Supreme Court Extends Retaliation Protection To Participation In Company Investigations, January 30, 2009
by Eric Paltell
On January 26, 2009, the United States Supreme Court ruled that an employee who is discharged after raising allegations of inappropriate conduct by a supervisor during a company investigation is covered by Title VII's anti-retaliation provisions. In the Court's decision, Crawford v. Metropolitan Government of Nashville in Davidson County, Tennessee, the Court found the employee's conduct to be protected, even though she never filed a harassment charge or initiated an internal investigation.
In Crawford, the plaintiff, Vicki Crawford, had worked for Metropolitan Government ("Metro") for over 30 years. In 2002, the Assistant Director of Human Resources began investigating allegations of sexual harassment by Metro's Employee Relations Director, Gene Hughes. As part of the investigation, Crawford was interviewed, and she told the Assistant Director of Human Resources that she believed Hughes had sexually harassed her and other employees.
Subsequently, Metro fired Crawford and two other employees who had alleged harassment by Hughes during the investigation. Metro claimed that Crawford had mishandled public funds, and was fired for mishandling these funds. Thereafter, Crawford filed an EEOC retaliation charge, alleging that she was fired in retaliation for disclosing Hughes's sexually harassing behavior during the internal investigation. The trial court granted summary judgment in favor of Metro because it found her participation in the internal investigation was not covered by Title VII's anti-retaliation provision. The trial court's decision was affirmed by the United States Court of Appeals for the Sixth Circuit.
The Supreme Court reversed the Sixth Circuit, holding that Crawford's conduct fell squarely within the "opposition clause" of Section 704(a) of Title VII. That clause makes it an unlawful employment practice to retaliate against an employee who either "opposes" an employer's discriminatory practice, or "participates" in proceedings to enforce rights under Title VII. The Court used a dictionary definition of "oppose," finding it to mean "to be hostile or adverse, as in opinion." In using this definition, the Supreme Court applied a much broader definition then did the Sixth Circuit, which held that Crawford's conduct was not covered because she did not make a complaint of discrimination herself. Writing for the Supreme Court majority, Justice David Souter stated:
The statement Crawford says she gave to [HR representative] Frazier is thus covered by the opposition clause, as an ostensibly disapproving account of sexually obnoxious behavior toward her by a fellow employee, an answer she says antagonized her employer to the point of sacking her on a false pretense.
The Supreme Court's decision in Crawford was not unexpected. Most employment law practitioners had believed that conduct such as Crawford's was likely protected by Title VII. Realistically, once an employee raises a complaint of harassment to a Human Resources executive or other manager, a prudent employer should treat the employee as if they had engaged in protected activity. Nevertheless, employers should keep in mind that if the employee engages in misconduct (as Ms. Crawford allegedly had), the employee is not insulated from discipline.
Stimulus Package Includes COBRA Overhaul, January 28, 2009
by Eric Paltell
The $825 billion economic stimulus package proposed by House Democratic leaders includes a $30.3 billion proposal to have the federal government pay much of the cost of health care continuation coverage for employees who lost their jobs between September 1, 2008 and December 31 2009..
Under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), an employer with 20 or more employees must provide employees and their families the option of continuing their coverage under the employer's group health insurance plan if employment is terminated or they experience a change in family status through death, divorce, or the end of a child's dependency under the parents coverage. COBRA coverage may be continued for a period of between 18 and 36 months, depending on the qualifying event. COBRA beneficiaries are generally required to pay 102% of the premium for an active employee who is enrolled in the same health plan.
If signed into law, the stimulus package would revise COBRA to subsidize coverage for a period of 12 months by having the government pay up to 65% of the employee's COBRA premiums. Additionally, the law would extend the availability of unsubsidized COBRA coverage for employees age 55 or older and employees with ten years or more of service beyond the 18 months provided under the current law. The individuals could remain on COBRA until they reach Medicare eligibility age or subsequently obtain health coverage through employment.
Although the law is well intentioned in that it may allow individuals to secure health care coverage at reduced rates, it could impose significant new administrative burdens and costs on employers. Indeed, individuals will now remain in the employers insurance pool for many years, and could thereby have an adverse impact on the employers experience rating.
The stimulus package is expected to be considered by the full House on January 28th. If passed, the proposed revisions to COBRA will need to be reconciled with a more narrowly tailored COBRA subsidy bill which passed the Senate Finance Committee on January 28th.
Government Loan Agreement Rules Out Strike at GM, January 23, 2009
by Meg GallucciGM received a total of 8 Billion in loans from the U.S. Treasury on December 31, 2008 and January 16, 2009, with a final 4 Billion due on February 17, 2009. The loans will mature December 31, 2011. In return for the loans, GM must provide detailed restructuring plans to the government.
