For the Week of March 1, 2010

KEY CASES

1stCir: Claims based on municipal employer’s recording of phone calls fail

Current and former municipal firefighters and police officers failed to make out claims against a municipality and other individuals for violating their constitutional and statutory rights by recording the employees’ telephone calls at work without their knowledge, ruled the First Circuit. The individual defendants were entitled to qualified immunity from the federal and state constitutional claims because at the time of the recordings there was no clearly established law granting public safety employees a Fourth Amendment right not to have calls made at work recorded. In addition, the city was not subject to municipal liability on the constitutional claims because the decisions at issue were not made by a municipal employee with final policymaking authority and the city’s policymaking officials were not shown to have had constructive knowledge of the policy. Moreover, the recordings were not so widespread as to be a custom or practice. Finally, the city was not a “person” subject to suit under the Rhode Island Wiretap Act, which excludes municipalities, the circuit court held. The state wiretap act provides for liability on the part of a “person,” in contrast to its federal counterpart, which makes any “person” or “entity” civilly liable for violations. And as the circuit court noted, federal courts disagree as to whether the term “entity” even includes a municipality (Walden v City of Providence, February 23, 2010).

1stCir: Employee with Type II diabetes not disabled under ADA

An employee who had Type II diabetes that he controlled by taking insulin twice a day could not show he was disabled under the ADA or that his discharge constituted unlawful retaliation, ruled the First Circuit. As a procedural matter, the circuit court held that because the employee ignored the express requirements of Puerto Rico’s anti-ferret rule, the trial court acted well within its discretion when it deemed as admitted a portion of the employer’s properly supported facts. As to the merits of his ADA claim, the court rejected the employee’s assertion that he was disabled within the meaning of the Act because his diabetes imposed only minor limitations upon him and did not substantially limit his ability to eat or see. The employee’s infrequent episodes of blurred vision did not limit his sight to a degree that would differentiate him from the rest of the population, and his twice-daily insulin shots and frequent eating allowed him to successfully control his condition. The court also rejected the employee's reprisal claim because the only evidence he set forth of pretext was temporal proximity, which alone was insufficient to create a triable issue of material fact. Moreover, it was undisputed that the employer had expressed dissatisfaction with the employee’s work performance two months prior to the employee's complaint that his work schedule affected his ability to take his insulin shot (Carreras v Sajo, Garcia & Partners, February 23, 2010).

4thCir: Court vacates financial advisors’ NASD arbitration award

An arbitration award rendered under NASD rules granting compensatory damages to financial advisors was properly vacated as the award did not rest on the evaluation of the advisors’ performance but rather on issues that were outside the arbitrators’ power under the FAA, the Fourth Circuit held. The advisors had independent contractor agreements with the broker that contained termination-at-will provisions. The broker’s in-house attorney had jointly represented the advisors in a third-party arbitration over complaints of serious misconduct against them, even though their individual claims differed in certain aspects. The advisors later brought an action for wrongful discharge, which went before the arbitration panel in keeping with NASD rules. Despite the at-will policy and the termination of agreements provision the advisors had voluntarily signed, the panel awarded damages, and the broker sought to have the award vacated. The basis of the advisors’ claims were wrongful joint representation, unauthorized practice of law and breach of the brokers’ legal and fiduciary duties, the appeals court, like the court below, concluded. These claims fell far outside the arbitration panel’s ability to resolve disputes arising out of significant aspects of the employment relationship. The panel in fact had adjudicated a tort claim, which was well beyond the Fourth Circuit’s expansive interpretation of “arising out of employment," and thus was not arbitrable (Raymond James Financial Serv, Inc v Bishop et al, February 22, 2010).

6thCir: Competitor did not know employees breached a duty to last employer

An agricultural supplier failed to show that a competitor aided and abetted a breach of fiduciary duty by three of the supplier’s employees when they set up a branch office for the competitor in the supplier’s territory, the Sixth Circuit held, since there was no showing that the competitor had actual knowledge that the employees were breaching a duty. In order to prevail, the supplier had to show that at least one of its employees breached a fiduciary duty; that the competitor gave “substantial assistance or encouragement”; and that the competitor had actual knowledge that the employees’ conduct breached a fiduciary duty—constructive knowledge would not suffice. In this instance, it was far from clear that the competitor knew that it was dealing with fiduciaries. The three employees had contacted the competitor to inquire about employment opportunities after the supplier’s new president made management changes, and eventually they left the supplier to work there. The employees introduced themselves as general manager, sales manager and operations manager, but they were not officers or directors of the supplier. Further, there was no evidence that the trio attempted to usurp any of the supplier’s corporate opportunities. Since nothing in the record supported the inference that the competitor knew the employees breached their fiduciary obligations, the supplier failed to make a showing that the competitor had actual knowledge of any fiduciary breach (Miles Farm Supply, LLC v Helena Chemical Co, February 25, 2010).

