Almost twenty-five years ago, the Iowa Supreme Court recognized a new cause of action for the benefit of terminated employees: wrongful discharge in violation of public policy. (See Springer v. Weeks & Leo Co.).   What it means is that an employee cannot be terminated if the employer is motivated by reasons that would frustrate a well-recognized public policy.    Springer involved an employee who was terminated because she sought workers’ compensation benefits for an on-the-job injury.   The rationale is that terminating an employee because of work injury would deter employees from pursuing legitimate workers’ compensation claims, and thereby frustrate the public policy underlying the workers’ compensation laws.

Since Springer, the Iowa Supreme Court has recognized myriad other types of employee conduct that is protected by public policy.    Despite the many court decisions addressing the subject, however, the concept of what is and is not protected by public policy remains vague. Courts can look to the Iowa Constitution, statutes, and regulations as a basis for public policy claims, regardless whether the law or regulation in question was intended to give employees the right to sue.    Given the countless number of laws and regulations that govern this state, public policy “exceptions” have the potential to swallow the general rule of at-will employment.   Some might say that has already occurred.

Another practical concern is that the Court’s approach to these cases has encouraged more litigation. Even an employer that is careful to comply with known employment laws and rules can be sued for wrongful discharge based upon conduct that has not yet been recognized as unlawful.   Most of the time, defendants settle these cases to avoid the costs, risk, and uncertainties associated with litigation, which in turn encourages even more claims. 

Given the trend of expanding public policy claims, the Iowa Supreme Court’s decision last week in Berry v. Liberty Holdings, Inc. was a refreshing exception. Berry claimed he was terminated because he filed a personal injury lawsuit against Premier Concrete Holdings, Inc., which was owned by the same person as his employer, Liberty Holdings, Inc. Berry had been involved in a motor vehicle collision with one of Premiere’s concrete pumping trucks.   He ultimately settled the case with Premiere’s insurance carrier, but soon after was terminated by Liberty Holdings. 

The trial court dismissed the wrongful termination case on the grounds that suing a sister company of your employer was not conduct protected by public policy.    However, in a 2010 decision, the Iowa Court of Appeals reversed the dismissal, holding that Iowa’s Comparative Fault Statute (Chapter 668) “does codify the state’s expressed policy that its citizens may seek legal redress for an injury caused by another’s negligence.”

The employer sought further review in the Iowa Supreme Court, and in a decision issued September 9, 2011, the Court reversed the judgment of the Court of Appeals and dismissed the suit.   The supreme court rejected the court of appeals’ view that Iowa’s Comparative Fault Act contained a policy supporting an employee’s right to seek compensation for injuries. Rather, the court concluded Chapter 668 simply created a framework courts and juries use to allocate fault to one or more parties claimed to have caused a person’s injuries.   

While Berry represents a victory for employers, it does little to stem the tide of more lawsuits based upon violations of public policy. The supreme court was careful to decide the case on narrow grounds.  In a footnote, the court made clear it decided only whether Chapter 668 supported an employee’s protection from discharge if he files a lawsuit.    The court specifically left unanswered the question whether the Iowa Constitution, other statutes, rules, or precedent would support Berry’s wrongful discharge claim. 

The vast majority of private sector employers in Iowa do not have a unionized workforce. Many employers (and employees for that matter) don’t understand that the National Labor Relations Act (NLRA) still applies to them.     Section 7 of the NLRA grants employees the rights to engage in various kinds of “concerted activities” for the purpose of collective bargaining or “other mutual aid or protection.” Employers are often surprised to learn that conduct prohibited in their employee handbooks—things like discussing compensation among employees, posting notices in the break room, or using social media to complain about wages or working conditions—may actually be protected by section 7.     Unfortunately, ignorance is seldom bliss, particularly if you find yourself the target of a National Labor Relations Board (NLRB) unfair labor practice charge.

Although employees have had section 7 rights for decades, many non-union employers in Iowa never used to worry about the NLRB.   That could and should change, given the agency’s more activist agenda in recent years.  Two recent announcements in particular highlight the importance of becoming more educated about your rights (yes, employers have rights under the NLRA) and those of your employees, so as to avoid ending up at the wrong end of an expensive and time consuming investigation, or worse.

