June 2009 Quick Clips

Vice President Assures CWA That Employee Free Choice Act, June 25, 2009

Vice President Biden, pandering to organized labor, told the Communication Workers of America recently that he and the President continue to support the Employee Free Choice Act. That Act, which has nothing to do about choice, would effectively eliminate secret ballot elections for employees being organized by a union. Biden, who never seems to miss an opportunity to say something stupid, suggested that the National Labor Relations Board is not an impartial government agency. Most employers who have dealt with the NLRB would argue that the NLRB, if it favors anyone, favors labor unions.

Barney Frank Introduces Act Banning Discrimination Based on Sexual Preference and Gender Identity, June 25, 2009

by Frank L. Kollman

Representative Barney Frank, a gay Congressman from Massachusetts, has proposed banning discrimination based on sexual preference and gender identity. While many states, including Maryland, prohibit discrimination based on sexual preference, gender identity discrimination is another story. An anatomically male person who lives as a woman would arguably be protected, which could present workplace questions about bathroom use and other delicate subjects. Stay tuned for details.

Catholic Church Weighs In On Unionization, June 23, 2009

by Frank L. Kollman

Religiously-based hospitals are not immune from unionization. The U.S. Conference of Catholic Bishops recently handed down guidelines for managers at those hospitals (and other health care institutions, such as nursing homes) for dealing with unionization.

Here are the seven principles the Conference adopted:

All parties are committed to demonstrate respect for each other's organization and mission.
"The union and employer should agree in advance on an equal number of written, verbal, or other communications for employees," and the employer should not conduct mandatory meetings about unionization.
All written communications should be "reviewed and jointly approved by the employer and union." Communications should be "factual, accurate, and holistically truthful."
Neither side will "make comments or engage in activities" that could be considered harassment, threats, intimidation, or coercion.
Employees will be allowed to vote through a secret ballot election supervised by the National Labor Relations Board or "another mutually agreed upon process," without lengthy hearings and delays.
A "neutral authority will be designated to ensure the principles are followed and resolve issues that arise."
All sides will honor the results of the election and will not engage in negative or disparaging conduct regardless of the outcome.

Lots of luck with that.

In unrelated news, the Supreme Court has turned down, in seven instances, requests to review a labor and employment case decided by a lower court. It seems the Court is not interested in labor and employment law this term. It may have plenty to look at once Congress begins passing new labor legislation.

No Mixed Motive Analysis In ADEA Cases, June 19, 2009

by Clifford B. Geiger

In Gross v. FBL Financial Services, Inc., the U.S. Supreme Court decided yesterday that mixed motive analysis does not apply to claims under the Age Discrimination in Employment Act (ADEA). In a 5-4 decision written by Justice Thomas, the court concluded that age discrimination cannot be established merely by proving that age was a “motivating factor” in an adverse employment decision. Instead, a plaintiff must prove, by a preponderance of the evidence, that the adverse action would not have been taken “but for” the employee’s age. Until yesterday’s decision, if there was evidence that age was a “motivating factor” in an employment decision, the burden of proof shifted to the employer to prove that it would have taken the same action regardless of the employee’s age. As a result of the decision, the burden of proof always remains with the employee. It may not seem like much, but this should make it substantially harder for employees to establish age discrimination under the ADEA. Justice Stevens issued a scathing dissent in which he said the majority disregarded precedent and engaged in unnecessary lawmaking. In all likelihood, the current Congress will take action to amend the ADEA to undo this decision, as it has done with Lilly Ledbetter and other Supreme Court decisions favorable to employers.

EEOC Takes First Step To Amend ADA Regulations, June 18, 2009

by Clifford B. Geiger

On June 17, 2008 the U.S. Equal Employment Opportunity Commission (EEOC) voted to revise its regulations to conform to changes made by the ADA Amendments Act of 2008, which will make it easier for an individual seeking protection under the ADA to establish that he or she has a disability. This vote approving the proposed regulations represents an initial stage in the regulatory process.

The ADA Amendments Act, which went into effect Jan. 1, 2009, makes significant changes to the definition of the term "disability" by rejecting the holdings in several Supreme Court decisions and portions of EEOC's own prior ADA regulations. The effect of these changes is to make it easier for an individual seeking protection under the ADA to establish that he or she has a disability as defined by the ADA. Under the ADA Amendments Act, the definition of disability will be construed in favor of broad coverage of individuals to the maximum extent permitted by the terms of the ADA.

The statement of EEOC Assistant Legal Counsel Christopher J. Kuczynski, describing key provisions of the proposed regulatory changes, can be accessed at
http://www.eeoc.gov/abouteeoc/meetings/6-17-09/kuczynski.html

Arbitration of Class Claims Before the Supreme Court Again, June 17, 2009

by Clifford B. Geiger

The U.S. Supreme Court has agreed to consider whether class claims must be arbitrated when the arbitration agreement at issue is silent on the matter (Stolt-Nielsen v. AnimalFeeds Int'l Corp., U.S., No. 08-1198, cert. granted 6/15/09). While the underlying case involves federal antitrust law and has nothing to do with employment law, the Supreme Court’s decision regarding the parties’ arbitration agreement will undoubtedly apply in other contexts, including to arbitration agreements between employers and employees. Recognizing that this issue has divided lower courts, the Supreme Court previous decided to address it in Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003). However, the Supreme Court’s opinion in Green Tree, which was only a plurality decision that mostly avoided the issue, did little to resolve the uncertainty.