8thCir: Court upholds jury finding that ADEA plaintiff was not an employee

A trial court did not abuse its discretion in upholding a jury’s determination that a marketing representative for a brokerage firm representing liquor and wine companies was an independent contractor and not an employee covered by the ADEA or Iowa Civil Rights Act, held the Eighth Circuit. The trial court ordered a bifurcated jury trial, with the first trial limited to the issue of employee status. Pursuant to the standard set forth by the Supreme Court in Nationwide Mutual Insurance Co v Darden, 503 US 318 (1992), the court instructed the jury that the factors it may consider in deciding the employee issue “include[d], but [were] not limited to,” sixteen enumerated aspects of the relationship between the marketing rep and the brokerage firm. The Eighth Circuit rejected the rep’s assertion that the trial court erred by omitting four of what she considered mandatory Darden factors, rewording three factors and improperly dividing three factors into multiple factors. A jury instruction need not quote all the factors enumerated in Darden as they appear in that opinion and need not list other relevant factors, ruled the appeals court. Rather, it was sufficient that the trial court listed sixteen factors that related the general factors to the evidence presented in a neutral matter. Further, a number of the Darden factors strongly supported a finding that the marketing rep was an independent contractor: she paid her own travel and other expenses; she worked almost entirely in the field; she had considerable autonomy over her schedule; the firm treated her as an independent contractor for tax purposes; she did not have employee benefits; and most significantly, all the other witnesses testified that the brokerage firm's marketing reps were not employees. Thus, the jury verdict was not clearly erroneous (Ernster v Luxoco, Inc, February 23, 2010).

8thCir: Lateral transfer of diabetic employee did not violate ADA

A diabetic employee who was removed from his team leader position and granted a lateral transfer to a computer support analyst position could not state a claim that he was discriminated against under the ADA because he failed to establish that he suffered an adverse employment action due to his diabetes. Rather, there was substantial evidence that the employee ignored and disobeyed explicit orders, that he couldn’t get along with certain employees, had difficulty maintaining a professional working relationship with other agencies, and had difficulty following the chain of command. As such, the employee failed to show that the reason offered for his transfer, difficulty getting along with others, was pretextual. The appeals court also rejected the employee’s argument that the accommodation offered by the employer to help him manage his diabetes was ineffective because it did not provide consistency or predictability. The employee’s own expert witness testified that an individual of his age and general health could adequately manage his diabetes without accommodations. Finally, the employer was not required to keep the employee in the team leader position simply because he alleged it allowed him to better control his diabetes. Summary judgment to the employer was affirmed (Lors v Dean, February 18, 2010).

9thCir: Front pay is an equitable remedy fully within court’s discretion

Under the FMLA, front pay is an equitable remedy determined by the court, not the jury, both as to availability and amount, held the Ninth Circuit, addressing the issue for the first time. In so ruling, the Ninth Circuit joins the Fourth, Fifth and Tenth Circuits; the Sixth Circuit has district courts determine the propriety of the award, but the jury decides the amount. Here, the jury awarded $1,551,000 in front pay to a human resources manager who was demoted after using FMLA leave, but after the district court judge realized that front pay was an equitable remedy, he reduced the amount to $267,000. While there is no explicit grant of front pay in the FMLA, such awards fall within the equitable relief of 29 USC §2617(a)(1)(B). The appeals court said front pay, which often covers lost compensation between judgment and reinstatement, is also a substitute for reinstatement, and should be completely within the purview of the court, as judicial discretion is “at the heart of the decision”—first to determine whether reinstatement is feasible by balancing the equities, then to decide the amount that would compensate someone for not getting a job back. The appeals court affirmed the $267,000 award, finding it was supported by substantial evidence. However, the lower court’s decision not to award liquidated damages was unsupported by specific good-faith and reasonable belief findings, and therefore was reversed and remanded for an explanation and, if appropriate, findings supporting the denial (Traxler v Multnomah County, February 26, 2010).

9thCir: Tip pool arrangement with kitchen staff was lawful

A restaurant did not violate the FLSA when it required its wait staff to participate in a tip pool that redistributed some of their tips to the kitchen staff, held the Ninth Circuit. The employee argued that the tip-pooling arrangement was invalid under Section 203(m), which only allows for tip pooling among employees who are “customarily and regularly tipped employees,” since kitchen staff are not customarily tipped in the restaurant industry. However, this provision applies only when employers claim a tip credit, and the employer here did not. Because the employer did not claim a tip credit, and it paid its wait staff a cash wage that exceeded the federal minimum wage, the tip-pooling plan did not violate this provision of the Act. Nor did the arrangement prevent the servers from getting full pay—the federal minimum wage and all tips—free and clear, as argued by the Secretary of Labor in an amicus brief. The Secretary called the forced participation in an “invalid” tip pool an indirect kickback to the kitchen staff for the employer’s benefit and an improper deduction from wages. The appeals court rejected this argument, pointing out that under the arrangement, only those tips the servers get from the redistribution belonged to them, so the Secretary’s interpretation of the “free and clear” regulation was erroneous and unworthy of deference. With no statutory bar to the employer’s practice, the appeals court affirmed dismissal of the waiters’ suit (Cumbie v Woody Woo, Inc, February 23, 2010).

