Can You Trust Your Company's HR Department?

A fellow blogger has a post out this week titled "Who Do You Report Harassment To If the Harasser Is the CEO?".  It is a thoughtful article and it makes the excellent point that HR for every company needs to bake into their policies a method by which an employee can internally report sexual harassment being committed by the CEO or owner of a company without risk of retaliation. I think that is an excellent goal to strive for and I hope that all HR departments set that as a goal.  There is only one problem with the premise of the article. 

The effort will almost certainly fail. 

Michael Corleone: "C'mon Frankie... my father did business with HR, he respected HR."

Frank Pentangeli: "Your father did business with HR, he respected HR... but he never trusted HR!"

 

 

HR is, in my opinion, possibly the most challenging role for any manager to do and do well. It is arguably designed to fail. The problem is obvious: HR serves two masters. On the one hand, HR is designed to serve as a helpful ombudsman to employees. To assist employees who are being mistreated. To conduct thorough investigations and correct inappropriate behavior against employees. On the other hand, HR is required to defend management against accusations of unlawful employment practices. HR is usually directly involved in the termination decisions that lead to EEOC filings. HR is then in charge of or at least heavily involved in drafting the company's defensive statement of position filings, arguing that the company is blameless. Thus, the very department that an employee is supposed to trust with his or her career and feel comfortable making a complaint to is the same department that will be spearheading the fight against the employee when it all goes south. 

What this means in most companies is that, no, you cannot trust HR to help you. While many HR officers have their hearts in the right place when they start working in the field, they can't help but know who is responsible for signing their paychecks. Hint: it's not the employee bringing a complaint against a member of management.  

So, should you bring complaints to HR? Yes, you should. In fact, in many cases you are legally required to do so or you risk waiving any claims you may have against the company for the discrimination or harassment you are reporting. Just don't assume that HR's only role is to help you. Because it isn't. While HR may be trying to assist you they are also assessing corporate risk, documenting your complaint in a way that will assist the company in defending against your complaint, and looking for ways to satisfy the demands of management. 

Here are a couple of quick tips: 

  1. Make all reports in writing. When push comes to shove down the road, HR is liable to either not "remember" you made a complaint or to remember it substantially differently than you do. Putting your report in writing is the only way to prove you made a complaint, when you made it, and to whom the complaint was made.

  2. You know that written report from number 1, above? KEEP A COPY. A written complaint does you know good if you send the only copy to HR. It might...you know...get lost.

  3. Consider going outside the organization to the EEOC. If your complaint involves EEO-based (age, sex, race, religion disability, color) discrimination or harassment then consider making a complaint to the EEOC sooner rather than later. There will be little question that a report to the EEOC is protected activity under the law. This gives you a somewhat higher level of protection from retaliation than if you merely report internally.

  4. Consult with an employment lawyer. If you are in a situation in which you feel you need to make a complaint against management then, make no mistake, you job IS at risk. Start looking for a qualified employment attorney who represents employees. Be warned, in many parts of the country there aren't that many who lawyers who specialize in representing employees. So start looking before you need one. And don't expect such a lawyer to visit with you for free. This is not a simple car accident case and you aren't looking for a PI lawyer who can take your case on a contingent fee basis. Employment law is very specialized and contingency fees are generally not available for consulting services. If you find a qualified lawyer to advise you, however, it is money well spent.

Bottom line: Yes, you should report harassment or discrimination internally to your company's HR department. But that doesn't mean you should blindly trust the HR department. Understand that they serve two masters and protect yourself accordingly.  

Tip Pool Violations and Other Forms of Wage Theft Common in the Restaurant Industry

Restaurant Workers Are Often Victims of Wage Theft

Restaurant Workers Are Often Victims of Wage Theft

The Wall Street Journal recently reported that wage lawsuits against restaurants have proliferated in troubling and damaging numbers:

“…The number of wage-violation lawsuits has been on the rise for more than a decade, driven by a successful worker-organization movement, increased attention by plaintiffs’ attorneys and complicated labor laws that leave some employers confused, according to legal analysts and industry leaders.

Nationwide, these lawsuits have doubled in the last 10 years in federal courts. In Texas, the number of overtime lawsuits and settlements continues to increase as well. The US Department of Labor recently reported that its wage and hour division found violations in 95 percent of its investigations of Austin-area restaurants between Oct. 1, 2015 and June 30, 2016. 

So why do the vast majority of restaurant employers continue to violate wage laws despite news reports of DOL investigations and lawsuits? 

Read more about overtime claims by restaurant workers.

Does Judge Gorsuch Really Love the Jury Trial?

National Employment Lawyers Association Opposes Nomination of Neil Gorsuch to Supreme Court

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In our current environment of a new scandal every five minutes, it is easy for really important issues to get lost in all the noise.  One such big issue currently pending is the nomination of Neil Gorsuch to the U.S. Supreme Court. 

Some oppose Gorsuch's nomination not for anything he has said or done himself, but because of the hotly contested and partisan manner in which his potential seat on the Court was arguably stolen from an equally qualified candidate by certain members of Congress last year. I personally think it was a big mistake for the republicans to inject even more partisan politics into the manner in which Supreme Court justices are selected. In our system of jurisprudence, the Supreme Court's power comes solely from its credibility with the American people. The more partisan the Court looks, the weaker it becomes.  Regardless of one's position on the issues the Court decides, it is in all of our interests for the Court to be respected and considered to be above politics to the greatest degree possible. 

Putting that issue aside for the moment, organizations that typically vet Supreme Court candidates are starting to come in with their assessments of him on issues that are important to said organizations' memberships.  This week the National Employment Lawyers Association announced their opposition to Mr. Gorsuch. NELA is the largest organization of U.S. attorneys who primarily represent employees. 

NELA's letter in opposition to Mr. Gorsuch, the text of which I include in full below, gives several reasons for the organization's opposition to his appointment. However, the most important reason listed, to my mind, is Mr. Gorsuch's reported antipathy for the jury trial...at least in employment cases. 

There have been several news reports over the course of the preceding few weeks touting Mr. Gorsuch's love of the jury trial and his plan to bring it back. Others have discussed Gorsuch's antipathy for the McDonnell-Douglass burden shifting framework in employment cases (an optional but usually-used framework for analyzing employment-related claims frequently used by judges to dismiss discrimination and harassment cases without a trial). On the surface both of these positions seem to align with the interests of employees. I hope that Gorsuch's statements regarding these issues are genuine and would support his efforts in this regard. 

But what NELA points out is that Judge Gorsuch, like many federal judges, has gotten into the bad habit of doing the jury's work for them in far to many cases. Rather than denying motions for summary judgment whenever there is a fact question at issue to be decided by a jury, he all to often weighs the evidence, draws inferences against the employee, and decides the credibility of the witnesses in the case -- all issues that are supposed to be left to the wisdom of the jury. 

Judge Gorsuch is, sadly, not unique in these reported failings. Federal judges overstepping their Constitutional role in employment cases to make improper fact determinations is a well-known problem throughout the country. (Read: "When it comes to employment cases, judges are killing the Civil Rights Act of 1964" by Judge Richard Kopf as well as "Anti-Discrimination Laws Have Been "Gutted"" on this blog.) It is a serious problem that threatens one of the most sacred elements of the American system -- the Constitutional right to a trial by jury. 

The following is the full text of NELA's letter in opposition to Judge Gorsuch's nomination: 

March 13, 2017

Submitted Via Email:
Ted_lehman@judiciary-rep.senate.gov
Paige_herwig@judiciary-dem.senate.gov

The Honorable Chuck Grassley, Chairman
United States Senate Committee on the Judiciary
224 Dirksen Senate Office Building
Washington, DC 20510

The Honorable Dianne Feinstein, Ranking Member
United States Senate Committee on the Judiciary
152 Dirksen Senate Office Building
Washington, DC 20510

Dear Chairman Grassley and Ranking Member Feinstein:

On behalf of the National Employment Lawyers Association (NELA), and its 4,000 circuit, state, and local affiliate members across the country, I write to express our strong opposition to the nomination of Judge Neil M. Gorsuch to the United States Supreme Court.

NELA is the largest professional membership organization in the country comprising lawyers who represent workers in labor, employment and civil rights disputes. Founded in 1985, NELA advances employee rights and serves lawyers who advocate for equality and justice in the American workplace. Our members litigate daily in every circuit, affording NELA a unique perspective on how employment cases actually play out on the ground. NELA strives to protect the rights of its members’ clients, and envisions a workplace in which employees will be paid at least a living wage in an environment free of discrimination, harassment, retaliation, and capricious employment decisions; employees’ safety and livelihood will not be compromised for the sake of corporate profit and interests; and individuals will have effective legal representation to enforce their rights to a fair and just workplace, adequate remedies, and a right to trial by jury.

As a member of the Tenth Circuit Court of Appeals, Judge Gorsuch has demonstrated a troubling propensity to both draw inferences against plaintiff-employees and make improper determinations regarding the credibility of the respective parties when deciding whether an employee should be permitted to present her claims to a jury (the procedural posture in most employment cases on appeal). This practice runs afoul of the applicable provisions of the Federal Rules of Civil Procedure and rulings from the Supreme Court. Judge Gorsuch has shown an affinity for deploying legal reasoning unsupported by the text and purposes of the particular employment laws at issue, and adopting inappropriately narrow readings of both the facts and law in ways that operate to the detriment of employees seeking to vindicate their statutory rights. This pattern gives rise to the question of whether Judge Gorsuch places the interests of employers over the rights of employees, which should be fully explored during his confirmation hearing.

Judge Gorsuch’s tendencies as described above are made more troubling by his much-discussed skepticism regarding the doctrine of Chevron1 deference. Administrative regulations, as well as other interpretations and enforcement guidance from administrative agencies such as the Equal Employment Opportunity Commission (EEOC) and National Labor Relations Board (NLRB) provide invaluable guidance to employers and employees regarding the nature of their rights and responsibilities, and are an essential tool for judges and advocates in resolving employment disputes. One can imagine many ways in which a Supreme Court Justice with Judge Gorsuch’s apparent tendencies regarding employment cases, further unencumbered by any responsibility to defer to authoritative interpretations developed by the agencies charged with interpreting and enforcing our workplace laws, could undermine profoundly the effective enforcement of the employment laws passed by Congress.

The case descriptions that follow constitute representative examples of the ways in which Judge Gorsuch’s jurisprudence in employment cases has manifested itself in cases arising under a number of different employment statutes.

A. Hwang v. Kansas State Univ.2 (Disability Discrimination)

After she was diagnosed with cancer, Professor Grace Hwang requested and received a six-month leave of absence covering the fall semester to recover from a bone marrow transplant. As she was preparing to return to teaching the following January, a flu outbreak erupted on campus. Because her doctor advised her not to subject her compromised immune system to such an environment, she sought further leave, during which she could have worked from home. This request contravened the employer’s rule capping all leave requests to a maximum of six months.

