KEY CASES

3rdCir: Christian teacher's religious bias suit is revived

A Christian teacher who alleged that her contract was not renewed because she objected on religious grounds to a "libations ceremony" at a staff banquet made a plausible case that she was discharged based on her religious beliefs, the Third Circuit held, partially reviving her religious discrimination suit. The teacher objected to the libations ceremony, a ritual where wine or another liquid is poured in honor of a god, because it required her to engage in the religious worship of ancestors who were not Christian. The appeals court affirmed dismissal of her failure to accommodate claims, explaining that since she did not provide her employer with "fair warning" that her religious beliefs specifically prevented her from participating in the libations ceremony, there was nothing to accommodate. However, the court revived the teacher's discriminatory discharge claim, finding that on a motion to dismiss, her complaints following the ceremony could be read to allege that she was fired based on her religious beliefs (Wilkerson v New Media Tech Charter School Inc, 3rdCir, April 9, 2008).

4thCir: Federal banking statute precluded discharged VP's state law claims

The "at-pleasure" provision of the National Bank Act (NBA), which provides that national banks have the power to elect or appoint directors and other officers "at pleasure," preempted the state law wrongful discharge claim of a senior bank vice president. The Fourth Circuit rejected the employee's contention that his suit was not preempted because he was not an "officer of the bank" as defined by the Act and he was not dismissed "by" the board, which the statute also requires. "The NBA is broadly written," the appeals court noted, declining to adopt an interpretation that limits "other officers" to those having "unique or special power or authority within the bank analogous to the power of the named officers." As to the circumstances of the employee's dismissal, although he was notified of his discharge by his supervisor and a human resources officer, the ratification of the termination by the board of directors after the fact made the discharge a board action sufficient to invoke the preemptive effect of the at-pleasure provision (Schweikert v Bank of America, NA, 4thCir, April 1, 2008).

6thCir: Hearsay evidence was admissible, given possible witness intimidation

Although it was hearsay evidence, an NLRB administrative law judge properly admitted affidavits executed by an employee that he later recanted in the administrative hearing, the Sixth Circuit ruled. The ALJ feared the repudiation was the result of employer intimidation, and the law judge's concern for protection of witnesses justified the admission as substantive evidence. "The judge clearly found that, without adoption of a relaxed evidentiary rule to permit a more complete picture of the situation faced by [the] workers, there was a distinct possibility that company officials would succeed in suppressing evidence otherwise available for consideration in determining whether an unfair labor practice had occurred," the appeals court noted. "The compromise reached by the administrative law judge represents an exemplary application of—and respect for—the federal rules of evidence `so far as practicable,'" as the NLRA's evidentiary provisions require (Conley v NLRB, 6thCir, March 31, 2008).

7thCir: Emergency utility workers not entitled to off-duty pay under FLSA

Claims that a utility's implementation of an automated "call-out" program for emergency repairs entitled linemen and other hourly workers to off-duty pay under the FLSA were rejected by the Seventh Circuit. Under the "call-out" system, employees are expected to accept at least 35 percent of the call-outs or else face disciplinary action. Although employees contended that waiting for frequent weekend call-outs disrupted their home life, the on-call requirements did not restrict employee's activities such that the wait time for on-call assignments constituted work time. The appeals court also held the employees' contention that they were also forced to work during their lunch break without pay was better suited for determination by an arbitrator (Jonites v Exelon Corp, 7thCir, April 3, 2008).

8thCir: Termination prior to surgery may be actionable under ERISA

An employee may pursue his ERISA claim that he was unlawfully discharged because he sought benefits coverage for his shoulder surgery, the Eighth Circuit ruled. When the employee sought time off for rotator cuff surgery, his employer approved the request. However, a few days later, the employee was laid off, ostensibly due to a "lack of work." The employer later contended it terminated the employee for cause as a result of accumulated misconduct. Concluding his employer was trying to avoid paying "the substantial costs and potential future costs" of his surgery, the employee filed suit, alleging a violation of ERISA Sec. 510, which prohibits an employer from discharging an employee for the purpose of interfering with the rights to benefits. Summary judgment was granted to the employer, but the appeals court reversed, finding material questions of fact remained as to whether the reasons for termination were pretextual. The appeals court noted the shifting rationales for the discharge as well as the fact that the employer decided to discharge him mere days after being informed of the surgery (Fitzgerald v Action, Inc, 8thCir, April 4, 2008).

