Iowa Employment Law Blog

Iowa Employment Law Blog

Alert and inform about legal issues, risks, and solutions relating to employees

Is it Really Possible the DOL’s Increase of the Minimum Salary for Exempt Employees Could Come Back?

Posted in Litigation and Trials, Wage and Hour

This time last year many employers were anxious about the new Department of Labor Rule that raised the minimum salary for exempt employees to $913 per week, more than double the existing minimum of $455.   The Rule was scheduled to become effective December 1, 2016.   Then, in a surprising stroke of fortune, on November 22, a federal district court in Texas issued a nationwide preliminary injunction barring the new rule from going into effect.

On December 1, 2016, the then Obama administration Department of Labor appealed the district court’s ruling.   With a new administration arriving January 20, 2017, and an anticipated new Secretary of Labor, the DOL asked the court of appeals to delay the briefing on the appeal.    I and many others expected at that time that the new rule was effectively dead.   Either the DOL would withdraw the appeal, the new Congress would override it, or the Department would take action to rescind the rule.

As it has turned out, none of those three things have happened, at least not yet.   In the meantime, the Department chose not to request further extensions of the briefing schedule beyond the June 30 deadline the court of appeals had established.

Then, in yet another surprise twist in this saga, in its brief filed on June 30, the Department asked the court to reverse the judgment of the district court.   You read that correctly.   The Trump DOL seemingly took the same position on the preliminary injunction you would have expected the Obama DOL to take.   What gives?

It seems the DOL’s position is driven by a concern about the legal basis of the district court’s injunction.   In granting the preliminary injunction, the district court ruled the DOL did not have the legal authority to establish a salary basis test.   The court reasoned section 213(a)(1) of the FLSA defines Executive, Administrative, and Professional exemptions only with respect to duties; the law says nothing about a minimum salary.   As such, the Department exceeded its statutory authority in making a minimum salary a part of the test for determining whether an employee is exempt.  If the injunction stays in place based upon the district court’s reasoning, it will set a precedent the DOL cannot set a salary test at all, regardless of the amount of the salary.

The new Secretary of Labor obviously wants to retain the authority to set a minimum salary for exempt employees, but would prefer a different amount to the $913 per week proposed in the new rule.  The Department has, in fact, commenced the process to revise the overtime rule to set the minimum salary at a different level.   The DOL requested the court not to address the validity of the $913 per week salary in its ruling.

So, what happens if the court of appeals actually grants the relief the Department requested?  In a typical case, reversing the district court’s grant of a preliminary injunction means the injunction is vacated.   But, what if that happens before the Department has issued a new rule modifying the salary basis test?  The agency has not withdrawn the new rule that was scheduled to go into effect December 1, 2016, so in theory the rules goes into effect if the injunction goes away.    If that actually were to happen, another complicating factor is the effective date of the rule.  Would it be effective retroactive to December 1, 2016, or would it take effect on the date the injunction was vacated?  Retroactive effect would be devastating to those employers that relied on the injunction to avoid implementing changes to salaries or re-classifying employees as non-exempt.   An effective date that is only prospective would not be much better, because employers are not expecting it and will have little if any notice.  Even if the Department does not take action to enforce the rule, there are certainly plenty of plaintiff side-lawyers willing to bring private wage and hour suits.

It’s possible the court of appeals could find other grounds to leave the injunction in place, or delay the effect of its ruling pending the DOL’s new rule making efforts.  But there’s no guarantee that will happen.    Given the potentially high stakes impact of the DOL’s approach on employers, it is surprising hardly anyone is talking about it.   Attorney Jim Coleman published an excellent analysis of these issues, but otherwise I have not seen much discussion.

I’m interested to know what others think about the potential for the OT rule being resurrected from the dead.   Could the sky really be falling, or am I just another Chicken Little?

Image Credits: From Google; Alexander Acosta official photo; From flickr, Creative Commons license, Chicken Little/Dave Walker

Eleventh Circuit the Latest to Rule Title VII Does Not Cover Discrimination Based Upon Sexual Orientation

Posted in Sex Discrimination, Title VII, U.S. Supreme Court

Whether Title VII protects employees from discrimination based upon sexual orientation is one of the most contentious employment law issues being litigated in the federal courts today.    EEOC contends Title VII covers sexual orientation, and a handful of district courts have agreed.  But, as of today, every U.S. Court of Appeal to consider the question has ruled that sexual orientation is not a protected status under Title VII.

The Eleventh Circuit is the most recent to weigh in, with a new opinion issued March 10. (Evans v. Georgia Regional Hospital, No. 15-15234).    In a 2-1 ruling, the court held that a female security officer who alleged she was discriminated against because she was a lesbian could not sue for sex discrimination under Title VII.   District Court Judge Martinez, sitting by designation, wrote the opinion of the court, which is not particularly noteworthy and breaks no new ground in its analysis of the issue.   What makes this ruling interesting, however, is the other two judges on the panel wrote separate opinions: Judge Pryor a special concurrence, and Judge Rosenbaum a dissent.  Both the special concurrence and the dissent articulate in a fairly clear way the legal analysis supporting the competing arguments for and against extending Title VII coverage to include sexual orientation.   In so doing, these judges have drawn a map for other circuits and perhaps the Supreme Court to follow, regardless on which side those other courts will rule.

Approximately twenty one states, including Iowa, have amended their civil rights statutes to cover sexual orientation as a protected status.   The language of Title VII, on the other hand, remains essentially the same as when Congress passed the law in 1964.  It prohibits an employer from discrimination in employment because of a person’s “race, color, religion, sex, or national origin.”    Even though Congress has not amended Title VII to include sexual orientation as one of the protected statuses, proponents of broader coverage contend sexual orientation discrimination is a form of sex discrimination, and is therefore already covered under the law.