11thCir: Discrimination in promotion found in three of nine claims

The Eleventh Circuit concluded that an African-American engineer presented sufficient evidence of discrimination and retaliation to support only three of her nine claims that she was discriminatorily denied promotion by a state department of transportation. Of those claims found valid, the appeals court concluded the department held a position open to give a white candidate time to gain experience, removed the employee’s name from a promotion register, or impermissibly applied a licensing requirement. As for the remaining six promotion opportunities, the employee failed to present evidence to the jury that drew a connection to herself and the employer’s acts of discrimination. She also failed to establish that she suffered retaliation in the six promotions because of her protected activity where the closest nonpromotion to the employee’s protected activity was three months removed and she offered no additional evidence. Accordingly, the appeals court affirmed only part of a jury’s finding of race discrimination. Moreover, backpay was permissible only as to the three promotions that yielded an inference of either discrimination or retaliation. Because the jury’s backpay award was a cumulative figure reflecting each of the nine promotions, that award had to be recalculated (Brown v Alabama Dep't of Transportation, February 23, 2010).

11thCir: Summary judgment reversed in mixed-motive age bias case

A district court erred in relying on the Supreme Court’s 2009 decision in Gross v FBL Fin Servs in granting summary judgment to an employer on a 62-year-old employee’s age bias claim, held the Eleventh Circuit. In Gross, the High Court held ADEA claims are not subject to the burden-shifting framework set forth for Title VII suits. In addition, the Court ruled out the idea of mixed motive ADEA claims, instead requiring plaintiffs to show that age was the “but for” cause of an employment action. Because an employee must establish “but for” causation, no “same decision” affirmative defense can exist—the employer either acted “because of“ the employee’s age or it did not. In view of Gross, and the traditional summary judgment standard, the circuit court concluded that triable issues existed and a reasonable juror could conclude the employer made discriminatory remarks. The employee testified that the company’s chief executive discharged her because she was “too old” and needed someone younger he could pay less, and her testimony was substantiated by the affidavits of two coworkers. Such remarks were sufficient evidence of a discriminatory motive to leave a question of material fact remaining as to whether age was the “but for” cause of the discharge (Mora v Jackson Mem’l Foundation, Inc, February 23, 2010).

NDCal: LMRA did not preempt state law privacy claims

The LMRA did not preempt an employee’s state law claims that an employer and union failed to prevent the unauthorized disclosure of personal information or to timely notify employees of such unauthorized disclosure and so violated employees’ rights to privacy, ruled a federal district court in California. The defendants asserted that when employees authorized the employer to deduct union dues from their wages, the bargaining agreement required that the employer provide the employees’ personal information to the union. As such, the defendants claimed, the employee’s state law claims were nothing more than a complaint about the manner in which the employer performed its obligations under the contract. However, the employee asserted that once the employer undertook to provide information to the union, the defendants were under independent duties under state law to protect against unlawful disclosure and to notify employees in the event that unlawful disclosure occurred. The district court agreed, concluding that each of the claims was premised on defendants’ violation of state law independent of the bargaining agreement—rooted in privacy and data rights secured by state law, rather than any right granted by the CBA. While the claims may require the court to look at provisions of the CBA, their resolution will not require interpretation of the contract (Saenz v Kaiser Permanente, February 19, 2010).

DColo: Both parties raise triable issues in pregnancy bias case

The EEOC raised triable issues under Title VII as to whether an employee was discharged because she was pregnant, while her employer adduced sufficient evidence to send the question of whether it acted in good faith to the jury, ruled a federal district court in Colorado. The court allowed the employer to proceed with its good-faith defense under the standard set forth in Kolstad v American Dental Association, 527 US 526 (1999), even though it did not have a policy in place that expressly prohibited pregnancy bias and it did not have a formal EEO training program. Fact questions remained on this issue given the employer’s evidence that it provided ongoing informal training, pointed out to its employees the posted EEO guidelines and made sure it followed antidiscrimination laws. Material issues of fact also existed as to whether the employer’s stated reasons for discharging the employee—low productivity, poor attitude and tardiness—were pretext for pregnancy bias. While the temporal proximity between the employee’s pregnancy and her discharge by itself was insufficient to defeat summary judgment, the employee presented evidence that her performance was not as poor as the employer claimed and that other employees who were repeatedly written up for tardiness were not terminated (EEOC v Professional Bureau of Collections of Md, Inc, February 22, 2010).

