“I Did Not Inhale” Is Not An Excuse, May 28, 2010
A federal trial court in New York recently was asked to resolve the following issue: “Can a government employee in a sensitive homeland defense position whose blood tested high for marijuana avoid being fired by testifying that he did not imbibe the drug, but absorbed it inadvertently from others smoking the substance?” In other words, can an employee avoid the consequences of a positive drug test by explaining that he did not inhale, but rather, is a victim of second hand smoke exposure (the politically correct term apparently is “passive inhalation.”) The answer in this case was “no.” The court recognized there are well-established cutoff levels in drug tests to account for false positives that can be triggered by passive inhalation. This Lead TSA Officer’s drug test results surpassed that cutoff. Better luck next time. The case is Sutera v. Transportation Security Administration, No. 09-CV-2351 (E.D.N.Y. Apr. 30, 2010).
“Employee Labor Rights Notice” Replaces “Beck Notice” Requirements, May 26, 2010
On May 20, 2010, the Department of Labor issued its final rule mandating certain federal government contractors and subcontractors to notify employees of their rights under the National Labor Relations Act. This new Notice requirement replaces the long-standing Beck Notice that the Obama administration had repealed in January 2009. The new Notice informs employees of, among other things, their right to organize; to bargain collectively with their employer; to choose not to join in union activities; and of protection from certain categories of employer and union misbehavior. The final rule mandates that the Notice be posted physically and electronically (if the employer customarily posts notices to employees by electronic means). The new Notice clause will be included in government solicitations issued on or after June 19, 2010. A copy of the new Notice can be downloaded from the DOL website: http://www.dol.gov/olms/regs/compliance/EO13496.htm.
Employer’s Failure To Investigate A Complaint of Discrimination Is Not An Adverse Employment Action For Purposes Of A Retaliation Claim, May 25, 2010
Cynthia Fincher worked as an auditor for a company and had complained to a Senior Director that “black people were set up to fail” in the Auditing Department because they were not provided equal training opportunities as white co-workers. Ms. Fincher asked this the director if he would be responding to her complaint. He advised no. After some other events transpired, Ms. Fincher resigned and sued her former employer for a variety of claims, including retaliation.
With respect to her retaliation claim, Ms. Fincher alleged the company’s failure to investigate her internal complaint of discrimination was the adverse employment action she suffered. Recognizing that an adverse employment action is one that might dissuade a reasonable worker from making or supporting a charge of discrimination, the Second Circuit Court of Appeals held that an employee whose complaint of discrimination is not investigated has not suffered an actionable penalty for bringing that complaint because the employee is in no worse of a position than she would have been had she not complained at all, or if the employer investigated the complaint and found it to be unsubstantiated.
While employers must not shirk their responsibility to investigate claims of harassment or discrimination, legally, the failure to investigate an alleged complaint of harassment is not, by itself, an adverse employment action that can support a retaliation claim.
Maryland State Employees Will Receive Health Care Benefits For Same-Sex Spouses Married in Other States, May 24, 2010
On May 19, 2010, the Maryland Department of Budget and Management (DBM) announced that health care benefits for active and retired Maryland state employees are being extended to same-sex spouses who were married in another state. According to the DBM notice, state employees who possess a valid same-sex marriage certificate from another state have until the close of business June 2, 2010 to submit an enrollment form. Following enrollment, employees will have to submit a copy of the marriage certificate and a Spouse Tax Affidavit, which is required for both same-sex and opposite-sex marriages. State employees who marry same-sex partners after the open enrollment period ends will be able to add their spouses to their health plans pursuant to the state’s usual qualified family status change process.
In February of this year, the Maryland Attorney General’s office issued a legal opinion concluding that Maryland should recognize same-sex marriages legally performed in other states. Those other states presently include Massachusetts, Connecticut, Iowa, Vermont, New Hampshire, and the District of Columbia. Maryland made domestic partner benefits available to state employees last year.
