Iowa Employment Law Blog

Iowa Employment Law Blog

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

Published By Patrick D. Smith

Employer’s Consistent Use of Progressive Discipline Defeats Discrimination Claim

Posted in Disability Discrimination, Eighth Circuit, Human Resources Compliance

Although many employers use progressive discipline policies, I am typically not a big fan.   In theory progressive discipline seems like a good idea:  it allows an employee to learn from their mistakes.  It puts the employee on notice that further discipline is going to have more serious consequences.    It is difficult for an employee who has gone through the steps to claim surprise when the termination arrives.

On the other hand, progressive discipline limits an employer’s flexibility.   Sometimes it is clear an employee isn’t working out, but the company feels bound to go through the steps before terminating.   In other cases, the circumstances may warrant giving an employee more chances that the policy allows.  In those situations, an employee may be terminated simply because they are on the last step, even though the company would rather keep the employee.

Of course, progressive discipline policies almost always have an “out.”   That is, the company reserves the right to skip one or more steps in the process, or not use it at all.   But, if the policy has an “out” which gives managers virtually unlimited discretion to avoid it, what is the point of having the policy?   Plus, the more discretion allow in applying the discipline policy, the greater the probability for inconsistent application.

Although I remain a skeptic, I have to admit that sometimes a progressive discipline might be decisive in defeating a discrimination claim, like it was in a recent case from the Eighth Circuit.   The plaintiff in Lindeman v. St. Luke’s Hospital of Kansas City worked for the hospital for eight, mostly uneventful years.  But, between January and April 2014, he quickly progressed through the hospital’s progressive discipline, ultimately ending with his termination.

St. Luke’s progressive discipline policy was typical of most: a first offense resulted in a verbal warning; second offense a written warning; third, a suspension or second written warning, and fourth termination.

The plaintiff received a verbal warning on January 1, 2014 when he became argumentative when receiving coaching from a supervisor.    Later in January he received a written warning for failing to comply with the hospital’s timecard and call-in procedures.   In February, the plaintiff was suspended when he failed to call in prior to missing a scheduled shift.   Finally, in April 2014, plaintiff was terminated when he violated the hospital’s confidentiality policies by mentioning the name of a patient to others inside and outside the hospital.

Plaintiff alleged his termination was motivated by several disabilities-obsessive compulsive disorder, attention deficit disorder, bi-polar disorder, and a number of physical limitations.    Plaintiff relied upon two pieces of evidence to prove the hospital’s stated reason for the termination was pretext for disability discrimination.   First, he claimed other employees disclosed patient names and were not disciplined.  Second, his eight year history of strong performance reviews followed by a quick progression through the discipline policy after he was assigned to new supervisors.

In many cases, evidence that similar offenses of other employees were treated more leniently generates a factual dispute sufficient to defeat summary judgment.  In this case, however, the hospital persuaded the court the other employees were not adequate comparators because they were not on the final stage of progressive discipline at the time of their offenses.  The court also found other reasons the comparators were not adequate, but the different places the other employees fell on the progressive discipline scale was a decisive fact.

The key takeaway:  employees at different stages of the progressive discipline policy can be treated differently, even for a similar offense.   So long as the evidence shows the employer consistently applies progressive discipline to all employees, it may provide the ticket to defeating a claim of discrimination.

Court Finds Employer’s Inquiry about Health Conditions of New Employees Absorbed in Merger Complies with ADA

Posted in Disability Discrimination, Human Resources Compliance

Publisher’s Note:  Today’s guest post is provided by Brandon Underwood, one of my colleagues at Fredrikson & Byron, P.A.   Hopefully Brandon will catch the blogging bug and continue to post….

The Americans with Disabilities Act (ADA) forbids medical examinations and inquiries in employment.  But not all of them.  Instead, an examination or inquiry’s permissibility, and scope, turns primarily on when it occurs.  Too early, and the examination violates the ADA.  Too late, and it may as well.

Correctly identifying a person’s spot on this timeline ordinarily isn’t too difficult.  Has she, for instance, been offered a job?  But the difficulty ratchets up when one company merges with another and will absorb its employees.  How to treat these incoming employees?  In Hustvet v. Allina Health System, No. 17-2963 (8th Cir. filed Dec. 7, 2018), the Eighth Circuit suggested the ADA allows these employees at least in some cases to be given an “entrance examination.”

