KEY CASES

7thCir: Agreement only guarantees flight engineer salary level until age 65

Two 75-year-old airline flight engineers were not entitled to jobs with pay comparable to what they had earned as flight engineers under an agreement the airline had negotiated with two unions when the airline began retiring aircraft that utilized a flight engineer, the Seventh Circuit held. The agreement provided that flight engineers would be guaranteed a position with a salary equivalent to what they earned as a flight engineer "until his normal flight engineer retirement date." Because the airline retirement benefit plan set age 65 as the flight engineer retirement date, an arbitrator had determined that the flight engineers were only guaranteed flight engineer pay until age 65. Consequently, a federal district court was bound by the arbitrator's determination in an ADEA suit brought by the engineers following the filing of a complaint with the EEOC. Additionally, the engineers' claim that the agreement was facially discriminatory was not properly before the court because it was not properly alleged in the EEOC charge (Miller v American Airlines, Inc, May 5, 2008).

7thCir: Married couple rightly discharged after FMLA applications denied

A married couple, fired after their retroactive applications for leave were denied, failed to show their terminations violated the FMLA. The husband took several days off to care for a sick child, but missed the deadline to file the medical certification. The form he used was preprinted with his wife's name and social security bar code information rather than his own, and as a result, the form apparently went astray. The employer did not interfere with the employee's FMLA rights by failing to warn that certification forms could not be interchanged with other employees. "There is a limit to how many warnings an employer must encumber its forms with," the Seventh Circuit noted. Nor was it interference to require that the completed certification be faxed or mailed directly by the health care professional rather than delivered by the employee. The employer may want to avoid the possibility of an FMLA applicant forging a letter or embellishing the doctor's comments before forwarding it, the appeals court noted, and "nothing in the statute forbids an employer to adopt reasonable, nonburdensome measures for preventing fraud." As for the wife, her discharge for missing the deadline by only one day was harsh, but after "a history of failed attempts to justify absences as being authorized by the FMLA... hers was a case of the last straw." The employer need not "exhibit more patience than the law and its own rules required," reasoned the court (Townsend-Taylor v Ameritech Servs, Inc, April 29, 2008).

7thCir: Executive who declined comparable job was not entitled to severance

A senior vice president of account management at an advertising agency who resigned after a change of control was not entitled to severance benefits under the golden-parachute clause of a severance plan because he spurned a job offer with the same title and a slightly higher salary at the other agency. The severance plan expressly denies severance benefits if the executive is offered a "comparable" position at the same salary or higher, the Seventh Circuit noted. The executive argued the entire compensation package should be reviewed in deciding whether the position offered was comparable, but the plan language referred to salary alone. "A court can no more rewrite a severance-benefits plan to be more favorable to employees than it could direct [the employer] to give its executives eight rather than four weeks of vacation," the court noted. It declined to consider whether the plan administrator should be afforded less deference because the plan in dispute was unfunded and thus, it is argued, the administrator over-inclined to make eligibility determinations in the employer's favor. The question whether an administrator's financial conflict of interest affects the standard of judicial review is squarely before the Supreme Court in MetLife v Glenn (Dkt No 06-923). "We need not hold this appeal for the outcome of MetLife, however," noted the court, because the plaintiff here loses even under de novo review (Williams v The Interpublic Severance Pay Plan, April 29, 2008).

DCCir: Retiree benefits negotiable? Depends on reservation-of-rights clause

Several subsidiaries of an electric utility company were entitled to modify the terms of their retiree health care benefits package without first negotiating with the union over the changes, the DC Circuit held. Several other of the company's subsidiaries were not allowed to make such unilateral changes, however. The appeals court rejected the blanket assertion that the retirement benefits were not mandatory bargaining subjects under the NLRA, since the benefits dispute affected current employees who would retire in the future. Rather, the right to unilaterally modify the retiree benefits package turned on whether the subsidiary had included a reservation-of-rights clause in the plan provisions of the applicable bargaining agreement. The appeals court thus enforced only in part an NLRB order finding the employers unlawfully refused to bargain, and vacated the Board's order with respect to the subsidiaries that had reserved the right to modify the plans (So Nuclear Oper Co v NLRB, May 6, 2008).

