SUPREME COURT NEWS

High Court to hear argument on "class-of-one" theory in public employment cases

The Supreme Court hears oral argument today in Engquist v Oregon Dep’t of Agriculture (Dkt No 07-474), considering whether the "class-of-one" theory of equal protection is applicable in the public employment context. This theory recognizes liability for violations of the equal protection clause where a plaintiff has been intentionally treated differently than similarly situated individuals and there is no rational basis for the treatment. In a matter of first impression, a divided Ninth Circuit ruled the theory did not apply to public employment cases, concluding that "the rights of public employees should not be as expansive as the rights of ordinary citizens." A majority of circuits have ruled otherwise.

Supreme Court to determine burdens as to "reasonable factor other than age"

On Wednesday, April 23, the High Court will hear arguments in Meacham v Knolls Atomic Power Lab (Dkt No 06-1505), revisiting an ADEA case in which it will consider whether an employee bears the burden of persuasion as to an employer’s defense that an employment practice, despite having a disparate impact on older workers, is permissibly based on a "reasonable factor other than age." The Second Circuit held the employer has only the burden of production while the employee bears the burden of persuading the fact-finder that the factors identified by the employer are unreasonable. This holding is in conflict with decisions of other circuits as well as an EEOC regulation. Should the High Court side with the Second Circuit, employees may face an uphill battle in ADEA disparate impact cases.

KEY CASES

3rdCir: Employer not required to arbitrate dispute over denial of disability benefits

An employer did not have to arbitrate its decision to deny long-term disability benefits to four employees under the arbitration clause of a collective bargaining agreement, the Third Circuit ruled. Although disability benefits were the subject of bargaining between the union and employer going back 40 years, the disability plan itself was separate from and independent of the bargaining agreement, and the right to receive disability benefits derives not from the union contract, but from the plan itself. By its terms, the disability plan vests an administrative committee with "sole discretion" to interpret the plan, includes a detailed claims procedure and appeal process, but does not provide for arbitration. The appeals court thus directed the district court to grant the employer summary judgment on the union’s claim seeking to compel arbitration under the Labor-Management Relations Act (LMRA). The plaintiffs’ ERISA claim, however, could proceed (Steelworkers v Rohm and Haas Co, 3rdCir, April 14, 2008).

6thCir: Employer’s knowledge of litigation created inference of retaliation

An employer’s mere knowledge that a job applicant had filed a lawsuit against the company raised an inference that the litigation was the reason for an adverse employment action against the applicant, the Sixth Circuit held. While the applicant was involved in a state law age discrimination suit against the employer, he agreed to conduct training for the employer. The training was cancelled after it was suggested that he "may not be the best person to do the training because of the litigation factor." On a motion for summary judgment, it was enough that the decision-makers knew of the litigation; it was not necessary that they knew the litigation involved an age discrimination claim, the court held. Noting the absence of controlling Tennessee caselaw, the court speculated that the state would not allow employers to so easily evade the anti-retaliation provision of its civil rights statute by maintaining a policy of not hiring or discharging anyone with any litigation claim against the company (Cline v BWXTY-12, LLC, 6thCir, April 1, 2008).

DCCir: Summary judgment motion waives arbitration clause in kidnapping case

An employer waived its right to enforce an arbitration clause when it filed a motion for summary judgment relying on matters outside the pleadings, the DC Circuit held. The case arose out of an employee’s attempt to recover for injuries sustained allegedly as a result of the employer’s mishandling of ransom demands following the employee’s kidnapping in the foreign country where he was employed. The employer argued that workers’ compensation was the employee’s exclusive remedy, and a lower court agreed. After an appeals court reversed, the employer successfully moved in district court to compel arbitration, citing an arbitration clause in the employment contract. On appeal, the employer argued that its involvement in the litigation was too limited in scope to constitute a waiver of its right to arbitrate, noting that it did not file an answer asserting affirmative defenses or move for discovery. However, the employer’s claim that the employment contract mandated coverage under workers’ compensation was an affirmative defense, which the motion for summary judgment invited the court to address. As for the employer’s failure to pursue discovery, the appeals court noted discovery would have focused almost entirely on documents and testimony in the employer’s possession anyway. Moreover, the employee suffered significant prejudice in time and resources opposing two district court motions and briefing two appeals (Khan v Parsons Global Services, Ltd, DCCir, April 11, 2008).

