November 2004 Quick Clips

Maryland Wage Payment Law Applies to Severance Pay, November 22, 2004

In a case of first impression, the Maryland Court of Special Appeals has held that the failure to honor a promise to provide severance pay may violate Maryland’s Wage Payment and Collection Law. Stevenson v. BB&T, No. 802 (Md. App. November 17, 2004). Specifically, the court held that the “non-payment of severance pay representing deferred compensation for services performed during the employment may be grounds for relief under the Act.”

After Diane Stevenson was fired by BB&T she sued for a breach of her written employment contract and violation of the Wage Payment Law. See Md. Code, Labor & Employment § 3-501 et seq. Both claims arose from BB&T’s contractual obligation to pay “Termination Compensation” equal to Stevenson’s “annual cash compensation” before her termination. A jury found in Stevenson’s favor on both counts – actually awarding more than she had requested – and the trial court reduced the award significantly. Stevenson appealed.

Returning the case to the Circuit Court for a new trial, the Court of Special Appeals found problems with the trial court’s decision. First, while some severance pay is covered by the Wage Payment Law, the “Termination Compensation” severance pay promised Stevenson in this case was not the type of “wages for work performed before termination.” Second, on remand, a jury will have to decide whether Stevenson’s severance benefit included her stock option earnings, which appeared to be “other cash based benefits” of her employment.

Congress Eliminates Double Tax on Attorneys' Fees, November 19, 2004

by Darrell R. VanDeusen

President Bush has signed the corporate tax bill passed by Congress in October. This bill, H.R. 4520, includes a portion of the Civil Rights Tax Relief Act (H.R. 1155/S. 557) that eliminates the double tax on attorneys' fees. Section 703 of the Act permits plaintiffs an above-the-line deduction for attorneys' fees and costs paid by or on behalf of the plaintiff in specific employment and discrimination cases. This provision precludes such payments from being subject to the Alternative Minimum Tax or the 2 percent floor on itemized deductions. Despite efforts to make this provision retroactive to December 2002, this section of the Act will apply only to judgments or settlements occurring after the Act’s enactment. On a related matter, the Supreme Court recently heard arguments in two consolidated cases relating to the proper tax treatment of contingent fees; a favorable result may provide further relief.

FMLA Leave for Domestic Violence Victim OK’d, November 19, 2004

by Darrell R. VanDeusen

The Alaska Supreme Court recently upheld a jury verdict in favor of an employee who had asked for FMLA leave to “get her life back together” and cope with her pregnancy and emotional condition resulting from domestic violence. Anchorage v. Gregg, No. S-10722, November 12, 2004. The Court held that the City of Anchorage was aware that Gregg, a city police officer, qualified for FMLA leave and violated the Act when it failed to provide leave for her after she fled the state to deal with injuries from a car accident, post-traumatic stress related to domestic violence and her pregnancy. The Court noted that a victim of domestic violence is not automatically entitled to FMLA protection, but that a victim who meets the test for a serious health condition--as Gregg did--has the right to statutory leave.

Abusive Treatment Of Chinese Lawyer Not Unlawful Discrimination, November 15, 2004

by Patrick J. Stewart

Otto Lee, of Chinese descent, was hired by Intel as a staff lawyer. At the time of his hire, Lee was placed on a nine-month probation period. Several months later, his manager was replaced. His new manager, Anne Gundelfinger gave Lee a poor performance appraisal and extended his probationary period for two months. At the end of the extended probation period, Gundelfinger fired Lee. Lee, being the lawyer that he was, sued Intel, claiming that he was discriminated against.

In support of his case, Lee claimed that Gundelfinger had been abusive towards him from the moment she saw him. To support his claim, Lee produced a co- worker who testified that Gundelfinger "regularly ignored" Lee and on other occasions interrupted him, yelled at him, and "treated him disrespectfully" - far worse than towards any other person.

Despite Lee's evidence, the court held that the abusive treatment towards Lee showed "no more than hostility", suggesting that Lee was fired "because Gundelfinger did not like him" as opposed to discriminatory intent. In dismissing the claim, the court noted that a "personal grudge can constitute a legitimate, non- discriminating reason for an adverse employment decision . . . In this context, 'legitimate' reasons are simply reasons that are facially unrelated to prohibited prejudice." Lee v. Intel Corp., Cal. Ct. App., No. H026343 (unpublished October 19, 2004).

Workers Illegally Fired For Distributing Flyers Criticizing Layoffs, November 15, 2004

by Patrick J. Stewart

A federal appeals court recently ruled that an employer violated the National Labor Relations Act ("NLRA") by firing a worker who distributed flyers at the workplace which expressed concerns about the company's layoffs of long-term employees. United Services Automobile Ass'n v. NLRB, No. 03-1317 (Nov. 9, 2004).

Under the NLRA, employees have a right to engage in "concerted protected activities" for "mutual aid and protection". As such, employees may not be disciplined if they engage in such activities. For example, an employer's action in firing employees for complaining about their terms and conditions of employment has been found to be unlawful.

In the United Services case, an employee, Loretta Williams, had several discussions with her co-workers about how the company was laying off long-term employees under its reorganization plan. Williams then prepared a flyer criticizing the process and requested co-workers to wear a red ribbon in support of their former colleagues. The flyer was anonymously written. Williams circulated the flyer throughout the company's offices after her work day.