10thCir: Multiple incidents supported hostile environment claim

An African-American employee presented sufficient evidence of a racially hostile work environment to have avoided an adverse summary judgment, ruled the Tenth Circuit. The employee claimed the harassment began in 1995 and over the years included racist graffiti on his locker and on restroom walls; racist cartoons posted on company billboards; overhearing another employee refer to an African-American manager as "F***ing Kunta Kinte;" and being called "boy" in the presence of at least two other employees. The employee claimed he complained after each incident and although the graffiti was cleaned up or removed, there was no investigation to find the perpetrators or no action was taken against the perpetrator. In 2003, after finding a life-size noose "prominently suspended from a large industrial clock," the employee reported the incident and ultimately filed suit in district court. While the employee was not "subjected to racism on a daily basis," there was sufficient evidence to support his hostile environment claim, the appeals court held, reversing the district court. A reasonable jury could find the complained-of incidents were calculated to demean or intimidate African-American employees. Further, there was a triable issue as to whether the employer condoned or tolerated the creation of the hostile environment, in that it knew or should have known about the alleged harassment and failed to remedy it (Tademy v Union Pac Corp, 10thCir, April 1, 2008).

STATE LAW CASES

CA: Employer not required to get a third opinion on serious health condition

In its first ruling on the Moore-Brown-Roberti Family Rights Act (or "CFRA," the state's family and medical leave act), the California Supreme Court held that the failure to seek a "tie-breaking" determination from a health care provider jointly chosen by the parties as to whether an employee was entitled to medical leave did not bar an employer from later claiming the employee did not suffer from a serious health condition and was capable of performing her job. The employer was not required to invoke this dispute-resolution mechanism provided by the statute, the high court held. Rather, the statute provides the employer "a choice of obtaining or not obtaining a binding decision from a third health care provider." The high court also ruled that an employee's working part-time in a similar job for another employer during the period in which she sought medical leave does not conclusively establish that she was capable of performing her regular job. The part-time job "is evidence of ability to do similar work for the original employer from whom the employee has sought medical leave," the court held. "The relevant inquiry is whether a serious health condition made her unable to do her job at defendant's hospital, not her ability to do her essential job functions `generally.'" Because conflicting evidence created a disputed issue of material fact on this point, the employee was afforded the chance to convince a jury that her part-time job was quite different than the full-time position that she alleged she was incapable of performing (Lonicki v Sutter Health Central, CalSCt, April 7, 2008).

CT: Employers have a duty to provide reasonable accommodations under state law

All Connecticut employers are required to make reasonable accommodations for employees with disabilities, the state supreme court has ruled in an issue of first impression, even though the Connecticut Human Rights and Opportunities Act does not explicitly require such a duty. The Connecticut Commission on Human Rights and Opportunities has "consistently interpreted" the statute to include a reasonable accommodation duty, and the agency's interpretation of the statute was reasonable. Various trial courts have followed the same interpretation, the high court noted. The statute imposes a duty on employers to engage in an "interactive process" to identify the "precise limitations resulting from the disability and potential reasonable accommodations that could overcome those limitations." In so holding, the supreme court reversed and remanded the case of a discharged employee, concluding that triable issues existed as to whether he was able to work his shift with a reasonable accommodation (Curry v Allan S. Goodman, Inc, ConnSCt, officially released April 15, 2008).

OK: Breath test results must be confirmed by licensed testing facility

Under the Oklahoma Standards for Workplace Drug and Alcohol Testing Act, evidential breath tests to determine an employee's blood alcohol content must be confirmed by a licensed testing facility before an employer may take disciplinary action in reliance on the test results, ruled the Oklahoma Supreme Court. Based solely on the results of two breath tests administered to the employee, the employer terminated him within an hour of the administration of the second test, and informed him there was no procedure to appeal his dismissal. No sample of the employee's breath was collected that could be independently tested at a later date, and no sample of any bodily fluid was taken or preserved. Further, the employer's clinic did not have a license to perform laboratory services. At the time of the employee's tests, evidential breath tests were regarded as laboratory services that must be confirmed by a licensed testing facility, which the employer failed to do (Estes v ConocoPhillips Co, OklaSCt, March 4, 2008).