MDTenn: Caterpillar could proceed on just one of its third-party claims against UAW

A federal district court in Tennessee allowed Caterpillar to proceed in its third-party complaint against the United Auto Workers international union and certain of its locals, concluding the manufacturer adequately alleged that by actively funding and encouraging lawsuits against the company by retirees in a dispute over modifications to retiree healthcare benefits, the union breached its promise to be bound by the labor contracts it negotiated in 2004. However, the court dismissed Caterpillar's more substantial claims that the UAW must indemnify the company for liability and costs associated with the suits (Winnett v Caterpillar, Inc, May 1, 2008).

STATE LAW CASES

IA: Jury could find wrongful discharge for reporting no-contact order violations

A female employee could proceed to trial on her claim that she was wrongfully discharged because the police came to her workplace after she reported no-contact order violations by a male coworker prosecuted for domestic assault. A federal district court in Iowa concluded the state's public policy favors reporting violations of no-contact orders issued to protect victims of domestic violence. Discharging a worker for reporting a no-contact order violation, especially when the violation occurs at work, would undermine public policy. Here, a reasonable jury could find the employee's reporting of the no-contact order violations was the determinative factor in her discharge and that other justifications were lacking (Rayburn v Wady Indus, Inc, NDIowa, April 10, 2008).

MI: Public employers may not grant benefits to same-sex domestic partners

Public employers in Michigan may not provide healthcare benefits to the domestic partners of gay and lesbian employees, the Michigan Supreme Court ruled last week. An amendment to the state constitution that expressly defined marriage as a union of one man and one woman prohibited the state from recognizing other unions "for any purpose," effectively barring the provision of benefits to qualified same-sex partners, a 5-2 majority of the state high court held (National Pride at Work, Inc v Governor of Michigan, MichSCt, May 7, 2008).

NJ: Internet users have right of privacy in subscriber information

Internet subscribers have a reasonable expectation of privacy in the personal information they supply to Internet service providers, the New Jersey Supreme Court ruled in a case of first impression. The case arose after a disgruntled employee used her home computer to change her employer's shipping address to a non-existent address. The employee was identified through her 10-digit IP address, which was captured on a supplier's website. In response to a subpoena, the internet service provider disclosed her identity along with her address, phone number, and other information. After she was arrested and charged with second-degree computer theft, the employee moved to suppress the evidence obtained through the subpoena. Finding the employee had a protected privacy interest in the subscriber information under the New Jersey Constitution, the state high court held the information was properly suppressed (New Jersey v Reid, NJSCt, April 21, 2008).

TN: Noncompete pact was assigned to corporate successor, corporation could sue

An employer that changed its business form from a sole proprietorship to a chartered corporation had standing to sue two former employees pursuant to the noncompete agreement they signed while working for the company as a sole proprietorship, a Tennessee appeals court ruled. There was no language in the agreement specifically prohibiting its assignment, and under state law, a covenant not to compete is assignable to the same degree as other contracts. While the defendants tried to raise a factual dispute over whether the pact had actually been assigned to the new corporation, there was no reason to conclude the noncompete agreement was not transferred, since all of the other assets of the business had been transferred. Thus, the noncompete agreement was assigned to the corporation by operation of law, and the corporation had standing to sue for enforcement (Packers Supply Co v Weber, TennCtApp, April 14, 2008).

WA: Injunction blocking state's emergency contraceptive regulation to stand

A divided Ninth Circuit denied a motion to stay a district court's preliminary injunction blocking Washington Board of Pharmacy regulations prohibiting pharmacies and pharmacists from refusing to dispense emergency contraception (i.e., the "Plan B" pill). Even if the district court erred in concluding the regulations violated the First Amendment's Free Exercise clause, there was insufficient evidence that the appellants-intervenors would face irreparable harm if the injunction remained in effect pending appeal. Accordingly, until the constitutional issues surrounding the regulations are decided at trial, the state is prohibited from enforcing them. However, pharmacists who refuse to fill a prescription for Plan B must immediately refer customers to the nearest or nearby source for the contraceptive. Dissenting, Judge Tashima would have granted the stay. "Granting a pharmacist the right to refuse to fill a lawful prescription for whatever reason is not constitutionally required," he wrote (Stormans Inc v Selecky, May 1, 2008).