Judge Gorsuch ruled that Professor Hwang’s request for an additional leave of absence was unreasonable and affirmed the dismissal of her case. Applicable law requires that requests for accommodations be evaluated on a case-by-case basis, and in U.S. Airways, Inc. v. Barnett 3, the Supreme Court suggested that a reasonable accommodation may require an employer to modify an otherwise neutral rule (such as this employer’s six-month cap on leave). Judge Gorsuch’s reasoning also contravened EEOC Enforcement Guidance, and conflicted with rulings from numerous other Circuit Courts of Appeals.

B. Roberts v. Int’l Bus. Machines Corp.4 (Age Discrimination)

In affirming summary judgment in favor of the defendant-employer in this case, Judge Gorsuch demonstrated a number of troubling propensities that employee rights advocates understand all too well: he both drew inferences against the non-moving party and improperly weighed the evidence in a manner that Supreme Court law requires be done by a jury.

In a text message conversation, two of the defendants’ human resources employees were quoted as referencing the plaintiff’s “shelf life” in deciding whether to eliminate his position (they subsequently did). In deciding that the phrase could not constitute direct evidence of discrimination, Judge Gorsuch concluded that “the instant message conversation unmistakably suggests that ‘shelf life’ was nothing worse than an inartful reference to Mr. Roberts’s queue of billable work.”

He then moved to the question of whether the phrase, in conjunction with conflicting evidence regarding the plaintiff’s performance record, could demonstrate that the defendant’s alleged reasons for firing the plaintiff were a pretext for age discrimination. Judge Gorsuch held that the plaintiff could not demonstrate that changes in his performance reviews were a pretext for discrimination unless he could “advance evidence that IBM’s changed evaluation of his performance, whether wise or mistaken, wasn’t honestly arrived at.”

The only way in which Judge Gorsuch could reach such conclusions about the meaning of statements such as “shelf life” and the credibility of the defendant’s asserted reasons for terminating the plaintiff was by drawing a series of inferences in the defendant’s favor, and by avoiding a more common interpretation of the phrase “shelf life” when applied in conversation to an older employee. Longstanding Supreme Court precedent holds that judges must avoid drawing such inferences when deciding whether a case should be dismissed or proceed to trial.5

C. TransAm Trucking, Inc. v. Administrative Review Board 6 (Whistleblower Retaliation)

Alphonse Maddin worked as a truck driver for the defendant-employer. He was driving a tractor-trailer down an Illinois freeway on a subzero night in 2009 when he noticed that his truck was nearly out of gas. He pulled over because he could not find a fuel station, and ten minutes later, the trailer’s brakes locked up due to the frigid temperatures. Mr. Maddin was unable to resume driving the tractor-trailer and reported the truck’s unsafe condition to a dispatcher. The dispatcher told Mr. Maddin that a repairperson would be sent to fix the brakes.

Mr. Maddin dozed off briefly and awoke to find that his torso was numb and he could not feel his feet. He told the dispatcher about his physical condition and asked when the repairperson would arrive. “[H]ang in there,” the dispatcher responded.

Approximately one half hour later, Mr. Maddin called his supervisor, Larry Cluck, and told Mr. Cluck that his feet were going numb and that he was having difficulty breathing. Mr. Cluck told Mr. Maddin not to leave the trailer and gave him two options: drag the trailer with inoperable brakes, or stay put until the repairperson arrives. Mr. Maddin knew that dragging the trailer was illegal, but concluded that he might not live much longer if he were to wait for a repairperson. Consequently, Mr. Maddin unhitched the trailer and drove off.

Fifteen minutes after Mr. Maddin left—more than three hours after he first notified TransAm that he was stranded in subzero temperatures—the repairperson arrived. Mr. Maddin drove the truck back to meet the repairperson, who then fixed the trailer’s brakes. Less than a week later, TransAm terminated Mr. Maddin for abandoning the trailer. Mr. Maddin filed suit, as the applicable law prohibits an employer from firing an employee who “refuses to operate a vehicle because . . . the employee has a reasonable apprehension of serious injury to the employee or the public because of the vehicle’s hazardous safety or security condition.”

An Administrative Law Judge, a panel of the Department of Labor’s Administrative Review Board (ARB), and a majority of the Tenth Circuit Court of Appeals panel that reviewed this case agreed that Mr. Maddin had engaged in protected activity and was retaliated against. Judge Gorsuch, however, dissented, and went out of his way to disregard the ARB’s statutory interpretation, adopt an unnecessarily narrow interpretation of the term “operate” to conclude that Mr. Maddin had not engaged in protected activity, and belittle the applicable statute’s health and safety goals as “vague and generic.”

D. Strickland v. UPS, Inc.7 (Retaliation Under the Family and Medical Leave Act and Gender Discrimination)

In this case, the plaintiff was subjected to intense and unwarranted scrutiny of her performance after returning from a protected and approved two-week leave under the Family and Medical Leave Act. She was required to attend additional meetings that took her away from her responsibilities, was required to commit to unrealistic performance goals, and was prevented from raising concerns regarding her treatment in line with applicable company policy. Multiple co-workers testified that the plaintiff was treated differently than her all of her co-workers after her return from leave. The treatment worsened to the point where the plaintiff left the company, though she never officially quit and it was unclear whether she intended to return to work.

A majority of the Tenth Circuit Court of Appeals panel reversed the district court’s grant of judgment as a matter of law on the plaintiff’s constructive discharge claims (as applied to her retaliation claim), as there was conflicting evidence as to whether the plaintiff intended to return to work. The panel also reversed the district court on the plaintiff’s gender discrimination claims, finding that there was evidence that she was treated worse than her male co-workers.

Judge Gorsuch dissented, and would have affirmed the district court’s ruling on the plaintiff’s gender discrimination claim. Despite the evidence presented that indicated that the plaintiff was treated less favorably than her male co-workers, Judge Gorsuch concluded that the supervisor in question treated both male and female employees poorly. In reaching this conclusion, Judge Gorsuch disregarded evidence from a male co-worker that he was not subjected to the same scrutiny as the plaintiff, despite trailing her in all relevant sales categories. He also relied in part on evidence that another female employee did not also face differential treatment, despite applicable law holding that the fact that the defendant does not discriminate against every employee of the plaintiff’s protected class is no defense to a discrimination claim.

E. Weeks v. Kansas8 (Retaliation)

Judge Gorsuch held that in-house counsel did not engage in protected opposition to alleged unlawful discrimination when she advised a fire marshal to take seriously an employee’s complaints of discrimination, and he affirmed the district court’s grant of summary judgment.

This ruling is problematic for its adoption of an exception to existing anti-retaliation laws. This judge-created exception is not included in the text or supported by the purposes of Title VII of the Civil Rights Act. Pursuant to his approach, employees in positions that require them to monitor an employer’s compliance with the law (such as in-house counsel) must engage in special forms of opposition or participation activity to demonstrate that they have taken a position truly “adverse to their employer.” Absent proof of this higher level of opposition, employees who hold positions such as that of a general counsel, who in many cases will be the employee best equipped to learn about and oppose unlawful workplace discrimination, are not protected against subsequent retaliation.

In affirming summary judgment and dismissing the plaintiff’s case before trial, Judge Gorsuch also refused to resolve the question of whether the exception at issue conflicted with the Supreme Court’s decision in Crawford v. Metro. Gov’t of Nashville & Davidson Cty.,9 which suggested that all one must do to “oppose” unlawful workplace behavior and be protected against retaliation is to “antagonize ...; contend against; ... confront; resist; [or] withstand” it. Judge Gorsuch did so because the plaintiff failed to cite Crawford in her briefs, even though that fact does not prevent a judge from resolving an apparent conflict with binding Supreme Court precedent.

Employees who have been treated unlawfully in the workplace deserve a full and fair opportunity to prove their claims in our federal courts. Reasoning of the type found in many of Judge Gorsuch’s opinions undermines workers’ ability to vindicate their rights and undercuts the promise of a fair and just American workplace that is embodied by the employment statutes enacted by Congress. Judge Gorsuch’s treatment of both the law and facts in the cases cited above, and in others that we reviewed, suggests an ideological perspective which is unsympathetic to workers and too solicitous of employers, and belies his reputation as a committed textualist. As such, we respectfully urge you to oppose Judge Neil M. Gorsuch’s confirmation to the United States Supreme Court.

Sincerely,


Terisa E. Chaw
Executive Director

Read More: ScotusBlog Profile of Gorsuch - Natural Successor to Scalia

$500,000 Defamation Settlement for a Facebook Comment

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According to a report in the ABA Journal, a woman has agreed to pay $500,000 to settle a defamation suit over a comment she made on Facebook that allegedly implied a onetime rival had caused the death of her child. 

The case reportedly resulted from a disagreement between two North Carolina women who originally were cooperating in an effort to take control of a local low-wattage radio station. They had a falling out and eventually the toxic dispute moved online. According to the report, one of the women made a comment on Facebook regarding the other that "I didn't get drunk and kill my kid", implying that the other woman had done so.

The comment was particularly harmful to the other woman because her son was killed by an accidental shooting while playing with another child in the 1970s. 

And while the comment at issue does seem pretty nasty, a $500,000 defamation settlement in a case like this is pretty remarkable. As is often the case with settlements, one wonders if there were other issues motivating the parties that did not make the news reports.

View the entire article.

McDonald's Hit with Sexual Harassment Charges

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The Fight for $15 group, a union-sponsored group, has found another way to pressure McDonald's. The group recently filed EEOC charges on behalf of 15 U.S. McDonald's workers who say they were sexually harassed on the job. 

The Charges were filed with the U.S. Equal Employment Opportunity Commission against McDonald's USA LLC and individual franchisees in eight states over the last month. The charges include one worker alleging a manager showed her a picture of his genitals and said he wanted to "do things" to her. Another charging party alleged a supervisor offered her $1,000 for oral sex.

A big part of this effort by Fight for $15 has to do with McDonald's claim that it does not employ any of the employees of any of its franchisee restaurants. In a case before the National Labor Relations Board, Fight for $15 claims the company is a joint employer of franchise workers who say they faced retaliation for joining in nationwide strikes organized by the group. McDonald's disclaims responsibility for any employment law violations that occur in its franchise restaurants even though all employment policies and procedures and training emanate from the McDonald's corporation.  

I'll be keeping an eye on these cases as they progress because they have the potential to dramatically change the legal landscape of employment law with regard to franchise business models.  