DCCir: Counter-petition restored majority support for union at contract expiration

An employer unlawfully withdrew recognition from an incumbent union following expiration of a bargaining agreement when it improperly ignored a counter-petition rescinding the employees’ renunciation of union representation, ruled the DC Circuit. Prior to expiration of the contract, the employer received a petition signed by a majority of employees announcing they no longer wished to be represented by the union. The employer thereafter ceased dealing with the union. However, on the day before the contract expired, the union presented the employer with the counter-petition. Unmoved, the employer refused to recognize the union or bargain for a new agreement after the contract expired. The appeals court concluded that the NLRB properly measured majority support for the union on the day the contract expired, because that was the date on which the employer’s withdrawal of recognition was to take effect. In this instance, however, the counter-petition made clear that on the expiration date, the union had not lost majority support (Parkwood Developmental Center, Inc v NLRB, DCCir, April 11, 2008).

NDCal: Caught cheating on real estate exam, supervisor drives out whistleblower

A high-level employee of a realty company learned that his supervisor cheated on an online real estate exam by having the secretary pretend to be the supervisor and take the test in his place. The employee notified the company’s general counsel of this violation of state law. Soon after, the supervisor told the employee he could no longer work with him and then sought to force him out. On these facts, the employee could bring a claim for constructive discharge in violation of public policy, a federal district court in California ruled. Moreover, since the company denied his severance benefits on discharge, and the severance plan expressly applies to an employee who experiences "a material adverse alteration in the nature of his or her position," the employee alleged a triable ERISA claim as well. However, the alleged conduct was not outrageous enough to sustain a cause of action for intentional infliction of emotional distress (Sutton v Brandywine Realty Trust, NDCal, April 4, 2008).

SDTex: Transgendered female’s Title VII claim moves forward

A biologically male applicant, living life as a female, stated a viable claim under Title VII for an employer’s withdrawal of its job offer ostensibly because she misrepresented her gender during the interview process, a federal district court in Texas held. The court rejected the blanket assertion that Title VII offers no protection to transgendered individuals, and in the absence of Fifth Circuit precedent, it applied Price Waterhouse v Hopkins, a Supreme Court ruling that interpreted Title VII’s protection to extend to individuals who fail to conform to traditional sex stereotypes. "There is nothing in existing case law setting a point at which a man becomes too effeminate, or a woman becomes too masculine, to warrant protection under Title VII and Price Waterhouse," emphasized the court. To hold otherwise, it cautioned, would allow employers and courts to superimpose a classification such as "transsexual" on a plaintiff and then legitimize bias based on the gender nonconformity by formalizing it into a purportedly unprotected classification. The applicant could proceed with her bias claim as a male who failed to conform to traditional male stereotypes (Lopez v River Oaks Imaging & Diagnostic Group, Inc, SDTex, April 3, 2008)

STATE LAW CASES

CT: Connecticut high court overturns $41 mil verdict for injured construction worker

The Connecticut Supreme Court has reversed a jury verdict of more than $41 million against a general contractor and in favor of a construction worker who was severely injured on a job site after being struck by a steel crossbeam that fell due to a failed weld. The trial court erred in concluding the general contractor owed a nondelegable duty of care under the state building code to inspect all welds, and that its failure to do so was negligence per se. Assuming such a duty arises under the building code, it is not nondelegable, and the general contractor’s duty was satisfied when the contractor hired a subcontractor to perform the inspection work. In addition, the high court held the jury was properly denied an instruction that the general contractor had a duty to inspect under common-law negligence principles, since it was not foreseeable that the subcontractor would not fulfill its contractual obligation to inspect the welds. The jury was also correctly denied the chance to consider whether the general contractor had retained control (and thus liability) over the inspection of welds at the work site, since the evidence so clearly demonstrated that the general contractor did not retain control over the "area or instrumentality" that caused the plaintiff harm (Pelletier v Sodroni/Skanska Construction Co, ConnSCt, April 22, 2008).

MI: The height wasn’t the danger—it was the height without the harness

In another negligence suit brought by an injured construction worker—in this case a carpenter who fell from a mezzanine-level lift while not wearing a required safety harness—the Michigan Supreme Court reversed the lower courts’ denial of summary judgment to a general contractor under the state’s "common-work-area" doctrine. A general contractor is liable under the doctrine if it fails to ensure that workers observe safety procedures, and its negligence in this regard "results in a significant number of workers being exposed to a high degree of risk in a common work area." The case turned on whether the danger in question that caused the injury was the height itself or working at that height without fall-protection equipment. A significant number of workers were exposed to working at that height—an unavoidable condition of construction work, the high court noted. But only the injured employee was exposed to the danger of working at such a height without a harness. As such, a significant number of workers were not exposed to the danger that befell the carpenter, and the common work area doctrine did not apply. The general contractor thus could not be held liable (Latham v Barton Malow Co, MichSCt, April 14, 2008).

AGENCY DEVELOPMENTS

SHRM submits comprehensive comments on DOL’s proposed FMLA rule

The Society for Human Resource Management has filed comments on the Labor Department’s proposed changes to the Family and Medical Leave Act regulations. The association noted its comments reflect input received from members at a series of "listening sessions" on the rule changes. SHRM said the proposed changes "are a positive step that will improve FMLA administration for both employees and employers."