AGENCY DEVELOPMENTS

NLRB: Hotel owner's press release and news media rule is overbroad

A hotel's rule that "all press releases and other statements of information" relating to any incident "that generates public interest or press inquiries" will be handled by the general manager or his representative, and further providing that no statements or information shall be supplied by any other employee, could be interpreted by employees to prohibit communicating with the media regarding a labor dispute and thus to prohibit Section 7 activity, the NLRB ruled. The Board refused to interpret the rule more narrowly to merely prohibit employees from speaking on behalf of the employer in response to media inquiries. The rule is one of several employment rules that the Board found violated the NLRA. However, the Board upheld a rule requiring employees to request permission to patronize food and beverage outlets during non-working times as well as one prohibiting discussion of company business or work difficulties in front of guests when on duty (Crowne Plaza Hotel, 352 NLRB No 55, April 30, 2008).

DOL: Marketing analyst is an exempt administrative employee

An employer's product technology application and marketing analyst (PTA) is an exempt administrative employee, according to the Wage and Hour Administrator. The PTA works with the company's engineering and design group to develop product tests and assessments. Other duties include assisting sales reps and evaluating product features for potential customers. These duties involve the "performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers," and thus are exempt (W & H Opinion Letter No 2571, FLSA2008-3).

DOL: OLMS issues proposed union transparency rules

The Department of Labor's Office of Labor-Management Standards issued a notice of proposed rulemaking today that would enhance union financial transparency. The proposed rule would revise certain aspects of the Form LM-2, which is filed by about 4,600 unions with annual receipts of at least $250,000. The proposal also implements a longstanding provision of the LMRDA to require unions that ordinarily file a simplified report to instead file the more detailed LM-2 if they violate their legal obligations. The public will have 45 days to comment on the proposed regulatory change.

SSA: Employers will not receive "no-match" letters in TY 2007

As many as 8 to 9 million employees each year provide incorrect social security numbers to their employers. Each year, employers submit that data to the SSA on W-2 forms. When the agency is unable to match the W-2s with its own records, employers are notified through "no-match" letters. Due to ongoing legal challenges, however, the SSA will not be sending no-match letters to employers for TY 2007, a spokesperson for the agency told CCH.

EEOC NEWS

Lawful to encourage applicants from protected groups, but not to seek them

Employers have not been held liable for using phrases such as "women or minorities are encouraged to apply" in their job ads. But use of the term "seeking," in phrases such as "seeking stay-at-home-moms,'' denotes a preference for a particular group—in this case, a group protected under Title VII. Seeking applicants on a protected basis would violate laws enforced by the EEOC, an informal discussion letter advises.

Rules on ADEA disparate impact, employee self-identification on agenda

Revising its regulation on disparate impact under the Age Discrimination in Employment Act and conforming regulations to its revised EEO-1 report's employee self-identification method are at the top of the EEOC's semi-annual regulatory agenda. Both items are in the proposed rule making stage.

Construction companies to pay $1.65 million to settle suit over nooses, KKK graffiti

A group of construction contracting firms will pay a collective $1.65 million to black employees who were allegedly subjected to racial harassment, including the display of hangman's nooses and KKK graffiti as well as regular use of the "N-word" at a power plant construction site. "The harassment in this case is shocking and unconscionable," said EEOC regional attorney Jacqueline McNair. "Employers must realize there will be a high price to pay for such egregious and unlawful conduct, regardless of the industry in which it occurs."

Restaurant chain to pay $1 million; 80-20 hiring ratio was reverse sex bias

Razzoo's, a Dallas/Fort Worth-based Cajun restaurant chain, will pay $1 million to settle an EEOC sex bias lawsuit brought on behalf of male applicants and employees who were refused hire or promotion to the position of bartender. An email to managers communicated a plan for an 80-20 ratio of women to men behind the bar. "Some may think that sex sells drinks, but gender ratios are illegal," said the EEOC's supervisory trial attorney and lead counsel on the suit. "A hiring ratio is illegal whether it is 80-20 whites to blacks or 80-20 women to men."