Corporate Officer Liable for Breach of Fiduciary Duty, May 21, 2010
A recent case out of the Southern District of Ohio illustrates the importance of an employer making full contributions to all applicable union benefit plans. In Road Sprinkler Fitters Local Union 669 v. Dorn Sprinkler Comp., the federal court ruled that David Dorn, Dorn Sprinkler’s chief executive officer, breached his fiduciary duties to benefit plan participants by failing to make the corporation’s employer contributions to certain union benefit plans.
Dorn Sprinkler was a participant in four union benefit plans, which required it to make certain employer contributions to the plans. In the fall of 2006, Dorn Sprinkler fell on hard times and, as a result, did not make the required employer contributions between October 2006 and January 2007. The union subsequently filed suit against, inter alia, Dorn individually alleging that Dorn breached his fiduciary duties to the plans and their participants.
The court ruled that Dorn was a fiduciary as defined by ERISA and, thus, personally liable. First, he exclusively made all the financial decisions for Dorn Sprinkler and had check writing power. Second, and more importantly, the court ruled that the employer contributions due but not yet paid were plan assets (as defined by ERISA) for the two plans that explicitly defined them as such. Those plans provided that employer contributions that have been paid or will be paid, or which are due and owing to the plan, are considered plan assets. As a result, Dorn was liable for the company’s failure to make the plan contributions notwithstanding the fact that the company used the money to pay other creditors.
This case offers a compelling reminder why a corporate officer needs to ensure that certain payments are made even if it means closing the business sooner rather than later. Certain obligations (such as the plan contributions set forth above and trust fund taxes) can create personal liability for a corporate officer. A prudent executive should be aware of this when his or her company has trouble meeting its obligations.
Jury Awards $250M In Sex Discrimination Lawsuit, May 21, 2010
On Wednesday, a federal jury in Manhattan ruled that Novartis Pharmaceuticals Corporation engaged in a pattern of discrimination against women. The nationwide class action brought in the Southern District of New York by female sales representatives alleged sex discrimination in pay, promotions and pregnancy leave. The jury awarded the twelve testifying plaintiffs $3.3 million in compensatory damages, and awarded the class $250 million in punitive damages. The punitive damage award is approximately 2½ % of Novartis’ 2009 revenue.
The ruling permits over 5,500 class members to apply for compensatory damages. Furthermore, back pay and emotional damage awards, along with non-monetary relief, still need to be resolved. Not surprisingly, Novartis intends to appeal.
This case exemplifies the importance of having in place adequate discrimination policies and the continual monitoring of those policies.
EFCA Update- With Little Chance to Pass the Senate, Obama Administration Looks to Boost Union Membership Through NLRB Rulings, May 21, 2010
By John S. Bolesta
Two weeks ago, the AFL-CIO took down the huge banner calling for passage of "card check" legislation from the side of its Washington headquarters (possibly in response to a union grievance citing the AFL-CIO’s employees’ right to offices with windows). Although hysterical in its own right, the removal also signals a possible shift in the union’s strategy to ram EFCA down our throats.
Facing more losses in the Senate with the upcoming midterm elections, unions have started to publically acknowledge that their top legislative priority—to eliminate the secret ballot in workplace elections—won't pass the Senate this year. Never ones to place the democratic process above their own policy objectives, unions are now looking to the Obama Administration to give them what they want through the back door.
As the "card check" bill stalled, President Obama resorted to his plan “B” by giving Craig Becker a recess appointment to the National Labor Relations Board. A long-time lawyer for the Service Employees International Union, Mr. Becker has said the NLRB can rewrite union-election rules without Congressional approval, including the elimination of secret ballots. The Senate blocked his confirmation, but Mr. Obama placed Becker on the board via the recess appointment process. Becker was a controversial choice for the board, as he thinks management should have little or no say in workplace organizing (Becker once wrote “Employers should have no right to be heard in either a representation case or an unfair labor practice case.”).