Hustvet had worked at Courage Center for about 15 years, helping patients with fragile immune systems.  In 2013, as part of a merger, Allina offered employment to all Courage Center employees meeting Allina’s employment conditions, including a health assessment screen.  Hustvet completed the screen but ignored a respirator form and stated she was unaware if she was immunized for rubella.  Testing later confirmed she was not.

After the merger, Allina instructed Hustvet to submit a completed respirator form and develop rubella immunity by taking the MMR vaccine.  Hustvet refused, and Allina terminated her employment.  Hustvet sued, alleging the health screen violated the ADA (and the counterpart Minnesota law).

She first contended the screen was impermissible because Allina required it too early:  before the job offer.  The ADA forbids an employer to require a medical examination before offering employment.  Alternatively, Hustvet insisted she was a “continuous” employee of the Courage Center and Allina and thus the screen was required too late:  after she was employed.  As to current employees, the ADA forbids medical examinations unless they are job-related and necessary to the employer’s business.

Allina argued the health screen was permissible as a condition of employment, enforced after the Allina job offer but before Hustvet began at Allina.  After offering employment, an employer may require a medical examination and condition a final offer on the examination’s results—this is an “entrance examination.”  An entrance examination need not be job-related or necessary, but it must be given to all employees regardless of disability.

In Hustvet, the Eighth Circuit was “inclined to” find the screen was a permissible entrance exam.  Hustvet received a letter confirming she would “soon be” an employee of Allina on the merger date, if she met the health screen requirements.  The letter clarified the screen needed to be completed before her employment with Allina began, suggesting the offer was conditional.  As a result, the court reasoned, it was immaterial that Hustvet was terminated after the merger, when Allina discovered she hadn’t completed the screen.  In the end, however, the court dodged this question, finding the screen permissible even assuming Hustvet was a current Allina employee.

Still, the ruling signals the Eighth Circuit’s willingness to apply the “less strict” entrance-examination requirements to employees absorbed in merger.  Dismissing Hustvet’s contention, the court didn’t presume she was a current employee of Allina because she’d worked for Courage Center.  The facts, in other words, will determine an employee’s status.

For now, Hustvet reminds us that the ADA forbids a medical examination of a current employee unless it’s related to the employee’s job and necessary to the business.  The Eighth Circuit had little difficulty concluding that screening an entire class of health care workers—all employees, like Hustvet, with client contact who merged into Allina—for communicable diseases was job-related and necessary.  After all, testing would reveal whether they risked spreading the disease to patients.

But if the same screen were required of, say, lawyers, the result may be different.  And in that case the Eighth Circuit would need to address the question it left expressly unresolved in Hustvet.

Image Credits: From GoogleCreative Commons license

Iowa Legislature Toughens Drug Testing Law, But Legal Risks for Employers Remain

Posted in Employee Privacy, Human Resources Compliance

In the last two sessions, the Iowa legislature has amended Iowa’s private sector drug testing law to give employers additional tools to combat employee substance abuse.   In last year’s session, the legislature amended the law to allow employers to use hair follicle testing for pre-employment drug screens.  Prior to the amendment, the law allowed only testing using urine, blood, or oral fluid.

In the 2018 session, the legislature again amended the law to lower the threshold at which an employer may take action based upon an employee’s positive alcohol test.    Effective July 1, an employer may take action if the employee has a blood alcohol concentration of at least .02% .  The existing standard is .04%.

The amendment allowing hair follicle testing is important because testing hair follicles is a more effective in detecting long term drug use than is testing of bodily fluids.   Many drugs are not detectable in urine 72 hours after using the drug, where the hair follicle testing can detect drug use for up to 90 days.     Using the hair follicle test for pre-employment testing will allow employers to screen out potential employees who may be longer term drug users but in the past were able to avoid detection by not using a few days before the drug test.

The lower BAC threshold in the 2018 amendment allows employers to enforce more readily a “no tolerance” policy on alcohol related impairment.  For many people, it takes only one drink to reach the .02 threshold, where it may take 2 or more to reach .04.

Even with these new employer friendly amendments, the Iowa drug testing law remains one of the most difficult laws in the country to administer because of its detailed procedures and employee safeguards.   Discipline or termination of an employee for a positive drug or alcohol test, without strict compliance with these procedural safeguards, presents a significant litigation risk.