How does discrimination because of “sex” include “sexual orientation”?   The argument traces its origins to a 1989 Supreme Court decision, Price Waterhouse v. Hopkins.  The Supreme Court ruled Price Waterhouse violated Title VII when it refused to offer partnership to a female senior manager, based in part on the male partners’ beliefs that she was too aggressive and did not act sufficiently feminine.   Price Waterhouse established the rule that an employer may not make employment decisions based upon “sex stereotypes.”  (A more thorough discussion and analysis of the expanding notions of sex discrimination under Title VII is contained in my article published in the January 2017 edition of DRI’s For The Defense, “Pushing the Boundaries of Sex Discrimination Under Title VII: Does Discrimination “Because of Sex” Cover Gender Identity and Sexual Orientation”).

In her dissent in the Evans case, Judge Rosenbaum contends Price Waterhouse “substantially broadened the scope of actionable discriminatory stereotyping under Title VII.   Before Price Waterhouse, Judge Rosenbaum noted that liability for sex stereotyping was “ascriptive”.  That means an employer could violate Title VII by ascribing certain characteristics to individual women based upon a stereotype, without considering whether any individual woman actually possessed the characteristics.   For example, an employer may assume women employees with young children have more family care obligations than men with young children, and as a result give more or better opportunities to men.

Price Waterhouse, however, recognized for the first time a form of what the judge calls “prescriptive” stereotyping.  Judge Rosenbaum explained that, under the prescriptive type, Title VII imposes liability if an employee does not satisfy the discriminator’s stereotyped “prescription” of “what the employee of that protected group should be or how the employee should act.” (emphasis added).   Unlike ascriptive,which attributes stereotyped characteristics to a female employee which she may or may not possess, prescriptive stereotyping treats the female employee less favorably because she fails to conform to the group’s prescribed stereotype.

As it relates to sexual orientation, Judge Rosenbaum contends one of the prescribed stereotypes of a woman is that she is sexually attracted only to men.   Therefore, if an employer terminates a lesbian because she is sexually attracted to women, the employer has acted based upon her failing to conform to the prescribed gender stereotype.  In this view, sexual orientation discrimination is by definition discrimination based upon a gender stereotype, which under Price Waterhouse is discrimination based upon sex.

Not surprisingly, Judge Pryor holds a more limited view of the doctrine of gender non-conformity.    The concurrence distinguishes between an employee’s gender-based “behavior” and her gender “status”.   Claims based upon gender non-conformity focus only on whether the employee’s behavior failed to conform to how the employer believes someone of that gender should act.  Judge Pryor rejects the dissent’s view that Title VII liability exists when an employee’s status deviates from the stereotype of what a person should be.     A person who experiences sexual orientation discrimination may also experience discrimination based upon the failure to conform to a gender stereotype.  But, it is also true one can occur without the other, and as such the concepts must be treated as legally distinct.    To treat the concepts as equivalent, Judge Pryor argues, imposes a false stereotype on gay individuals; namely, that their behavior always deviates from a certain prescribed gender stereotype.

Judge Pryor also rejects the dissent’s view that gender non-conformity, in and of itself, results in Title VII liability.    In the concurrence’s view, gender non-conformity under Price Waterhouse is not a revolutionary new doctrine, but is simply an evidentiary approach to proving sex discrimination.  In other words, an employer’s reliance on gender stereotypes is evidence the employer holds males and females to different standards of behavior.   Discrimination based upon gender non-conforming behavior is used as a proxy for discrimination because of sex.   But, a Title VII plaintiff must always prove that one of the enumerated statuses, in this case sex, is the basis for the employment decision.   Sexual orientation is not a protected status under Title VII; therefore, sexual orientation alone, without evidence the person’s behavior failed to conform to gender stereotypes, does not result in liability.

The competing approaches of the concurrence and dissent are ultimately based competing judicial philosophies.  Specifically, is establishing a new protected status under Title VII the role of Congress or the Courts?   Judge Pryor contends that, because Congress has not made sexual orientation a protected class, the arguments the dissent makes should be made to Congress and not the court.   Judge Rosenbaum disagrees.  During the fifty years since Title VII was enacted, the courts have expanded the meaning of discrimination because of sex more broadly that the law’s sponsors probably intended.  Based on this view, extending its meaning to cover sexual orientation is the next logical step.

The Eleventh Circuit’s opinion is not the last word on this subject.  There are similar cases pending in the Second and Seventh Circuits, and it is likely those courts will issue opinions later this year.  As Congress is not likely to amend Title VII any time soon, there is little doubt the Supreme Court will be asked to take up this issue soon.

The Sweeping Reforms to Iowa’s Collective Bargaining Law May Be Short-Lived

Posted in Iowa Appellate Courts, Labor

There is reason to be concerned the AFSCME lawsuit challenging the recent collective bargaining amendments will undermine the legislature’s effort to reform public sector collective bargaining.  As discussed in our previous post on the new law, AFSCME Council 61, the state’s largest public employee union, filed a lawsuit to invalidate the new law on February 20, 2017, only three days (and one business day) after the law went into effect.

The target of the lawsuit is the exemption in the new law for “public safety” employees.   Any employee who is part of a bargaining unit with at least thirty percent (30%) “public safety” employees is exempt from the amendments to the law.  That means, unlike all other public employees, employees in a public safety bargaining unit have the right to bargain over benefits, working conditions, evaluation procedures, seniority, transfers, grievance procedures and a host of other subjects.   Non-public safety employees’ bargaining rights are limited to base wages.