Currently, there are several important issues pending before the NLRB, including:
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• A petition by seven unions to require employers to bargain with unions that represent less than a majority of the employer's workers. Right now businesses need only recognize a union if it represents a majority;
• The time between when a petition for a unionizing vote is accepted by the NLRB and when the vote is actually held could be shortened;
• Employers could also be forced to turn over employee contact information and give unions equal access to workplaces during organizing drives, says Steven Hill, director of the political reform program at the New America Foundation and co-author of the Nation article;
• Another possible change is an expansion of what is called a Gissel order. This is used when the NLRB decides that a business acted so illegally in fighting an organizing effort that it orders the firm to bargain with the union. Rarely used, it could become more common under the new NLRB.
With EFCA stalling in Congress, expect the newly minted NLRB to rule in big labor’s favor on the above issues and increase union membership through union-friendly rulings.
Maryland Proposal Highlights Teacher Accountability, Union Freaks Out, May 21, 2010
By John S. Bolesta
Al Shanker, former president of the American Federation of Teachers, was once quoted as saying, “I don’t represent the children. I represent the teachers.” Proving that this sentiment remains alive and well, Maryland's biggest teachers' union says it has "serious concerns" with the state's draft Race to the Top application, putting a roadblock in the state's quest to win $250 million in federal grants.
The Maryland State Education Association (MSEA) sent a letter to state school Superintendent Nancy S. Grasmick on Thursday detailing its objections to the proposal, which would make student growth half of teacher evaluations, among other changes. The union questions whether that is within the bounds of the education reform law that Gov. Martin O'Malley signed earlier this week. The union has also questioned they're lack of involvement in the planning process. Because the Department of Education has made teachers' union support a factor in how it evaluates Race to the Top proposals, MSEA’s lack of support could effectively kill the state’s application.
While this may sound ridiculous (it is), Marylanders should feel fortunate. Some states, such as New York, have gone even further in their support of unions by enacting statutes that preclude any consideration of student growth when conducting teacher evaluations (in New York’s case, for tenured teachers only). With laws like these, it’s easy to see why 51% of Americans are unable to name the three branches of government.
9th Circuit Opinion Clarifies Reach of FLSA on Tip Pooling Arrangements, May 21, 2010
By John S. Bolesta
On Feb. 23, 2010, the U.S. Court of Appeals for the 9th Circuit, in a 3-0 panel decision, held that an agreed-to tip pool requiring sharing of tips with several “back of the house” employees does not violate the Fair Labor Standards Act (FLSA) where no tip credit against the minimum wage is claimed. Cumbie v. Woody Woo, Inc., 596 F.3d577 (2010).
In Cumbie, an Oregon employer required its wait staff to pool all tips and redistribute a majority of the tips to “back of the house” staff. Under Oregon law, the employer was prohibited from claiming a tip credit against the minimum wage, but was not prohibited from requiring an employee tip pool. Significantly, the employer paid its servers in excess of Oregon’s minimum wage. The Cumbie decision makes clear that, as long as the employer does not attempt to take a tip credit and pays at least the minimum hourly wage, an employer may, without violating the FLSA, permissibly mandate tip pooling with employees who do not customarily and regularly receive tips.
The court’s decision may provide employers in the hospitality and restaurant industry leverage to broaden their tip pools to “back of the house” employees while reducing wage costs, so long as the wages paid meet or exceed the federal and state minimum wage. Of course, before formulating any tip pooling arrangement, employers should engage counsel to determine whether such arrangements are permissible under state law.
Ricci, Part Two, May 14, 2010
The recent and well known Supreme Court decision in Ricci v. DeStefano, 129 S. Ct. 2658 (2009), has thwarted an African-American firefighter’s disparate impact claim based on the same promotional tests examined in the original Ricci litigation.
In Ricci, white and Hispanic firefighters claimed that the failure by New Haven officials to certify promotional examination results constituted discriminatory disparate treatment as prohibited by federal law. The Supreme Court agreed and ruled that the city must have a “strong basis in evidence” to believe that it will be subject to disparate impact liability before it can engage in race-based discriminatory treatment.
In the wake of Ricci, Michael Briscoe, an African-American firefighter, filed suit and claimed that those same tests had a disparate impact on African-Americans. The federal court ruled that while Briscoe’s claims were “appealing,” they were foreclosed by the Supreme Court’s Ricci decision.
