KEY CASES

6thCir: No evidence that employer condoned strike; discharge was lawful

An employer did not violate the NLRA when it terminated striking workers, the Sixth Circuit held, affirming the Board's reversal of a law judge's finding that the discharge was unlawful because the employer had condoned the work stoppage. After rumors circulated about a proposed workweek reduction, a group of employees walked off the job and insisted on speaking to the plant manager. The plant manager refused to talk to the assembled employees and told them they had 15 minutes to return to work or leave the property. The parties agreed that the manager told the employees to return to work, but disputed what happened next. The manager testified that he informed the workers that their refusal to return to work would equate to their voluntary resignations. The striking employees claimed the manager told them to leave but that they should return the next day. However, when they were denied entrance the next day, none of them called the manager to find out why. Nor did they inform their union rep that they intended to return to work. Given the disputed interaction with the plant manager, and the employees' conduct the day after the walkout, the facts did not support a finding of condonation. "Condonation," noted the appeals court, "may not be lightly presumed from mere silence or equivocal statements, but must clearly appear from some positive act by an employer." Here, such clear evidence was lacking, thus, the employee failed to satisfy his burden of showing the discharge was unlawful (Exum v NLRB, November 7, 2008).

NDIll: Suit against city proceeds for denial of building permit due to labor dispute

A federal district court in Illinois declined to dismiss several claims brought by a hotel employer against the City of Chicago and a city alderman who refused to issue building permits to the hotel until it resolved a longstanding contract dispute with a labor union. The court denied a motion to dismiss the hotel's claim that the alderman's conditioning the permit issuance on the settlement of the labor negotiation was subject to the NLRA's Machinists preemption. Moreover, the court found the hotel sufficiently asserted a "class of one" equal protection claim against the city and alderman. Also, because the hotel alleged a concrete injury and continuing adverse effects, the hotel's claim for injunctive relief could proceed. However, the court dismissed the hotel's due process claims against the municipal defendants; the issuance of building permits requires discretionary approval by various city departments and the hotel therefore lacked a property interest in the permits. "Plaintiff has alleged nothing more than a unilateral expectation of permits, rather than legitimate claim of entitlement to them," the court noted. The hotel's request for punitive damages was also stricken. Finally, because the court lacked jurisdiction to issue a mandamus compelling defendants to grant the requested permits, the hotel's claim for such a writ was dismissed (520 S. Michigan Ave Associates, Ltd v Fioretti, November 5, 2008).

DKan: "Me, too" evidence inadmissible, district court rules for the second time

In an ADEA case on remand from the Supreme Court, a federal district court reiterated its view that the "me, too" evidence of bias and age-derogatory remarks offered at trial by a manager who was discharged during a reduction in force was inadmissible because it was unrelated to her employer's discharge decision. "Me, too" evidence is testimony by coworkers who suffered from the same adverse employment actions as the employee filing suit, but who do not have the same supervisor and who are not parties to the suit. The Supreme Court found that such evidence was "neither per se admissible nor per se inadmissible" under the Federal Rules of Evidence; rather, it depends on many factors, including how closely related the evidence is to the plaintiff's circumstances and theory of the case. Here, the employee had not alleged a disparate impact or a pattern or practice of age bias. She presented no evidence that any supervisor who allegedly discriminated against the five employees-witnesses that were discharged in the RIF "had any connection to her chain of command or that her employer had a company-wide practice of age bias which infected its entire culture or of which her supervisors were aware." In addition, she failed to show these alleged age-derogatory remarks had anything to do with her discharge (Mendelsohn v Sprint/United Mgmt Co, November 4, 2008).