The law defines “public safety” employee to include a sheriff’s regular deputy, a police officer of a city, members of the division of state patrol, narcotics enforcement, state fire marshal, or criminal investigation, conservation officer or park ranger, fire fighter,  and DOT enforcement officers.   Police officers not employed by a city and corrections officers are not included within the definition of “public safety” employees.

The AFSCME lawsuit includes four individual plaintiffs strategically chosen to highlight what AFSCME characterizes as the arbitrary nature of the “public safety” exclusion.   For example, one of the plaintiffs is a DOT enforcement officer, which is included within the definition of a “public safety” employee.  Yet, more than 30 percent of her bargaining unit is non-public safety, so she is not covered by the exemption.   Another plaintiff is identified as a “police officer III” employed by the state.   Even though his duties are similar to a sheriff’s deputy or city police officer, he is excluded from the definition of “public safety” employee, and thus not covered by the exemption.

The legal challenge is based upon Iowa’s version of the equal protection clause, contained Article I, section 6 of the Iowa Constitution.  That section provides: “All laws of a general nature shall have a uniform operation; the general assembly shall not grant to any citizen, or class of citizens, privileges or immunities, which, upon the same terms shall not equally belong to all citizens.”

To pass constitutional muster, laws that relate to economic issues, like the collective bargaining amendments, must satisfy what is known as the “rational basis” test.    So long as there is a rational connection between the purpose of the statute and the classifications in it, the law does not violate equal protection.   Generally, the “rational basis” test is a low bar.  A person does not have a fundamental right to public employment, nor is union membership or collective bargaining a suspect class subject to strict court scrutiny.   Therefore, even if a court disagrees with the purpose of the law or means of achieving it, they are supposed to defer to legislative judgment and not substitute its own.

But, that does not mean the courts will give this law a free pass.   The only stated reason I have seen or heard for including the public safety exemption is a political one; that is, public safety employees are viewed more favorably than other public employees, and granting them more rights will garner more support for law’s passage.    While many of us agree public safety is the most critical function of government, it does not necessarily follow that granting a certain segment of these employees favored bargaining rights promotes public safety.   The 30% bargaining unit threshold seems particularly arbitrary.    The biggest challenge facing the law’s proponents is coming up with a principled, rational reason for this classification.  Hopefully they have thought of one, and will at some point share it with the rest of us.

While there are very few Iowa Supreme Court decisions striking down legislation using the rational basis test, it is not unheard of.    The Court’s recent constitutional jurisprudence has tended to be unpredictable, especially when the issue is politically charged.   Thus, while I am not making a prediction, there is a legitimate risk the Court will rule that granting favored bargaining rights to a limited segment of public safety employees violates equal protection.  Unfortunately for the proponents of this law, it will be at least two years before that happens.  It is very possible the window of opportunity for this type of sweeping reform will have closed by then.

Why the Legislature Was Right to Limit Public Sector Collective Bargaining

Posted in Labor

The 2017 Iowa legislative session has been one of the more rancorous in recent memory, driven in large part by proposed amendments to the public sector collective bargaining law.  Following all-night debates and massive protests by union supporters, the house and senate both voted on February 16 to make the most sweeping changes in the public sector collective bargaining statute since it was first enacted in the 1970s.  Governor Branstad signed the bill into law on February 17, a Friday.  Predictably, by the following Monday, the State’s largest public employee union, AFSCME Local 61, filed a lawsuit to prevent the law from going into effect.574px-Gov_Walker_Protests1_JR

In our view, the amendments are a much needed re-set of the relationship between public employees and the state agencies, municipalities, and school districts that employ them.  It’s true that the vast majority of public employees are hard-working, conscientious, and have a true spirit of public service.  Very few citizens begrudge paying competitive wages and benefits to public employees.   But, granting public employees the right to collectively bargain has, over time, unduly favored the interests of employees and unions at the expense of public employers and taxpayers.  It’s no coincidence that public employee union membership exceeds private sector membership  by more than five times (34.4 percent to 6.4 percent in 2016).

When benefits such as health insurance and pensions are taken into account, there can be little doubt public employee compensation typically exceeds the compensation of comparable private sector employees.   In some circumstances, public employees are eligible to retire in their 50s and receive their full pension benefit under the Iowa Employee Public Retirement System (IPERS).   Early retirees can sometimes “double-dip;” that is, they return to public employment while at the same time drawing a pension.    Much of the criticism of public sector compensation is based upon the fact that, while receiving generous wages, benefits, and retirement payouts, public employers have more job security and less accountability for poor performance compared to a similarly situated employee in the private sector.

Unfortunately, most of the news coverage and commentary published while the legislature debated the new law glossed over or even ignored fundamental differences between public and private sector employment that justify limiting the subjects over which public employees are allowed to bargain.  The most important difference is that the market imposes at least some check on a private sector union’s ability to bargain for economically unsustainable wages, benefits, and work rules.  Private employers have customers that won’t necessarily accept ever increasing prices or poor quality goods or services.  History is replete with examples of companies that failed or became less competitive under the weight of unsustainable collective bargaining agreements.  Public employers, on the other hand, are almost always a monopoly.   Citizens have nowhere else to go for public services, and governments can always raise taxes to pay for ever increasing wages and benefits.

