june 2004 Quick Clips

Court Certifies Class Action Against Wal-Mart - 1.6 Million Women, June 23, 2004

The U.S. District Court certified a class of about 1.6 Million women former and current Wal- Mart employees in a suit alleging discrimination in pay and promotion because of their sex. Wal-Mart, the largest private-sector employer in the United States, is accused of consistently paying women less than men in comparable positions and retaliating against those women who complained.

Certifying the class does not indicate whether a court believes the merits of the case but rather that class meets factors provided by Rule 23 of the Federal Rules of Civil Procedure. The initial factors are: numerosity (the class must be so numerous that joinder of all members is impracticable); commonality (common questions of law or fact exist among the class members); typicality (the named plaintiffs must be members of the same class they represent and have the same interest and suffer the same injury); and adequacy of representation (proposed representatives do not have conflicts of interest with the proposed class and the plaintiffs are adequately represented by qualified counsel).

The court then considers whether the class is maintainable; in this case, the plaintiffs rely on the provision that "the party opposing the class has acted or refused to act on ground generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole." F.R.Civ. Pro. Rule 23(b)(2).

Wal-Mart could face billions of dollars in settlement or judgment for lost pay. Dukes v. Wal- Mart Stores, Inc., No. C01-02252 MJJ, June 21, 2004 (N.D. Cal.).

Work injury vs. Pregnancy: Have a Light Duty Policy and Use it, June 21, 2004

When Jennifer Daugherty, a Certified Nursing Assistant ("CNA") at a long term nursing facility became pregnant, her doctor restricted her to "light duty" assignments, including a restriction against lifting anything weighing more than 75 pounds. Her employer terminated her because this was an essential function of her position, which she held from July 20, 2001 to October 15, 2001. She sought relief under Title VII, specifically the Pregnancy Discrimination Act ("PDA"). The U.S. District Court of Maryland granted summary judgment for the defendant without a hearing.

The court found no dispute of any material fact established in discovery. The facility had a longstanding policy of withholding "light duty" assignments for all employees who have work restrictions other than those whose restrictions were the result of on-the-job injuries. Plaintiff did not substantially challenge the existence of the policy which, in other words, provides that any man or woman on the nursing staff who was temporarily disabled from performing the essential functions of the job as a result of non-work-related disability was not eligible for "light duty."

There was no dispute that the policy was a justified "business necessity." CNAs were responsible for providing patient care, including lifting and transporting residents who were unable to ambulate by themselves. A CNA is required to be able to lift at least 75 pounds. It was also undisputed that a long term nursing facility must provide a certain level of care under state and federal regulations while operating under tight budgetary constraints. If all employees injured off the job were offered "light duty" assignments, the facility would not be able to properly care for its patients. The employer did, however, feel it had a special obligation to employees who were injured at work, and it felt obligated to continue to pay them.

Finally, the court held that Daugherty had "not remotely shown that the policy ha[d] ever been applied in a discriminatory manner" nor has she shown that the economic justifications for the policy were pretextual. Daugherty v. Genesis Health Ventures of Salisbury, Inc., 2004 WL 1047388, May 10, 2004 (D. Md.).

NLRB Changes Course Again On "Weingarten Rights", June 18, 2004

by Eric Paltell

On June 15, 2004, the National Labor Relations Board changed its position yet again on the controversial issue of "Weingarten Rights" for non-union employees. In IBM Corporation, 341 NLRB No. 148 (2004), the Board reversed its 2000 decision in Epilepsy Foundation and ruled that non-union employees do not have the right to have a co-worker present at an investigatory interview that might lead to discipline. The Board's decision was the fourth time in the past 23 years that it has "flip-flopped" on the issue of whether Weingarten rights are limited to unionized workplaces.

The case arose after IBM received a letter from a former contract employee alleging harassment by regular employees. IBM began interviewing employees about the allegations, and three employees asked to have a co-worker present during their interviews. An IBM manager denied the request, and the company fired the three employees about a month later. The employees filed unfair labor practice charges challenging IBM's denial of their request to have a co-worker present during their interviews.

In ruling for IBM, the NLRB reversed a decision of the Clinton-era NLRB requiring that non-union employers provide employees with the same right to have a co-worker present that extends to unionized workplaces. Unionized employees have "Weingarten Rights" which allow them to request the presence of a shop steward or other union representative when the employee reasonably believes an investigatory meeting might result in discipline against them.

The NLRB differentiated between union and non-union workplaces, recognizing that, in a union setting, the union representative is familiar with administering a collective bargaining agreement and may be able to propose solutions that could avoid the filing of a grievance. The Board distinguished that setting from that of a co-worker in a non-union workplace, who the Board found "unlikely to bring such skills to an interview primarily because he has no experience as the statutory representative of a group of employees." The Board found that such a co-worker "could actually frustrate or impede the employer's investigation because of his personal or emotional connection to the employee being interviewed" or because the co-worker is a "participant in the incident requiring the investigation."

The NLRB's decision in IBM Corporation is a significant victory for employers. The Board's prior decision in Epilepsy Foundation was highly controversial, and many labor law observers expected it to be overturned once President Bush was elected and appointed new Republican members to the NLRB. Whether or not the decision in IBM Corporation remains the law of the land for more than a brief period probably depends upon the outcome of the November elections.