First, the NLRB’s Acting General Counsel recently released a report detailing its investigation into cases involving employer’s social media policies and employee’s use of social media.  The report focuses on employee terminations related to Facebook postings, blogs, and Tweets, as well as social media policies generally that the Board contends are overly broad. The U.S. Chamber of Commerce also issued a survey on the NLRB’s social media activity.   Both of these reports are a must-read.

Second is the NLRB’s announcement of a new Rule requiring most private sector employers to post notices informing employees about their rights under the NLRA. The New York Labor and Employment Law Report has a good summary of the requirements. While there is some debate whether the NLRB has legal authority to require such postings, the rule nonetheless goes into effect November 14.   Employers are encouraged to find out between now and then your rights and responsibilities under this new rule, and especially the consequences for failing to follow it. 

 

Last week a federal judge in the Southern District of New York Judge dismissed the EEOC’s long running sex and pregnancy discrimination lawsuit against financial media company Bloomberg, LP.    EEOC claimed Bloomberg engaged in a “pattern and practice” of discrimination against pregnant women and mothers returning from maternity leave by reducing their pay, demoting them in title, removing responsibilities, and subjecting them to stereotypes about female caregivers.

What is notable about the case is not the judge’s conclusion based upon the evidence, but the fact that she took the unusual step of offering some “concluding remarks” highly critical of the EEOC’s approach to the case.   Judge Preska wrote: “[a]t bottom, the EEOC’s theory of this case is about so-called “work-life balance”…"It amounts to a judgment that Bloomberg, as a company policy, does not provide its employee mothers with a sufficient work-life balance."   But, she noted, despite the fact that it may be desirable, the law does not mandate “work-life balance”. “The law simply requires fair treatment of all employees. It requires holding employees to the same standards.”   In a company like Bloomberg, which explicitly makes all-out dedication to the company its expectation, “making a decision that preferences family over work comes with consequences. But those consequences occur for anyone who takes significant time away from Bloomberg, not just for pregnant women and mothers….”    As a final bombshell, the judge concluded:

Whether one thinks those consequences are intrinsically fair, whether one agrees with the roles traditionally assumed by the different genders in raising children in the United States, or whether one agrees with the monetary value society places on working versus childrearing is not at issue here. Neither is whether Bloomberg is the most “family-friendly” company. The fact remains that the law requires only equal treatment in the workplace. Employment consequences for making choices that elevate non-work activities (for whatever reason) over work activities are not illegal.

Predictably, Judge Preska’s opinion unleashed a firestorm of both support and criticism.  One commentator claimed the judge has “contempt for women with kids who have ambition”, while others recognized the fact that the balance between work and family is ultimately a personal decision that all employees make, regardless of gender. 

Coincidentally, the Bloomberg decision follows closely on the heels of an announcement by the Iowa Attorney General that the State paid $180,000 to settle a sex discrimination lawsuit by employee who alleged she was terminated because of family care obligations.  The plaintiff alleged her boss (also a woman) made unfavorable comments about the work commitment of mothers with children.  The reasons given for the termination was that the plaintiff lacked dedication to her job because she was unwilling to work the necessary long hours.  She claimed she was replaced by a man who worked the number of hours she did without complaint from the supervisor. 

These two cases illustrate the increasing trend of family care discrimination claims.  Indeed, EEOC has made such claims an important part of its enforcement agenda.   Bloomberg is an important reminder, however, that equal treatment does not impose on employers the obligation to accommodate an employee’s personal life choices.  At the same time employers must ensure they avoid making decisions based upon gender stereotypes, and hold all employees, regardless of gender, to the same standards. 

 

Wal-Mart v. Dukes, decided by the U.S. Supreme Court in June, could derail a class action race discrimination case against the State of Iowa that has been pending since 2007 (See our posts here and here on the Wal-Mart case).    The Iowa case involves 32 named plaintiffs who claim the State maintained hiring and promotion practices that discriminated against African American applicants and employees.   The suit was certified as a class action in 2010 to include class all African Americans who sought appointment to or held a merit based position in the Executive branch since July 1, 2003.   The class claims could potentially involve up to 6,000 persons in addition to the named plaintiffs. 