AGENCY DEVELOPMENTS

DOL: Administrative Review Board clarifies SOX burdens of proof on remand

The Department of Labor's Administrative Review Board clarified the proper legal standards in a case under the whistleblower protection provisions of the Sarbanes-Oxley Act. The case is noteworthy for being the first in which the Occupational Safety and Health Administration ordered the whistleblower reinstated after a preliminary investigation (which the Second Circuit later ruled was unenforceable). The ALJ found that the whistleblower had engaged in protected activity, which was a contributing factor in his termination, but that the employer's financial condition was a legitimate reason for terminating him. The ARB instructed the ALJ to determine, on remand, whether the whistleblower proved by a preponderance of the evidence that his protected activity was a contributing factor in his termination rather than whether he created an inference of discrimination; whether the employer proved by clear and convincing evidence that it would have terminated him in the absence of protected activity rather than whether the employer proved by a preponderance of evidence that it had a legitimate, non-discriminatory reason to terminate him. If the employer meets that burden, the employer prevails. The ARB expressed no opinion, however, whether application of the correct legal standards on remand would alter the finding that the whistleblower had been discharged for cause (Bechtel v Competitive Techs, Inc, DOL ARB, Dkt No 06-010, March 26, 2008).

DOL: Response to SOX complaint is discretionary, ARB clarifies

An employer has 20 days to answer a complaint under the whistleblower protection provisions of the Sarbanes-Oxley Act from the time it receives notice of the complaint from the Occupational Safety and Health Administration, but it is not required to do so, the Administrative Review Board of the Department of Labor clarified. SOX procedural rules apply when the general rules of practice and procedure governing administrative hearings before the Office of Administrative Law Judges conflict. Thus, the employer was not required to respond to the alleged whistleblower's objections/notice of hearing following OSHA's dismissal of a complaint because it was untimely, but properly responded by filing a motion for summary decision. Moreover, where OSHA dismissed the complaint before the 20-day period had run, the employer's failure to respond to the complaint did not waive its right to defend against it when the whistleblower requested a hearing (Brady v Direct Mail Management, Inc, DOL ARB, Dkt No 06-044, March 26, 2008).

DHS: Foreign student workers can stay longer if employers use E-Verify

Foreign students who have studied science, technology, engineering or mathematics will be allowed to stay in the country for an additional 17 months if they are working for employers that participate in the E-Verify program, under a rule announced on April 4 by the Department of Homeland Security.

EEOC: McDonalds franchise to pay $505,000 to settle teen harassment charge

A McDonalds restaurant franchise based in Durango, Colorado will pay $505,000 to settle a Title VII suit brought by the EEOC on behalf of a class of young female employees, including teenagers who were 15 to 17 years old, who were subjected to egregious sexual harassment by their male supervisor. The harassment allegedly included the supervisor biting the breasts and grabbing the buttocks of the employees, making numerous sexual comments, as well as offers of favors in exchange for sex. "The EEOC will vigorously prosecute claims of harassment, especially cases involving teenagers, many of whom are in the workplace for the first time," said Mary Jo O'Neill, regional attorney for the EEOC's Phoenix, Denver and Albuquerque offices.

EEOC: $773,000 settles age bias suit against Lockheed Martin

Lockheed Martin Global Telecommunications will pay $773,000 to a class of eight older employees in settlement of an age discrimination suit brought by the EEOC. The Bethesda, Maryland-based employer violated the Age Discrimination in Employment Act when it discriminated against the employees, who were fired during a reduction in force. (In January, the agency reached a $2.5 million settlement with Lockheed Martin in a racial harassment case.)

LEGISLATION

Ninth Circuit will reconsider San Francisco healthcare ordinance

The Ninth Circuit Court of Appeals announced on April 7 that it would reconsider its ruling in which it held the San Francisco Health Care Security Ordinance, which requires employers with 20 or more employees to spend certain minimum amounts per hour worked on employee healthcare, was preempted by ERISA. The court will hear oral argument on April 17. Elaine Chao, US Secretary of Labor, has filed an amicus brief in the case, urging the appeals court to find the city's healthcare mandates are preempted by federal law.

House measure would increase fines for hiring undocumented workers

Representative Sue Myrick (R-NC) has reintroduced the 10K Run for the Border Act (H.R. 5706), which would increase fines for employers who knowingly hire or continue to employ aliens not authorized to work in the United States. The proposed bill would fine employers $10,000-$80,000 for each undocumented individual hired, with heightened fines for repeat violations.

California Supreme Court declines to hear appeal of new living wage ordinance

Los Angeles' second Hotel Worker Living Wage Ordinance, which sets living wage requirements of at least $9.39 per hour for certain hotel workers employed within the business improvement district abutting Los Angeles International Airport, will stand after the California Supreme Court declined April 10 to hear an appeal by hotel operators. A state appeals court ruled that the Los Angeles City Council did not improperly approve the living wage ordinance that was essentially similar to one that it had repealed following a successful campaign to institute a referendum on it. The reviewing court found the measures were in fact distinct, since the new ordinance added substantive provisions and attempted to address the objections to the initial ordinance (Rubalcava v Martinez, CalCtApp, 155 LC ¶60,533). The new living wage will now take effect within 30 days.

