contribution pension plan sued their employer, alleging that the plan administrators violated their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by paying excessive fees to investment advisors and requiring plan participants to pay the cost of mutual fund fees instead of having the fees paid by the plan. The district court dismissed both ERISA claims. The U.S. Court of Appeals for the Seventh Circuit affirmed, holding that nothing under ERISA required the plan administrators to find and offer the cheapest possible funds. With regard to the second claim, the Seventh Circuit held that no fiduciary duty was breached by requiring the participants to pay for advisor fees instead of having them paid for by the plan. ERISA does not impose a duty on employers to contribute to employee benefit plans at a certain level and, in determining the contribution an employer chooses to make, the employer may act in its own interests. This case is another important decision in favor of qualified retirement plans and plan administrators. However, as other courts have found in favor of plan participants in similar cases, plan administrators should be mindful of the competitiveness of the fees charged and ultimately borne by plan participants.

Loomis v. Exelon Corp., No. 09-4081 & No. 10-1755 (7th Cir. Sep. 6, 2011)

No Overtime for Banquet Hall Sales Managers

Sales managers for a company that owns high-end banquet halls were expected to maintain relationships with existing clients and secure new clients for custom events, such as weddings or corporate parties. Sales managers functioned as the primary client contact and were responsible for designing, coordinating and executing the event to the client’s approval within the fee structure outlined by their employer. They were given a handbook that contained some sales guidelines, but the handbook did not provide prescribed techniques or “sales pitches.” Also, the sales managers could neither issue discounts to clients nor sign-off on client contracts without the employer’s consent. They received salaries and were not paid overtime if they worked more than 40 hours in a week. A group of former sales managers challenged this practice and sued to recover overtime under the Fair Labor Standards Act (FLSA). The employer claimed that the sales managers were not entitled to overtime because they fit within the statute’s “administrative exemption.” To establish that the sales managers qualified under the administrative exemption, the employer had to demonstrate that the sales managers routinely exercised “discretion and independent judgment with respect to matters of significance.” The U.S. Court of Appeals for the First Circuit held that the sales managers were exempt in spite of their lack of authority to make financial and contractual decisions on behalf of their employer because their work in securing clients and creating a custom product, personalized to individual tastes and budgets, was sufficient to meet the independent discretion requirement. Regarding the handbook, the court concluded that the rules were not so numerous or specific as to restrict the judgment required to engage with clients and prospective clients. Employers are reminded that not all “sales managers” will meet the independent-discretion factor of the administrative exemption. Employers are urged to work with their counsel to review the business practices in place and the responsibilities assigned to a position to determine if the position is properly classified as exempt from the overtime requirements.

Hines v. State Room, Inc., No 10-2298 (1st Cir. Nov. 28, 2011)

Transsexual Employee Covered by 14th Amendment’s Equal Protection Clause

A public employee was terminated after she alerted her supervisors of her intent to transition from a man to a woman and come to work as a woman. The decision to terminate the employee was based on the employer’s perception of the employee as “a man dressed as a woman and made up as a woman” and on the “sheer fact of the transition.” The employee sued the employer, alleging claims of sex discrimination in violation of the Equal Protection Clause of the 14th Amendment. The U.S. Court of Appeals for the Eleventh Circuit held that discriminating against someone on the basis of his or her gender nonconformity constitutes sex-based discrimination under the Equal Protection Clause. In effect, discriminating against someone who fails to act according to socially prescribed gender roles constitutes actionable discrimination. Public employers should be aware that the Equal Protection Clause provides another legal basis for some employees, including individuals who otherwise may not be able to claim protected status under Title VII of the Civil Rights Act of 1964, as amended, to contest gender discrimination in the employment context. While this opinion is somewhat limited to public employers, all employers should also refrain from taking disciplinary action against individuals solely for not conforming with societal gender norms, as similar legal theories have been successfully litigated under Title VII.