Before the recently enacted changes, unions held most of the advantages in bargaining.  If the two sides could not reach an agreement on wages, insurance, and other items, the matter was submitted to binding arbitration.  Each party submitted its final offer to the arbitrator, who had to choose between them.  Among the criteria the arbitrator could rely upon in the decision was the arbitrator’s judgment whether the public employer could levy taxes and appropriate funds to pay for the wages and benefits in question.   Thus, even if a public body did not want to raise taxes to pay for the union’s proposed wage or benefit increases, an arbitrator had the effective power to impose a tax increase (or force the public body to cut services to pay for the arbitrator’s decision).

There is one other important reason public sector collective bargaining has unduly favored employee interests over those of employers.   Before it was amended, Iowa law allowed unions to demand that public employers withhold union dues from employee’s paychecks.   Public sector unions, in turn, use this dues money to support candidates running for city council, school board, or other public offices.  Over time, the unions end up negotiating contracts with the very public officials they helped elect to office.   In effect, the employee’s interests are represented on both sides of the bargaining table.

Even Franklin Roosevelt, one of history’s greatest supporters of workers’ right to collectively bargain, expressed opposition to public sector collective bargaining.   “All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service,” he wrote. “It has its distinct and insurmountable limitations when applied to public personnel management.”  He added: “[t]he very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations,”

The amendments to Iowa’s law are not perfect.   One of the gaping loopholes is the exemption for certain “public safety” employees.   The AFSCME lawsuit relies upon the public safety exemption in its constitutional challenge to the law.   We will discuss the lawsuit in a future post.  It is sufficient for now to say that its ultimate outcome is far from certain, and the loophole in the amendment may yet serve as the law’s undoing.

Image Credit from Google, Creative Commons license, Gov. Walker Protests

Surprise! The Employees of the Vendor You Hired Might be Your Employees Too

Posted in Human Resources Compliance, Labor, Wage and Hour

While “joint employment” is not a new legal concept, federal agencies such as the Department of Labor and National Labor Relations Board have aggressively sought to expand its application in recent years.

A joint employment situation typically occurs when an employer uses an independent contractor or vendor for certain services, or relies upon a staffing agency to supply workers.   The employer relying upon the vendor probably does not consider the vendor’s employees to be its employees as well.  Indeed one of the reasons to use vendors, contractors, or staffing agencies is to delegate to others certain obligations that come with having employees, such as payroll administration, wage and hour compliance, collective bargaining, or workplace safety.     But, if an employer is not careful in how it structures and administers its vendor and contractor relationships, it may unwittingly find itself saddled with legal obligations it thought had been assumed by others.

A recent opinion issued by the U.S. Court of Appeals for the Fourth Circuit (Salinas v. Commercial Interiors, Inc. , No. 15-1915, 1/25/2017) highlights this very risk.  The Fourth Circuit’s opinion purports to clarify the test for determining when a “joint employer” relationship exists under the Fair Labor Standards Act (FLSA).   While this opinion applies only in Maryland, Virginia, and North Carolina, it would not be surprising if other circuits adopted the Fourth Circuit’s new test, which in many cases will make it easier to prove the existence of joint employment.

Summary of the Case

03The plaintiffs in Salinas were employees hired by a company known as J.I. General Contractors, Inc.   J.I. worked almost exclusively on projects for another contractor, Commercial Interiors.  Commercial Interiors offered general contracting and interior finishing services, including drywall installation, carpentry, framing, and hardware installation.    The J.I. employees filed a collective action against both J.I. and Commercial, alleging they were not paid wages, including overtime wages.   The plaintiffs obtained a judgment for unpaid wages and attorneys’ fees against J.I..  But, the district court dismissed the claim against Commercial, finding Commercial had a legitimate independent contractor relationship with J.I. that was not entered into for the purpose of evading its legal wage and hour obligations.

The Court of Appeals reversed, finding the district court incorrectly ruled in Commercial’s favor on the joint employment question.  In a lengthy opinion, the Court of Appeals criticized the trial court for focusing on the legitimacy of the contractual relationship and the good faith of the parties’ intent to comply with the wage and hour laws.  But, the Court also found the existing precedent for FLSA joint employment cases, both in the Fourth and other circuits, unsatisfactory and confusing.   As such, the Court decided to “set forth our own test for determining whether two persons or entities constitute joint employers for purposes of the FLSA,”  guided by the principle that the law “must not be interpreted or applied in a narrow, grudging manner.”

The Court framed the “fundamental threshold question” in these cases as, “whether a purported joint employer shares or co-determines the essential terms and conditions of a worker’s employment.”  In answering the question whether joint employment exists, the Court of Appeals said courts should consider the following, non-exhaustive, list of factors:

  • Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to direct, control, or supervise the worker, whether by direct or indirect means;
  • Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to—directly or indirectly—hire or fire the worker or modify the terms or conditions of the worker’s employment;
  • The degree of permanency and duration of the relationship between the putative joint employers;
  • Whether, through shared management or a direct or indirect ownership interest, one putative joint employer controls, is controlled by, or is under common control with the other putative joint employer;
  • Whether the work is performed on a premises owned or controlled by one or more of the putative joint employers, independently or in connection with one another; and
  • Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate responsibility over functions ordinarily carried out by an employer, such as handling payroll; providing workers’ compensation insurance; paying payroll taxes; or providing the facilities, equipment, tools, or materials necessary to complete the work.