EDMich: Club may pursue counterclaims in wage suit by exotic dancer

A federal court refused to dismiss a breach of contract counterclaim filed by a men’s club for the return of dance fees in a wage suit by an exotic dancer. The club offered its dancers the opportunity to perform as an employee or an independent contractor pursuant to a written contract. The dancer worked under a “dancer performance lease,” whereby she retained a substantial portion of the mandatory dance fees and paid a portion of the fees in the form of rent. The dancer retained amounts paid over and above the mandatory fees as tips. According to the club’s counterclaim, the parties agreed that if there were a legal determination that their business relationship was in fact an employment relationship, then alternative provisions in the lease would apply to define the parameters of that relationship. Thus, in the event that the dancer is successful on her minimum wage claims, the club has alleged sufficient facts to demonstrate a plausible claim for relief based on the lease contract. Further, the counterclaim was compulsory because it arose out of the same occurrence as the dancer’s claim, and existed at the time she filed her complaint. Additionally, the court determined that since the counterclaim was for return of a portion of the fees it allowed the dancer to keep, it alleged facts sufficient to show that in the event the dancer was entitled to a minimum wage as an employee, the club may be entitled to a return of its dance fees (Doe v Cin-Lan, Inc, February 24, 2010).

SDMich: Severance payments not “wages” for FICA taxation

Severance payments were not “wages” subject to FICA taxation, so a bankrupt employer was entitled to a refund of more than $1 million for FICA taxes paid on severance payments to former employees, ruled a federal district court in Michigan. The payments were made to employees upon termination of their employment due to the downsizing and subsequent closing of the employer’s operations. For purposes of FICA, “wages” are defined as “all remuneration for employment.” The court rejected the government’s argument that payments made by the employer were wages because the payments were made in connection with employment and were not conditioned on eligibility for unemployment benefits as required under an exception. Rather, the court reasoned that the severance payments were intended to serve the same purpose as social security benefits, that is, to support workers in lieu of a lost ability to earn wages, so that the collection of social benefit taxes on wage-replacement benefits made little sense. Further, since the severance payments were made because of an involuntary separation from employment resulting directly from a discontinuance of operations, the payments fell within the 26 USC §3402(0)(2) exception for “supplemental unemployment compensation benefits,” concluded the court (US v Quality Stores, Inc, February 23,2010).

EDMo: Buyout release shielded Chrysler from discrimination claims

A former Chrysler employee was barred from pursuing claims of racial discrimination, harassment and retaliation after she signed a union-negotiated voluntary buyout agreement that released Chrysler from any claims she had against it, held a federal district court in Missouri. In the Eighth Circuit, the validity of a release depends on whether it was entered into voluntarily and knowingly, as determined by the circumstances under which the release was obtained. Here, the employee was mailed the application for the buyout plan, which included the release of claims. Additionally, a notice describing the plan was posted on a bulletin board at the employer’s plant. The release used clear and simple language. In completing the application, the employee was free to consult with an attorney or union representative before signing the application and release. Further, the employee was free to rescind the application at any time before the deadline set for receipt of applications by Chrysler. On these facts, the court determined the employee knowingly and voluntarily entered into the buyout agreement. Thus, Chrysler was entitled to summary judgment on the employee’s Title VII claims (McCray v Chrysler, February 23, 2010).

SDOhio: Indemnification issue stayed pending arbitration of PEO’s status

In an employee’s suit for unpaid overtime wages under the FLSA that alleged a joint employer relationship between an employer and a professional employer organization (PEO), the PEO’s crossclaim for indemnification was stayed pending arbitration of that issue. The PEO, which contracted to provide payroll processing services to the employer, contended it was not a joint employer and that under the contract the employer agreed to indemnify it against liability, including wage claims like the suit at hand. The employer contended, however, that the contract’s arbitration provision required that the court stay the PEO’s crossclaim. In view of the federal policy favoring arbitration, the court determined the indemnification issue should be arbitrated as the parties agreed to in their contract. On the other hand, the court noted that the employee’s underlying claim involved allegations under the FLSA, and questions concerning each parties’ obligations under the Act, and whether those obligations had been fulfilled fell within the court’s jurisdiction. Because the court had jurisdiction of the underlying claim, it declined to dismiss the PEO’s crossclaim, but stayed the issue pending arbitration of the employer’s obligation to indemnify the PEO against liability for the wage claim (Weisbecker v SOS Security Services, February 18, 2010).