Colorado provides workplace accommodations for nursing mothers

Colorado has passed the Workplace Accommodations for Nursing Mothers Act, a measure that will require employers to provide reasonable unpaid break time or permit an employee to use paid break time, meal time, or both, each day to allow the employee to express breast milk for her nursing child for up to two years after the child's birth. The employer shall make reasonable efforts to provide a room or other location in close proximity to the work area, other than a toilet stall, where an employee can express breast milk in privacy, the law provides. The statute also mandates nonbinding mediation between an employer and an employee before an employee may file suit for a violation of the law.

Washington extends workplace protections to domestic violence, sexual assault victims

The state of Washington has enacted a law extending employment protections to employees who are victims of domestic violence, sexual assault or stalking. Employees whose family members are victims of such crimes are also protected. Under H. 2602, which took effect on April 1, employees are afforded the right to reasonable leave from employment to receive medical treatment or obtain other necessary services, such as legal or law enforcement assistance or remedies to ensure the health and safety of the employee or employee's family members. Also, effective October 1, the state will extend the leave-sharing provisions that it affords state employees to donate annual leave, sick leave or personal holidays for use by fellow employees to allow state employees who are victims of domestic violence, sexual assault or stalking to make use of such donated leave.

IN OTHER NEWS

House subcommittee hears testimony on proposed FMLA rule changes

"Fifteen years ago, Congress recognized that maintaining a careful balance between the legitimate rights of employees and employers in the workplace was the key to making the FMLA a success," said Victoria A. Lipnic, assistant secretary of the Employment Standards Administration, Department of Labor. Lipnic testified in support of the Labor Department's recently proposed FMLA rule changes at an April 10 hearing of the House Subcommittee on Workforce Protections, Committee on Education and Labor.

USCIS reaches FY 2009 H-1B cap

US Citizenship and Immigration Services has received enough H-1B petitions to meet the congressionally mandated cap for fiscal year 2009, the agency announced on April 8. USCIS also received more than 20,000 H-1B petitions filed on behalf of persons exempt from the cap under the "advanced degree" exemption.

Ageist language cuts employee productivity, leads to legal liability

The wrong language denigrating older workers, even if only subtly, can have an outsized negative impact on employee productivity and corporate profits, says Bob McCann, an associate professor of management communication at the USC Marshall School of Business. The use of such language can raise liability issues as well.

Massachusetts employer offers "citizenship initiative" program for employees

The Lupoli Companies, a Lawrence, MA, employer, has launched a pilot program for employees holding green cards that will provide free legal guidance, educational assistance, citizenship training and language skills development to aid them in pre-qualifying for US citizenship. The employer believes the "one-stop shop" process to full citizenship will benefit employees and employers alike, and may ultimately serve as a national model.

Xerox settles sales rep race discrimination claim

Xerox Corp will pay $12 million to settle a race discrimination lawsuit brought by a class of current and former African-American sales representatives who alleged bias with respect to sales territory assignments, quotas and compensation. The company announced the proposed settlement resolving the litigation on April 10, but "adamantly denies that it engaged in any policy or practice of unlawful discrimination or retaliation, or any other unlawful conduct." Xerox will also establish a task force comprised of a diverse group of employees to ensure that African-American sales representatives are compensated in a non-discriminatory manner by assessing the territory assignment process, among others.

Wal-Mart's internal videos are up for sale, much to retailer's chagrin

"Watch the never-before-seen footage of Wal-Mart managers performing in drag at a company meeting," Wal-Mart critic Wal-Mart Watch invites visitors to its website. It turns out Flagler Productions, Inc, the production company that had filmed the retailer's internal meetings for decades, has opened up its Wal-Mart video archives for sale to enthusiastic buyers—such as union critics and plaintiffs lawyers—after the company dropped the small firm as a contractor. "In front of the camera and in the public eye, Wal-Mart claims it is `committed to empowering all women,' Wal-Mart Watch says, introducing the video. "But behind closed doors, Wal-Mart sends its employees a very different message." Wal-Mart had offered to pay $500,000 for the archives. But in an October, 2007, letter to the retailer now posted on its website, attorneys for the production company notified Wal-Mart that their client had reduced its price—to $145 million, and informed the retailer that it would be pursuing an array of other potential buyers, from those with "a political bent, to legal, to national media." As if employees bearing camera phones were not worrisome enough.

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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 Work Week offers timely coverage of breaking legislative developments, regulatory activity, state law changes, key case law and expert commentary by CCH editors.