Applying the six factors to the Commercial-J.I. relationship, the Court found the following facts were important in finding that Commercial jointly employed J.I.’s employees:

  • The Plaintiffs performed nearly all of their work on Commercial job sites and for Commercial’s benefit;
  • Commercial provided the tools, materials, and equipment necessary for Plaintiffs’ work, with Plaintiffs providing only small, handheld tools;
  • On at least one occasion, Commercial rented a house near the job site for J.I. employees to stay in during a project;
  • Commercial actively supervised Plaintiffs’ work on a daily basis by having foremen walk the job site and check Plaintiffs’ progress;
  • Commercial required Plaintiffs to attend frequent meetings regarding their assigned tasks and safety protocols;
  • Commercial required Plaintiffs to sign in and out with Commercial foremen upon reporting to and leaving the job site each day;
  • Commercial foremen frequently directed Plaintiffs to redo deficient work, communicating problems to J.I. supervisors who translated the information to Plaintiffs
  • Commercial foremen told certain Plaintiffs to work additional hours or additional days;
  • Commercial communicated its staffing needs to J.I., and J.I. based Plaintiffs’ jobsite assignments on Commercial’s needs;
  • When J.I. performed certain “time and materials” work for Commercial and was paid on an hourly, rather than lump-sum, basis, Commercial told J.I. how many of its employees to send to the project and how many hours those employees were permitted to work;
  • Commercial provided Plaintiffs with stickers bearing the Commercial logo to wear on their hardhats and vests bearing Commercial logos to don while working on Commercial jobsites;
  • I. supervisors instructed Plaintiffs to tell anyone who asked that they worked for Commercial;
  • Commercial provided J.I. supervisors with Commercial-branded sweatshirts to wear while working on Commercial projects;
  • On at least one occasion, Commercial required J.I. employees to apply for employment with Commercial and directly hired those employees.

Employer Takeaways

It’s typically in the details of doing the job that the relationship get blurred between an employer’s own employees, and those of a contractor or vendor.    The company principals sign an agreement that sets forth the relationship, usually with good intentions.  But, in the effort to get the project or job done, the administration of the relationship does not comport with what it may say in the written agreement.   The following are a few reminders that should help keep the lines between the employer and contractor/vendor more clear:

  • Provide clothing or logos for your employee’s, but not the employees of a contractor/vendor;
  • Do not provide equipment or tools for the contractor/vendor’s employees;
  • You are allowed to exercise quality control over a contractor/vendor’s finished product, but do not instruct a contractor/vendor’s employees about the details of the work;
  • Communication about unsatisfactory work should be to a designated liason with the contractor/vendor, not the employees themselves;
  • Do not discipline or threaten to terminate a contractor/vendor’s employee; issues of conduct or performance of a particular employee should be addressed with the liason;
  • Contractor/vendor employees should comply with general safety protocols of the work site; but, if there are safety protocols unique to the contractor/vendor’s work (e.g., if they use certain chemicals), the contractor/vendor should enforce those rules.
  • Do not directly keep track of contractor/vendor employee hours, or direct those employees when to work, or insist they work overtime.
  • Train supervisors about these rules;
  • Closely following these rules is most important if the employer is the exclusive or nearly exclusive firm that uses the contractor/vendor; even if the contractors has many other customers, the employer should endeavor to follow these practices, but there may be more flexibility.

Image Credit from Google, Creative Commons license, Contractors Plant and Machinery.

 

Honest Belief About Employee’s FMLA Abuse Enough to Defeat Retaliation Claim

Posted in FMLA, Human Resources Compliance

Employee abuse of intermittent FMLA leave is a common employer complaint.   An example of intermittent leave is when an employee occasionally has to take off work because of an ongoing or chronic medical condition.    What happens if the employer suspects the employee uses FMLA covered leave to miss work for non-covered reasons, but does not know for sure?  What kind of evidence is needed to take action?

The U.S. Court of Appeals for the Third Circuit addressed that question in a recent decision.  (Capps v. Mondelez Global, LLC, (No. 15-3839, 1/30/2017).  Fredrick Capps worked for the company that makes Oreos and other Nabisco snacks.   He suffered from a condition known as avascular necrosis, which causes a loss of blood flow to the bones and tissues, resulting is the death of those cells.   In Capps’ case, he developed arthritis in his hips and frequently experienced severe pain in the pelvic region, hips, and thighs, sometimes lasting for days at a time.   Capps’ doctor certified he needed full bed rest to recover from these periodic pain episodes, and thus recommended he be completely off work when they occurred.  The company granted him the intermittent leave he requested.

One Thursday, February 14, 2013, Capps was scheduled to start work at 1:00 p.m., but called in and said he would be late to work because of leg pain.  He called later in the day stating that he was taking a full day off because the pain had not subsided.  That same evening, about 6:30 p.m., Capps went to a local pub to get dinner because his wife was out of town and he “didn’t know how to cook.”   It so happened some his friend were there, and he ended up staying for 2 ½ hours.   Naturally, he had a few beers…and then a few shots.   Unfortunately for Capps, a few too many.  The police stopped him on the way home.  His blood alcohol concentration was more than four times the legal limit.   Capps was arrested and put in jail that night, but released the next morning, February 15, 2013.   He was scheduled to start work at 1:00 p.m. that day, but called in again, stating that he would be using FMLA leave because of his ongoing leg pain.

By the following Monday, everything was back to normal; Capps reported to work as ususal.  He did not report his arrest to the company, nor was he required to do so.    He later plead guilty to DUI and was sentenced to three days in jail, which he served in August 2013.

Almost one year after the arrest, in early 2014, an HR Manager at the company learned from a newspaper article about Capp’s DUI conviction and jail sentence.   He decided to investigate Capps’ attendance record to determine if he had been absent during the time frame of the arrest and conviction.