Suspicious that Williams may have authored the flyer, she was questioned by management. Williams initially denied any involvement. Six days later she fessed up and told the company's general manager that she prepared and circulated the flyer. She was fired immediately.

Williams then filed an unfair labor practice charge. The National Labor Relations Board found that the company violated the NLRA by interrogating Williams about her activity and for firing her when she told the truth. The Board ruled that Williams engaged in protected concerted activity by distributing the flyer, that the company's interrogating her about her involvement with the flyer tended to "restrain coerce or interfere" with her right to engage in concerted protected activity, and that the company interfered with her rights by firing her. The Court of Appeals for the District of Columbia affirmed the Board's decision.

Lesson 1: Keep in mind that employees have a right to engage in actions that may facially appear insubordinate or out-of-line, primarily if done for the benefit of a group of employees rather than for the concern of just one worker.

Lesson 2: If such circumstances arise, be careful not to discipline participating employees unless you are convinced that their actions would not be found to amount to concerted protected activities by the National Labor Relations Board.

Lesson 3: Don't forget Lessons 1 & 2.

USERRA Does Not Provide a Right to Rest Time, November 9, 2004

In a time when military service is of great relevance to Americans, the Third Circuit considered a case in which the Plaintiff alleged that the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA") creates an independent right to rest for employees returning from military service. The court held that the Act, which is liberally construed in favor of the service member, does not create such a right.

Willie Gordon was returning home from weekend Army Reserve duty and stopped at the Wawa store where he worked to pick up his paycheck and get his work schedule for the upcoming week. His shift manager allegedly ordered him to work that night's late shift, threatening to fire him if he refused. Gordon complied; on his drive home from work, he lost consciousness at the wheel, crashed his car, and died as a result of his injuries.

His mother sued, claiming that Gordon was denied his right under USERRA to an eight-hour rest period. The court held that the plain language of the Act does not confer this right. Rather, it held that Congress "[set] forth a returning employee's requirement for providing notice of intent to return to work in order to reclaim his or her former job, and [USERRA] contains no rights- creating language." The court further held that the plaintiff did not show that the alleged threat to terminate Gordon was motivated by his military service or that he even made his supervisor aware of his weekend of reserve duty. Gordon v. Wawa, Inc., No. 03-3089 (3rd Circuit (N.J.), Oct. 28, 2004).

Supervisor Abused Lots of People, Was Not Discriminatory, November 8, 2004

Lee, a Chinese attorney, alleged that his boss's abusive treatment was race discrimination. The evidence showed that his supervisor disliked and abused not only Lee but also other people under her supervision. Lee himself stated that the supervisor was "rude to two other members" of the group – an African American female attorney and an older Caucasian female assistant. He also related how she yelled and berated a male technical support employee – "her shouting was so extreme and loud that I could hear it from my cubicle which was about thirty feet away." In other words, she abused lots of people. The court held that even if she treated Lee worst of all, employer showed that there was a legitimate reason for Lee's termination and there were no other circumstances that suggested discriminatory animus. Lee v. Intel Corporation, No. H 026343, Santa Clara County Super. Ct. No. CV785316, Oct. 22, 2004.

Court Rejects Sex Harassment Claim From Golf Club Manager, November 1, 2004

by Eric Paltell

As anyone who has ever seen the movie "Caddyshack" can confirm, working at a golf resort can be a very interesting experience. However, according to the court's decision in, Kriescher v. Fox Hills Golf Resort, 94 FEP Cases 1007 (7th Cir. 2004), the mere fact that there are sexual escapades going on at the golf club is not enough to create a sex harassment claim.

The case arose when the club's former front desk manager, Judith Kriescher, complained that the Fox Hills Golf Resort was a "sexually permissive environment . . . permeated with misconduct and rule violations." In particular, Ms. Kriescher complained that the resort hosted a golf event for adult entertainment in which naked strippers paraded around the pool and spa area at 3:00 a.m. In another incident, Ms. Kriescher complained that the club's food and beverage manager was caught in his office with a resort bartender with the lights off and the door closed. However, in neither case was Ms. Kriescher present. Rather, she heard about these incidents from a security officer.

After hearing about these escapades, Ms. Kriescher directed the club's security manager to investigate the food and beverage manager. When the club's general manager learned about her direction to the security guard, he fired her, claiming she had no authority to direct security personnel to gather information about other managers. The general manager also said that Ms. Kriescher had failed to maintain confidentiality by spreading rumors around the resort about the food and beverage manager and the bartender.

After her termination, Kriescher sued the resort, claiming she had been subjected to a hostile work environment and that she was fired because of her age and sex. The United States Court of Appeals for the 7th Circuit rejected her claims, finding that, although she offered proof of a sexually permissive atmosphere in the workplace, she offered no proof that a reasonable person would find the environment hostile towards women or older employees. The court noted that she had not offered any acts or remarks directed at her or anyone else that demonstrated hostility towards women or older employees. She also offered no evidence that she had endured unwanted physical contact, or that other employees or supervisors directed disparaging comments at her or other women that were older employees. Ms. Kriescher also offered no evidence that she was exposed to any of the incidents in question, or that they in any way affected the terms and conditions of her employment.

The court's decision in Kriescher demonstrates that not every incident of sexual misconduct in the workplace triggers liability for sexual harassment. While the conduct at the Fox Hills Golf Club and Resort may not have been appropriate, there was no evidence that it was directed at any particular employee, or that it made working conditions intolerable for any employee.

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