The statutory remedies for violating the law include reinstatement (or hiring if the person is an applicant subject to a pre-employment screen), back pay, and attorney’s fees.   In one case, the employer was found to have violated the notice provisions of the law when it hand-delivered the results of the drug test to the employee instead of sending in by certified mail.   The court also ruled the employer did not have authority to conduct a drug test as part of the employee’s doctor visit to treat for work related carpal tunnel syndrome, because the injury did not occur as the result of an “accident.”   The employee was awarded $22,805 in back pay and $13,275 in attorney’s fees.   See Skipton v. S&J Tube, Inc., 822 N.W.2d 122 (Iowa Ct. App. 2012).

Another potential legal claim for violation of the drug testing law is one for wrongful discharge in violation of public policy.  The additional risk of a common law claim based upon violation of the drug testing statute is that a plaintiff has potential remedies over and above those the statute allows, including to damages for emotional distress and punitive damages.   In McVey v. National Organization Service, Inc (Iowa 2005), the Iowa Supreme Court allowed an employee to sue for the employer’s failure to strictly comply with the drug testing law, but did not recognize the claim as a public policy claim, which limited the remedies to those in the statute.    However, a trial court in Delaware County recently allowed a public policy claim based upon violation of the drug testing law.  The employer in that case admitted it did not strictly comply with the drug testing law in connection with an employee termination, but contended the employee was limited to statutory remedies.    The trial court not only disagreed with the employer’s position, but granted the plaintiff summary judgment based upon the employer’s admission it violated the statute.   The jury award was not significant in the grand scheme of things ($57,000 economic damages, $12,000 emotional distress).  But, this ruling nonetheless highlights that the employer benefits that came with the legislature’s amendments do not eliminate legal risks for failure to strictly comply with the law.

 

Iowa Civil Rights Act Protections Do Not Apply to Ex-Pat Employee

Posted in Iowa Appellate Courts, Litigation and Trials

In the recent case of Jahnke v. Deere & Co. (May 18, 2018), the Iowa Supreme Court ruled that a Deere employee who was repatriated to the United States as discipline for engaging in sexual misconduct while on assignment at a Deere factory in China did not state a claim for discrimination under the Iowa Civil Rights Act (ICRA)

Jahnke sued Deere in Iowa State Court, alleging the decision to repatriate him from China to a lower paying job in Waterloo, Iowa was based on his age, sex, and national origin.    While on assignment as the manager of a Deere factory in China, Jahnke engaged in sexual relationships with two younger, Chinese women who were in his “span of control”, which violated Deere’s policies.   Jahnke claimed Deere violated the Iowa Civil Rights Act because his discipline was harsher than that imposed on the female employees with whom he had the relationships.

The trial court denied Deere’s motion for summary judgment, but the Iowa Supreme Court granted Deere’s application for interlocutory appeal to address two issues.  First, whether the ICRA has extra-territorial application.  Second, whether the geographic reach of the ICRA extends to a U.S. Citizen working abroad where the employer has a presence in Iowa but the alleged discrimination occurred in the foreign country.

The Iowa Supreme Court answered the first question “no”, the ICRA does not apply to acts of discrimination that occur outside of Iowa.   There is a presumption in the law that a statute does not apply extraterritorially, unless the legislature expressly intends otherwise.   The Court found nothing in the language of the ICRA indicating the legislature intended it to extend to acts that occur outside of Iowa.

Even though the ICRA does not apply to discriminatory acts in other states or foreign countries, Jahnke claimed it nonetheless applied to his claims because he was an Iowan working on temporary assignment in China, who was discriminated against by Iowans who made their discriminatory decisions in Iowa.

It was true that Jahnke and Deere both had connections in Iowa.   Jahnke’s last assignment in the United States before moving to China was at Deere’s Ankeny plant.    When repatriated he was assigned to a factory in Waterloo, Iowa.    But, when he assigned to manage the Chinese factory, all of the decisions concerning Jahnke’s employment were made in China, or from Deere’s world headquarters in Moline, Illinois.     The compliance committee that investigated Jahnke’s misconduct was based in China, and personnel in China made the recommendation that Jahnke be repatriated to the U.S.     Two Deere mangers were charged with communicating the decision to Jahnke and executing his return to the U.S.  Both of them lived in Iowa, but worked at Deere’s Moline headquarters, across the river in Illinois.