DMinn: Six-day recall restarted six-month layoff clock under WARN Act

Laid-off workers who were recalled briefly for six-seven days did not suffer a qualifying "employment loss" under the WARN Act because they were ultimately rehired within six months of the date that their recall ended, a federal district court in Minnesota held. The brief recall stopped the clock for purposes of calculating the duration of their layoff, only to restart a new six-month layoff period upon the end of the recall, the court reasoned. The workers' union argued generally that employers should not be allowed to evade the WARN Act by simply recalling workers who, but for a brief recall, suffered what is in effect an employment loss. However, the union failed to allege the employer here lacked a legitimate business reason for the recalls or that the employer otherwise acted in bad faith. "The court agrees there are situations in which a recall should be disregarded because it was too brief and was implemented with the purpose of attempting to evade the WARN Act," the court noted, "but that is not the case here." The court also declined to entertain the alternative notion that the workers suffered an actionable "reduction in work hours of more than 50 percent" pursuant to another WARN Act provision. The workers suffered a layoff, not a reduction in hours, so this alternate cause of action was simply inapplicable. To read the statute otherwise would render this provision nugatory, the court noted (United Steelworkers v Ainsworth Engineering, November 10, 2008).

DOre: "Independent contractor" was employee under ERISA, benefit plans

A regional "contract" correspondent was an employee within the meaning of ERISA and standard agency law, a federal district court in Oregon ruled, and thus, had standing to sue under ERISA for benefits under the employer's medical, dental, pension and 401(k) plans. The correspondent did not waive her right to benefits by entering into agreements which classified her status as an independent contractor. Further, these agreements were not controlling on the question of whether the correspondent was an employee within the meaning of the employer's benefits plans. Rather, the plan documents controlled. A plan-by-plan determination found the correspondent was not ineligible under most of the eight employer plans (Barnard v Advance Pension Plan, et al, November 4, 2008).

STATE LAW CASES

CA: Nonresidents could assert state labor code, unfair competition claims

Nonresidents of California employed by Oracle, a Delaware corporation whose principal place of business was California, could sue for overtime claims under the California Labor Code for work performed within the state, the Ninth Circuit ruled. As an initial matter, the appeals court concluded that California law applied, finding the employees' home states of Colorado and Arizona had "no interest in applying their minimum wage laws (or lack thereof)" to the employees' California work. "To the degree that Colorado or Arizona would be interested in the economic welfare of its residents working in California, these states both have an interest in the application of California rather than Colorado or Arizona law, for California's Labor Code is by any measure the most advantageous to the employee," the appeals court wrote. Next, the court rejected the employer's assertion that applying California law to residents of Colorado and Arizona violated due process and the dormant commerce clause, finding the contacts creating California interests "are clearly sufficient to permit the application of California's Labor Code in this case." Applying California law, the appeals court concluded the Labor Code "govern[s] all work performed within the state, regardless of the residence or domicile of the worker." The nonresidents could also assert a state Unfair Competition Law (Sec. 17200) claim under the statute's "unlawful" prong, predicated on the Labor Code violations. However, the employees could not invoke the UCL's "unlawful" prong to obtain redress for violations of the federal Fair Labor Standards Act for work performed outside California (Sullivan v Oracle Corp, 9thCir, November 6, 2008).

MA: Prevailing wage must be used to calculate overtime on public projects

Employees engaged in public services contracts which are subject to the Massachusetts prevailing wage law must receive the applicable prevailing wage rate as their hourly wage in order to determine the employees' overtime pay, the Massachusetts Supreme Court ruled. The case was brought by a class of waste disposal truck drivers and laborers who alleged their employer's payroll formula, which substituted a lower hourly rate for the prevailing wage rate in its calculations, violated the prevailing wage law and state overtime law. For work for which a prevailing wage rate applies, overtime must be calculated based on the hourly prevailing wage. To rule otherwise would frustrate the statutory purposes of the overtime law, the high court held (Mullally v Waste Mgmt of Mass, Inc, MassSJCt, November 6, 2008).

AGENCY DEVELOPMENTS

Federal contractors, subcontractors must use E-Verify as of January 15, 2009

Certain federal contractors and subcontractors will be required to use the federal government's E-Verify system to confirm their employees' employment eligibility starting January 15, 2009, pursuant to final rules published on November 14. The rule inserts a clause into federal contracts committing government contractors to use E-Verify to ensure that all new hires and current employees directly performing work under federal contracts must be legally authorized to work in the United States.