Glenn v. Brumby, No. 10-14833 & No. 10-15015 (11th Cir. Dec. 6, 2011)

Even Under ADAAA, Major Life Activity of Working Still Requires a Heightened Showing

A medical assistant began suffering migraine headaches after being reassigned to a new doctor within the medical group by which she was employed. The headaches occurred several times per week and varied in severity. Shortly after submitting a letter of resignation, the assistant asked to rescind it. The request was denied. The assistant sued the medical group under the Americans with Disabilities Act (ADA), alleging that the employer failed to accommodate her disability and wrongfully terminated her employment. During discovery, it was established that the assistant had never suffered migraines prior to working for the specific doctor to whom she was reassigned, and stopped suffering headaches after her employment ended. Under the ADA, to qualify as disabled an individual must establish that he or she suffers from a physical or mental impairment that substantially limits a major life activity. Before the trial court, the assistant argued that she was substantially limited in the major life activity of working. Prior to the passage of the ADA Amendments Act of 2008 (ADAAA), establishing a substantial limitation in the ability to work required a showing that one was limited in a class of jobs or a broad range of jobs, rather than simply unable to perform a specific job or work for a specific employer. Nevertheless, the assistant argued that under the new U.S. Equal Employment Opportunity Commission (EEOC) regulations interpreting the ADAAA, she could establish a substantial limitation on her ability to work even if she was only unable to perform a single job. The U.S. Court of Appeals for the Tenth Circuit rejected this argument. While it noted that the EEOC’s amended regulations no longer specifically refer to the “class of jobs or a broad range of jobs” requirement, the agency’s interpretive guidance makes clear that this remains a required showing to establish a substantial limitation in the major life activity of working. Consequently, the assistant could not establish that she was disabled under the ADA, and summary judgment was granted to the employer. Employers should focus on specifically how an employee is limited in performing his or her job, as those facts may be crucial in determining whether the individual is disabled under the ADA.

Allen v. Southcrest Hosp., No. 11-5016 (10th Cir. Dec. 21, 2011)

Ledbetter act only Affects Limitations Period for Claims Involving Actual Discrimination in Pay

In 2003 and 2004, a school district eliminated two employees’ custodial positions. The district offered the employees lower-paying janitorial jobs along with a promise to maintain their prior pay for two years. The employees accepted and continued to receive higher custodial wages until the pay cuts took effect in 2005 and 2006. When those pay cuts went into effect, the employees filed administrative charges alleging that the school district had violated the Age Discrimination in Employment Act (ADEA) by forcing them into lower-paying positions because of their age. The district court concluded that the charges were barred because they had not been filed within 300 days of the discriminatory decisions in 2003 and 2004, as required by the ADEA. The employees appealed based upon the Lilly Ledbetter Fair Pay Act of 2009 (Act). The Act changed how the limitations period is calculated for claims under the ADEA and Title VII of the Civil Rights Act of 1964, as amended, that involve “discrimination in compensation.” Under the Act, in applicable cases, each paycheck issued to an employee is treated as a new act of discrimination, and thus each paycheck resets the 300-day limitations period. The employees argued that their charges were filed within 300 days of their most recent paychecks, and therefore were timely under the Act. The U.S. Court of Appeals for the Tenth Circuit rejected this argument, holding that the Act was intended as a narrow adjustment that only applies to claims involving actual discrimination in rates of pay (i.e., unequal pay for equal work). In this case, the employees had alleged discrimination in their demotion, not that younger employees were paid more for equal work. Accordingly, the employees’ 2005 and 2006 paychecks were not fresh acts of discrimination under the Act, and their claims were time-barred. This decision is a positive development for employers and if followed by other federal courts will limit the Act to claims involving actual pay discrimination and will not allow employees to bring stale claims involving other forms of discrimination.

Almond v. Unified Sch. Dist. #501, No. 10-3315 (10th Cir. Nov. 29, 2011).

Seventh Circuit Emphasizes "Flexible" Similarly-Situated test in Discrimination Case Involving Threats, Violence at USPS

A female African-American Postal Service employee of 35 years voluntarily entered a psychiatric clinic to be treated for depression, anxiety, and insomnia. While in treatment, she admitted having homicidal thoughts toward her supervisor. She was eventually discharged after much improvement and returned to work, but her supervisor learned of the threats after calling the clinic. She was almost immediately terminated for what the employer said was a violation of its workplace anti-violence policy.

The employee sued the Postal Service, alleging that she had actually been terminated based upon her race and sex in violation of Title VII of the Civil Rights Act of 1964, as amended. As part of her case, she showed that, shortly before her threats became known, two white male workers who had “jokingly” held down a black worker and pulled a knife on him had only been suspended for 7 days. She argued that this was evidence that the anti-violence policy was a pretext for the actual discriminatory reasons for her termination. The district court granted summary judgment for the Postal Service, reasoning that the male workers, who worked in different positions than the employee and committed a different violation, had not been “similarly situated” to the employee and so could not be used to prove her case.