 

Read More: Reuters

Buc-ee’s Sues Former Employee for Violating Retention Agreement / Non-Compete

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Story in the HoustonPress reports a former employee of the popular Buc-ee's convenience store chain is being sued for more than $60,000.00 for allegedly violating what is called a retention agreement. 

The employee in question, Kelly Rieves, was hired by the store as an assistant manager in Cypress, Texas for total compensation of about $55,000. She was hired as an at-will employee, meaning that the company could fire her for any reason at any time. But Buc-ee’s required her to sign an employment contract that is uncommon in the convenience store industry. It's called a "retention agreement". 

What is a "Retention Agreement"?

The contract Rieves signed divided her pay into two categories, regular pay and “retention pay." The amount allocated to "retention pay" accounted for approximately one-third of her total compensation. The contract allowed the store to recoup the retention pay should she fail to remain employed for a full 48-month term. The contract also required Rieves to give six months' notice before leaving. This is despite the fact that the company maintained the right to terminate Rieves prior to the end of the period. (The contract may or may not have contained notice provisions in favor of the employee that I am not privy to but it would not be required to have such provisions under Texas law.)

Three years later, Rieves decided to leave her job a year or so before her contract expired. We don't know her reasons but we do know she tried to work it out with the company first but her boss refused to let her out from under the contract. So she quit. 

In response, Buc-ee’s sued her for the full amount of the retention pay she earned during her three years with the company -- an amount over $67,000.00.

Are Retention Agreements Legal?

In a word, yes. If drafted properly, retention agreements can be enforced against employees in Texas. However, it is highly unusual to see such an agreement used with anyone other than high-level company executives. 

In the case of Ms. Rieves, a trial court ruled in favor of the company last fall. And it gets worse. The Court also ruled that, in addition to the original sum she owed under the contract, she was also responsible for the company’s legal fees plus interest on the retention pay since she left Buc-ee’s. 

The total the company is now seeking from Rieves approaches $100,000. The matter is currently on appeal. 

The Moral of the Story.

Don't sign an employment contract without having an attorney review it for you. Don't sign an arbitration agreement without having an attorney review it for you. Just don't! 

As a lawyer who primarily represents employees, I spend a fair amount of my time trying to help workers get out of contracts that they never should have signed in the first place. It is an uphill battle. 

The time to negotiate or get changes to employment-related contracts is BEFORE you sign them. Companies do not necessarily have your best interests at heart. You need to understand the implications of what you are signing BEFORE you sign it. A couple hundred dollars spent on lawyer contract review may seem like a lot when you are excited about starting a new job, but compared to the economic havoc that can be caused by signing a contract you don't understand, it's peanuts. 

Get the information you need to protect yourself and your family. It may be the best money you ever spend.

More: Read the entire story from the HoustonPress here.

Beware: Failing to Report Sexual Harassment Can Kill Your Case

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A recent case out of the Fourth Circuit Court of Appeals, McKinnish v. Brennan No. 14-2092 (4th Cir. Nov. 6, 2015), serves as a stark reminder of the important of utilizing employer's internal sexual harassment reporting procedures if any are available. 

In McKinnish, the employee received numerous sexually explicit text messages, photos, and videos from her supervisor over a ten-month period. She considered them to be harassing. But she never reported them to her employer as alleged harassment. McKinnish's husband eventually reported the messages to the employer after he discovered them. And the employer did the right thing and immediately terminated the supervisor.

McKinnish later sued and alleged hostile-environment sexual harassment under Title VII. The employer (the U.S. Postal Service) argued that McKinnish's claims should be dismissed because they were subject to what employment lawyers call the Faragher-Ellerth defense. The employer agreed. 

What is the Faragher-Ellerth defense?

In 1998, the U.S. Supreme Court used two cases called Faragher v. City of Boca Raton, 524 U.S. 775 (1998), and Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998) to create a defense for employers against sexual harassment claims. It later expanded this defense in a case called Vance v. Ball State

The Faragher-Ellerth affirmative defense applies when: (i) the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior; and (ii) the plaintiff unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.

In other words, if the employer has an internal policy providing a process for reporting, investigating and correcting incidents of sexual harassment, and employee must make use of that policy. If she fails to do so an it is determined by the court that her refusal to utilize the internal process was unreasonable, she will lose her claim against the company. 

Often, employees don’t want to report sexual harassment internally because it is uncomfortable to talk with someone in HR about the problem, because the employee doesn’t believe HR really has her best interests at heart, or she fears retaliation.  In fact, that is exactly what Ms. McKinnish argued in her case. Sadly, the court rejected this argument, holding that an employee’s “subjective fears of confrontation, unpleasantness or retaliation” do not alleviate the employee’s duty to alert his or her employer to an allegedly hostile environment.

Bottom Line: Report Sexual Harassment

This is an area where the Supreme Court has been pretty consistent. The courts want employers and employees to try to work out employment-related problems before they resort to going to court. The law requires you to give the company a chance to do the right thing before you sue them. 

  • If you are being sexually harassed, report it.

  • Report it in writing (email is fine).

  • Keep a copy (print the email).

Is it possible that in response to your report the company won’t take any action or might even retaliate against you? Yep. But if that happens then a lawyer will be in a much better position to help you and the court will be much more likely rule in your favor.

Another Court Follows Wallace Decision - FRCP 9(b) Fraud Pleading Standard Does Not Apply to SOX Whistleblower Cases

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As previously written about here, I had the privilege this year of being a part of the team of lawyers representing the plaintiff in Wallace v. Tesoro. The opinion issued in favor of my client by the Fifth Circuit in that case created very positive law for SOX whistleblowers around the country. 

This past week I learned of a recent decision from the District of Connecticut in a Sarbanes-Oxley whistleblower retaliation case that adopted the Wallace pleading standard for SOX whistleblowers. The case serves to underscore the broad scope of protected conduct under SOX. In Wiggins v. ING, the court held that the heightened Rule 9(b) pleading standard for fraud claims does not apply to SOX retaliation claims and a whistleblower can plead that she had a reasonable belief that her employer violated one of section 1514A’s enumerated fraud provisions without specifically alleging that she believed that the employer’s conduct satisfied all of the elements of the federal statute/SEC rule that was allegedly violated.

In Wiggins, the Plaintiff worked as an operations consultant at an insurance company. She alleged that she disclosed irregularities in the processing of terminated retirement plans that reflected a lack of compliance with federal securities laws, including “frequent inaccuracies in market value assessments on retirement plans that were being terminated and sent to other providers, incorrect and inconsistent application of deferred sales charges, and deliberately failing to provide identified “problem” files for quarterly auditing procedures.” She alleged that the company terminated her employment in response to her whistleblowing.

Court Holds: Rule 9(b) Does Not Apply to SOX Whistleblower Claims

The company argued that Ms. Wiggins’ complaint should be dismissed because it alleged she had blown the whistle about fraudulent activities but did not allege said fraud with the heightened particularity required under Rule 9(b) for pleadings in which a defendant is sued for fraud.

The court rejected the company's argument and concluded that the “reasonable belief” standard set forth in the statutory text obviates any requirement for a SOX whistleblower to prove actual fraud:

ING’s argument overlooks the fact that section 1514A(a)(1) “protects an employee who `reasonably believes’ that conduct violates an enumerated statute.” Wallace v. Tesoro Corp., 796 F.3d 468, 480 (5th Cir. 2015). As such, there is room for a plaintiff to maintain a SOX whistleblower claim under Section 1514A, assuming he has satisfied the other pleading requirements, “even if the [complained of] conduct turns out not to be fraudulent.” Id.; see also Guyden v. Aetna, Inc., 544 F.3d 376, 384 (2d Cir. 2008) (“a whistleblower need not show that the corporate defendant committed fraud to prevail in her retaliation claim under § 1514A”). Because section 1514A protects the employee who acted under a reasonable belief that fraud was occurring — rather than protecting only those employees who report activity that is, in fact, fraudulent —”Federal Rule of Civil Procedure 9(b) does not apply because [Wiggins] brings a retaliation claim based on his reasonable belief of fraud rather than a claim necessitating proof of fraud.” Jin Huang v. Harman Intern. Industries Inc., Civil Action No. 3:14-cv-1263-VLB, 2015 WL 4601047, at *2 n. 3 (D. Conn. July 29, 2015); see also Wallace, 796 F.3d at 480 (“Although [the defendant] maintains that dismissal can be affirmed for failing to satisfy Rule 9(b), it is plain from the rule’s text that it does not apply to this [SOX] retaliation suit”). Thus, ING’s argument that the Amended Complaint must be dismissed because it does not meet the heightened pleading standard of Rule 9(b) is without merit, because SOX whistleblower claims do not need to be plead in accordance with this heightened standard.

The court went on to state that “a SOX whistleblower plaintiff can state that she had a reasonable belief that her employer violated one of section 1514A’s enumerated provisions, without specifically alleging that she believed that the employer’s conduct satisfied all of the elements of the federal statute/SEC rule that was allegedly violated.” In addition, the court noted that “in order for a SOX whistleblower plaintiff to allege that she reasonably believed that her employer was violating one of the enumerated provisions, the plaintiff must allege that she believed, at least approximately, that her employer’s actions satisfied the elements of the enumerated provision allegedly violated.”

Wiggins follows the Fifth Circuit's holding in Wallace, of broadly construing SOX protected whistleblowers and refusing to impose a heightened standard of objective reasonableness. This is important because it makes it much more difficult for an employer to seek dismissal of a SOX whistleblower case at the pleading stage on a motion to dismiss.

 

Hat Tip: Jason Zuckerman

Fifth Circuit Reinstates SOX Whistleblower Claim Against Tesoro Corp.

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A unanimous panel of the Fifth Circuit U.S. Court of Appeals issued a decision last Friday reinstating Plaintiff Kevin Wallace’s Sarbanes-Oxley Act (SOX) whistleblower claim against Tesoro Corp. 

Wallace worked for the petroleum company Tesoro as Vice President of Pricing and Commercial Analysis. He discovered structural flaws in Tesoro’s accounting system that garbled important financial results and tax reporting used by management, the Board of Directors, and Tesoro’s public filings. Wallace confirmed his findings with company experts and reported them internally. On March 12, 2010, Wallace reported internally that he was being retaliated against by management. He was fired within hours of this report.

The district court had previously dismissed the case based on several procedural motions filed by Tesoro. Tesoro argued that the case needed to be plead pursuant to FRCP 9(b)'s strict fraud pleading requirements. Tesoro also argued that the lawsuit raised factual issues that had not been presented with particularity to OSHA (the administrative agency charged with conducting initial investigation into SOX charges).

