Legal Briefs for HR

Welcome to Legal Briefs for HR, an update on employment issues sent to over 4000 HR professionals, in-house counsel and business owners to help them stay in the know about employment issues.  Anyone is welcome to join the email group . . . just let me know you’d like to be added to the list and you’re in!  Back issues are posted on my firm’s website at www.munckcarter.com under E-Newsletter.  Welcome to new subscribers who attended my speeches for the International Game Developers Association, North Texas Compensation Association and at the State Bar of Texas annual meeting/combo session for the Business Law and Corporate Counsel sections!   

Here’s what’s hot:

1. Age Matters (Not So Much, Maybe)– Employers, take heart!  With the volume of age discrimination claims growing proportionately with the increase in cost-cutting RIFs and related measures, the Supreme Court has offered up a bit of relief.  “Old think” was that the burden-shifting method used in Title VII mixed-motive cases also applied to age discrimination claims under the Age Discrimination in Employment Act (ADEA).  The 5-4 majority, led by Justice Thomas, explained that while Congress amended Title VII (via Civil Rights Act of 1991) to OK discrimination claims where a protected status was alleged to be “a” (vs. “the”) motivating factor in an adverse employment decision, they had the opportunity but did not similarly amend the ADEA.  In fact, Congress did amend the ADEA at that time, in other respects, and the Supremes point to that as evidence that they knew what they were doing (J) and intentionally declined to sync up Title VII and the ADEA in that way.  Going forward, the burden of persuasion will not shift to the employer in these “mixed motive” ADEA cases and the employee must prove, by a preponderance of the evidence, that “but for” his/her age, the employer would not have engaged in the adverse employment action.  No longer will the employer be forced to show it would’ve taken the action anyway, in order to prevail.  Gross v. FBL Financial Services, Inc. (U.S. 6-09).
2. A Hearing About Hearing– A delivery service and five deaf employees who were denied drivers’ jobs have ended a 10-year litigation journey by settling on a one-year protocol which, if successful, may become company policy.  The company had denied drivers’ jobs to these individuals by applying U.S. Dep’t of Transportation (DOT) standards related to minimum hearing requirements even though the vehicles to be driven were less than 10,000 pounds and therefore not subject to DOT regulations.  After going up and down in the courts and sideways through three rounds of mediation, a new screening test with a threshold between zero and the DOT standard will be administered by a licensed or certified audiologist to driver applicants.  Managers who train drivers will themselves receive training in effectively communicating with hearing-impaired drivers, and the drivers must be periodically re-tested to monitor and detect additional hearing loss.  The protocol is touted as a balance between treating impaired individuals fairly while maintaining an unwavering commitment to public safety. Bates v. UPS (N.D. Cal. 6-09).   Given recent changes to the Americans With Disabilities Act coupled with expanded EEOC budgets and promises to step up enforcement activity, employers will want to carefully consider any new or revised policy which impacts the employment prospects of otherwise qualified individuals with disabilities.  If you need ideas about possible reasonable accommodations, don’t forget to check out the Job Accommodation Network (JAN) at www.jan.wvu.edu.  And stay tuned for revised ADA regulations, which were OK’d by the EEOC on June 17 and will be available for public comment shortly.
3. Mass. Says “You Will Pay”– Two recent cases in Massachusetts demonstrate the reach and relative inflexibility of state laws governing timely payment of wages and salaries to employees.  In a case deciding whether a laid off employee was entitled to unused vacation despite the employer’s “use it or lose it” and “vacation is not earned or accrued” policy statements, the state Supreme Court held that the 20-year employee was entitled to the balance of the five weeks of vacation pay he had coming to him during his last year of employment.  The employer argued that the payday statute says wages are defined as “ . . . vacation payments due an employee under an oral or written agreement” and the written policy clearly stated the employee would take nothing upon termination of employment.  The Court, however, countered that the policy was internally inconsistent because it contained a formula tied to years of service, indicating the amount of vacation received was indeed “earned” or “accrued.”  Further, the holding was not seen as inconsistent with an earlier Mass. Attorney General Opinion letter that said “use it or lose it” was OK, so long as the employee had advance notice and a reasonable opportunity to use the vacation before it was forfeited.  Since the employee was laid off, the employer had interfered with the employee’s ability to use the vacation.  The Court did not decide whether the outcome might be different, if the employee had resigned. EDS v. Mass. Attorney General (Mass. 6-09).  Many states, including Texas, default to the employer’s written policy when determining if a departing employee is entitled to pay for unused vacation.  It will be interesting to see if other states ignore or adopt this view.