The HR Manager reviewed the criminal court docket to try and determine the dates Capps’ had court dates, and compared them to dates he used FMLA leave.   The HR Manager was not an attorney and did not understand the meaning of all the docket entries.  But, he concluded Capps had used FMLA leave on the date of his arrest and the day after, as well as two dates he appeared in court.    When confronted with this information, Capps denied he had improperly used FMLA leave.  Capps later produced a undated notes from his doctor stating that he had taken time off on the days in question because of hip and leg pain.  Capps claimed he waived his right to appear in court on the dates the docket showed he had court dates, because he was actually at home suffering from pain flare ups.   The company was suspicious about the authenticity of the doctor’s letters.  The employer terminated Capps for FMLA abuse and dishonesty in reporting about his FMLA leave, all of which violated company policy.

2846903064_6077c22df2_zCapps sued for FMLA interference and retaliation, as well as failure to accommodate a disability under the ADA.    One of the key issues in the case was whether the employer had enough evidence to terminate in light of Capps’ claim there was a medical need for using leave on the dates in question, and his denial he appeared in court on the dates the docket showed he had court dates.    Noting that FMLA retaliation requires proof of the employer’s retaliatory intent, the court found that the employer’s honest belief the employee was misusing FMLA leave was a legitimate, non-retaliatory justification for the discharge.   Even if the employer was wrong in its belief, so long as it was honest, it is enough to defeat the claim.   In this case, Capps did not have enough evidence to show the company’s belief about his FMLA abuse was not an honest belief, and so his claim was dismissed.

The Capps case is a good reminder that absolute certainty the employee is abusing FMLA is not required before taking action.    It is also important to remember, however, that simply having a hunch or subjective belief abuse is occurring is not good enough to prove the belief was honest.    Rather, the employer should rely upon facts:  facts to support your belief, but also facts indicating the employee’s position is not believable.    In this case, it was enough that the HR Manager relied on the court docket showing when Capps was supposed to be in court, and that the employee produced a doctor’s note that was suspicious because it was undated and contained information that normally wouldn’t be expected from a doctor.

Image Credits: from Google, Creative Commons license, Oreo Two Cookies; Honesty is the Best Policy, Rick Harrison

Does the ADA Require an Employer to Treat Disability Related Misconduct More Leniently?

Posted in Disability Discrimination, Human Resources Compliance

An employee commits an offense that would justify termination.  But, she asks for another chance because the misconduct was not intentional; it was caused by a diabetes induced severe drop in blood sugar that caused confusion and memory loss.    Must the employer be more lenient on an employee with a disability as a form of reasonable accommodation?

This very question the subject of a recent decision from the U.S. Court of Appeals for the Tenth Circuit.   In DeWitt v. Southwestern Bell Telephone Co. (1/18/2017), the plaintiff was a customer service representative at SWBT’s Wichita, Kansas call center.    She suffered from insulin dependent Type I diabetes.  Whenever her blood sugar was low, DeWitt could experience various symptoms, including shakiness, fatigue, lethargy, confusion, and poor coordination.   She told her employer about the condition, and the company allowed her to take breaks to eat or drink as needed to raise her blood sugar.

At the time of her termination, DeWitt was already on a last chance agreement, which meant that any incident of poor performance or misconduct could lead to termination.     One day she suffered a severe drop in blood sugar that she was not able to stabilize even after eating food and drinking juice.   She experienced lethargy, disorientation, and confusion, and was “unable to communicate with anyone.”    While experiencing this condition, she “dropped” two calls, which meant she hung up on two different customers.

The company had recordings of the two dropped calls, but DeWitt claimed to have no memory of them because of her diabetic induced condition.    SWBT terminated her employment because DeWitt’s supervisor believed she intentionally hung up on the customers, and it was not a result of her diabetic induced low blood sugar.  DeWitt sued under the ADA, claiming she was terminated because of a disability, and that the company should have excused the dropped calls as a reasonable accommodation.Call center

Court’s Analysis of ADA Issues

This case presented two important ADA issues.   First, what if the supervisor was wrong in concluding the plaintiff intentionally hung up the customers, and thereby unfairly discounted the potential the disability played a role?  In granting summary judgment to SWBT on this question, the court relied upon a rule known as the “honest belief” doctrine.  That means, if the decision maker honestly holds a belief and acts on it in good faith, it does not matter whether in the end the belief is actually true.  In this case, the court found many objective reasons to confirm the supervisor’s belief the plaintiff acted intentionally.  They included the fact that it is very difficult for a customer service representative to accidentally hang up on a customer because terminating a phone call is a two-step process that required two separate mouse clicks.   The supervisor also found the plaintiff operated successfully the rest of the day, and did not take a break from accepting calls, which she was permitted to do if she felt ill.  No fellow employee witnessed the plaintiff’s disoriented condition despite being in close proximity to her.  Finally, the supervisor concluded the last chance agreement motivated her to not be completely forthright about what happened with the dropped calls.

The second issue involves the employer’s obligation to accommodate.   DeWitt argued the company should have accommodated her disability by excusing the disability related misconduct.   The court concluded, however, that an employer’s obligation to accommodate a disability is prospective; there is no requirement to overlook past misconduct as an accommodation, even if disability related.    The employer’s duty to provide a reasonable accommodation is triggered by an employee’s adequate request for accommodation.   Although the plaintiff had alerted the employer to her diabetes, that was not sufficient because she did not request an accommodation concerning the specific behavior at issue, namely, the possibility of dropped calls.