AFL-CIO urges Department of Labor not to "gut" FMLA

In comments filed on April 11 pursuant to the open comment period, the AFL-CIO called on the Bush Administration to drop its proposed changes to the FMLA rules, as outlined in the proposed Labor Department amendments. The labor group charged the pending rule revisions "would make it more difficult for workers to get the time off they need to care for themselves or their loved ones in emergencies."

OFCCP: Defense contractor to pay $1.5 million to resolve discrimination charges

Dallas-based Vought Aircraft Industries has agreed to pay $1.5 million in back wages to 1,045 applicants after entering into a consent decree with the OFCCP to settle allegations of hiring discrimination based on race and gender.

DOJ: American Airlines settles pilot benefits dispute

The Justice Department has reached an agreement with American Airlines to settle a USERRA action filed more than 10 years ago, charging the airline failed to provide pilots with adequate vacation and sick leave benefits while on military leave. Under the settlement, if approved by a court, the airlines will pay 353 pilots a total of about $346,000 for the loss of vacation and sick leave benefits and modify its policies to ensure that all pilots serving in the military accrue the appropriate benefits.

NLRB: General Counsel addresses ABA committee concerns on casehandling

General Counsel Ronald Meisburg issued Memorandum GC 08-05 last week, addressing several questions on agency casehandling procedures that arose at a committee meeting of the Practice and Procedure Committee of the ABA’s Section on Labor and Employment, including coordination between Board regions, deferral of cases, and the use of investigative subpoenas.

NLRB: General Counsel discusses compliance specification time targets

GC Meisburg has issued a memorandum discussing the NLRB’s time targets for obtaining compliance with outstanding Board orders and court judgments, as well as the various factors impacting the agency’s ability to meet those targets.

LEGISLATION

Florida’s "guns in parking lot" measure becomes law

Florida joins five other states that restrict employers from barring firearms on their property, with passage of the Preservation and Protection of the Right to Keep and Bear Arms in Motor Vehicles Act of 2008 (H.B. 503). The law prohibits employers from preventing employees (or other invitees) who are licensed to carry a concealed weapon from keeping firearms in their locked vehicles at work. Signed by Gov. Charlie Crist on April 15, the law takes effect July 1, barring challenges by employer and business groups that have promised to file suit against the measure.

Massachusetts employers will pay treble damages for state wage violations

Triple damages will be awarded to Massachusetts employees who prevail in state wage-hour suits, even where employer violations are inadvertent, with the enactment of Senate bill 1059 on April 14. Under the new law, state courts do not have discretion to reduce a damage award even where an employer is found to have acted in good faith. Massachusetts Gov. Deval Patrick had previously rejected the legislation, sending it back to the Senate and urging a good-faith exception be added. However, the bill passed unamended.

Kennedy says Senate will soon take on legislation overturning Ledbetter

"The right to equal pay for equal work is a fundamental civil right," said Sen. Edward Kennedy (D-MA), in remarks to Senate colleagues imploring them to pass legislation overturning the Supreme Court's controversial 2007 decision that limited the time in which employees can bring disparate pay claims under Title VII. In remarks addressed to the President the next day, Kennedy said: "In these times of economic hardship, working people deserve more than ever the chance to earn a fair day's pay for an honest day's work. Yet, as a result of the Supreme Court's 5-4 decision last May in Ledbetter v Goodyear Tire & Rubber Company, more American workers will have to endure pay discrimination—without the means to stop it."

House bill would end misclassification of workers as independent contractors

The Taxpayer Responsibility, Accountability, and Consistency Act would remove the loophole that allows businesses to bypass the IRS test of whether a worker is an employee or an independent contractor, according to Rep. Jim McDermott (D-WA), chairman of the Income Security and Family Support subcommittee of the House Ways and Means Committee, and the bill’s sponsor. H.R. 5804, introduced in the House on April 15, also would require businesses to give the IRS information about large payments to independent contractors. "Today, millions of American workers are incorrectly or deliberately misclassified as independent contractors, and the shock wave of abuse that ripples through the economy harms everyone and everything in its path," McDermott said.

Senators introduce bill to increase H1-B visa cap, "recapture" unused visas

On the heels of a DHS announcement that it received enough H-1B petitions to meet the congressionally mandated cap for FY 2009, Senator John Cornyn reintroduced legislation that would, among other things, temporarily increase the H-1B visa cap from 65,000 to 115,000 for FY 2009 through 2011 and recapture 150,000 previously unused H-1B visas that would be distributed over a three year period, giving US employers access to previously unused H-1B temporary worker visas and permanent employment-based visas from prior fiscal years.