The Court found that the focus of Jahnke’s employment relationship while on assignment in China was in China, or perhaps Illinois.  There was no evidence of discrete employment actions that occurred in Iowa.  The Court was not persuaded that Jahnke’s occasional trips back to Iowa for work purposes, Deere’s substantial operations in Iowa, or that the Iowa residence of the two Deere managers involved in returning Jahnke to the U.S, was sufficient to provide ICRA coverage.

The Jahnke decision is important to Iowa employers that have employees in foreign countries and other states.    Just because an employer has an Iowa presence does not necessarily allow an employee based somewhere else to sue in Iowa courts claiming protection under the Iowa civil Rights Act.    Such an employee may have claims under federal law, but federal law and federal court is generally a more favorable to employers than is an Iowa Civil Rights Act claim in state court.

Recent Ruling from Eighth Circuit Shows an Employer’s Shifting Reasons for Decision May Not Be Evidence of Pretext

Posted in Eighth Circuit, Litigation and Trials, Title VII

It is a truism that employers prefer to win discrimination cases on summary judgment rather than go to trial.    In most cases, winning on summary judgment means convincing the judge there is not enough evidence that would allow the plaintiff to prove “pretext.”   (Pretext: “a purpose or motive alleged or an appearance assumed in order to cloak the real intention or state of affairs.” Merriam-Webster Online Dictionary).    With pretext, the plaintiff goes to trial; without pretext, the plaintiff goes home and the employer wins.

By the time the case gets to the “pretext” stage, the employee has produced enough evidence to create a presumption the employment decision was discriminatory.   The employer in turn has presented enough evidence to rebut the presumption, by providing one or more reasons for the employment decision that are legitimate, and not based upon discrimination.  That’s when the pretext question arises:  is the employer’s stated reason(s) for employment decision the real reason(s) or is it “pretext” for unlawful discrimination?

Courts have identified a number of ways in which a plaintiff can prove pretext.   One common way is to show the employer has been inconsistent over time in the reasons given for the termination.    For example, at the time of termination, the employer tells the employee the decision is based upon the employee’s negative interactions with co-workers and failure to support the company.   Later, after the lawsuit is filed, the employer claims poor performance and customer complaints were additional reasons.   An employer’s shifting reasons often means summary judgment denied.

A recent case from the Eighth Circuit, however, shows that coming up with new reasons for the employment decision after the fact will not always mean the employer loses on summary judgment. (Rooney v. Rock-Tenn Converting Co., No. 16-3631, 1/9/2018).  The employer in Rock-Tenn is the exemplar employer described above.  The employer gave two reasons for its action at the time of termination, but came up with two others when it filed its motion for summary judgment.   Even though the employer seemingly was inconsistent in the stated reasons for the termination, the trial court granted summary judgment.

On appeal, the plaintiff claimed the trial court failed to follow the requirements of the pretext framework by relying upon new reasons for the termination not articulated at the time of termination.  The plaintiff argued his obligation was to present evidence the reasons stated at termination were pretext; he should not also be burdened with showing the employer’s new reasons identified in the summary judgment motion were pretext.   Not surprisingly, the plaintiff offered evidence that the original reasons were pretext, but not the new reasons.    The Court of Appeals rejected the plaintiff’s argument, and concluded the plaintiff was mistaken the employer could defeat summary judgment only based upon reasons articulated at the time of the termination.   The Court’s reasoning quoted below will provide summary judgment ammunition the next time an employer identifies additional reasons for a termination during the litigation:

The employer’s burden to articulate non-discriminatory reasons for the an adverse employment action does not arise when the adverse employment action is taken-rather, it is triggered during litigation, when an employee meets his burden of establishing a prima facie case of discrimination.  Title VII does not impose a legal obligation to provide an employee an articulated basis for dismissal at the time of firing, and an employer is certainly no bound as a matter of law to whatever reasons might have been provided. (emphasis added).

Despite the Court’s ruling in Rock-Tenn Converting, it remains the best practice to identify all the reasons for the decision at the time the decision is made.   But, if that does not occur, the Court’s opinion in this case will provide authority to support the argument that an employer’s shifting reasons does not create a genuine dispute that will defeat summary judgment.