ArkSCt: Postjudgment interest accrues during appeal of pay dispute

Postjudgment interest on unpaid commissions continued to accrue against an employer where its “tender” of the payment plus interest was invalid because it was coupled with a condition that the employer had no right to impose, held the Arkansas Supreme Court. After being fired as a sales supervisor, the employee sued his employer for unpaid commissions under Arkansas law. A jury found in favor of the employee. On appeal, the jury’s award of commissions was upheld. Thereafter, the employer sent the employee a check for the commissions plus interest with a letter stating that the check was intended as “full and complete satisfaction of the judgment.” The employee returned the check because of the employer’s characterization and because he intended to file a petition for review. The “stopping of the interest clock” required an unconditional tender or payment of the money into the registry of the court, observed the supreme court. In this instance, the employer’s “tender” to the employee was clearly conditioned upon acceptance as “full and complete satisfaction” of the judgment. The employer had no right to make its demand, especially because the employee had put the employer on notice that he intended to petition for a rehearing. Since the employer never made an unconditional tender nor offered to deposit the funds in the registry of the court, the trial court was correct when it held that the employer’s purported tender did not stop the accrual of postjudgment interest (McCourt Mfg Corp v Rycroft, February 25, 2010).

ColoSCt: Voter initiative on campaign contributions unconstitutional

The Colorado Supreme Court has stricken a voter initiative, Amendment 54, after concluding that certain provisions of the amendment were unconstitutionally overbroad, vague, and violated equal protection. Designed to eliminate “a presumption of impropriety between contributions to any campaign and sole source government contracts,” Amendment 54 prohibited and imposed severe penalties on campaign donations from those holding sole source contracts to “any candidate for any elected office of the state or any of its political subdivisions.” This absolute ban on contributions from sole source contractors was unconstitutional, since the governmental interest in preventing the appearance of impropriety was not sufficient to justify all restrictions on First Amendment freedoms. Further, because the amendment’s over-inclusive definition of “sole source contract” applied to all contracts that did not solicit three bids, it was not sufficiently directed toward eliminating the appearance of impropriety, and thus was overbroad. After striking several unconstitutional terms, the court held the remaining provisions did not constitute a meaningful legislative enactment and, therefore, the entire amendment must be purged from the state constitution. Accordingly, the high court affirmed the trial court’s preliminary injunction (Dallman v Ritter, February 22, 2010).

DelChanCt: Former employees enjoined after removing trade secrets

Three former employees of Agilent Technologies breached their employment contracts by removing property from the company’s premises without permission and taking proprietary information, including trade secrets, to found a competing company. Additionally, two of the employees breached their employment contracts by failing to assign patent applications they filed on behalf of their company to Agilent. While at Agilent, each of the employees signed a confidentiality agreement requiring that they only use trade secrets and confidential information “in the performance of Agilent duties.” When the employees left Agilent, they told the company they planned to fulfill niche projects that the company was not involved with. However, they actually pursued processes and products that Agilent had researched or produced, and had taken documents related to those products. The court concluded the three employees took a great deal of confidential information in clear breach of their contractual duties and then used that information to compete against their former employer. Further, one of the employees developed a multilayering process while at Agilent but failed to assign the patent application to the company. Consequently, the employees and their company were enjoined from using Agilent confidential information and were required to return all Agilent property to its possession (Agilent Technologies, Inc v Kirkland, February 22, 2010).

KyCtApp: Hospital gave insufficient notice of FMLA leave calculation method

The Kentucky Court of Appeals upheld a pregnant nursing assistant’s jury award against her employer for FMLA interference where the record showed that the hospital failed to give sufficient information regarding how her FMLA benefits and time used had been calculated before discharging her for excessive absenteeism. The court rejected the hospital’s claim that the nursing assistant exhausted her FMLA leave prior to her discharge under a “rolling method of calculation” because the hospital failed to inform her that it was using that method to calculate her leave. Rather, the nurse was entitled to have her leave calculated using the “calendar year” method and, therefore, she had not exhausted her FMLA leave at the time of her discharge. The court also found support in the record that had she been aware her FMLA time was about to expire, she could have returned to work prior to her discharge. Accordingly, the jury’s award of liquidated damages was upheld based on sufficient evidence that the hospital acted in bad faith when it misled the nursing assistant as to the calculation of her leave, backdated her FMLA application, failed to comply with FMLA notice requirements and failed to accurately track her leave (Highlands Hosp Corp v Preece, February 19, 2010).

MoSCt: Hospital whistleblower couldn't show discharge violated public policy

The Missouri Supreme Court rejected an at-will hospital employee’s claim that he was wrongfully discharged for reporting safety violations to his superiors, holding that the case did not fall under the public policy exception to at-will employment because the federal and Missouri regulations cited to support his claim did not prohibit the conduct that he reported. A wrongful discharge action must be based on a constitutional provision, statute, or regulation based on a statute or a rule promulgated by a governmental body, held the supreme court. Rejecting the worker’s reliance on a federal regulation that grants a patient “the right to receive care in a safe setting” (42 CFR 482.13(c)(2)), the court concluded that the regulation was personal to the patient and too vague to support the wrongful discharge action. The court also rejected the worker’s reliance on a state regulation dealing with hospital hazards (19 CSR 30-20(K)(3)), holding that the regulation impacted building safety, not patient treatment, and that mere citation to the regulation was insufficient to support the employee’s claim that his discharge violated a clearly mandated public policy. In a sharp dissent, Judge Teitelman criticized the majority’s reasoning, stating that the regulations cited did express a clear and important public policy requiring hospitals to take steps to ensure patient safety and, therefore, supported the employee's wrongful discharge claim (Margiotta v Christian Hosp Northeast Northwest, February 9, 2010.)