LEGISLATION

President Bush signs bill bringing US immigration law to Northern Mariana Islands

US immigration law now applies to the Commonwealth of the Northern Mariana Islands (CNMI) after President Bush signed into law the Consolidated Natural Resources Act of 2008 (S.2739). The CNMI had administered its own immigration rules for more than 30 years, which resulted in abusive conditions for immigrant workers in the garment industry, as well as narcotics trafficking and other illegal activities.

After Dems' Ledbetter bill falls short, Voinovich bill seeks a "middle ground"

The statute of limitations for filing disparate pay claims under Title VII would begin to run when employees "knew or should have known" they were affected by that decision or practice, under a bill introduced by Sen. George Voinovich (R-Ohio). The Fair Pay Act of 2008 would strike a "moderate middle ground" between the Supreme Court's Ledbetter ruling and the failed legislation that sought to overturn the controversial decision.

IN OTHER NEWS

"H1B only need apply"? Computer firm settles bias claim

iGate Mastech Inc, a Pittsburgh computer consulting company, will pay $45,000 in civil penalties to settle allegations that it discriminated against US citizens in its employment practices when it placed job ads for computer programmers that expressly favored H-1B visa holders.

Federal rules favoring recruitment of US workers is lax, say witnesses

Federal requirements to ensure that qualified US workers are recruited first for job openings before employers hire from abroad are inadequate and rife with abuses, witnesses told a House Education and Labor Committee hearing last week.

UAW local launches strike over work rules against GM

Members of UAW Local 31 are striking a Fairfax, Kansas, GM plant over such issues as job selection, transfers, and shift preferences, they say. However, some analysts believe the walkout at this key facility, which makes GM's popular Chevrolet Malibu, is not really over local work rules but is a strategic move to gain leverage in the union's protracted struggle against auto parts manufacturer American Axle, where a ten-week strike has disrupted operations at 32 GM plants.

Laid-off Steelworkers to be recalled with backpay, arbitrator rules

Some 225 workers represented by the Steelworkers will receive up to one year of lost wages after an arbitrator ordered Johnstown America Corp/FreightCar America, Inc to recall them to their jobs. The arbitrator found the company violated the union contract covering workers at its Johnstown, Pennsylvania plant when it laid off more than half the hourly workforce between April and August of 2007.

Machinists call for airline re-regulation in the face of industry woes

The Machinists union urged lawmakers at a Senate commerce committee hearing last week to resist airline consolidation, calling instead for measured re-regulation of fares and capacity as the only way to ensure safe and reliable air transportation in the US. "Limited re-regulation is the only long-term solution for an industry that is continually seeking government assistance," said IAM Robert Roach, Jr., IAM general vice president, at a hearing on the state of the airline industry.

Aflac shareholders gain a "say on pay," first ever for American public company

Shareholders of Aflac, Inc last week overwhelmingly approved the company's pay-for-performance compensation policies and procedures, with 93 percent of votes cast in favor of Aflac's compensation practices. In March, Aflac's board of directors formally invited shareholders to vote on the company's performance-based compensation policies—the first time shareholders of a US public corporation have been empowered to vote on executive pay.

UK companies gearing up to launch employee blacklist

Workers in the UK who are accused of theft or dishonesty could soon find themselves blacklisted on a register to be shared among prospective employers—regardless of whether they have been convicted of a crime, according to a report from the BBC. Later this month, the National Staff Dismissal Register will go live. It's an online database of workers who are deemed suspect, for use by employers in vetting applicants.

Employer's Guide to Union Organizing Campaigns

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State Employment Law Compare

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Editor

Lisa Milam-Perez, JD

About CCH WorkWeek

This weekly newsletter provides corporate counsel and law firm practitioners with need-to-know employment and labor law information in a timely, yet manageable manner. Benefit from news and information in a broader context, with deeper analysis of recent developments and corresponding trends. Delivered to you every Monday, CCH WorkWeek offers timely coverage of breaking legislative developments, regulatory activity, state law changes, key case law and expert commentary by CCH editors.