Summary Judgement in Employment Discrimination Cases May Be Making a Comeback in Iowa State Court

Posted in Disability Discrimination, Human Resources Compliance, Iowa Appellate Courts, Litigation and Trials

As we have written here many times, summary judgment is an important tool for defendants in employment discrimination cases.   Studies have shown that in federal court, summary judgment is granted to defendants in employment discrimination cases more than in any other type of case.  These studies confirm the experience of most employment lawyers who try cases, whether they represent mostly plaintiffs or mostly defendants.

But, in state court, at least here in Iowa, courts seldom grant summary judgment in employment discrimination cases.   That is the main reason employment lawsuits have migrated from federal to state court during the past decade.  I have attributed the difficulty in obtaining summary judgment in state court to two factors:  First, state court judges, at least in the past, have not been as familiar as federal judges with the laws and procedures governing employment discrimination.  Second, summary judgment motions tend to be fact intensive and legally complex.   State court judges simply do not have the resources, particularly access to law clerks, to engage in the time consuming record review and legal research and analysis that a summary judgment motion requires.

But, there is some recent anecdotal evidence that gives employers a glimmer of hope when considering whether to file for summary judgment when defending a case in state court.   Since the end of September, the Iowa Court of Appeals has issued three opinions affirming district courts’ granting of employers’ motions for summary judgment in employment discrimination cases.  Three cases may be a small sample of all the cases filed.   Nonetheless, it is also possible these cases show state courts are getting more familiar with employment cases and perhaps are more open to summary judgment than they used to be.

The first case is Remick v. Magellan Health (Iowa Ct. App., No. 16-0954, 9/27/2017).  The facts in Remick were fairly complex.  The plaintiff was a social worker who suffered from depression and anxiety.    She worked for the employer for several years with no issues, but then her depression flared up.  The plaintiff took medical leave for several weeks to get treatment, and when she returned perceived that her colleagues were treating her differently.  Plaintiff’s mental condition continued to flare up and she took intermittent FMLA for treatment.    Plaintiff became concerned that her co-workers were angry that she was frequently missing work.  Her supervisor told her to talk to her co-workers about her mental illness and need for ongoing intermittent leave.  The supervisor put Plaintiff in a private office and brought co-workers in one or two at a time so Plaintiff could explain her situation and her need for ongoing, intermittent medical leave.   At least one of Plaintiff’s colleagues became angry because of the increased workload resulting from Plaintiff’s absences.  Plaintiff not surprisingly was humiliated by having to disclose her private medical information to co-workers.   Plaintiff’s mental illness combined with the stress resulting from disclosing her condition workers and negative feedback received from co-workers eventually rendered her unable to perform her daily job functions.  Plaintiff used up her FMLA leave and was ultimately terminated because there was no available accommodation.

The district court granted summary judgment on all three of Plaintiff’s claims:  disability discrimination; retaliation; and disability based harassment.    The disability discrimination claim was dismissed because Plaintiff was not qualified and there was no reasonable accommodation.   Summary judgment was granted on retaliation because the alleged adverse action, transferring plaintiff to another assignment, only lasted one day and was not sufficiently adverse.   The harassment claim was defeated because the employer conducted a prompt investigation and disciplined the supervisor who forced Plaintiff to tell co-workers about her mental illness.

The second and third cases involved the same plaintiff suing two different municipalities for failing to hire him as a fire fighter because he suffered from Multiple Sclerosis (MS) (Deeds v. City of Marion, Iowa Ct. App. No. 16-1666 10/11/2017; Deeds v. City of Cedar Rapids, No. 16-1779, 10/11/2017).    Both cities made Plaintiff a tentative job offer conditioned on satisfactory completion of a medical screening.   Each city sent Plaintiff to a different physician for the medical exam, but with the same result:  both physicians opined Plaintiff was not medically capable of working as a fire fighter.  Neither physician identified the precise medical condition that disqualified Plaintiff in their reports, but both cities withdrew their offers upon receipt of the medical exam results.

Plaintiff claimed both cities discriminated him on the basis of his disability.  The physicians who declared him unfit to serve as a fire fighter relied upon National Fire Protection Association (NFPA) guidelines.   NFPA disqualifies any person with MS who has exhibited symptoms during the past three years.    Plaintiff contended that relying upon NFPA violated the Iowa Civil Rights Act because it did not allow for an individual assessment of his condition.

The cases were heard by different trial court judges, but also with the same result: summary judgment granted.   Judge Doyle wrote both opinions for the Court of Appeals.  He affirmed the summary judgments because neither City required the examining physicians to use the NFPA or any other guideline.  They simply relied upon the examiner’s final opinion that Plaintiff was not medically cleared.