MoSCt: "Contributing factor" the causation standard for wrongful discharge claims

In a unanimous decision, the Missouri Supreme Court has expressly adopted a public-policy exception to the state’s at-will employment doctrine, in the case of an employee who sued for wrongful discharge when she was fired the day after telling her supervisor about her telephone conversation with a federal Department of Labor investigator regarding its investigation into possible overtime pay violations by the employer. The high court also held “contributing factor” is the appropriate standard of causation in such cases. The court noted that while “exclusive causation” is the appropriate standard for workers’ compensation cases, it is not the proper standard for wrongful discharge based on the public-policy exception. Employees would be discouraged from reporting their employers’ violations of the law or refusing to violate the law if “exclusive causation” were the standard, determined the court. In the case at hand, the trial court had instructed the jury that it must find for the employee if she was fired “because” she communicated with the investigator. Since the employer did not argue that “because” is an easier standard than “contributing factor,” it failed to show that it was prejudiced by the trial court’s jury instruction (Fleshner v Pepose Vision Institute, February 9, 2010).

NJCtApp: Proof of constructive or actual discharge needed for CEPA claim

To obtain back pay damages from violations of New Jersey’s Conscientious Employee Protection Act, as in the state’s Law Against Discrimination, a plaintiff must prove a constructive or actual termination, held a New Jersey appeals court. A former chemical plant operator who claimed he was retaliated against over time after making safety complaints to OSHA and to management eventually took a leave of absence and retired with a disability pension. In LAD cases, economic damages cannot be recovered where there was no constructive discharge; both LAD and CEPA are civil rights statutes and should be treated the same, as nothing in CEPA’s legislative history requires a different result, the court concluded. The appeals court reversed and remanded the case for entry of judgment for the defendant. After arguing that a plaintiff merely had to show an adverse employment action to recover back pay damages, the plaintiff could not now abandon that tactic and get a new trial (Donelson v DuPont Chambers Works, February 24, 2010).

NLRB: Employer must bargain over change in no-match policy

Aramark unlawfully refused to bargain by unilaterally implementing a Social Security no-match policy and unlawfully suspending 15 workers under the policy prior to reaching an impasse in bargaining with a union over that issue, held the NLRB. It was clear that Aramark made a significant change in its policy regarding no-match letters when it went from a practice of lax enforcement to one of stringent enforcement. Because employees were disciplined under the new policy, the company could not lawfully change the terms of employment without first bargaining to impasse with the union. Further, the union’s agreement to “freeze” implementation of the policy without rescinding the suspensions did not cure the violation, concluded the NLRB. The Board also rejected the company’s contention that the union failed to timely request bargaining regarding the policy. Rather, the union requested bargaining at each involved facility but those requests went unheeded. However, the employer’s unremedied unfair labor practices did not taint the negotiations with the union so as to preclude the parties from later reaching a good-faith bargaining impasse that permitted the employer to implement and enforce the policy. The positions of both parties were fixed, but reasons for the change in the no-match policy were valid because the employer was required to comply with existing immigration law (Aramark Educ Servs Inc, 355 NLRB No 11, February 18, 2010 [released February 19, 2010]).

LEGISLATION

Senate approves $15 billion jobs package

The Senate approved a $15 billion jobs package on February 24 by a 70 to 28 margin, with the support of thirteen Republicans. The Hiring Incentives to Restore Employment Act (HR 2847) provides a payroll tax break for new hires and a $1,000 credit is also provided for any employee who qualifies for the payroll tax holiday and who remains continually employed for 52 weeks by an employer, among other provisions. (Democrats hope last week’s bill will be the first of several successful job-related measures over the next several months. Senate Majority Leader Harry Reid (D-Nev) plans to soon release a second jobs package that would extend several expiring tax breaks favored by small business. The second jobs bill is still in the works but it is expected to contain roughly $30 billion in tax extenders and extensions of multiple pieces of current law, including unemployment insurance, COBRA, several small business provisions from the American Recovery and Reinvestment Act and a package of Medicare extenders.) HR 2847 now moves to the House, where it is unclear whether that chamber will advance the Senate measure without making changes. The House had previously passed a $150 billion jobs package in December 2009 that placed greater emphasis on federal funding for building projects.