The Fifth Circuit reversed the dismissal and remanded the case back to district court for further proceedings and discovery. In rejecting Tesoro's arguments, the Court stated:

The requirements of Rule 9(b) show how poorly it would work as a benchmark for reasonable belief that fraud is occurring. “At a minimum, Rule 9(b) requires allegations of the particulars of time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.” Benchmark Elecs., Inc. v. J.M. Huber Corp., 343 F.3d 719, 724 (5th Cir. 2003). But an employee who is providing information about potential fraud or assisting in a nascent fraud investigation might not know who is making the false representations or what that person is obtaining by the fraud; indeed, that may be the point of the investigation. Leaving those employees unprotected would have grave consequences for the statutory scheme of employee protection embodied in § 1514A and would do so in a way that appears completely unrelated to whether a belief actually is reasonable.

SOX was enacted as a reaction to a number of major corporate and accounting scandals, including Enron, and Worldcom. The law protects employees from retaliation for engaging in protected activity, which is defined as:

"any lawful act done by the employee to provide information, cause information to be provided, or otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violation of section 1341 [mail fraud], 1343 [wire fraud], 1344 [bank fraud], or 1348 [securities fraud], any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders . . ."


The undersigned is counsel for Mr. Wallace, co-counseling with San Antonio attorney Alex Katzman and Washington D.C. attorney Richard Renner. The U.S. Department of Labor, Office of the Solicitor of Labor, participated with an amicus brief asking the Fifth Circuit to reverse.


Download: Wallace v. Tesoro Corp., No. 13-51010 (5th Cir. 7-31-2015).

EEOC Begins a Rollout of New Online Charge-Handling System

ACT Digital Pilot Program Allows Online Interaction With Employers


Last week the EEOC announced that 11 of its 53 offices will begin a pilot program called ACT Digital to digitally transmit documents between the EEOC and employers regarding discrimination charges. This is the first step in the EEOC's move toward an online charge system that will streamline the submission of documents, notices and communications in the EEOC's charge system. This system applies to private and public employers, unions and employment agencies.

The EEOC receives about 90,000 charges per year, making its charge system the agency's most common interaction with the public. The EEOC's ACT Digital initiative aims to improve customer service, ease the administrative burden on staff, and reduce the use of paper submissions and files.

The first phase of ACT Digital allows employers against whom a charge has been filed to communicate with the EEOC through a secure portal to download the charge, review and respond to an invitation to mediate, submit a position statement, and provide and verify their contact information. The newly designed EEOC notice of a charge will provide a password-protected log in for the employer to access the system in the pilot offices. Employers will also have the option of opting out of the pilot program and receiving and submitting all documents and communications in paper form.

EEOC Chair Jenny R. Yang commended ACT Digital as an innovative first step in streamlining the agency's charge system.

"The EEOC's pilot of a digital charge system is an important step forward that will benefit the public and our staff," Chair Yang noted. "This will improve our responsiveness to the public, efficiently utilize our resources, and protect the security of documents in our online system. We encourage employers to provide candid feedback and suggestions during the pilots so we can make adjustments to strengthen the system."

The pilot begins May 6, 2015 in the following EEOC offices: Charlotte, Greensboro, Greenville, Norfolk, Raleigh, Richmond and San Francisco. The EEOC offices in Denver, Detroit, Indianapolis and Phoenix will also begin their pilots by the end of May 2015.

Follow-Up Links


Same-Sex Spouses Enjoy FMLA Protection In All But Four States - And Yep, Texas is One of the Four

There has been a good deal of reporting over the last month or so about the Department of Labor's recently-implemented final FMLA rule that expanded the definition of “spouse” under the FMLA to include employees in legal same-sex marriages. Both employee-side and employer-side groups praised the new rule because it brought uniformity to FMLA regulations.

Although this rule took effect on March 27, 2015, a federal district court ruling in Texas left the status of the new rule in limbo.

After the DOL issued its final rule, Attorneys General in Texas, Arkansas, Louisiana, and Nebraska filed suit in a federal district court in Texas asking the court to strike down the DOL’s final rule. The court granted an injunction and halted the DOL’s enforcement of its final rule. Given this ruling, it was uncertain what the DOL would do. The agency has since announced that it will not enforce the rule in the four states of Texas, Arkansas, Louisiana and Nebraska.

In a court filing, the DOL said: “[W]hile the preliminary injunction remains in effect, the [DOL does] not intend to take any action to enforce the provisions of the Family and Medical Leave Act (FMLA) . . . against the states of Texas, Arkansas, Louisiana, or Nebraska, or officers, agencies, or employees of those states acting in their official capacity, in a manner that employs the definition of the term “spouse” contained in the February 25, 2015, final rule . . . .”

However, the DOL confirmed it will enforce the rule in the remaining 46 states. 

EEOC Updates Its Guidance on Pregnancy Discrimination – Questions and Answers

The EEOC recently issued Enforcement Guidance on pregnancy discrimination for the first time in over thirty years. The guidance suggests that the Pregnancy Discrimination Act’s (“PDA”) coverage may be much broader and provide workers much more protection than many employers previously thought. The Enforcement Guidance updates prior guidance on this subject in light of legal developments over the past thirty years.

The guidance (full copy of which can be found here) includes discussions of:

  • when employer actions may constitute unlawful discrimination on the basis of pregnancy, childbirth, or related medical conditions in violation of Title VII of the Civil Rights Act of 1964 (Title VII), as amended by the Pregnancy Discrimination Act of 1978 (PDA);

  • the obligation of employers under the PDA to provide pregnant workers equal access to benefits of employment such as leave, light duty, and health benefits; and

  • how Title I of the Americans with Disabilities Act (ADA), which went into effect over a decade after the PDA and was amended in 2008 to broaden the definition of disability, applies to individuals with pregnancy-related impairments.

The PDA clarifies that discrimination based on pregnancy, childbirth, or related medical conditions is a prohibited form of sex discrimination. It requires that employers treat women affected by pregnancy or related medical conditions the same way they treat non-pregnant applicants or employees who are similar in their ability or inability to work.

Title I of the ADA prohibits employment discrimination on the basis of disability and requires covered employers to provide reasonable accommodations to the known limitations of otherwise qualified employees and applicants for employment. Although pregnancy itself is not a disability, impairments related to pregnancy can be disabilities if they substantially limit one or more major life activities or substantially limited major life activities in the past. The ADA also covers pregnant workers who are regarded as having disabilities.

Both the PDA and the ADA apply to private and state and local government employers with 15 or more employees, labor organizations, employment agencies, and apprenticeship and training programs. The PDA applies to employees in the federal sector, as does Section 501 of the Rehabilitation Act of 1973, which applies the ADA’s employment nondiscrimination standards. Beyond these federal laws, state and local laws in some jurisdictions provide additional protections.

With this new guidance in mind, here are some EEOC answers to some commonly asked questions regarding pregnancy discrimination and the Pregnancy Discrimination Act (“PDA”):

General Prohibitions and Requirements

  • What workplace actions are prohibited under the PDA?

Under the PDA, an employer cannot fire, refuse to hire, demote, or take any other adverse action against a woman if pregnancy, childbirth, or a related medical condition was a motivating factor in the adverse employment action. The PDA prohibits discrimination with respect to all aspects of employment, including pay, job assignments, promotions, layoffs, training, and fringe benefits (such as leave and health insurance).

  • Does the PDA protect individuals who are not currently pregnant based on their ability or intention to become pregnant?

Yes. The PDA’s protection extends to differential treatment based on an employee’s fertility or childbearing capacity. Thus sex-specific policies restricting women from certain jobs based on childbearing capacity, such as those banning fertile women from jobs with exposure to harmful chemicals, are generally prohibited. An employer’s concern about risks to a pregnant employee or her fetus will rarely, if ever, justify such restrictions. Sex-specific job restrictions can only be justified if the employer can show that lack of childbearing capacity is a bona fide occupational qualification (BFOQ), that is, reasonably necessary to the normal operation of the business. (See also Question 7, below.)

An employer is also prohibited from discriminating against an employee because she has stated that she intends to become pregnant. Thus, demoting an employee with a good performance record two weeks after she informed her manager that she was trying to become pregnant would constitute evidence of pregnancy discrimination.

  • May an employer ask an employee or applicant whether she is pregnant or if she intends to become pregnant soon?

Although Title VII does not prohibit employers from asking applicants or employees about gender-related characteristics such as pregnancy, such questions are generally discouraged. The EEOC will consider the fact that an employer has asked such a question when evaluating a charge alleging pregnancy discrimination. Adverse decisions relating to hiring, assignments, or promotion, that are based on an employer’s assumptions or stereotypes about pregnant workers’ attendance, schedules, physical ability to work, or commitment to their jobs, are unlawful.

  • Is an employee or applicant protected from discrimination because of her past pregnancy?

Yes. An employee or applicant may not be subjected to discrimination because of a past pregnancy, childbirth, or related medical condition. For example, an employer would violate the PDA by terminating an employee shortly after she returns from medically-related pregnancy leave following the birth of her child if the employee’s pregnancy is the reason for the termination. Close proximity between the employee’s return to work and the employer’s decision to terminate her, coupled with an explanation for the termination that is not believable (e.g., unsubstantiated performance problems by an employee who has always been a good performer), would constitute evidence of pregnancy discrimination.

  • What are examples of medical conditions related to pregnancy or childbirth?

Medical conditions related to pregnancy may include symptoms such as back pain; disorders such as preeclampsia (pregnancy-induced high blood pressure) and gestational diabetes; complications requiring bed rest; and the after-effects of a delivery. (For information about the application of the ADA to pregnancy-related medical conditions, see Question 18, below.)

Lactation is also a pregnancy-related medical condition. An employee who is lactating must be able to address lactation-related needs to the same extent as she and her coworkers are able to address other similarly limiting medical conditions. For example, if an employer allows employees to change their schedules or use sick leave for routine doctor appointments and to address non-incapacitating medical conditions, then it must allow female employees to change their schedules or use sick leave for lactation-related needs.

In addition to being protected under the PDA, female hourly employees who are breastfeeding have rights under other laws, including a provision of the Patient Protection and Affordable Care Act that amended the Fair Labor Standards Act to require employers to provide reasonable break time and a private place for breastfeeding employees to express milk. The Department of Labor has published a Fact Sheet providing general information on the break time requirement for nursing mothers. The Fact Sheet can be found at http://www.dol.gov/whd/regs/compliance/whdfs73.htm.

Workers with Caregiving Responsibilities

  • Does the law provide protections for caregivers?