What is the takeaway from these opinions?  One possible conclusion is these cases are evidence of a new trend in state court to grant summary judgment in appropriate cases.  All these cases involved fairly complicated facts that would have made it easy to find a genuine dispute and deny summary judgment.   As more employment cases appear on their docket, state court judges may be scrutinizing them more than in the past.    Another explanation is that the medical evidence in all three cases was clear the plaintiff was not qualified to perform the job.  Perhaps the more appropriate conclusion is that disability cases where the medical evidence shows the employee cannot perform the job’s essential functions are fairly compelling summary judgment candidates.    Regardless of the answer, the potential for winning on summary judgment is an important question for any employer sued for discrimination.  We will continue to monitor these cases to see if we can detect a real trend.

Court Affirms Six-Figure Verdict to Nursing Mother Who Quit Because of Employer’s Failure to Provide Suitable Breastfeeding Accommodation

Posted in Litigation and Trials, Sex Discrimination, Title VII

Employers that accommodate employees’ temporary disabilities should consider extending the practice to nursing mothers returning to work following maternity leave.   That’s the lesson of a recent opinion from the U.S. Court of Appeals for the Eleventh Circuit  (Hicks v. City of Tuscaloosa, Alabama, 11th Cir., 9/7/2017)    In Hicks, a City police department’s insistence that an officer return to the beat rather than to allowing her work a temporary desk job resulted in a substantial plaintiff verdict.

The plaintiff, Stephanie Hicks, was a narcotics investigator for the City’s police department.    When she returned from maternity leave she was reassigned to the patrol division.  Unlike narcotics officers, patrol officers are required to war a bulletproof vest all day.   Hicks’ doctor warned that wearing the heavy and tight vest all day could interfere with her ability to breastfeed and subject her to a painful infections. Hicks’ requested a desk assignment while she was breastfeeding so she would not have to wear a bulletproof vest.

The Department denied the requested re-assignment on the ground that breastfeeding was not a condition that warranted a special accommodation.   Instead, the Department offered Hicks two other alternatives that it believed would still allow her to do patrol duty:  1) not wearing a bullet proof vest at all; or 2) wearing a specially fitted vest.   The city also offered to assign Hicks to safe beats that allowed her access to a lactation room and she could get priority to take two breastfeeding breaks per shift.

Not surprisingly, Hicks believed not wearing a vest was not really an accommodation because it was so dangerous.  Likewise, the larger, specially fitted vest was ineffective because it left gaping, dangerous holes.   She decided to resign and sue rather than accept the Department’s proposed accommodations.    A jury found the City’s conduct constituted discrimination that is prohibited by the federal Pregnancy Discrimination Act (PDA), and awarded Hicks $374,000 in damages (which the judge reduced to $160,000, plus attorney’s fees).   Even though she resigned and was not fired, the jury found it was a “constructive discharge.”  That means the City’s proposed accommodations made Hicks’ working conditions so intolerable that any reasonable person would have been compelled to resign.

The PDA prohibits discrimination “on the basis of pregnancy, childbirth, or related medical conditions.”    The City contended it was not liable under the PDA for two reasons:  1) Hicks’ choice to breast feed her baby was not covered by the PDA; and 2) The PDA does not require an employer to provide a “special accommodation” to breast feeding workers.  The Court rejected both of the City’s defenses.

The Court ruled the PDA covers a breast feeding mother because breastfeeding is a “related medical condition.”   The court looked to the ordinary definition of “lactation”, which is “the physiological process of secreting milk from mammary glands which is directly caused by hormonal changes associated with pregnancy and childbirth.”   The Court also found that an employment decision based upon the fact that the employee was breast feeding her baby qualifies as sex discrimination, because it is a gender specific condition that imposes on women a burden that male employees need not-indeed could not-suffer.

The duty to provide the accommodation Hicks sought was a closer question.   “The line between discrimination and accommodation is a fine one”, the Court stated, “but Hicks’ case presents a scenario that appears to straddle that line.”   The issue was whether allowing Hicks’ to temporarily work a desk job was a “special” accommodation, which the PDA does not require.  Or, was it the type of accommodation the employer would allow to other employees who were not breast feeding.   The City’s problem was it had permitted employees in other situations, such as those with temporary injuries, to be assigned alternative duty until they healed.   Based upon this evidence, the Court concluded Hicks did not request a special accommodation, that is, one that asked for more than equal treatment.  Rather, she simply asked to be treated the same as “other persons not so affected but similar in their ability or inability to work.”    It was reasonable, the Court ruled, for the jury to conclude under these circumstances that Hicks’ working conditions were intolerable.

