Claims of sexual harassment typically involve the behavior of fellow employees.   But, an employer’s potential liability for sexual harassment also extends to conduct by a non-employee, such as a customer, client, or patient, that creates a hostile work environment.

The principle of employer liability for harassment by a non-employee third-party presents particular challenges to the long term care industry.   The problem occurs when the harasser is a resident or patient with dementia or other diminished mental capacity.   Physical violence or sexually inappropriate is sometimes associated with Alzheimer’s or other forms of dementia.   In many cases, courts have recognized behavior that might qualify as sexual harassment in other contexts does not create a hostile work environment for care facility employees directly caring for such patients, because the employee should reasonably expect it to occur.  The unique circumstances involved in caring for dementia patients essentially makes tolerating at least a certain level of bad behavior part of the job.

However, a recent case from the Fifth Circuit (covering Texas, Louisiana, and Mississippi) shows that long term care employers do not always get the benefit of the doubt when it comes to a dementia patient’s alleged sexual harassment of a care center employee.   The case is Gardner v. CLC of Pascagoula, LLC, (5th Cir. 2-7-2019).  The plaintiff in Gardner was a Certified Nursing Assistant (CNA) at an assisted living facility.   She was experienced in working with mentally disabled patients, and was trained in de-escalation and defense tactics for aggressive patients.  Gardner often worked with patients who wither “either physically combative or sexually aggressive.”

The harasser was an elderly resident who lived at the facility for eight years.   Gardner worked with him for three of those years.  The resident had a reputation for groping female employees and becoming physically aggressive when reprimanded.   He was diagnosed with dementia, traumatic brain injury, personality disorder with aggressive behavior, and Parkinson’s Disease.   He was reported to have a “long history” of violent and sexual behavior toward both patients and staff.

Gardner alleged she experienced on a daily basis the resident physically grabbing her and repeatedly making sexual comments and requests.   She documented the resident’s behavior in his chart and routinely complained to supervisors about it. The resident was at one time transferred to a different wing of the facility because of his behavior, but the employer refused the Gardner’s request to be reassigned so she would not have to care for him.  When she attempted to discuss her concerns about the resident’s behavior with her supervisor, there was evidence Gardner’s supervisor laughed and told her to “put [her] big girl panties on and go back to work.”

The facility terminated Gardner after an incident that occurred while she was helping the resident in question attend a therapy session.   As Gardner was trying to help the resident out of bed, he tried to grope her, then punched and pushed her.  Although Gardner disputed it, the facility claimed she swung her fist over the resident’s head and her arm brushed the top of his head in the process.  As she left the resident’s room Gardner uttered an expletive about refusing to do anything else for the resident.  Gardner sustained serious enough injuries in the incident that she went to the ER and ended up missing three months of work. Shortly after returning from leave, the facility fired her for insubordination (refusing to work with the resident), attacking the resident, and violating his rights by swearing in front of him.

The trial court dismissed Gardner’s hostile work environment claims.  The court reasoned that the resident’s “harassing comments and attempts to grope and hit are [not] beyond what a person in Gardner’s position should expect of patients in a nursing home.”  However, the Court of Appeals reversed the grant of summary judgment, concluding that “the evidence of persistent and often physical harassment…is enough to allow a jury to decide whether a reasonable caregiver on the receiving end…would have viewed it as sufficiently severe or pervasive, even considering the medical condition of the harasser.”  The facts significant to the court of appeals seemed to be the frequency of the resident’s conduct (daily), its severity (physical sexual assault and violent outbursts), and its impact on Gardner’s employment (she was on medical leave for three months because of the injuries she sustained in the altercation).  It probably didn’t help that a supervisor was dismissive of Gardner’s concerns.

While the facts in Gardner may show extreme and unusual patient behavior, it nonetheless establishes a troubling precedent for long term care facilities where dementia patients live.   Unlike an employee who can be abruptly terminated, residents in care facilities, particularly those receiving Medicaid benefits, have rights that prevent them from being immediately discharged.   Sometimes such residents have the right to hearing before an administrative law judge, who may or may not agree the patient can be evicted, or who may delay the eviction.  In the meantime, these residents must be cared for.  Depending upon the size of the facility and the number of care giving employees, simply reassigning an employee away from the difficult resident on a permanent basis could be quite difficult.    Long term care facilities will have to be more attentive than ever to balancing the rights of caregiving employees to be free from harassing conduct while also providing adequate care for difficult residents whose bad behavior is often the result of their medical condition.

For an industry that already faces a challenging regulatory and legal environment, the prospect of more sexual harassment jury trials arising out of the behavior of dementia patients is not a welcome development.

In 1990 Congress enacted the Older Workers Benefit Protection Act (OWBPA) out of concern that employees terminated  as part of a Reduction in Force (RIF) did not fully understand the rights they were giving up in exchange for the payment of severance benefits.   Under OWBPA, a severance agreement entered into with a terminated employee over age 40 is not valid unless the agreement contains certain provisions.   Among other things, the release is supposed to be written in easy to understand language rather than legal jargon; it must advise the employee to seek advice from an attorney; it must allows the employee adequate time to consider whether to sign the release (21 to 45 days, depending upon how many employees are part of the RIF); and, in the event the employee changes his mind after signing, the employee has seven days to revoke the agreement.  If the release does not comply in every respect, it is not valid, and an employee who signed and accepted the severance payments may still sue for age discrimination under the federal Age Discrimination is Employment Act (ADEA).   An employee who sues may not even  have to return the money received as part of the severance agreement.

Continue Reading Are You Facing a Reduction in Force? Make Sure the Release is Valid or You May Pay Severance and Still Get Sued for Age Discrimination.

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.

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

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.

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

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.

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

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.

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

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…

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.

 

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

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.