Proposed legislation would reprioritize H1-B visa program

Legislation introduced in the Senate last week would replace the current H1-B visa program with a new lottery program that prioritizes visas to applicants with an advanced degree in science, technology, engineering or mathematics. "Talent is a nation's most important resource in today's information age, and our nation's immigration policies need to catch up to this economic reality," said Sen. Judd Gregg (R-NH), sponsor of the bill (S. 2868). "By converting a lottery visa program that has marginal skills requirements into one that is focused on the best and the brightest, we strengthen our competitive advantage, spur economic and job growth here in the United States, and deter employers from sending work overseas where highly skilled talent is located."

Iowa employment verification bill would require photo IDs of employees

A bill passed by the Iowa House last week would require employers, within ten business days of hiring a new employee, to verify their identity by obtaining a copy of their Iowa driver's license or non-operator's identification card for facial validity. Under the measure (H.F. 2686), employers who fail to comply with the proposed bill or knowingly submit false information would be subject to penalties. The bill also clarifies the distinction between employees and independent contractors. It now heads to the Senate for debate. Also, currently in committee in the Iowa House is a bill (H.F. 2026) that would make corporate officers civilly or criminally liable if their companies knowingly hired undocumented workers.

IN OTHER NEWS

Federal courts see 72 percent jump in class actions; FLSA suits a key culprit

The Class Action Fairness Act has caused a rise in the number of class actions filed in the federal courts, according to a study released by the Federal Judiciary Center. District courts saw a 72 percent increase in class action activity, a majority of which were opt-in collective actions brought under the FLSA.

Support for Employee Free Choice Act could hurt candidates

The Coalition for a Democratic Workplace, a coalition of employer and business groups that was forged to defeat the Employee Free Choice Act, has released a survey that finds support for the union-backed measure could spell trouble on Election Day for Democrats running for President and Congress.

Continental Tire to pay $158 million to VEBA in settlement with Steelworkers

Continental Tire North America will pay $158 million into a retiree health insurance fund for 2,300 retirees to settle a lawsuit filed by the United Steelworkers and a class of retirees who alleged the company violated federal law when it unilaterally implemented a $3,000 cap on its payments for retiree health coverage. A federal district court ruled last year that Continental did not have the right to reduce or terminate benefits.

ICE targets identity theft at poultry processing plants in five states

More than 280 foreign nationals employed at Pilgrim's Pride plants in five states were arrested last week by Immigrations and Customs Enforcement and charged with committing identity theft and other criminal violations in order to obtain their jobs. "Pilgrim's Pride has relied on the ICE Best Hiring Practices in designing its immigration compliance program," the company noted in a statement following the raid, adding that no criminal or civil charges have been filed against it. Pilgrim’s Pride is one of the largest chicken-processing companies in the US.

Staffing agency to challenge $6.5 million jury verdict in religious bias case

Temporary staffing services firm Kelly Services Inc will likely file post-trial motions seeking to overturn a federal jury verdict of $647,174 in compensatory damages and $5.9 million in punitive damages to an employee who alleged she was denied a promotion because she was not a member of the Fellowship of Friends, a religious organization founded in the 1970s. Should the motions not be granted, the firm is "confident that there are a significant number of grounds on which we will appeal, which we intend to do," Kelly’s general counsel confirmed.

BCI settles with EEOC in case that was withdrawn from Supreme Court

BCI Coca-Cola Bottling Co will pay $250,000 and provide other injunctive relief to settle a race discrimination case that the company had brought up to the Supreme Court. The litigation established the "subordinate bias" theory in the Tenth Circuit, under which an employer may be liable for discrimination when it relies on comments from a biased subordinate supervisor when taking adverse employment action against an employee. The High Court accepted the case and it was fully briefed and set for oral arguments, but less than a week before oral argument, BCI withdrew its appeal without explanation.

"Waterboarded" at work, employee files suit

You wouldn’t think you need to train managers that it’s impermissible to use torture as a motivational tool. But a Provo, Utah company is under fire after a sales manager essentially waterboarded an employee as part of a "team-building" exercise, the Washington Post reports. "You saw how hard Chad fought for air right there," the sales supervisor told his team immediately after the incident. "I want you to go back inside and fight that hard to make sales."

Employer's Guide to Union Organizing Campaigns

In this environment every employer may find themselves subject to organizing efforts. Aspen Publishers' ALL-NEW manual Employer's Guide to Union Organizing Campaigns helps you guide your company through every stage of union organizing campaigns, so that you can react quickly, effectively, and legally even before organizing begins.

State Employment Law Compare

Quickly & easily compare state employment laws side-by-side

This new innovative tool uses "Smart Chart" functionality to instantly compare multiple state laws, all at the same time on the same chart.

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.