Discrimination based on an employee’s caregiving responsibilities may violate Title VII if it is based on sex. For instance, an employer would violate Title VII by denying job opportunities to women, but not to men, with young children, or by reassigning a woman who has recently returned from maternity leave to less desirable work based on the assumption that, as a new mother, she will be less committed to her job. Although leave related to pregnancy, childbirth, or related medical conditions can be limited to women affected by those conditions, if an employer provides parental leave, it must be provided to similarly situated men and women on the same terms. In addition, employers covered by the Family and Medical Leave Act (FMLA) must provide eligible employees with up to 12 weeks of job-protected leave to care for and bond with a newborn baby or a recently adopted child. Discrimination based on an employee’s caregiving responsibilities may violate the ADA if it is based on the employee’s relationship with an individual with a disability. See Question 22, below.

Concerns About Safety and Ability to Perform the Job

  • Will an employer violate the PDA if it takes an adverse action against a pregnant worker based on concerns about her health and safety?

Yes. Although an employer may, of course, require that a pregnant worker be able to perform the duties of her job, adverse employment actions, including those related to hiring, assignments, or promotion, that are based on an employer’s assumptions or stereotypes about pregnant workers’ attendance, schedules, physical ability to work, or commitment to their jobs, are unlawful. Even when an employer believes it is acting in an employee’s best interest, adverse actions based on assumptions or stereotypes are prohibited. For instance, it is unlawful for an employer to involuntarily reassign a pregnant employee to a lower paying job involving fewer deadlines based on an assumption that the stress and fast-paced work required in her current job would increase risks associated with her pregnancy.

An employer may only reassign a pregnant worker based on concerns about her health or the health of her fetus if it can establish that non-pregnancy or non-fertility is a BFOQ as described in Question 2, above. In very few, if any, situations will an employer be able to establish this defense.

  • May an employer take an adverse action against a pregnant worker because of the views or opinions of co-workers or customers?

No. Just as an employer cannot refuse to hire or retain a pregnant woman because of its own prejudices against pregnant women, it cannot take an adverse action against a pregnant worker because of the prejudices of co-workers, clients, or customers. For instance, an employer may not place a pregnant worker who can perform her job on leave based on her co-workers’ belief that she will place additional burdens on them and interfere with their productivity.

Harassment

  • Does the PDA protect employees from harassment based on pregnancy, childbirth, or related medical conditions?

Yes. Unwelcome and offensive jokes or name-calling, physical assaults or threats, intimidation, ridicule, insults, offensive objects or pictures, and interference with work performance that is motivated by pregnancy, childbirth, or related medical conditions may constitute unlawful harassment. Whether the conduct is sufficiently hostile to constitute unlawful harassment depends on factors such as the frequency of the conduct or its severity. Employer liability can result from the conduct of supervisors, coworkers, or non-employees such as customers or business partners over whom the employer has some control.

Equal Access to Benefits
An employer is required under the PDA to treat an employee temporarily unable to perform the functions of her job because of her pregnancy or a related medical condition in the same manner as it treats other employees similar in their ability or inability to work, whether by providing modified tasks, alternative assignments, or fringe benefits such as disability leave.

Light Duty

  • If a pregnant employee needs light duty (temporary work that is less physically demanding than her normal duties), is the employer required under the PDA to provide it?

Yes, if it provides light duty for employees who are not pregnant but who are similar in their ability or inability to work. An employer may not treat pregnant workers differently from employees who are similar in their ability or inability to work based on the cause of their limitations. For example, an employer may not deny light duty to a pregnant employee based on a policy that limits light duty to employees with on-the-job injuries.

  • Does EEOC’s interpretation of the PDA create preferential treatment for pregnant workers?

No. Consistent with the language of the law, the EEOC’s position is that the PDA requires only that an employer treat pregnant workers the same as it treats workers who are not pregnant but who are similar in their ability or inability to work. Thus, an employer may offer light duty to pregnant employees on the same terms that it offers light duty to other workers similar in their ability or inability to work. For example, if an employer’s policy places certain types of restrictions on the availability of light duty positions, such as limits on the number of light duty positions or the duration of light duty, the employer may lawfully apply the same restrictions to pregnant workers as it applies to non-pregnant workers. If an employer does not provide light duty to employees who are not pregnant, it does not have to do so for pregnant workers.

Leave

  • May an employer require a pregnant employee who is able to perform her job to take leave at any point in her pregnancy or after childbirth?

No. An employer may not force an employee to take leave because she is or has been pregnant, as long as she is able to perform her job. Requiring leave violates the PDA even if the employer believes it is acting in the employee’s best interest. If an employee has been absent from work as a result of a pregnancy-related condition and then recovers, her employer may not require her to remain on leave until the baby’s birth; nor may an employer prohibit an employee from returning to work for a certain length of time after childbirth.

  • May an employer impose greater restrictions on pregnancy-related medical leave than on other medical leave?

No. Under the PDA, an employer must allow women with physical limitations resulting from pregnancy to take leave on the same terms and conditions as others who are similar in their ability or inability to work. Thus, an employer:

may not fire a pregnant employee for being absent if her absence is covered by the employer’s sick leave policy;
may not require employees limited by pregnancy or related medical conditions to first exhaust their sick leave before using other types of accrued leave if it does not impose the same requirements on employees who seek leave for other medical conditions;
may not impose a shorter maximum period for pregnancy-related leave than for other types of medical or short-term disability leave; and
must allow an employee who is temporarily disabled due to pregnancy to take leave without pay to the same extent that other employees who are similar in their ability or inability to work are allowed to do so.
An employer must also hold open a job for a pregnancy-related absence for the same length of time that jobs are held open for employees on sick or temporary disability leave. If the pregnant employee used leave under the Family and Medical Leave Act (FMLA), the employer must restore the employee to her original job or to an equivalent job with equivalent pay, benefits, and other terms and conditions of employment.

Note that under the ADA, an employer may have to provide leave in addition to that provided under its normal leave policy as a reasonable accommodation for someone with a pregnancy-related impairment that is a disability. (For more information about the obligation to make reasonable accommodations under the ADA, see Questions 23–25, below.)

  • Must an employer provide leave to bond with, or care for, a newborn (called “parental leave” in the Guidance)?

Under the PDA, leave related to pregnancy, childbirth, or related medical conditions may be limited to women affected by those conditions, but parental leave must be provided to similarly situated men and women on the same terms. If, for example, an employer extends leave to new mothers beyond the period of recuperation from childbirth, it cannot lawfully refuse to provide an equivalent amount of leave to new fathers for the same purpose. In addition, the FMLA requires covered employers to provide 12 weeks of job-protected leave for covered employees to care for and bond with a newborn baby or a recently adopted child.

Health Insurance

  • Are employers who provide health insurance benefits required to provide insurance that includes coverage of pregnancy, childbirth, or related medical conditions?

Yes. Employers who have health insurance benefit plans must apply the same terms and conditions for pregnancy-related costs as for medical costs unrelated to pregnancy. If the plan covers pre-existing conditions – as all health plans are required to do as of January 1, 2014, under the Patient Protection and Affordable Care Act – then it must cover the costs of an insured employee’s pre-existing pregnancy. If the plan covers a particular percentage of the medical costs incurred for nonpregnancy-related conditions, it must cover the same percentage of recoverable costs for pregnancy-related expenses.

Employers can violate the PDA by providing health insurance that excludes coverage of prescription contraceptives, whether the contraceptives are prescribed for birth control or for medical purposes. To comply with Title VII, an employer’s health insurance plan must cover prescription contraceptives on the same basis as prescription drugs, devices, and services that are used to prevent the occurrence of medical conditions other than pregnancy. For example, if an employer’s health insurance plan covers preventive care for medical conditions other than pregnancy, such as vaccinations, physical examinations, or prescription drugs to prevent high blood pressure or to lower cholesterol levels, then prescription contraceptives also must be covered.

  • May employers covered by the PDA refuse to provide coverage of prescription contraceptives if they have religious objections to doing so?

In Burwell v. Hobby Lobby Stores, Inc., the Supreme Court recently ruled that the Patient Protection and Affordable Care Act’s contraceptive mandate violated the Religious Freedom Restoration Act (RFRA) as applied to closely held for-profit corporations whose owners had religious objections to providing certain types of contraceptives. EEOC’s Enforcement Guidance explains Title VII’s prohibition of pregnancy discrimination; it does not address whether certain employers might be exempt from Title VII’s requirements under the RFRA or under the Constitution’s First Amendment.

Proof of Pregnancy Discrimination

  • How can a pregnant worker prove that an adverse action was the result of pregnancy discrimination under the PDA?

A PDA violation will be found if an employee’s pregnancy, childbirth, or related medical condition was a motivating factor in an adverse employment action. Evidence of discriminatory motive may include an explicit policy that treats pregnant workers less favorably; statements of decision-makers demonstrating pregnancy bias; close timing between an adverse action and a decision-maker’s knowledge of the employee’s pregnancy, childbirth, or related medical condition; and more favorable treatment of employees of either sex who are not affected by pregnancy but who are similar in their ability or inability to work.
Discrimination may also occur when a neutral policy or practice has a disparate (or disproportionate) impact on pregnant employees if an employer cannot show that the policy or practice is job related and consistent with business necessity. Examples may include policies that exclude all or substantially all pregnant employees from access to light duty or leave.

 

THE AMERICANS WITH DISABILITIES ACT

Covered Disabilities

  • Are pregnant employees covered under Title I of the ADA?

In some circumstances, employees with pregnancy-related impairments may be covered by the ADA. Although pregnancy itself is not an impairment within the meaning of the ADA and thus is not a disability, pregnant workers and job applicants are not excluded from the ADA’s protections. Changes to the definition of the term “disability” resulting from the enactment of the ADA Amendments Act of 2008 make it much easier for individuals with pregnancy-related impairments to demonstrate that they have disabilities and are thus entitled to the ADA’s protection.

Pregnancy-related impairments are disabilities if they substantially limit one or more major life activities or substantially limited major life activities in the past. Major life activities that may be affected by pregnancy-related impairments include walking, standing, and lifting, as well as major bodily functions such as the musculoskeletal, neurological, cardiovascular, circulatory, endocrine, and reproductive functions. The term disability should be construed broadly, and the determination of whether someone has a disability should not demand extensive analysis. An impairment does not have to prevent, or severely or significantly restrict, performance of a major life activity to be considered substantially limiting, and impairments of short duration that are sufficiently limiting can be disabilities.

The ADA also covers pregnant workers who are regarded as having disabilities. An employer regards a pregnant worker as having a disability if it takes an adverse action against her (e.g., refuses to hire or terminates her) because of an actual or perceived pregnancy-related impairment, unless the employer can demonstrate that the impairment is transitory (lasting or expected to last for six months or less) and minor.

  • What are examples of pregnancy-related impairments that may be substantially limiting within the meaning of the ADA?