On appeal, the U.S. Court of Appeals for the Seventh Circuit reversed. The Seventh Circuit held that the district court’s analysis of the “similarly situated” question had been far too demanding. Because the male workers had been terminated by the same decisionmaker, were subject to the same anti-violence policy, and had committed a violation of at least equivalent — and possibly greater — seriousness, they were sufficiently “similarly situated,” and could be used to show that the employer had terminated the female employee for discriminatory reasons rather than violation of the anti-violence policy. The Seventh Circuit emphasized that it is concerned about “the tendency of judges in employment discrimination cases to require closer and closer comparability between the plaintiff and members of the comparison group,” because “[d]emanding nearly identical comparators can transform this evidentiary ‘boost’ into an insurmountable hurdle.”

In light of the Seventh Circuit's statements regarding the flexibility of the "similarly situated" test, employers should ensure that all disciplinary policies are evenly enforced among all employees. Any discrepancy in enforcement can later be used as comparative evidence to support a discrimination claim.

White House Announces plan to fill Three Vacancies on the NLRB through Recess Appointments

On January 4, 2012, President Obama announced his intent to recess appoint three individuals to serve as Members of the National Labor Relations Board. These appointments will return the Board to a full five-member slate for the first time since August of 2010. Time will tell whether these appointments will have a significant impact on future NLRB decisions. However, it is possible that future Board actions may face legal challenges as a result of these recess appointments. The Republican controlled Senate has taken the position that it is not currently in recess and that the White House, therefore, cannot legally make recess appointments.

The NLRB press release provided the following biographies:

Sharon Block, Deputy Assistant Secretary for Congressional Affairs at the U.S. Department of Labor. Between 2006 and 2009, Ms. Block was Senior Labor and Employment Counsel for the Senate HELP Committee, where she worked for Senator Edward M. Kennedy. Ms. Block previously served at the National Labor Relations Board as senior attorney to Chairman Robert Battista from 2003 to 2006 and as an attorney in the appellate court branch from 1996 to 2003. From 1994 to 1996, she was Assistant General Counsel at the National Endowment for the Humanities, and from 1991 to 1993, she was an associate at Steptoe & Johnson. She received a B.A. in History from Columbia University and a J.D. from Georgetown University Law Center where she received the John F. Kennedy Labor Law Award.

Terence F. Flynn, currently detailed to serve as Chief Counsel to NLRB Board Member Brian Hayes. Mr. Flynn was previously Chief Counsel to former NLRB Board Member Peter Schaumber, where he oversaw a variety of legal and policy issues in cases arising under the National Labor Relations Act. From 1996 to 2003, Mr. Flynn was Counsel in the Labor and Employment Group of Crowell & Moring, LLP, where he handled a wide range of labor and employment issues, including collective bargaining negotiations, litigation of unfair labor practices, defense of ERISA claims, and wage and hour disputes, among other matters. From 1992 to 1995, he was a litigation associate at the law firm David, Hager, Kuney & Krupin, where he counseled clients on federal, state, and local employment and wage hour laws, NLRB arbitrations, and other labor relations disputes. Mr. Flynn started his law career at the firm Reid & Priest, handling labor and immigration matters from 1990 to 1992. He holds a B.A. degree from University of Maryland, College Park and a J.D. from Washington & Lee University School of Law.

Richard Griffin, General Counsel for International Union of Operating Engineers (IUOE). He also serves on the board of directors for the AFL-CIO Lawyers Coordinating Committee, a position he has held since 1994. Since 1983, he has held a number of leadership positions with IUOE from Assistant House Counsel to Associate General Counsel. From 1985 to 1994, Mr. Griffin served as a member of the board of trustees of the IUOE’s central pension fund. From 1981 to 1983, he served as a Counsel to NLRB Board Members. Mr. Griffin holds a B.A. from Yale University and a J.D. from Northeastern University School of Law.

New Workplace laws for California Employers

If you have employees in California, you may wish to scroll through this list of legislation passed in 2011, all of which became effective January 1, 2012. The legislation includes new rules about using consumer credit reports as a part of background checks, E-verify, leaves of absence for organ donors, and various other employment and wage and hour provisions.