GM and the United Auto Workers (UAW) are under intense pressure to negotiate. GM's loan agreement with the government calls for a reduction in compensation, including wages and benefits, commensurate with that of U.S. hourly workers at Toyota, Nissan and Honda. The agreement also stipulates that a "pending" or "threatened" strike is a default on the loan, making it critical that the UAW and GM negotiate in good faith and actually reach an agreement. GM and the UAW must determine and implement specified wage and benefit reductions as soon as possible.
The government is taking a firmer position with GM than it did in providing the "bail out" for financial institutions, which was apparently not subject to much oversight. The government has made it clear to GM that their agreement is a contract which GM may not breach.
Employer Requests Reinstatement of Union Election Petition, January 21, 2009
by Meg GallucciIn 2007, a labor union filed an election petition to represent teachers and counselors at a Michigan public charter school run by Charter School Administration Services Inc. (the “Employer”), a private, for-profit entity. The Regional Director for the National Labor Relations Board issued a Decision and Order finding that the Employer was exempt from the jurisdiction of the NLRB because the school is a political subdivision. State or political subdivisions are excluded from the definition of “employer” under the National Labor Relations Act. The Regional Director then dismissed the election petition.
The Employer, oddly enough, requested that the NLRB review the decision. The Employer is a Michigan corporation and manages public schools in several other states. The Michigan public charter school contracted with the Employer to operate the school and hire the school’s teaching staff pursuant to Michigan law, permitting public schools to contract with service providers. The school staff works for the private entity, which also pays their salaries.
The determination of the status of any employer as a political subdivision is subject to the test described in NLRB v. Natural Gas Utility District of Hawkins County, 402 U.S. 600 (1971). Under the Hawkins County test, an entity is exempt from NLRB jurisdiction if it is either (1) created directly by the State and constitutes a department or administrative arm of the government, or (2) administered by individuals who are responsible to public officials or the general electorate.
Obviously, the private Employer does not satisfy the first prong of the test. Instead, the case focuses on the second prong, analyzing the accountability of the Board of Directors (the “BOD”) of the private entity. The NLRB found that the BOD is appointed by and subject to removal only by other private individuals in the corporation and not by any public officials or the general electorate. Therefore, the NLRB decided that the employer is not exempt from its jurisdiction, and the election petition was reinstated.
Had the Employer not requested that the NLRB review the Regional Director’s decision, the election petition might not have been reinstated, presenting a different approach to labor relations than the usual employer versus union.
The case is Charter School Administrative Services Inc., 353 NLRB No. 35, Sept. 30, 2008.
"Cat's Paw" Liability In Employment Discrimination, January 19, 2009
by Meg GallucciA court may find unlawful discrimination under the "cat's paw" liability theory when an employee dupes an unwitting employer into implementing an adverse employment action against another employee based on discriminatory animus harbored by the first employee. The term "cat's paw" is derived from the fable where the monkey induces the cat to stick its paw into the fire to retrieve roasting chestnuts. A recent case in a Florida district court exemplifies the theory.
Two sales associates at a Saks Fifth Avenue in Bal Harbour, Florida were terminated by the regional human resources director for allegedly giving unauthorized discounts to customers. The plaintiffs contend that their termination was actually motivated by age discrimination by their immediate supervisor and the local human resources director at the Bal Harbour store. For the plaintiffs to prevail under the cat's paw theory, they must prove that the Bal Harbour human resources director influenced the regional human resources director to fire the plaintiffs for an underlying discriminatory purpose of which the regional director was unaware. The Court did find clear evidence of discriminatory animus by the immediate supervisor. On the other hand, the Court found no evidence of discrimination by the local human resources director.
The plaintiffs' evidence consisted of hiring statistics at the Bal Harbour store. During the period when the Bal Harbour human resources director worked at Saks, all 11 employees hired in their department were under 40 years old. This fact, coupled with their immediate supervisor's age-related remarks, provided the basis for their complaint. The Court found, however, that the hiring statistics were unpersuasive because the Bal Harbour store had 250 employees, and one-third of the new hires during the local human resource director's tenure were over 40. Furthermore, there was no evidence that the Bal Harbour human resource director was unresponsive to age-related complaints, and she had responded appropriately to the complaint lodged against their immediate supervisor by the plaintiffs.