Supreme Court Clarifies Standards For Sex Harassment Liability, June 16, 2004

by Eric Paltell

On June 14, 2004, the United States Supreme Court clarified the circumstances under which an employer can be held liable for a sex harassment allegedly so severe that the employee felt compelled to quit. In Pennsylvania State Police v. Suders, U.S. No. 03-95 (June 14, 2004), the Court held that a Pennsylvania State Police communications officer who claimed she was forced off the job by the offensive comments and conduct of three supervisors may be able to sue her employer for constructive discharge. However, the Court held that, unless her resignation was brought about by an official adverse job action - - such as a humiliating demotion, an extreme cut in pay, or a transfer to a job with unbearable working conditions - - her employer can avoid liability by showing that it had a complaint system that the employee unreasonably failed to use before she quit.

In Suders, the plaintiff claimed that three of her supervisors subjected her to a continuous barrage of sexual harassment that stopped only when she quit her job. She claimed that one supervisor repeatedly talked about sex with animals, while another repeatedly spoke to her about oral sex. Although she spoke to the State Police Equal Employment Opportunity Officer about the conduct, she never filed a formal complaint. After she was arrested by her supervisors for theft, she resigned and claimed she was "constructively discharged."

The Supreme Court ruled that, to show a constructive discharge, an employee must show "that the abusive working environment became so intolerable that her resignation qualified as a fitting response." However, unless an official act of the employer, such an unusually demeaning demotion or a dramatic pay cut, is part of that conduct that compels the employee to quit, the Supreme Court was unwilling to impose automatic liability on the employer. The reason, according to the Court, is that in such a case, "the employer would have no particular reason to suspect that a resignation is not a typical kind daily occurring in the workforce." Therefore, the employer should be able to avoid liability by showing that it had an effective anti-harassment policy in place, and that the employee unreasonably failed to take advantage of the policy.

In reaching this decision, the Supreme Court extended the "Ellerth-Faragher" defense to constructive discharge cases. In those two landmark 1998 Supreme Court cases, the Court held that, when no tangible job action has been taken against an employee, the employer can avoid liability for a supervisor's sexual harassment by showing that it exercised reasonable care to prevent and promptly correct sexually harassing behavior, and that the employee failed to take advantage of any preventive or corrective opportunities to avoid harm. The Court's decision is a victory for employers because it requires employees to use internal harassment complaint resolution mechanisms before proceeding to court.

Inevitable Disclosure Rejected in Maryland, June 8, 2004

by Clifford B. Geiger

In the absence of an agreement not to compete, what happens when an employee who has exposure to sensitive customer, marketing, and financial information resigns to work for a direct competitor? Some employers attempt to enjoin departing employees from working for competitors by using laws designed to protect trade secrets. Such laws typically prohibit former employees (and others) from misappropriating, using, and disclosing trade secrets without consent. Whether this approach works may depend on your jurisdiction’s view of the “inevitable disclosure doctrine.”

In jurisdictions that apply the inevitable disclosure doctrine, a court may prevent a departing employee from working for a competitor if it is “inevitable” the employee will be required to use or disclose his former employer’s trade secrets to perform his new job. One such case involved a former Pepsi executive who was enjoined from working for the Quaker Oats Company, which was Pepsi’s competitor in the sports beverage market. Pepsi argued the executive had access to its confidential marketing strategies and pricing information. The court enjoined the executive from assuming any duties with Quaker related to beverage pricing, marketing, and distribution, because the executive would “inevitably disclose” Pepsi’s trade secrets. The executive’s new job with Quaker also involved pricing, marketing, and distributing sports beverages. An appeals court agreed, finding that unless he had an uncanny ability to compartmentalize information, the executive would be making decisions about Quaker’s products by relying on his knowledge of Pepsi’s trade secrets.

The court in the Pepsi case relied on the “inevitable disclosure doctrine.” Under this doctrine, even if there is no evidence that trade secrets have been or will be disclosed, and the employee is acting in good faith, the court will infer that disclosure is inevitable based on the surrounding circumstances. This inference is then used to support an injunction that prevents the departing employee from taking a job at which disclosure is inevitable.

On the other hand, there are jurisdictions, including Maryland, that have not adopted the inevitable disclosure doctrine as a basis for injunctive relief. In a recent case dealing with the Maryland Uniform Trade Secrets Act, the Court of Appeals of Maryland declined to adopt the inevitable disclosure doctrine. Lejeune v. Coin Acceptors, Inc., 2004 WL 1067795 (Md., May 13, 2004). There were two reasons. First, the court was reluctant to restrain employee mobility when an employer has not negotiated (and an employee has not signed) an agreement not to compete. Second, the court was unwilling to infer the threatened disclosure of trade secrets merely because an employee was exposed to them.

The inevitable disclosure doctrine will continue to be the subject of much disagreement among courts. So, if you are worried about your employees leaving to work for competitors, trade secret law is not a reliable substitute for negotiating a reasonable covenant not to compete and a confidentiality agreement.

Lack Of Felony Conviction Means Lack Of Cause, June 4, 2004

by Pete S. Saucier

A school custodian who surreptitiously photographed and tape recorded co- workers in direct violation of state law was charged with felony wiretapping, but made a deal to reduce the charge and plead guilty to misdemeanor disorderly conduct. His employer discharged the custodian when he was charged with the felony. Later, an arbitrator returned him to work because, after all, it's not as though the custodian was convicted of a felony! On appeal, the court upheld the decision.

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