Takeaways

Despite the favorable employer outcome in DeWitt, discipline or termination for misconduct or performance that is potentially disability related is still a risky proposition.    There are several important things to keep in mind when presented with this situation:

  • The employer should not speculate about whether a disability contributed to the misconduct or poor performance; only if the employee raises the issue should the employer consider it.
  • If the first time the employer learns about a disability is during the discipline or termination process, there is no need to accommodate for what happened in the past; but, if the employee remains employed, the employer should discuss the need for future accommodations.
  • If the employer is already accommodating the employee’s disability is some way, the employer must consider whether the parties contemplated that the disability would cause or contribute to the specific misconduct or performance issues.
  • The employer must carefully consider whether the misconduct or performance issue is actually related to the disability. But, you cannot rely upon speculation; there must be objective facts on which you rely to make this determination

Image Credit: from Google, Creative Commons license, Call Center, Phone, Service, Help, Call

Accommodating Employees’ Mental Health Conditions Presents Unique Challenges

Posted in Disability Discrimination, Human Resources Compliance

Most employers know they are obligated under the ADA to accommodate mental as well as physical disabilities.  In theory that seems easy enough, but in practice mental health conditions are much more difficult to deal with than physical disabilities.   For example, a common problem is that the employer often lacks specific information about the nature of the employee’s condition.   Sometimes that is because the employee himself does not disclose the condition (or perhaps does not even recognize it himself), but co-workers or a supervisor observe behavior changes or a performance decline.   While the employer may ask the employee general questions about how the employee is feeling, the law allows a more specific inquiry about a medical condition only under limited circumstances.   A disability related inquiry or medical exam is permitted only if the employer has a reasonable belief, based upon objective evidence, that the employee’s ability to perform the essential job functions is impaired by a medical condition, or the medical condition poses a threat to the employee or others.   Unfortunately, it is not always easy for an employer to judge whether there is sufficient reliable information to justify a disability inquiry.

Even in those cases where the employee discloses a mental health condition and requests accommodation, the employer often lacks sufficient information about the nature of the condition or proposed accommodations.  This is particularly true in cases of stress or anxiety.   Medical providers have been known to impose vague restrictions for stressed or anxious employees, including some of the following:  the employee should “avoid working in an environment she finds stressful; “keep stress levels as low as possible;” the supervisor should stop having “hostile confrontations” and instead provide the employee with “calm, non-confrontational treatment.”   By its nature work is often stressful, and employees sometimes have to deal with unpleasant tasks or people.   To demand a stress free work environments in neither helpful for reasonable.

dreamstime13812115What is an employer to do when presented with these types of vague restrictions?  Although I am not often a big fan of EEOC’s work, last month the agency published a resource document that is likely to be helpful.    Entitled “The Mental Health Provider’s Role in a Client’s Request for a Reasonable Accommodation at Work”, the document is targeted at the mental health professional and not the employer.    Presented in a question and answer format, the document provides useful information about the ADA and how the provider can help her patient obtain an accommodation from the employer.  Most useful in question 9, which describes the type of documentation that would be helpful for the employer to assess nature of the employee’s condition, the functional limitations, and proposed accommodations that are specific to the functional limitations.    Employers should consider giving this resource document to the employee and asking the employee to present it to the medical provider.   An employer could also develop its own questionnaire for the provider based upon question No. 9 in the document.

A medical provider who responds to the information listed in question No. 9 would not only help her patient, but also assist the patient’s employer in evaluating appropriate reasonable accommodations for a mental disability.

Image Credit: from Google, Creative Commons license, Man Suffering Stress and Anxiety.

What to Make of Big Verdicts in Employment Cases: Aberration or Harbinger of Things to Come?

Posted in Litigation and Trials

Last month in Jackson County, Missouri (Kansas City), two different juries issued eye-popping plaintiff verdicts in employment discrimination cases.    In one case, a jury awarded Deborah Miller $450,000 in compensatory damages and a whopping $20 million in punitive damages.  Miller sued American Family Insurance for age and sex discrimination and retaliation after she lost her management position as part of a corporate restructuring.  In the second case, a jury awarded Gary Gentry $120,892 in compensatory damages and $10 million in punitive damages in a retaliation case against the pest control company Orkin.

Trial_by_Jury_-_Chaos_in_the_CourtroomDuring the twenty years I have practiced employment law in Iowa, seven figure verdicts have been rare, let alone the eight figures awarded in the Missouri cases.   Only once have I seen an eight figure verdict, and that case involved egregious harassment with completely non-responsive management.  In the Missouri cases decided last month, on the other hand, a local lawyer observed they were fairly routine discrimination and retaliation cases.

Could something like what happened in these two Kansas City verdicts happen here?  The good news for Iowa employers is that punitive damages are not available under the Iowa Civil Rights Act.    Some federal employment laws allow punitive damages, most notably Title VII (covering race, sex, religion, and national origin) and the Americans with Disabilities Act (ADA).   But, those federal laws cap compensatory and punitive damages based upon the employer’s size.   For employers with less than 100 employees, the limit is $50,000.  The most that can be recovered is $300,000, for employers with more than 500 employees.    Although the damages caps do not apply to awards for back pay, lost wages in the future, or plaintiff’s attorney’s fees, those items are not where juries are giving big awards.  So, even in those Iowa cases where a jury awards multiple millions for punitive or non-economic damages, the judge will reduce the verdict to comply with the caps, and the plaintiff will not in the end recover anything close to the amount awarded.

In the end, does it make any difference to Iowa employers that juries in another jurisdiction awarded significant damages in seemingly routine discrimination cases?     Or, is this a sign that the employment litigation landscape is becoming (or has already become) more employee friendly?  For many years defendants had most of the advantages in employment litigation.  It used to be that most of the cases were in federal court and summary judgment was routinely granted for defendants.   Even when cases were tried, jurors were often skeptical of discrimination claims and non-economic damage awards were low.