Extension of unemployment benefits, COBRA subsidy in limbo for now

The House unanimously approved legislation (HR 4691) extending unemployment benefits and the COBRA health insurance premium subsidy on February 25. The measure extends unemployment benefits through April 5 and eligibility for the 65 percent subsidy for COBRA premiums through the end of March, according to a summary from the House Ways and Means Committee. The Senate failed to pass a comparable measure before these benefits and subsidies expired on February 28, with Sen. Jim Bunning (R-Ky) last Thursday blocking a request for unanimous consent for a short-term extension. But media reports indicate the Senate this week will turn to a bill that extends these benefits for a year.

Dems’ bill would give workers, retirees priority in bankruptcy claims

Legislation intended to protect employees’ earnings and retirement savings in the wake of a business collapse was recently introduced by Sen. Richard Durbin (D-IL) and Rep. John Conyers (D-MI). The Protecting Employees and Retirees in Business Bankruptcies Act (S. 3033, H.R. 4677) would ensure that back pay awarded through WARN Act damages would be given priority in the bankruptcy claims process. “When a company’s bankruptcy filing means pink slips for skilled workers and millions for ousted CEOs,” Brown noted, “something is very wrong.” Among other provisions, the legislation will double the maximum value of wage claims entitled to priority payment for each worker up to $20,000; toughen procedures through which retiree benefits can be reduced or eliminated, including preventing companies seeking retiree health benefit reductions from singling out nonmanagement retirees for concessions; and prohibit the payment of bonuses and other forms of incentive compensation to senior officers and others. The respective bills have been referred to the Senate and House judiciary committees.

TWITTER UPDATES

HEALTH CARE REFORM

Health care summit makes little progress

Congressional leaders came away from Thursday’s lengthy health care summit without any breakthroughs in advancing a bill that could win bipartisan support. Senate Minority Leader Mitch McConnell (R-Ky) said he was "discouraged by the outcome” and House Speaker Nancy Pelosi (D-Cal) said she was "not overly optimistic" of GOP support. President Obama signaled he would be willing to continue working with Republicans if he saw "significant movement" and believed there was a serious effort to find common ground. However, Democrats refused to back away from the prospect of using the budget reconciliation process, if necessary, to move a bill through Congress.

Obama to announce next steps

President Obama is expected to announce "the best path forward" on health care reform this week, according to White House press secretary Robert Gibbs. At a press briefing on February 26, Gibbs described the pending announcement as "an updated proposal" in the wake of last week’s health care summit. While GOP and Democratic lawmakers have major differences, Gibbs noted both parties showed a common interest in reducing fraud, reining in defensive medicine practices and limiting questionable medical malpractice suits. There also appeared to be some common ground on purchasing health insurance across state lines although differences remain.

Why we need reform

At the heart of the health care reform debate is a stark, almost-apocalyptic vision of America’s economic future. Eighteen cents of every dollar earned now goes to medical care. Over the last decade, the average annual premium for employer-sponsored family insurance coverage rose from $5,800 to $13,400 and the average cost per Medicare beneficiary went from $5,500 to $11,900. The current system has helped capsize the American auto industry and emptied state and federal coffers, and the ramifications only threaten to deepen. We can’t afford not to try, contends labor and employment law editor Matt Pavich in CCH WorkDay. The alternative is a sinking American economy dragging employers, employees and the world economy behind it.

Keeping up with reform

Is reconciliation next? Stay on top of health care reform as it picks up speed again. Our benefits editors offer regular updates and analysis in Health Reform Talk, their daily blog.

COMPLIANCE

EEOC's proposed RFOA rule comes with a roadmap

The EEOC’s Notice of Proposed Rulemaking on the definition of "reasonable factors other than age" (RFOA) under the ADEA goes a long way in providing guidance for employers to avoid liability for disparate impact age discrimination. The proposed rule is a virtual checklist for avoiding liability for unintentional age bias, notes labor and employment law editor Pam Wolf in CCH Workday. The federal agency also issued a question and answer document (Q&A) that provides a functional roadmap of its proposed RFOA rule.

ELECTRONIC WORKPLACE

Sample bill aims to aid states in banning texting while driving

Transportation Secretary Ray LaHood unveiled sample legislation for states to use as a starting point when crafting new laws to prohibit texting while driving, the latest step in the federal agency's campaign against distracted driving. The sample state law is patterned on the Executive Order issued by President Obama on October 1, 2009, directing federal employees not to engage in text messaging while driving government-owned vehicles.

Text this message to your employees: ST&D (stop texting and drive)

Revisit your policies on employee use of hand-held devices and communicate to employees a company policy forbidding their use while operating a motorized vehicle, labor and employment law editor Lucas Otto advises employers in CCH WorkDay. The failure to do so may subject employers and employees to costs that far outweigh any improper overages incurred on a mobile device bill.

CONSIDER THIS

GINA and social media

The Genetic Information Nondiscrimination Act (GINA) makes illegal the mere acquisition of genetic information—with certain exceptions, including “commercially and publicly available information.” The EEOC invited public comment on whether this exception should include personal websites and social networking sites. What happens if these sites are not included among the exceptions? What if they are? The ever-insightful Delaware Employment Law blog considers the ramifications of either outcome.