Push Me – Pull You Compliance, June 11, 2009

by Peter S. Saucier

The press enjoys besmirching employers with allegations that abuse and misuse of immigrants is the order of the day. Our experience is that almost all employers simply want hard workers, to whom they pay a fair wage. Still, the public clamor to attack employers who employ “illegal aliens” is deafening. It is nearly impossible for an employer to satisfy the political whims of popular opinion.

Overhill Farms could tell you all about it. Some 254 workers whose social security numbers were invalid were given 30 days to correct the problem. When they failed to do so, Overhill Farms terminated their employment rather than face the wrath of government penalties, including possible criminal prosecution, for knowing ly employing illegal aliens.

No good deed goes unpunished. Overhill Farms now faces a frontal assault from the United Food and Commercial Workers Union, and others, claiming that the Company is racist and discriminatory. The Company’s explanation that it regretted the terminations of productive, skilled employees were ignored.

There is no constitutional right to consistent government. Ask Overhill Farms.

Congress Sniffs At Mandatory Arbitration, June 11, 2009

by Peter S. Saucier

For years, popular opinion has lauded mandatory arbitration, the favored stepchild of unions, as the vehicle of deliverance from the evils of the corporate legal system. But now that discharged employees have had a taste of the system, it does not seem so sweet. Dutifully, Senatorial champions of the oppressed have stepped in to present the Arbitration Fairness Act of 2009, a bill to ban pre-dispute mandatory arbitration from the workplace (absent a union agreement, of course). The more things change, the more they remain the same.

Company Owes $4.1 Billion To Former Marketing Employee, June 1, 2009

by Kelly C. Hoelzer

Employers take heed – ignoring a former employee's claims can be very costly – in this case to the tune of billions of dollars. This was the mistake made by iFreedom Communications Inc. and its founder Timothy Ringgenberg when former marketing manager, Paul Chester, brought breach of contract claims against them. Chester, who only worked for iFreedom for 15 months, had an employment contract with the company providing him a monthly salary of $12,000, plus commissions of 5% of gross sales. The contract stated that if iFreedom fired Chester without cause, he would continue to receive commissions. Chester was also contractually entitled to 1.1 million shares of company stock upon hiring and an additional 600,000 shares upon meeting certain sales targets.

After he was terminated, Chester filed an arbitration claim alleging that the company fired him without cause and breached his contract when it failed to pay him commissions. Chester also claimed violations of California wage laws. Ringgenberg fired company attorneys and represented the company himself. Ringgenberg apparently did not take his arbitration obligations seriously – ignoring discovery requests, refusing to provide documents, and failing to show up at the arbitration hearing – for which he and his company paid the price. After the arbitration hearing, at which Chester provided all the evidence regarding sales revenues and revenue growth rates, the arbitrator ruled in Chester's favor, finding that the defendants "engaged in a pattern of despicable conduct that constitutes oppression, fraud and malice." The arbitrator awarded Chester $977 million in compensatory damages and interest, three times that amount in punitive damages, $57,000 in statutory penalties, $634,500 in attorneys' fees and costs, and sanctions against his former employer.

Chester petitioned to confirm the arbitration award in California state court, which was granted on May 28, 2009. The court judgment awards Chester $3.9 billion in damages, over $203 million in interest through May 28, plus post-judgment interest of about $1.125 million per day until the judgment is paid. Chester v. iFreedom Communications, Inc., Case No. BC353567 (Cal. Sup. Ct. May 28, 2009).

Exotic Dancers – Employees Or Independent Contractors? June 1, 2009

by Kelly C. Hoelzer

The Playground Lounge and Casino in Great Falls, Montana, is a nightclub with female exotic dancers performing on stage and providing "lap dances" to individual patrons in more private settings. Recently, the Montana Supreme Court addressed the unusual issue of whether the exotic dancers were independent contractors or employees. In the Matter of Wage Claims of Renne L. Smith, et al. v. TYAD, Inc., Case No. 07-0305 (Mont. May 20, 2009). Prior to January 2003, Playground considered its dancers to be employees and paid them hourly wages, making appropriate withholdings and keeping wage records. In 2003, however, the club decided to treat the dancers as independent contractors, requiring them to sign a "rental agreement" in which they agreed to pay a fee (between $10 and $20) to "rent" the dance stage and dressing room for the nights they worked, plus an additional $10 for each lap dance performed. In exchange, the dancers could keep all tips and lap dance fees they received from customers.

The exotic dancers brought wage claims against Playground to the state labor department, claiming that they were employees and entitled to back wages and overtime pay under Montana law. The agency agreed, finding that they were subject to the nightclub's direction and control, and ordered Playground to pay each dancer a specific amount of backpay. On appeal, Playground argued that the agency's backpay calculation was far too generous. Because Playground stopped keeping any time records after 2003, however, the court found that it was reasonable for the agency to rely solely on the testimony of the dancers regarding the number and length of on-stage shifts they worked and the number of lap dances performed each night (and the fees collected for each dance). The court also required Playground to reimburse each dancer for the "rental" fees she paid to use the stage and the "lap dance" fee.

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