Now, at least in Iowa, most employment cases are filed in state court and it is rare to win on summary judgment.   When conducting voir dire of potential jurors, it is obvious citizens are more aware than they used to be of the anti-discrimination laws, and that employees have legal rights.  Jurors, almost all of whom are also employees, are more willing to impose consequences on an employer who treats an employee unjustly.   Another factor that may play a role in the amount of awards is that Americans are more sensitive to claims of emotional harm than in the past, and more willing to place economic value on mental and emotional distress.

I think these Missouri verdicts are evidence that employment lawsuits are more plaintiff friendly than ever before.    It is a trend that is likely to continue, despite the fact that federal enforcement agencies such as EEOC will be  less aggressive under a Republican administration.   So long as these cases are tried to juries, we can expect more plaintiff verdicts, and probably bigger verdicts.

In light of this trend, it’s more important than ever to try and prevent lawsuits in the first place, and if they occur to be in a defensible position.     The most obvious response is to have the right policies and procedures in place, and to make your best efforts to follow them closely.    An HR Audit is a good way to see where your company stacks up in this area.     Ensuring you have appropriate Employer Practices Liability Insurance (EPLI) is critical, especially if an employment lawsuit would cripple your business.   Finally, companies should consider whether arbitration of employment disputes would be more beneficial that litigation.    There are restrictions on the ability of employers to impose arbitration on their employees,  so legal counsel should be consulted before going down that road.

Image Credit: from Google, Creative Commons license, Scene from Trial by Jury at the Royalty Theatre.

 

Does the ADA Require Reassignment to a Vacant Position as a Reasonable Accommodation?

Posted in Disability Discrimination, Human Resources Compliance, Litigation and Trials

It’s an all too common situation: an employee’s medical condition results in permanent restrictions that prevent the employee from performing essential job functions that she used to be able to do.   It is not reasonable to modify the job so the employee can keep the position.   There is a vacancy in another department for which the employee is qualified, and she wants the job.  But, the employer has another candidate who is more qualified for the vacant position, but does not have a disability.    Does the ADA require the employer to reassign the employee with a disability in favor of hiring someone else more qualified?

What Does the Law Require?

In its published Enforcement Guidance, EEOC takes the position that the ADA requires the employer to do just that.    But, in a recent opinion, the U.S. Court of Appeals for the Eleventh Circuit rejected the EEOC’s position.  (EEOC v. St. Joseph’s Hospital, Inc., 11th Cir. 12/7/2016).     The Court ruled the ADA indexdoes not require non-competitive reassignment as a reasonable accommodation for a disability.  In other words, it is legal to choose a more qualified, non-disabled employee over a less qualified employee with a disability.   The Eleventh Circuit (which covers Alabama, Florida, and Georgia) cited previous opinions from courts in the Fifth and Eighth Circuits (which includes Iowa) that already followed this rule.

In theory the rule is simple, but like many decisions involving the employment discrimination laws, it is more complicated in practice.    The EEOC v. St. Joseph’s Hospital case shows why.  The plaintiff was a nurse who had worked various jobs in the psychiatric unit for more than 20 years.    She developed back pain from spinal stenosis, which ultimately made it difficult for her to walk more than short distances without stopping.  The Plaintiff obtained a doctor’s note recommending she use a cane, which would provide support and allow her to walk longer distances.  But, the hospital was concerned the cane presented a safety risk in the psychiatric unit because patients could use it as a weapon.

Despite the doctor’s recommendation, the hospital told the Plaintiff she could no longer use the cane because of the safety risk.     Rather than immediately terminate her employment, the hospital offered Plaintiff 30 days to apply for other, open positions.    Technically, Plaintiff was not eligible for a transfer because she had been in her existing position for less than six months and was working under a final written warning.   But, the hospital waived those requirements as an accommodation.

The Plaintiff applied for three other jobs.   The hospital hired other, non-disabled candidates for two of them.  The third job was not actually available and was posted in error.    In the end, because plaintiff was not able to find another position, she was terminated.

Here is where it got complicated.  Even though the court ruled the hospital was not required by law to favor Plaintiff over other more qualified candidates, the question of who was the more qualified candidate was left for the jury to resolve.   The jury found the hospital failed to provide a reasonable accommodation for the Plaintiff by not reassigning her to one of the jobs for which she applied.     The hospital still won the case because the jury also concluded the hospital made good faith efforts to find a reasonable accommodation.  But, it is important to note the good faith defense eliminated the liability in this case because of some technical issues relating to the form of the jury instructions.     An employer’s good faith defense in most cases will protect only from damages, but not equitable relief or attorney’s fees.

What Should Employers Do?

The good news is, the the St. Joseph’s case reaffirms principle that an employer may hire the best candidate for the position, with or without a disability.  On the other hand, it remains a significant litigation risk to fill a vacant position with someone other than an employee with a disability, when the disabled employee will be terminated if not selected.   This is especially true for long term employees.   There is a very good chance a jury will be second guess the employer’s decision about which candidate is really the most qualified.

There are a number of policies or practices employers should consider that will make these types of  claims more defensible:  1)  employers should have a stated policy or demonstrated practice of hiring the best candidate for the job;  2) the stated qualifications for a position should match as much as possible the actual job duties; 3) the stated qualifications should emphasize criteria that are more objective (e.g., education, years of experience); 4)  subjective factors, such as the “right fit,” positive attitude, etc. are relevant but should be subordinate to objective criteria  4) identify and document the specific reasons the chosen candidate is more qualified than other candidates, especially if it is not obvious based upon the objective criteria.

Image Credit: from Google, Creative Commons license, Handicapped sign.