While this may or may not be the end of the controversy surrounding New Haven’s promotional tests, it certainly portends the likely fight between disparate impact and disparate treatment claims.
Don't Stay With Friends Who Smoke Dope, May 6, 2010
A federal appeals court has upheld the termination of an airport screener by TSA for testing positive for marijuana. Sutera v. TSA, No. 09-CV-2351 (E.D.N.Y., April 30, 2010). The employee had maintained that he never smoked marijuana, but did stay with a friend who did. He even added that we had urged his friend to quit.
The court pointed out that the TSA screener was in a sensitive position and knew he would be tested for marijuana. While he may not have known that exposure to second hand smoke could cause a positive drug test, that was his problem, not his employer's. Good decision.
Viva the Green Revolution, May 5, 2010
The Secretary of Labor recently addressed one of her favorite constituencies – a meeting of Big Labor, anti-employer special interests – and stated that the Obama Administration has made big investments in education and worker training to prepare workers for some sort of “green revolution.” Secretary Solis, however, pointed out that DOL is still working on a definition of a green job, so it is difficult to understand what she is talking about at this point.
The Secretary did use this speech, an address to the Blue-Green Alliance -- a group that include the Steelworkers Union, Laborers Union, Communications Workers of America, the Service Employees International Union, the Utility Workers Union, the American Federation of Teachers, the Sheet Metal Workers' International Association, and the Amalgamated Transit Union – to bash employers. Her remarks undoubtedly were met with thundering applause.
Money for Incarcerated Veterans? May 5, 2010
While supporting veterans is hardly a controversial subject, one has to wonder why the federal government is spending $4 million to support criminal veterans. The Department of Labor has announced grants designed to support incarcerated veterans who are at risk of becoming homeless. The grants will fund employment referral and counseling services for such veterans.
“Troublesome Employee” Is Not Victim of Age Discrimination, May 4, 2010
A federal appeals court ruled recently that an employee had not proven age discrimination in a “failure to rehire” case because he failed to show that the reason offered by his former employer for not rehiring him – basically that he was a jerk – was a pretext for discrimination. Viergutz v. Lucent Techs. Inc., No. 08-3626 (6th Cir., April 23, 2010). The case, which undoubtedly cost the company a small fortune to defend, illustrates the problem of waiting to deal with problem employees.
The employee in this case had worked for the company for several years, compiling a reputation as a troublesome employee. Instead of firing him, the company took advantage of an opportunity to lay him off presented by business circumstances. When the former employee applied for a job opening, the company decided it did not want him back. Unfortunately, because the employee had been “laid off” rather than “discharged,” the employee was able to make out a case of age discrimination that the company had to rebut.
If possible, discharge poor employees, rather than look for opportunities to lay them off. Face the issue sooner, rather than later.
Challenges to Arizona Immigration Law Filed, May 1, 2010
Just six days after Arizona Governor Jan Brewer signed Arizona S.B. 1070 into law, two lawsuits have been filed challenging the new law. Arizona S.B. 1070 makes it a state crime to be in Arizona in violation of federal immigration laws, and it allows state and local officials in certain situations to inquire into the immigration status of any person is there if there is "reasonable suspicion" to believe a person is in the United States illegally.
One lawsuit, filed by the National Coalition of Latino Clergy and Christian Leaders, claims Arizona S.B. 1070 is unconstitutional because it conflicts with federal immigration law and will lead to racial profiling and civil rights violations. They also allege the new law will lead to national origin and race discrimination in violation of Title VII of the 1964 Civil Rights Act. The second case, filed by a self-identified Hispanic police officer, alleges Arizona S.B. 1070 is the “result of racial bias and anti-Hispanic beliefs and sentiments.” The police officer also contends the new law is unconstitutional and preempted by federal immigrations law. The lawsuits seek injunctions which either prevent the law from taking effect or prevent its enforcement.
Based on the amount of controversy Arizona S.B. 1070 has managed to stir up, more legal challenges are certain to follow.
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