Examples of pregnancy-related impairments that may substantially limit major life activities include pelvic inflammation, which may substantially limit the ability to walk, or pregnancy-related carpal tunnel syndrome affecting the ability to lift or to perform manual tasks. Impairments that may substantially limit reproductive functions include disorders of the uterus or cervix that may necessitate certain physical restrictions to enable a full term pregnancy, or may result in limitations following childbirth. Pregnancy-related impairments that may substantially limit other major bodily functions include pregnancy-related sciatica limiting musculoskeletal functions; gestational diabetes limiting endocrine function; and preeclampsia, which causes high blood pressure, affecting cardiovascular and circulatory functions.

  • When does an employer discriminate against a pregnant applicant or employee based on a record of a disability?

An employer discriminates against an applicant or employee on the basis of her record of a disability when it takes an adverse action against her because of a past substantially limiting impairment. For instance, an employer would violate the ADA by denying employment to a job applicant based on a history of gestational diabetes that resolved itself following the birth of her child three years earlier.

  • When does an employer regard someone who is pregnant as having a disability?

An employer regards a pregnant applicant or employee as having a disability if it takes a prohibited action because of an actual or perceived pregnancy-related impairment that is not both transitory (lasting or expected to last six months or less) and minor. For instance, if an employer makes an adverse employment decision such as involuntarily reassigning a pregnant employee to a lower paying, less physically demanding position because it believes that the employee is experiencing pregnancy-related “complications,” it regards the employee as having a disability. The employer would be liable for discrimination if the employee is able to do the essential functions of her job without posing a “direct threat” (i.e., a significant risk of substantial harm) to herself or others.

  • Does the ADA protect the parents of a newborn with a disability?

Yes. The ADA prohibits discrimination against individuals who have a known “association” with an individual with a disability. Thus, for example, an employer would violate the ADA by refusing to hire the mother or father of a newborn with a disability because it was concerned that the applicant would take a lot of time off to care for the child or that the child’s medical condition would impose high health care costs.

Pregnancy and Reasonable Accommodation

  • What is a reasonable accommodation?

A reasonable accommodation is a change in the workplace or in the way things are customarily done that enables an individual with a disability to apply for a job, perform a job’s essential functions, or enjoy equal benefits and privileges of employment.

  • Must an employer provide a reasonable accommodation to a worker with a pregnancy- related impairment who requests one?

Yes, if the accommodation is necessary because of a pregnancy-related impairment that substantially limits a major life activity. An employer may only deny a needed reasonable accommodation to an employee with a disability who has asked for one if it would result in an undue hardship. An undue hardship is defined as an action requiring significant difficulty or expense.

  • What are some accommodations a pregnant worker may need?

Examples of reasonable accommodations that may be necessary for someone whose pregnancy-related impairment is a disability include:

  • Redistributing marginal or nonessential functions (for example, occasional lifting) that a pregnant worker cannot perform, or altering how an essential or marginal function is performed;

  • Modifying workplace policies, such as allowing a pregnant worker more frequent breaks or allowing her to keep a water bottle at a workstation even though keeping drinks at workstations is generally prohibited;

  • Modifying a work schedule so that someone who experiences severe morning sickness can arrive later than her usual start time and leave later to make up the time;

  • Allowing a pregnant worker placed on bed rest to telework where feasible;

  • Granting leave in addition to what an employer would normally provide under a sick leave policy;

  • Purchasing or modifying equipment, such as a stool for a pregnant employee who needs to sit while performing job tasks typically performed while standing; and

  • Temporarily reassigning an employee to a light duty position.

THE FAMILY AND MEDICAL LEAVE ACT

  • Does the Family and Medical Leave Act (FMLA) provide additional protections for pregnant workers and parents?

Yes. Although Title VII does not require an employer to provide pregnancy-related or child care leave if it provides no leave for other temporary illness or family obligations, employers covered by the FMLA (those with 50 or more employees) must provide eligible employees with up to 12 weeks of leave in a 12-month period for the birth of a child and to care for a newborn child, for the placement with the employee of a child for adoption or foster care or to care for the newly placed child, for the employee’s own serious health condition, or for the employee to care for a spouse or child who has a serious health condition. Employees with such a need for family or medical leave are eligible if they worked for a covered employer for a year and for at least 1,250 hours during the immediately preceding year. The FMLA is enforced by the U.S. Department of Labor. For more information about the FMLA see http://www.dol.gov/whd.

A Win for Pregnant Workers at the Supreme Court

Peggy Young, a UPS driver who was forced from her when she got pregnant because the company wouldn’t allow her to work light duty, was victorious late last month at the U.S. Supreme Court. You can read the entire opinion here.

"Conservative" Supreme Court Justices John Roberts and Samuel Alito joined with the "liberal" justices on the Court in what most observers are characterizing as a big win, not just for pregnant women, but also for all women in the workplace. That is no small feat from a court that has in recent years narrowed interpretations of anti-discrimination law and been reluctant to impose any new burdens on businesses. 

The case had brought together an unusual alliance of women’s rights activists and anti-abortion groups, who argued that women shouldn’t have to choose between her pregnancy and her job.

The 6-3 opinion, written by Justice Stephen Breyer, sends the Young case back to the Fourth Circuit of Appeals, which had previously ruled against Young, with a new set of rules that should make Young’s chances of prevailing “very strong.” The Fourth Circuit, Breyer wrote, should have asked, “Why, when the employer accommodated so many, could it not accommodate pregnant women as well?”

Justices Anthony Kennedy, Clarence Thomas and Antonin Scalia dissented. Young argued that because UPS accommodated other kinds of workers, such as injured ones or drivers who had lost their Department of Transportation licenses, it was discriminatory not to extend the same to pregnant women who also temporarily needed to be accommodated. The court’s majority didn’t entirely accept that argument, but it did say that pregnant workers could bring claims under the long-settled "McDonnell Douglass process for adjudicating other discriminatory claims under Title VII of the Civil Rights Act.

Under the court’s reasoning, Young wouldn’t have to show UPS was intentionally discriminating against pregnant workers, but a court would have to “consider the extent to which an employer’s policy treats pregnant workers less favorably than it treats non-pregnant workers similar in their ability or inability to work.”

UPS has reportedly already changed its policy to explicitly include accommodations for pregnant workers, but the rules laid out by the case will impact working women at companies around the country, since they guide lower courts in future litigation.  

EEOC Releases 2014 Statistics

The Equal Employment Opportunity Commission (EEOC) today released a comprehensive set of fiscal year 2014 private sector data tables providing detailed breakdowns for the 88,778 charges of workplace discrimination the agency received. The fiscal year ran from Oct. 1, 2013, to Sept. 30, 2014.

The number of charges filed decreased compared with recent fiscal years, due in part to the government shutdown during the reporting period. While charge filings were down overall compared to the previous fiscal year, first quarter charge filings--which included the period of the shutdown--were 3,000 to 5,000 less than the other quarters.

Among the charges the EEOC received, the percentage of charges alleging retaliation reached its highest amount ever: 42.8 percent. The percentage of charges alleging race discrimination, the second most common allegation, has remained steady at approximately 35 percent. In fiscal year 2014, the EEOC obtained $296.1 million in total monetary relief through its enforcement program prior to the filing of litigation.

The number of lawsuits on the merits filed by the EEOC's Office of General Counsel throughout the nation was 133, up slightly from the previous two fiscal years. A lawsuit on the merits involves an allegation of discrimination, compared with procedural lawsuits, which are filed mostly to enforce subpoenas or for preliminary relief. Monetary relief from cases litigated, including settlements, totaled $22.5 million.

"Behind these numbers are individuals who turned to the EEOC because they believe that they have suffered unlawful discrimination," said EEOC Chair Jenny R. Yang. "The EEOC remains committed to meaningful resolution of charges and strategic enforcement to eliminate barriers to equal employment opportunity."

The updated data include the popular tables of Statutes by Issue and Bases by Issue. "Bases" refers to the protected characteristics giving rise to the discrimination, such as sex or age. In contrast "issue" is the discriminatory action, such as discharge or failure to promote.

More specifically, the charge numbers show the following breakdowns by bases alleged in descending order.

  • Retaliation under all statutes: 37,955 (42.8 percent of all charges filed)

  • Race (including racial harassment): 31,073 (35 percent)

  • Sex (including pregnancy and sexual harassment): 26,027 (29.3 percent)

  • Disability: 25,369 (28.6 percent)

  • Age: 20,588 (23.2 percent)

  • National Origin: 9,579 (10.8 percent)

  • Religion: 3,549 (4.0 percent)

  • Color: 2,756 (3.1 percent)

  • Equal Pay Act: 938 (1.1 percent) but note that sex-based wage discrimination can also be charged under Title VII's sex discrimination provision

  • Genetic Information Non-Discrimination Act: 333 (0.4 percent)

These percentages add up to more than 100 because some charges allege multiple bases, such as discrimination on the bases of race and color, or sex and retaliation.

In fiscal year 2014, 30 percent of the charges filed with EEOC alleged the issue of harassment on various bases, such as race harassment or harassment on the basis of disability. Preventing harassment through systemic enforcement and targeted outreach is a priority issue for the Commission. The January 14, 2015 Commission meeting focused on Workplace Harassment. The new table for All Harassment Charges includes sexual harassment as well as other forms of harassment. Sexual Harassment still remains as a separate table, joined by new tables showing charges of Race Harassment as well as Charges Alleging Harassment Other than Sexual Harassment.

Discharge continues to be the most common issue for all bases under Title VII, the ADEA and the ADA. Allegations of harassment for all bases were the next most frequently cited issue, with the exception of race. For the basis of race, discriminatory terms and conditions of employment was the second most frequently cited issue (9,332), with harassment being the third (9,023).

The updated tables also include Charges by State. The greatest number of charges were filed in Texas (8,035), followed by Florida (7,528) and California (6,363).

Supreme Court Issues Opinion in Young v. UPS Pregnancy Discrimination Case

The US Supreme Court has issued an opinion in Young v. United Parcel Service, Inc. - holding that employers must provide accomodations for pregnant employees to the same degree that they provide accommodations to other employees. The opinion is fresh off the press so I'll post a lengthier analysis after I get time to read and digest the full opinion.  

In the meantime, I've included the full text of the the Court's Syllabus (summary) of the decision and a copy of the full opinion can be downloaded here.


SUPREME COURT OF THE UNITED STATES

Syllabus

YOUNG v. UNITED PARCEL SERVICE, INC.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 12–1226. Argued December 3, 2014—Decided March 25, 2015

The Pregnancy Discrimination Act added new language to the defini­tions subsection of Title VII of the Civil Rights Act of 1964. The first clause of the Pregnancy Discrimination Act specifies that Title VII’s prohibition against sex discrimination applies to discrimination “be­cause of or on the basis of pregnancy, childbirth, or related medical conditions.” 42 U. S. C §2000e(k). The Act’s second clause says that employers must treat “women affected by pregnancy . . . the same for all employment-related purposes . . . as other persons not so affected but similar in their ability or inability to work.” Ibid. This case asks the Court to determine how the latter provision applies in the context of an employer’s policy that accommodates many, but not all, workers with nonpregnancy-related disabilities.