When the theory works, an unwitting employer is actually a conduit for the discriminatory act of another. In this case, the Bal Harbour director was briefly in contact with the regional director regarding the allegedly unauthorized discounts that lead to the plaintiffs' termination, but the regional director actually relied on input from others in terminating the plaintiffs. The nexus was broken, and the plaintiffs lost.
The case is Perez v. Saks Fifth Avenue, Inc., Southern District of Florida, decided on January 5, 2009.
Employers Should Tread Carefully When Speaking With The Police, January 14, 2009
In a case that seems to defy common sense, the Fourth Circuit recently vacated the grant of summary judgment in favor of a bank that terminated an employee after learning the employee may have been involved in an attempted robbery of the bank.
In Worden v. SunTrust Banks, Inc., a bank employee was questioned by police in connection with an attempted robbery of the bank. Without the participation of the bank, authorities administered two polygraph tests, which the employee failed. The police later shared the polygraph results with bank officials and, indeed, the employee himself told a bank official that he failed the test.
Not surprisingly, the bank terminated the employee. Also not surprisingly, the employee sued the bank for violations of the Employee Polygraph Protection Act. While the court accepted the bank’s argument that it would have terminated the employee even had it not known of the polygraph results and dismissed the employee’s wrongful discharge claim, it sent back to the trial court the issue of whether the bank “used” or “referred to” the polygraph test results. At least based on this case, it seems that when the police administer a polygraph test, ignorance may be the best defense.
Cat's Paw Theory Rejected, January 8, 2009
When I saw the headline on this case, I had to look twice. Under the cat's paw theory, an employee proves discrimination by showing that the person making the termination decision, for example, was not motivated by illegal reasons, but was tricked into making the decision by someone who was. The reference to "cat's paw" is to a fable where a monkey talked a cat into putting its paw in a fire to retrieve some chestnuts.
The court said to invoke the cat's paw theory, the former employee had to show some connection between the innocent supervisor's decision and the guilty supervisor's actions. In the case before the court, there was no evidence that the supervisor, who in that case had made remarks about the employee's age, was involved at all in the decision to terminate. Perez v. Saks Fifth Avenue Inc., No. 1:07-cv-21794 (S.D. Fla., January 5, 2009). The court overturned a jury verdict in the employee's favor.
Apparently Subprime Mortgages Are Not Merrill Lynch's Only Problem, January 6, 2009
Merrill Lynch will pay $1.55 million to a former employee pursuant to an EEOC settlement of his religious and national origin discrimination claims. The employee, an Iranian Muslim, claimed he was denied opportunities because he was "from a country which has a high risk factor and a threat." EEOC v. Merrill Lynch, No. 07-CV-6017 (SDNY, December 30, 2008).
Deposition Questions Violate National Labor Relations Act, January 5, 2009
While it is proper for an employer to state to its employees that it is against unionization, it is not proper for an employer to question employees about their union sympathies. For example, it is fine to state: "We believe unions are not good for this company, and we urge all our employees to resist any union attempts to organize this company." It is not fine to ask: "So, what do you think about the Teamsters Union?"
The NLRB ruled recently that deposition questions posed by a company lawyer during a wage and hour suit violated the National Labor Relations Act. Specifically, the lawyer asked if the employee supported recent efforts by the CWA to unionize the company. The NLRB found the question coercive, and it issued a cease and desist order. Chinese Daily News, 353 NLRB No. 66 (2008).
If, as a result of amendments to the National Labor Relations Act, union organizing increases, your supervisors need to be aware of the restrictions on interrogation of employees contained in the Act. Right now might be a good time to make sure they know.
Lawyer Jokes Not Sexual Harassment, January 2, 2009
The American Bar Association has championed an effort for lawyers to stamp out any humor that makes us the butt of the punch line. It is not clear what is invidious about lawyer jokes, except among lawyers who cannot take jokes. Sadly there are plenty of those.
In any case, in one recent case the eggshell sensitivity of the ABA, and that of a fervently like- minded employee, combined in a sexual harassment case. Andrew Distad , who worked in a school for the mentally challenged, objected to any thing he considered sexual. For example, he refused to be alone in a room with any woman, and objected to having had his shoulder touched by a woman.
The last straw arose when Distad saw an offensive email at the table where he commonly read his bible. The email bore the title, Lawyers are Idiots! Beneath it was a quote allegedly from an actual lawsuit which read:
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ATTORNEY: Are you sexually active?
WITNESS: No, I just lie there.
Distad, who considered the quote to be sexual, said that the situation had then become so stressful and awkward that he no longer could work at the school. He later sued the school for sexual harassment based upon the quote and other similar incidents. The case recently was dismissed by the court on summary judgment.
No word whether Distad is planning to apply for employment with the ABA.
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