The court held a hearing last week concerning the potential application of the Dukes case.  The holding in Dukes that potentially applies to the Iowa case involves the question of “commonality”. That is, are the circumstances of the class members sufficiently common that their discrimination claims can be addressed as a group rather than individually.   In Dukes, the Court held that claims of 1.6 million female employees alleging gender discrimination at thousands of Wal-Mart stores across the United States could not, as a practical matter, be adjudicated as a class.   The essential question in a discrimination claim—“why was I disfavored”-involved too many individual circumstances. 

According to coverage of the hearing in the Des Moines Register,  the Iowa Plaintiffs are trying to overcome the Dukes decision by showing the State of Iowa’s hiring and promotion practices were centralized and applied to each African American applicant and employee.   At Wal-Mart, on the other hand, the evidence showed the hiring and promotion decisions occurred at the store level and therefore were highly decentralized.   The Plaintiffs’ evidence against the State of Iowa relies to a great extent on statistics purporting to show African Americans were less likely to survive an initial round of applicant screening, less likely to be interviewed, and less likely to be hired.

Another important difference in the Iowa case is that it is pending in Iowa state court rather than federal court.   Although similar, Iowa courts and federal courts have two different sets of rules governing these types of proceedings. 

The Dukes case is a powerful weapon for employers defending class actions, and it will be interesting to see whether it will allow the State to avoid a trial in this case.

Yesterday the U.S. Supreme Court issued an opinion Wal-Mart v. Dukes, an important case addressing issues involving both employment law and class actions.    There has been an incredible amount of coverage and analysis of this opinion in both regular and legal media outlets and blogs (including our own summary in the DRI Publication, The Court Reporter).   Rather than repeating any of it here, the following are a few of the sources where you can find both good background information as well as helpful analysis about the potential impact of this case from both a business and legal perspective: 

What Does Wal-Mart Ruling Mean for Class Actions: from WSJ Law Blog

Supreme Court Rejects Class Action Against Wal-Mart:  Connecticut Employment Law Blog

Justices Curbs Class Actions, from WSJ.com

Supreme Court Erects Major Barriers to Class Actions…: National Law Journal’s Law.com

Seven Key Points for Employers from the Wal-Mart v. Dukes Opinion: from Ohio Employer’s Law Blog;

What Wal-Mart’s High Court Win Means for Employers, Large and Small, from The Employer Handbook Blog

 

 

 

Robin Shea at Employment and Labor Insider had a great post a couple of days ago on common misconceptions about employment laws that trip up employers.

It is surprising how often employers think the law allows freedom to act without risk of bad consequences when precisely the opposite is true.  I call them “employment law myths”.     

Robin’s post lists her top five misconceptions, and invites others to contribute theirs.  Here are three of the most common myths I see on a regular basis: 

1) Employment “at will”.     In theory, this is still the law in Iowa.  The reality is that exceptions to employment at will have become so numerous that they swallow the rule.  Discrimination because of race, gender, disability, age, etc., retaliation, and violation of public policy are some of the typical exceptions, but there are others. 

2)  Probationary Employment.  Many employers designate the first 3-6 months of employment as a "probationary period", and sometimes think they can terminate an employee at any time for any reason during that period without consequence (see employment at will, above).

3)  Employees are Prohibited from Discussing Compensation.  There is a little law called the National Labor Relations Act (NLRA).   Most of us think about the NLRA only in connection with unions, but it applies to non-union employers as well.  Among other things, the NLRA allows employees to engage in “protected” and “concerted" activity, which includes communicating information about wages and benefits.    Although an employer can’t be sued in court for violating this law, there is an administrative complaint procedure under the NLRA that can be almost as cumbersome.

The best advice before making termination decision or taking other serious action aganist an employee: pause, take a deep breath, and consider consulting with your lawyer first. 

In a unanimous decision yesterday, the U.S. Supreme Court expanded the universe of employees who might be protected from retaliation under Title VII and other federal employment laws.