Petitioner Young was a part-time driver for respondent United Parcel Service (UPS). When she became pregnant, her doctor advised her that she should not lift more than 20 pounds. UPS, however, re­quired drivers like Young to be able to lift up to 70 pounds. UPS told Young that she could not work while under a lifting restriction. Young subsequently filed this federal lawsuit, claiming that UPS act­ed unlawfully in refusing to accommodate her pregnancy-related lift­ing restriction. She brought only a disparate-treatment claim of dis­crimination, which a plaintiff can prove either by direct evidence that a workplace policy, practice, or decision relies expressly on a protect­ed characteristic, or by using the burden-shifting framework set forth in McDonnell Douglas Corp. v. Green, 411 U. S. 792. Under that framework, the plaintiff has “the initial burden” of “establishing a prima facie case” of discrimination. Id., at 802. If she carries her burden, the employer must have an opportunity “to articulate some legitimate, non-discriminatory reason[s] for” the difference in treat-

 

2                       YOUNG v. UNITED PARCEL SERVICE, INC.

Syllabus

ment. Ibid. If the employer articulates such reasons, the plaintiff then has “an opportunity to prove by a preponderance of the evidence that the reasons . . . were a pretext for discrimination.” Texas Dept. of Community Affairs v. Burdine, 450 U. S. 248, 253.

After discovery, UPS sought summary judgment. In reply, Young presented several favorable facts that she believed she could prove. In particular, she pointed to UPS policies that accommodated work­ers who were injured on the job, had disabilities covered by the Amer­icans with Disabilities Act of 1990 (ADA), or had lost Department of Transportation (DOT) certifications. Pursuant to these policies, Young contended, UPS had accommodated several individuals whose disabilities created work restrictions similar to hers. She argued that these policies showed that UPS discriminated against its pregnant employees because it had a light-duty-for-injury policy for numerous “other persons,” but not for pregnant workers. UPS responded that, since Young did not fall within the on-the-job injury, ADA, or DOT categories, it had not discriminated against Young on the basis of pregnancy, but had treated her just as it treated all “other” relevant “persons.”

The District Court granted UPS summary judgment, concluding, inter alia, that Young could not make out a prima facie case of dis­crimination under McDonnell Douglas. The court found that those with whom Young had compared herself—those falling within the on-the-job, DOT, or ADA categories—were too different to qualify as “similarly situated comparator[s].” The Fourth Circuit affirmed.

Held:

1. An individual pregnant worker who seeks to show disparate treatment through indirect evidence may do so through application of the McDonnell Douglas framework. Pp. 10–23.

(a) The parties’ interpretations of the Pregnancy Discrimination Act’s second clause are unpersuasive. Pp. 12–20.

(i) Young claims that as long as “an employer accommodates only a subset of workers with disabling conditions,” “pregnant work­ers who are similar in the ability to work [must] receive the same treatment even if still other nonpregnant workers do not receive ac­commodations.” Brief for Petitioner 28. Her reading proves too much. The Court doubts that Congress intended to grant pregnant workers an unconditional “most-favored-nation” status, such that employers who provide one or two workers with an accommodation must provide similar accommodations to all pregnant workers, irre­spective of any other criteria. After all, the second clause of the Act, when referring to nonpregnant persons with similar disabilities, uses the open-ended term “other persons.” It does not say that the em­ployer must treat pregnant employees the “same” as “any other per-

 

Cite as: 575 U. S. ____ (2015)                                              3

Syllabus

sons” who are similar in their ability or inability to work, nor does it specify the particular “other persons” Congress had in mind as ap­propriate comparators for pregnant workers. Moreover, disparate-treatment law normally allows an employer to implement policies that are not intended to harm members of a protected class, even if their implementation sometimes harms those members, as long as the employer has a legitimate, nondiscriminatory, nonpretextual rea­son for doing so. See, e.g., Burdine, supra, at 252–258. There is no reason to think Congress intended its language in the Pregnancy Discrimination Act to deviate from that approach. Pp. 12–14.

(ii)  The Solicitor General argues that the Court should give special, if not controlling, weight to a 2014 Equal Employment Op­portunity Commission guideline concerning the application of Title VII and the ADA to pregnant employees. But that guideline lacks the timing, “consistency,” and “thoroughness” of “consideration” nec­essary to “give it power to persuade.” Skidmore v. Swift & Co., 323 U. S. 134, 140. The guideline was promulgated after certiorari was granted here; it takes a position on which previous EEOC guidelines were silent; it is inconsistent with positions long advocated by the Government; and the EEOC does not explain the basis for its latest guidance. Pp. 14–17.

(iii)UPS claims that the Act’s second clause simply defines sex discrimination to include pregnancy discrimination. But that cannot be right, as the first clause of the Act accomplishes that objective. Reading the Act’s second clause as UPS proposes would thus render the first clause superfluous. It would also fail to carry out a key con­gressional objective in passing the Act. The Act was intended to overturn the holding and the reasoning of General Elec. Co. v. Gil­bert, 429 U. S. 125, which upheld against a Title VII challenge a company plan that provided nonoccupational sickness and accident benefits to all employees but did not provide disability-benefit pay­ments for any absence due to pregnancy. Pp. 17–20.

(b) An individual pregnant worker who seeks to show disparate treatment may make out a prima facie case under the McDonnell Douglas framework by showing that she belongs to the protected class, that she sought accommodation, that the employer did not ac­commodate her, and that the employer did accommodate others “sim­ilar in their ability or inability to work.” The employer may then seek to justify its refusal to accommodate the plaintiff by relying on “legitimate, nondiscriminatory” reasons for denying accommodation. That reason normally cannot consist simply of a claim that it is more expensive or less convenient to add pregnant women to the category of those whom the employer accommodates. If the employer offers a “legitimate, nondiscriminatory” reason, the plaintiff may show that it

 

4                       YOUNG v. UNITED PARCEL SERVICE, INC.

Syllabus

is in fact pretextual. The plaintiff may reach a jury on this issue by providing sufficient evidence that the employer’s policies impose a significant burden on pregnant workers, and that the employer’s “le­gitimate, nondiscriminatory” reasons are not sufficiently strong to justify the burden, but rather—when considered along with the bur­den imposed—give rise to an inference of intentional discrimination. The plaintiff can create a genuine issue of material fact as to whether a significant burden exists by providing evidence that the employer accommodates a large percentage of nonpregnant workers while fail­ing to accommodate a large percentage of pregnant workers. This approach is consistent with the longstanding rule that a plaintiff can use circumstantial proof to rebut an employer’s apparently legiti­mate, nondiscriminatory reasons, see Burdine, supra, at 255, n. 10, and with Congress’ intent to overrule Gilbert. Pp. 20–23.

2. Under this interpretation of the Act, the Fourth Circuit’s judg­ment must be vacated. Summary judgment is appropriate when there is “no genuine dispute as to any material fact.” Fed. Rule Civ. Proc. 56(a). The record here shows that Young created a genuine dispute as to whether UPS provided more favorable treatment to at least some employees whose situation cannot reasonably be distin­guished from hers. It is left to the Fourth Circuit to determine on remand whether Young also created a genuine issue of material fact as to whether UPS’ reasons for having treated Young less favorably than these other nonpregnant employees were pretextual. Pp. 23–24.

707 F. 3d 437, vacated and remanded.

BREYER, J., delivered the opinion of the Court, in which ROBERTS, C. J., and GINSBURG, SOTOMAYOR, and KAGAN, JJ., joined. ALITO, J., filed an opinion concurring in the judgment. SCALIA, J., filed a dissent­ing opinion, in which KENNEDY and THOMAS, JJ., joined. KENNEDY, J., filed a dissenting opinion.


 

Non-Compete Agreements Are The New Black, Part 2

Last week I discussed the fact that non-compete agreements are becoming an ever-increasing threat to employees throughout the country. Recent statistical studies indicate that one in four workers have signed a non-compete in their lifetime and 12.3 percent all workers are bound by one right now. Those numbers might be even worse here in Texas, where non-compete agreements have become extremely enforceable in recent years.

So, given this state of affairs, what is an employee who is presented with non-compete do to protect himself or herself? Here are some thoughts on the subject:

  • Inquire About Non-Compete Agreements Before You Accept A Job

The time to talk to an employer about a non-compete agreement is BEFORE you take a job. Once you quit your current job, accept a new position, and possibly move your family to a new locale, your bargaining power as it relates to a non-compete agreement drops dramatically. Many employers wait until after you start working to bring you the proposed non-compete agreement for your signature. By then it may realistically be too late for you to refuse the agreement. 

During the interview process, you will be asked if you have any questions.  Most people say "no". You need to say "Yes. Will I be asked to enter into a non-compete agreement?" Get it out in the open early. The fact that one exists doesn't necessarily mean that you can't take the job. But by addressing it before you accept the position you will be able to review it and possibly seek modification of the terms to something that everyone can live with while you still have bargaining power with your prospective employer.

  • Don't Blindly Sign All Of That "New Employee" Paperwork

At the beginning of every new job, every employee is presented with many documents for their review and signature. Most employees don't really review them carefully. The HR officer handling the process seems to be in a hurry. As a new employee, you are eager to make a good impression. So you just flip through the documents and sign off on them. 

Let me be clear: Don't Do This. It is a very bad idea.

Take the time to actually read the documents that are put in front of you. These documents might be asking you to waive your right to a jury trial in the event of a wrongful termination. They might be indicate your agreement to draconian non-compete provisions. They are important. So, please read them carefully. If you have questions about what they mean then ask the person who is running the on board process what they mean. If you still have questions then respectfully ask for time to take them home and review them and bring them back. Will the busy HR rep be miffed?  Maybe. But who cares. This is your career and your family's welfare we are talking about here. NEVER sign anything you don't 100% understand and agree with. 

If you ignore this advice and them come to me after you get fired to try to help you get out of something you signed way back when, I won't be able to do near as much good as I could have before you signed the agreements.

  • Consult With An Employment Lawyer Before You Sign The Agreement

The time to consult an employment attorney about a non-compete agreement is before you sign it. Not after. I routinely am asked to represent employees regarding non-compete agreements and unfortunately 90% or more of these clients come to me after their employment has ended regarding a non-compete agreement they signed years ago without giving the matter enough thought. 