EEOC resolves controversial English-only suit against the Salvation Army

A controversial federal lawsuit brought against the Salvation Army over its adoption of an English-only policy and English fluency requirement has been settled by a consent decree approved by a federal court. The EEOC had alleged the charitable organization discriminated against two employees on the basis of their national origin by requiring that they comply with an English-only rule and discharging them because they failed to comply with an English proficiency requirement, spoke Spanish in the workplace and could not fluently speak or understand English. Amidst national controversy last year over workplace "English-only" rules, the case prompted Sen. Lamar Alexander (R-TN) to champion an amendment that would have stopped the EEOC from suing employers that required employees to speak English on the job.

EEOC settles suits over prayer breaks, use of pork-handling waiver form

The EEOC has resolved two religious discrimination suits brought on behalf of Muslim employees against a chicken processor and the employment agency that referred workers to the company. Pursuant to a consent decree, Gold'n Plump Poultry will add a paid break during the second half of each shift to accommodate the religious beliefs of Muslim employees who wish to pray during the work day. In its suit against The Work Connection, the EEOC had alleged the employment agency required job applicants to sign a form stating they would not refuse to handle pork on the job in order to be referred for work at Gold'n Plump. Under a consent decree, the agency will offer placement at Gold'n Plump to job seekers previously turned away for refusing to sign the form and stop using the "pork form" altogether.

$1.8 million settles suit against University of Phoenix for bias against non-Mormons

A federal district judge has entered a consent decree for nearly $2 million and significant remedial relief to resolve a class religious discrimination suit against the University of Phoenix and its parent corporation, Apollo Group, Inc, according to the EEOC. The university engaged in a widespread practice of discriminating against non-Mormon employees who worked as enrollment counselors in the university's online division, the agency alleged.

DOJ recovers more than $1 billion in fraud, false claims in FY 2008

The federal government secured $1.34 billion while pursuing allegations of fraud against the United States in the fiscal year that ended September 30, the Justice Department announced. Almost 78 percent of this year's recoveries are associated with suits initiated by private citizens, often employees who unearth violations while on the job. In fact, several of the government's most significant settlements and judgments in 2008 were secured via qui tam suits filed by employees—who reaped significant financial gains along the way.

MANAGING THE CRISIS

Unemployment rises to 6.5 percent; 1.2 million jobs lost so far this year

The unemployment rate rose from 6.1 to 6.5 percent in October, according to the Bureau of Labor Statistics. Employment fell by 1.2 million in the first ten months of 2008; over half of the decrease has occurred in the past three months.

Nearly three-quarters of employers prepare for possible budget cuts

Seventy percent of HR professionals say budget cuts across entire organizations are likely if current challenges to the U.S. economy continue, according to a survey by the Society for Human Resource Management. More than half of the respondents said hiring freezes are also likely. Respondents shared what measures they will likely implement in light of the crisis.

Retirees may go without pension checks due to poor economy, underfunded plans

Americans who thought their money was safely tucked away in a traditional pension plan are now faced with the possibility that they will receive only 50 percent of their money—or nothing at all—due to sharp losses in the stock market, warns one pension administrator. The Adjusted Funding Target Attainment Percentage (AFTAP), enacted as part of The Pension Protection Act of 2006, may prevent pension distributions to retirees and others who need their pension check to pay bills.

Workplace litigation risk heats up as economy cools

A cooling economy and the workforce reductions that follow can raise employee anxiety and increase the prevalence of employment litigation. It's critical for employers to anticipate trouble on the legal front when the economy slows.

First, consider the legal implications of workforce reductions

It may be an inevitable strategy in a downward economy, but it carries its own risks. When deciding whether to conduct a layoff or a wide-scale reduction in force, a careful consideration of the myriad legal issues that can arise is essential. Maintaining compliance while implementing reductions takes careful planning and ongoing vigilance.