The Hicks case should serve as an important reminder to employers to be consistent in their treatment of medical conditions that temporarily limit an employee’s ability to do his or her regular work.   If non-pregnancy related conditions are accommodated, there is no good reason-and no legal reason-not to accommodate those related to pregnancy.

Uncertainty Over the Future of Salary Test Remains Despite Court Ruling Invalidating Obama-Era Increase

Posted in Human Resources Compliance, Litigation and Trials, Wage and Hour

On August 31, 2017, Judge Amos Mazzant in the Eastern District of Texas issued a final ruling invalidating the Obama Department of Labor’s increase in the minimum salary for exempt employees under the Fair Labor Standards Act.  This is the same judge that issued the preliminary injunction on November 22, 2016 that prevented the rule from going into effect as scheduled on December 1, 2016.  Even though the DOL appealed the preliminary injunction to the Fifth Circuit, the Court of Appeals did not stay the proceedings in the trial court while the appeal was pending.  Thus, Judge Mazzant issued his final ruling before the Court of Appeals had the opportunity to weigh in on the validity of his preliminary injunction.

You may recall the Trump DOL took the surprising position on appeal that Judge Mazzant erred in issuing the preliminary injunction, and requested that it be reversed.  If the DOL had succeeded it obtaining the relief it requested, the new overtime rules could have gone into effect, which would have caused all kinds of havoc.  Fortunately, on September 5, after Judge Mazzant’s ruling, the Department withdrew its appeal of the preliminary injunction.  At least for the moment, the uncertainty surrounding the status of the minimum salary has been settled.    The fanfare with which the DOL announced the rule last year, the thousands of lawyers hours spent educating our clients about it, and the dread with which employers anticipated its effective date, ended with a relative whimper.

For now, the minimum salary an employer must pay to exempt employees remains $455 per week.   But, it may not stay that way for very long.   The Department of Labor recently requested comments from the public whether it should raise the minimum salary to something more than $455 per week, but less than $913 per week in the now invalid rule.  As of today, the DOL has received over 138,000 comments in response to its request, so there is obviously significant interest in further changes.  The comment period remains open until September 25, so you still have the chance to weigh in if you haven’t already.

All the controversy about the new overtime rule raised an important question that warrants more attention:  that is, should there even be a minimum salary as part of the test for determining whether an employee is exempt from overtime?    In the ruling on the preliminary injunction, Judge Mazzant questioned whether the DOL has the legal authority to establish a salary basis test.   He reasoned the FLSA itself defines Executive, Administrative, and Professional exemptions only with respect to duties, and says nothing about the employee’s salary.  Therefore, he ruled, Congress did not intend that the amount of an employee’s salary be a factor in determining whether the employee was exempt; only the duties are relevant.   By including a salary basis test in addition to a duties test, Judge Mazzant concluded, at least preliminarily, that the DOL likely exceeded its statutory authority.

In his final ruling, Judge Mazzant again cited Congress’ intent that only duties matter.  But, he backed off his preliminary ruling that the DOL lacked legal authority to use salary test at all.  Instead, he concluded merely that the minimum salary in the Obama era rule was too high because it likely would have the effect in many cases of eclipsing the duties test, essentially rendering the duties irrelevant.   In other words, the salary was so high that many employees who satisfied the duties test for one of the executive, administrative, or professional exemptions would still be classified as non-exempt because their salary was less than $913 per week.    So, in the end, the concept of some minimum salary apparently satisfies Congress’ intent, but the amount must still pass Judge Mazzant’s (or some other judge’s) sensibilities to be valid.

Notably, the reason the Department requested the Court of Appeals to reverse Judge Mazzant’s preliminary injunction was this very issue: the DOL did not want to lose the right to establish a minimum salary as part of the test for determining who is an exempt employee.   It appears Judge Mazzant read the Department’s brief and perhaps decided to back off of what seemed to be the logical conclusion of his preliminary injunction ruling.   On the other hand, it appears the Department may still be open to an exemption test that does not include a minimum salary.   One of the questions (No. 7) on which the DOL is seeking public comment is whether an exemption test that relies solely on duties without regard to the employee’s salary be preferable to the current test, and if so, what elements should be included in such a test.