If you don't 100% understand what a proposed non-compete means, don't sign it. Call an employment lawyer and come in for a quick consultation.  Non-competes often are not a big deal given the situation but you need to know exactly what it means and just how enforceable it is before you lock yourself in.

  • When Possible, Negotiate As A Group

I recently handled a non-compete situation in which a company was purchased by a larger company and, following the purchase, all 30 employees in the local office were sent non-compete agreements and told (not asked) to sign them. Two of these employees came to see me and we quickly communicated to the rest of the 30 employees in the office. 

The non-compete agreement would have required employees to agree not to work in the industry for a full year if they quit or were fired for any reason. This is not an unusual restriction but can be very hard on an employee if they later leave or are let go by the company. 

The two employees didn't want to sign the agreement but were worried that if they didn't then they would likely be terminated. I told them they were likely correct about that. Fortunately we were able to get with the rest of the employees in the local office and the entire group decided as a unit that they would all refuse to sign the agreement. 

Guess what happened when all 30 employees in the local office refused the non-compete. That's right: the company backed off. 

There is strength in numbers. Use it. Even if you don't have a union at your workplace (and most employees in Texas unfortunately do not) there is nothing stopping you from discussing workplace terms and conditions and working together as a group. As Ben Franklin said, "[w]e must hang together or we shall surely hang separately."

  • Don't Be Afraid To Walk Away

Lastly, don't be afraid to refuse to take a job or to quit an existing job if the employer is demanding you sign an unfair and overly restrictive non-compete. Walking away from a job or potential job feels risky, I know. But believe me, signing an overly restrictive non-compete without adequate severance payment protection is even riskier. 

Non-Compete Agreements Are The New Black, Part 1

As employment lawyer Eric Meyer put it last week in his article on the subject, "orange non-competes are the new black." They are increasingly being used by employers everywhere against all types of employees - from "tech workers to sandwich makers." Recent statistical studies indicate that one in four workers have signed a non-compete in their lifetime and 12.3 percent all workers are bound by one right now.

These numbers will understandably vary widely from state to state and from industry to industry. From my own experience working with hundreds of Texas employees in non-compete cases, it would not surprise me if the numbers are even higher for Texas workers.

 

In his article, Meyer indicates his surprise that so many employees who are presented with a non-compete agreement simply sign it without protest. He was also surprised by the relatively small percentage of employees who try to argue with their employer about the issue.  The Washington Post article to which he refers notes the following:

“And overall, only about 10 percent of workers who’ve signed a non-compete ever try to argue over it, with most assuming that it’s either not negotiable or that doing so would cause tension with an employer.”

In my personal opinion, non-compete agreements are morally justifiable only in the most extreme cases -- situations in which employees truly will be given access to real trade secret information that would obviously cause serious harm to an employer if it got into the hands of a competitor (think secret recipe of eleven herbs and spices). This is a very small percentage of workers. And yet we see that more and more employees are being asked and are agreeing to sign such agreements and thereby damage their ability to work in their chosen field should they be fired or choose to leave their employer.  Why?

I think there are a few reasons for this phenomena:

  • An actual or perceived weak bargaining position. -- A majority of the time non-competes are presented at or just after the point of a job offer being made. Employees believe that if they want the job then they have no choice but to sign the agreement.

  • Employees don't realize what they are signing. -- Many times employers slip non-compete agreements in along with the 30 other documents that a new employee must sign on his or her first day. They then rush them through the process and absolutely do not encourage the new employee to actually take the time to read and consider the documents they are signing. I would estimate that 30%-40% of those who consult with me because they have been sued or threatened with a lawsuit relating to a non-compete state they were not even aware that they had signed such an agreement.

  • An incorrect belief that such agreements are not enforceable. -- The enforceability of non-compete agreements is largely a creature of statute and varies dramatically from state to state but here in Texas such agreements are, generally speaking, very enforceable. But this wasn't always the case. As big business interests have increased their stranglehold of Texas' legislature and its courts over the last 20 years, the law regarding non-competes has done nearly a full 180. Non-compete agreements - once considered to be not worth the paper they were written on - are now as good as gold. Yet people's perceptions of such agreements have been slow to catch up.

So, given this state of affairs, what should an employee who is presented with a non-compete do to protect himself or herself? I'll address this in a follow-up post next week.

Employment Litigation is Too Expensive

Sticker Shock

Sources I trust say that defending a case through discovery and a ruling on a motion for summary judgment can cost an employer between $75,000 and $125,000. If an employer loses summary judgment (which much more often than not is the case), the employer can expect to spend a total of $175,000 to $250,000 in legal fees just to take a case to a trial. (Source) Obviously this will vary somewhat based on geography but, even adjusting for that issue, this is a crazy amount of money to spend defending your average employment discrimination case.  The average employment case settles out of court for about $40,000. (Source)

Simply put, defending employment lawsuits costs too much. Why on earth are companies paying $75,000 to $250,000 to defend cases that, on average, can be settled for $40,000?

The answer is...you guessed it...complicated. From my viewpoint as an attorney who has practiced on both sides of the docket for both individuals and large corporations, the cause of this strange phenomena involves the interplay of several factors, including modern American law firm business structure, client emotional issues, and the way the courts have developed their procedures for handling employment cases. 

 1) Defense Firm Structure and Billing Pressure

Any law firm that wants to advertise itself as "full service" to its business-side clients needs to have lawyers who can defend employment-related cases. So they do. The problem is that there simply aren't enough employment-related cases to keep this many lawyers legitimately busy. In my city there are probably 3-5 times as many employment defense lawyers as there are plaintiff's side employment lawyers. As a result, defense lawyers' dockets have far fewer cases than the average plaintiff lawyer's docket.

But even though they have fewer cases to manage and the average settlement value of their cases may be relatively low (as compared to the commercial litigation partner down the hall), they still face the relentless pressure to bill fees for the firm. This results in a natural motivation for defense lawyers to be extremely thorough in the defense of such cases. File discovery motion after discovery motion, subpoena the plaintiff's employment records from 10 years ago whether there is any realistic belief they will gather relevant information or not, file a motion for summary judgment in nearly every single case, etc. You get the idea.

Is there anything unethical about thoroughly developing a case file? No, of course not. Does it make sense to advise a client to spend three times more to fight a case than it could have been settled for the week it was filed?  Perhaps not.

 2) Emotions

Employment-related cases can be very emotional for both sides of the docket. When an employment lawsuit is filed against a company, the managers who are alleged to have acted wrongfully understandably take the allegations very personally. They feel personally and professionally threatened. They often lock into a "flight or fight" emotional state that makes it nearly impossible for them to use sound business judgment in dealing with the claim.

Strong emotions are something that employment lawyers on both sides of the docket have to deal with. Getting clients to get past their emotions and to make a "business decision" about their case based on the realities of the law, the court, and the potential outcome of a trial is something about which I often commiserate with opposing counsel.

But defendants have a potential advantage in this regard. Usually, the defendant is a corporate entity. This means that often the manager who is accused of wrongdoing can be removed and protected from the decision-making process when it comes to directing the course of the litigation and settlement negotiations. Surprisingly, however, many defendants leave the manager involved. Almost without exception this makes the process longer and more expensive for all involved.

3) The Law

The law in the area of employment-related disputes has developed quite differently than the law governing say, personal injury or commercial disputes. From its inception, employment law has taken a fairly straight forward question, "Was the plaintiff terminated because of ______?" and obscured it in layer after layer of complicated abstraction. A lengthy required pre-litigation administrative process, tricky jurisdictional issues, multi-step prima facie standards, shifting burdens of proof, and the improper treatment of many fact questions as something that can be decided by a judge as a matter of law have combined to make employment law one of the most complex areas in which to practice.

The overly-complicated nature of the law applicable to employment disputes greatly increases the time and money spent litigating issues that are, fundamentally, pretty straight forward and easy to understand. This has led to a practice of Defendants filing complex and lengthy motions for summary judgment in nearly every single case. If the motion is successful and the case is dismissed then the plaintiff will likely file an appeal - a process that adds another year's worth of work and expense to the case. If the motion for summary judgment fails then, typically, the case will settle. Note that the case may settle not necessarily because the defendant believes it would certainly lose at trial but because it simply can no longer justify spending more time and expense on a case that can settle for less than has already been spent. And often the case settles for at or near an amount that it could have been settled for before the motion for summary judgment was filed.

The law applicable to employment cases (and more specifically summary judgment practice in such cases) desperately needs to be reformed to curb the wasteful and abusive overuse of dispositive motions. Summary judgment was originally designed to only be available in cases in which there is truly no genuine question of fact to be determined by a jury. Instead they are abused an filed be defendants in nearly ever single case. Until this practice is reformed, both sides of the docket will spend more time and money than they should resolving employment-related disputes.

Is There a Solution?

The current system really isn't working terribly well for either plaintiffs or defendants. It doesn't serve anyone's interest to drag out these disputes for years and spend tens of thousands of dollars on attorney's fees and expenses when a very high percentage of such disputes could be resolved relatively early for far less money than most defendants end up paying in combined attorney's fees, expenses and settlement funds. I certainly don't claim to have all the answers but I do have a few thoughts from my time spent both as a plaintiff's lawyer and as a defense lawyer at a large international firm. I will discuss these ideas in an upcoming post. (And in case you were wondering -- No, binding arbitration is not the answer. It is actually more expensive and time consuming than litigation.)

 

 

What is a "Right to Work" law?

In meeting with employees, I often am asked about so-called "Right to Work" laws. What are they? When do they apply? Is it the same as "Employment at Will"? Here's the answer:

"Employment at Will" and "Right to Work" are two different concepts that can be confusing and are often mixed up by employees. But they are very different concepts.

"Right to Work" is a concept that has to do with union membership. A "right-to-work" law is a state statute that prohibits union security agreements, or agreements between labor unions and employers. Generally speaking, they forbid union "closed shops". A closed shop is one in which union membership is required for employment if your job is covered by an existing collective bargaining agreement between the employer and employee. In a right to work state, a union can be elected to represent the workers but the workers cannot be required to join the union or pay union dues.

The sounds pretty good to many employees at first and right-to-work laws have gained some traction as a result. Right-to-work laws exist in 24 U.S. states, mostly in the southern and western United States, but also including, as of 2012, the midwestern states of Michigan and Indiana. The downside of such laws is that they dramatically weaken unions buy effectively starving them of the funds they need to operate and organize. As a result, union membership in right to work states has dropped dramatically. Lower union membership in these states has led to a drop in workers's wages and severe damage to job protections for workers in those states.

Not surprisingly, right-to-work laws have been strongly championed by anti-worker political action groups, such as U.S. Chamber of Commerce. Such groups have spent millions on running misleading advertising and purchasing politicians who will support their efforts to curtail workers' rights and suppress wages.

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