A retaliation claim is based upon an employer’s adverse action taken in response to an employee’s “protected activity”. Typically, protected activity includes things such as making a complaint of discrimination or harassment, or giving information in connection with a harassment investigation. Any adverse action against an employee (or even a former employee) because he engaged in “protected activity” subjects an employer to liability for damages and attorney’s fees.  

In Thompson v. North American Stainless, LP, the Supreme Court held that Title VII’s anti-retaliation protection extends to the fiancée of an employee who filed a charge of discrimination with the EEOC. Even though the fiancée himself engaged in no “protected activity”, the Court reasoned the company’s conduct could well dissuade a reasonable employee from herself filing a charge. In other words, if an employee knew her fiancée would be fired in response to her EEOC charge, she might not file the charge. 

The practical challenge this case presents for employers is identifying the zone of persons who might be affiliated with a complainant.   While acknowledging this difficulty, the Court nonetheless declined to establish a bright line to determine which relationships are protected and which are not. Justice Scalia, writing for a unanimous Court, stated:

We must also decline to identify a fixed class of relationships for which third-party reprisals are unlawful. We expect that firing a close family member will almost always meet the Burlington standard, and inflicting a milder reprisal on a mere acquaintance will almost never do so, but beyond that we are reluctant to generalize.

Two immediate takeaways from this case:

First, when going down the road of termination, employers need to inquire whether there is anyone affiliated with the employee to be terminated who has filed a charge of discrimination.  Who is affiliated? Certainly a spouse or other close family member; definitely a fiancée. After that, who knows?

Second, just because there is some affiliation does not mean the termination should not occur.   The terminated employee is still required to prove a connection between his termination and the protected activity of the other employee with whom he is affiliated.

For other commentary on this decision, I recommend the following:

Daniel Schwartz’s Connecticut Employment Law Blog

Eric Meyer, at The Employer Handbook

IIyse Schuman at Washington DC Employment Law Update

Russell Cawyer, Texas Employment Law Update

 

An Article in Sunday’s Des Moines Register pointed to an increase in the hiring of temps as an early sign of economic recovery.    One of the benefits to employers of temporary workers, the article noted, is that they provide a company with flexibility when market conditions are uncertain. “Companies feel more comfortable using temporary work forces” in these conditions; they can better ramp up-or down-to meet production needs.  

While not disputing the benefits of leased workers, employers should also be aware of the potential downside of using temporary employees—particularly those who are employed for longer term assignments of one year or more.

First, it is critical to do due diligence on the staffing agency that is used.   Make sure the agency is financially sound and meeting its obligations for payroll withholding, workers’ compensation, and benefits. If the agency goes out of business and did not handle those issues, the employer may be responsible.   One client had a leased worker injured on the job, and it turned out the staffing agency had not procured workers’ compensation coverage for the state in which the employee worked. The employer ended up being responsible for the injury, and had no workers’ compensation coverage available to cover the costs.

A second important issue relates to employee benefits.   If a leased employee works for an employer for more than one year, that employee may have to be included in non-discrimination testing for employee benefit plans.  In addition, there are some circumstances where a long term leased employee could become eligible for benefits under the employer’s benefit plans.

Finally, using a staffing agency for hiring will not necessarily protect a company from liability under the anti-discrimination laws.    This post at the Wisconsin Labor & Employment Blog discusses certain staffing agency practices deliberately designed to avoid the anti-discrimination laws.   See paragraph above about due diligence. 

A federal judge in the Eastern District of Pennsylvania recently waded into this thorny subject. The case is Burlington v. News Corp., in which a white television reporter for the Fox affiliate in Philadelphia alleges he was terminated for using the “n-word”.  The suit claims black employees who also had uttered the word were not even disciplined.

It all started during a discussion of another reporter’s coverage of a “symbolic burial” of the n-word, conducted by the Philadelphia NAACP Youth Council. The other reporter said the participants in the burial used the “n-word” “at least a hundred times or more during the course of the proceedings.” In response, the plaintiff asked, “does this mean we can finally use the word n_____”. Plaintiff said he was not intending to be offensive or provocative, but only want to suggest that using the actual word in the story would give the story more credence.  