What do you think?  Would exempt employees be harmed if there was no minimum salary as part of the test for determining who is exempt from overtime?   If a minimum salary is essential, what should it be, who should make the determination, and by what criteria?   Is it appropriate that federal judges are the final arbiter of what is or is not an acceptable minimum salary?  Hopefully the Department will be thoughtful in its considerations of these important questions.  Stay tuned…

Have Big Jury Verdicts in Discrimination Cases Suddenly Become the New Normal in Iowa?

Posted in Litigation and Trials

It’s been a difficult three months for central Iowa employers.   May, June, and July each saw a million dollar plus plaintiff verdict in an employment discrimination lawsuit.    One such verdict in these parts is notable, but three in three months is unheard of until now.  Back in January, we noticed juries in other parts of the country had returned some substantial plaintiff verdicts, and wondered then whether more and larger plaintiff verdicts were becoming a trend.     It remains uncertain whether the recent Iowa verdicts are evidence of a continuing pattern, or if it was simply a coincidence these particular cases were tried in three consecutive months.   But, whether this is the new normal or not, these types of verdicts have a significant impact on how lawyers and clients perceive the risk of employment claims.  Perception effectively becomes reality when clients settle cases that otherwise might be tried, or pay more than they otherwise would, to avoid the risk of being a victim of a headline grabbing and ruinous jury verdict.

The first verdict was issued May 4.   The plaintiff was a former athletic administrator at the University of Iowa who alleged she was discriminated against on the basis of sex and sexual orientation, and was subject to retaliation when she was reassigned to a position outside the athletic department and then had her position eliminated.   Verdict:  $1.4 million, including past and future emotional distress of $1.056 million.

The second was returned June 18.   The plaintiff was the former communications director for the Iowa Republican Senate Caucus who alleged she was subject to years of sexual harassment and then terminated when she complained about it.  Verdict: $2.195 million, which consisted entirely of damages for past and future emotional distress.

The third was just a couple of weeks ago, on July 25.    The plaintiff was a 40 year employee of the Grinnell Regional Medical Center who claimed he was terminated because of age and disability.  Verdict:  $4.5 million, including $4.28 million in emotional distress.

What is most eye-opening about these verdicts is not necessarily the total dollar amount, but that the lion’s share of the damages awarded in all three was because of emotional distress.    In the suit against the Republican Caucus, there were no economic damages awarded at all; the verdict consisted entirely of damage for past and future emotional distress.   In the other two cases, the ratio of emotional distress to back pay was 3 to 1 (U of I Athletic Dept.) and 19 to 1 (Grinnell Medical Center).

What should we make of these stunning awards for emotional distress?    The value of discrimination cases used to be driven by hard numbers like lost wages or back pay.   That certainly made it easier to assess the risk of employment claims.  Back pay or other economic damage is fairly objective and calculable.  Emotional distress, on the other hand, is almost entirely subjective and quite unpredictable.   It is possible that increased emotional distress verdicts simply reflect the modern cultural attitude of greater sensitivity to emotional and mental distress resulting from traumatic events in life, and a willingness to put a dollar value on it.

Unfortunately, the knee jerk reaction among many is to panic and think runaway verdicts are more common than they really are.   We lawyers often contribute to the problem by using these big verdicts as examples of “what might happen to you” if you don’t follow the policies and practices we recommend in our client seminars.   Not that the standard advice is bad, but we should also not ignore the data that shows most employment discrimination cases that are tried result in an employer win.

The response I propose to these out-sized verdicts seems like common sense but is not very common:  employers should try more and settle fewer employment lawsuits.   So few cases are tried nowadays, we really don’t have a benchmark on how to reliably value the claims.   Instead, we look to the few outliers that are being tried and those verdicts are used to place settlement values on future cases.   Is this approach risky?  Sure.  Would you lose some cases?  Naturally.  Would it be expensive? Of course, at least in the short term.   But, over time, the defense bar would get better at responding to and countering claims of emotional damage.    Perhaps we would find out whether most of these cases are defensible like we think they are.    If we are right, it just might discourage the filing of cases just because the plaintiff expects to get a settlement.

 

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