IN OTHER NEWS

Labor’s goals hit roadblocks

Labor's high hopes for major gains under President Obama and a Democratic Congress have dimmed, raising fresh doubts about union leverage even in the best of political times, notes the Minneapolis Star Tribune. Leaders of labor's largest federation will try to figure out how to refocus their political agenda when they begin their annual meeting in Orlando today.

Task force signals Administration support for EFCA

The Employee Free Choice Act is crucial to providing access to “good quality jobs,” according to the report issued by the White House’s Middle Class Task Force on Friday. The task force outlines a number of plans to increase the real wages of middle-class workers, many of which will be seen as favoring organized labor. Anti-labor groups attacked the report, with the National Association of Manufacturers calling it “boilerplate and claptrap.”

Public opinion for labor sagging

Favorable views of labor unions have plummeted since 2007 amid growing public skepticism about unions' purpose and power. Currently, 41% say they have a favorable opinion of unions while about as many (42%) express an unfavorable opinion, according to the latest nationwide survey by the Pew Research Center. In January 2007, a clear majority (58%) had a favorable view of unions while just 31% had an unfavorable impression. The findings about eroding public support for unions are consistent with other recent surveys.

Unions for health care workers are growing

The number of medical personnel covered by some form of collective bargaining agreement or registered as union members is edging up, according to BLS numbers. Nurses are leading the trend, mostly in hospitals, the AMA reports.

Government contracts may require living wage

The White House is looking at a new policy that would give an advantage in bidding on government contracts to companies that offer generous benefits and good pay, according to Associated Press reports. But business groups say it would shut out smaller companies from competing for more than $500 billion a year in federal contracts and increase government procurement costs.

San Diego County bans PLAs

Voters won’t be asked to prohibit project labor agreements on county government projects after the San Diego Board of Supervisors thought better of spending $100,000 on an election, reports the San Diego Union Tribune. Instead, the all-Republican board passed an ordinance prohibiting PLAs, which are viewed by proponents as a way to ensure quality and fair wages but are seen by detractors as wasting taxpayer money.

Work-share program that cuts hours vs jobs may grow

A program that encourages companies to avoid layoffs by reducing workers' hours could be expanded to nearly half the states this year. Legislation in at least seven states would create work-share programs in Colorado, Hawaii, Ohio, Oklahoma, New Hampshire, New Jersey and Pennsylvania, growing the initiative for the first time in decades, according to USA Today.

Report: Federal courts disfavor employee plaintiffs

Studying data from the Administrative Office of the United States Courts, Stewart J. Schwab, dean of the Cornell Law School, and Kevin M. Clermont, law professor at the Cornell Law School, found that “the federal courts disfavor employment discrimination plaintiffs, who are now forswearing use of those courts.” The authors concluded that they’ve “unearthed an anti-plaintiff effect that is troublesome.” The American Constitution Society for Law and Policy released the findings.

Report: E-Verify identifies 54 percent of undocumented workers as authorized

Fifty-four percent of undocumented workers with cases submitted through the E-Verify system are erroneously found to be work-authorized, according to a report evaluating E-Verify for the Department of Homeland Security. The finding is not surprising, the report says, since many undocumented workers commit identity fraud that cannot be detected by the system.

Microsoft legal work goes to India

Microsoft has entered into an agreement with a legal outsourcing provider to offshore legal work to lawyers in India, according to a Legal Week report (via Law.com).

Labor agitates at Whirlpool

In the wake of a recent announcement by the Whirlpool Corp that it plans to shut down its Evansville, Indiana operations by June 2010 and move to Mexico, and despite the company’s threats made to workers that they would endanger their future job prospects if they protest the plant's closing, more than 5,500 workers and community and religious activists converged in front of the plant last Friday to deliver the message to “Keep It Made in America.” Noting that Whirlpool received $20 million in stimulus funds, the labor activists are attempting to persuade the company to revisit its decision, according to the AFL-CIO.

January mass layoffs show first hike in months

Employers took 1,761 mass layoff actions in January, laying off 182,261 workers, as measured by new filings for unemployment insurance benefits during the month. Both mass layoff events and initial claims increased from December—the first increase since August 2009 in layoff events and since September 2009 for initial claims.

$8.6 mil settlement reached in WARN class action

A proposed settlement has been reached in a class action suit brought on behalf of more than 750 former employees of Spansion Inc, who were terminated from the company’s Sunnyvale, California and Austin, Texas sites in February of 2009. The suit claimed the company violated the California and federal WARN Acts by failing to provide employees with adequate advance notice of the layoff. Under the settlement, more than 750 former Spansion employees would receive a portion of an estimated $8.6 million global settlement fund, with cash payments to be made directly to class members.

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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.