Blueprint for a legally compliant reduction in force

Employers may find it necessary to conduct a reduction in force to stay competitive or remain in business during an economic downturn. Gerald L. Maatman, Jr., a partner at Seyfarth Shaw and member of the Wolters Kluwer Labor and Employment Law Advisory Board, offers compliance guidance and a blueprint for employers when structuring and implementing a RIF.

Don't forget the visa holders

Companies are facing the most significant reengineering effort of the past two decades as a result of the global economic slowdown. These changes pose particular challenges for companies whose U.S. workforce includes visa holders and candidates for permanent residency. The Legal Times looks at the big picture.

Rise in layoffs raise immigration issues as well

Properly attending to immigration matters during the downsizing process can prevent making a bad situation even worse, notes attorney Greg Siskind, who answers some frequently asked questions on immigration issues related to layoffs.

IN OTHER NEWS

Obama transition team will not discriminate based on gender identity

The jobs page of the Obama-Biden Transition Project website states that the transition team will not discriminate in hiring on the basis of sexual orientation or gender identity, among other characteristics. This pledge marks the first time employment discrimination based on gender identity is prohibited in the executive branch. It begs the question: is the Employment Non-Discrimination Act (ENDA) far behind?

High Court will not review whether records can be unsealed in Title VII case

The Supreme Court has declined review of a Third Circuit decision that allowed all records in a federal employment discrimination case to be sealed from the public for seven years. A publisher sought to unseal the docket in a case of first impression, in which the appeals court ruled an employee may proceed with her claim that she was wrongly discharged because she had an abortion.

Women face more harassment in work groups with male-female balance

Despite common assumptions, new research suggests that women are not more likely to be sexually harassed when they are the minority or majority in a work group. Instead, in most cases, women were sexually harassed at work when their work group had a similar proportion of males to females.

Is there a better way to discuss labor contracts?

On the heels of two recent labor negotiations—one that brought a two-month strike, the other that was fairly smooth sailing—Boeing Co and a Seattle Post-Intelligencer columnist ruminate on the ills of how we currently negotiate labor agreements.

Former IBM employee, now an Apple exec, counter-sues in noncompete dispute

A federal district court enjoined a former IBM employee immediately to cease working as a senior VP for rival Apple, Inc, pending IBM's breach of contract suit against him. In a counter-suit filed last week, Information Week reports, the former Big Blue employee argued his noncompete agreement with IBM was unrelated to his work at Apple, and was unenforceable nonetheless.

NYC employment agencies use illegal, deceptive practices

About half of the employment agencies licensed in New York City use illegal or deceptive practices, according to the results of an 18-month investigation by the city's Department of Consumer Affairs. Mayor Michael Bloomberg announced that the city had uncovered widespread violations throughout the industry, including illegal fees, contract violations and withholding refunds, after a review of contracts, applications and receipts of over 200 employment agencies and nearly 100 inspections.

Union must pay out $28.1 million to retired NFL players after jury verdict

More than 2,000 retired pro football players scored a legal touchdown last week when jurors awarded a $28.1 million verdict against the National Football League Players Association and its licensing and marketing division. The jury found the union breached its fiduciary duty by failing to market retired players' licensing rights under a group licensing authorization contract covering the licensing of electronic games, collectibles and other merchandise. The verdict included $21 million in punitive damages, following testimony from several former NFL stars about the benefits promised by the union that were never received and the difficulties in gaining information about the NFLPA's finances and licensing agreements.

Pop star Justin Timberlake's restaurant hit with wage suit

Here's some news to cite to impress the teens in your life: a wage suit has been filed against singer Justin Timberlake and his partners and managers at Southern Hospitality BBQ, the Manhattan restaurant owned by the pop mega-star. The suit, filed by a former busboy on behalf of 50 other employees, alleges the restaurant staff were cheated out of tips and overtime pay. For added "cool points," tell them you read it at ScoopTheMagazine.

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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.