Despite the context, other employees were offended and complained to management.   One person who was offended and complained, even though she had not been present at the newsroom meeting, was the plaintiff’s co-anchor, who was African American. The event apparently caused tension between the plaintiff and his co-anchor, which affected their on-air chemistry.   To complicate matters further, someone leaked to other media outlets that plaintiff had used the “n-word”, and stories were published about it in the local papers. 

The plaintiff presented evidence that three different black employees had used the “n-word” in the past, but had not been subject even to discipline.   The employer’s defense for treating plaintiff differently was the statements by the black employees had not incited complaints or resulted in negative publicity. Plaintiff contended the complaints and resulting publicity were the result of race discrimination that ultimately influenced management’s decision to terminate him. 

Ultimately, the court denied the employer’s request to dismiss the lawsuit, holding that the jury should decide the question whether the plaintiff was treated differently because of his race. In its conclusion, the court stated:

This case presents unique issues regarding an employer’s liability under Title VII for cultural assumptions about a word that is considered by many to be the most offensive in the English language. Plaintiff portrays himself as a victim of political correctness run amok, while Defendants portray themselves as employers who made the only choice they could in response to an employee who repeatedly uttered "the most noxious racial epithet in the contemporary American lexicon…resulting in problems in the workplace and significant adverse publicity.” Whether Plaintiff was a victim of discrimination or his own poor judgment is for a jury to decide….

Setting aside the troubling cultural and social implications this case presents, the management of Fox 29 faced a difficult and tenuous legal decision. Regardless of how they handled the case, there was no good outcome. If they terminated the white reporter, as they did, they face a race discrimination lawsuit. If they don’t discipline or terminate, they face a potential complaint from other employees for allowing a racially hostile work environment to exist.  

In these situations, often the best approach is to make what you think is the least worst decision…and get ready for the inevitable fallout.   The real lesson, however, is that employers need to be proactive in ensuring that the use of offensive language is always subject to discipline, regardless of the person’s race.

For additional discussion of this case, I recommend the following:

Jon Hyman, at Ohio Employer’s Law Blog

Peter Thompson, at Maine Employment Law Blog

Jottings by an Employer’s Lawyer 

We have discussed in this blog before the migration of discrimination claims to Iowa state courts rather than federal courts.   The trend is driven by a number of factors, including the recognition in 2005 of the right to a jury trial under the Iowa Civil Rights Act (ICRA) and the greater propensity of federal courts to grant summary judgment.

Another important factor in a plaintiff’s decision to choose state or federal court will be the type of discrimination alleged.    For example, as a result of the ADA Amendments, disability claims are more likely to end up in federal court.   Just the opposite is true, however, with respect to age discrimination claims. The Eighth Circuit’s recent decision in Clark v. Matthews International Corporation confirms that assessment.

The Plaintiff in Clark alleged age discrimination under both the federal Age Discrimination in Employment Act (ADEA) and the Missouri Human Rights Act (MHRA).   The trial court granted summary judgment to the employer on both claims. The Eighth Circuit affirmed the grant of summary judgment on the ADEA claim, but reversed on the MHRA claim.   The Court found the plaintiff’s evidence was not sufficient to generate a genuine dispute under the ADEA’s “but for” standard. However, the court declined to rule as a matter of law on the MHRA claim.    Under the MHRA, a plaintiff must prove age was a “contributing factor” in the decision, which the court concluded was less demanding than the ADEA’s standard.

The evidence in question included the following:

  • Plaintiff’s supervisor asked him if he was “just trying to make it to retirement.”
  • The same supervisor suggested to another employee that he could “always become a Wal-Mart greeter.”
  • The company sent unsolicited mailings from the AARP to employees when they turned 56 years old

The test under the ICRA is whether age was “a motivating factor” in the employment decision. This is similar to the standard under the Missouri law, and certainly less demanding that the “but for” test under the ADEA.   If Clark is any indication, it will not take much less evidence to survive summary judgment for an ICRA claim than an ADEA claim.