4. And Pay Some More– In the second Mass. case, the co-founder and president of a newly formed corporation entered into a written agreement to waive his $144,000 salary for a year.  When the year ended and the contract expired, he sued the company for unpaid wages.  As with most states, the payday statute requires employers to pay its employees either once or twice a month, depending upon FLSA exempt or non-exempt status. It also provides for treble damages, interest, attorney’s fees and individual liability for officers and directors if a violation is found.  The Court first found that the president was an “employee” entitled to the protection of the statute and that his deferred salary was “wages” which are also subject to the statute.  Further, the statute says that rights under the statute cannot be waived via contract, making the deferral agreement void as a matter of law.  Stanton v. Lighthouse Financial Services (D. Mass. 3-09).  When devising a contractual arrangement which impacts pay, be sure that your advisor is knowledgeable in both contract law principles as well as statutory employment and tax law (IRC 409A ringing a bell?) considerations.
5. More Fun With FMLA– Do you have a policy or procedure that requires employees to produce a doctor’s note to “verify” an absence within three day or be subject to termination of employment?  If you do and you’re an FMLA employer (i.e., 50 employees anywhere in the U.S.) then be careful of the circumstances under which you or your managers invoke that rule.  A court found that an employer had interfered with a call center employee’s FMLA rights, where she was about to be discharged based on an attendance points system unless she could produce a doctor’s note to verify the absences within three days.  Unfortunately for the employer, they had already deemed her eligible for intermittent FMLA based on documents diagnosing two types of depression.  The FMLA’s medical certification procedures can be waived, but if invoked require the employer to give the employee at least 15 days (not 3) in which to respond.  Smith v. CallTech Communications LLC (S.D. Ohio 6-09).
6. Who’s the Boss? – A company may be liable for co-worker harassment where it knew or should’ve known about open and pervasive conduct that creates a hostile work environment.  Courts often find that the employer knew or should’ve known if management level employees had actual or constructive knowledge of the misconduct, but just who is “management?”  In a recent case, the court decided that knowledge was not imputed to the employer where the acts were witnessed, but not reported, by two team leaders whose duties involved overseeing production in a manufacturing environment and who did not have hire, fire or disciplinary authority. Oh, and it also helped tremendously that once the plaintiff reported the incidents to HR, they hopped on it that day and did a swift investigation followed by prompt remedial action.  The court further clarified, relying on the definition of “agency,” that those whose knowledge of misdeeds will be imputed to the employer are those whose knowledge of the fact is material to the agent’s duties, such as  someone who is “sufficiently senior in the employer’s governing hierarchy, or otherwise in a position of administrative responsibility over employees under him, such as a department or plant manager”  or an employee who is “specifically employed to deal with sexual harassment” such as those working in the HR department.  Huston v. Procter & Gamble Paper Products (3^rd Cir. 6-09).  A prompt and effective remedial response to harassment can be a “silver bullet” against employer liability, so be sure that those whose duties squarely put them in the agent category have received the proper training to identify what acts cross the line and what they should do about it.  Pronto!
7. Assignment Axed – A federal court in CA found that an overbroad assignment clause signed upon hire violated the State’s prohibition on noncompetes.  The employees signed a document stating that any invention disclosed by the employee within one year of termination of employment was presumed to be conceived during employment and would be assigned back to the employer if it related to work done for the employer.  Problem?  The clause applied even if the idea was conceived before the employees worked for the employer and whether or not they improperly used or disclosed the employer’s confidential information.  Applied Materials v. Advanced Micro-Fabrication Equipment Company (N.D. Cal. 5-09)   Noncompetes are creatures of state law and vary widely in terms of the elements of enforceability . . . in most states, you can use ‘em, but be sure they are drafted properly, imposed at the right time and supported by adequate and proper consideration. 
8. Heads’ Up, SC and MS– Mandatory use of E-Verify for certain federal contractors may still be on ice (See LB4HR#5-2009) but some states already require some or all employers to use it and others are coming on line.  South Carolina employers of 100+ will be required to use E-Verify on new hires starting July 1, 2009.  Mississippi is phasing in the requirement, with the next step adding private sector employers of 100+ to the mix, effective July 1, 2009.
9. Heads’ Up, Everybody in Interstate Commerce – The federal minimum wage takes its third and final (for now) increase to $7.25/hour on July 24, 2009.  Many states have minimum wage rates which exceed the federal requirement.  You can check out those state law variations at www.dol.gov/esa/minwage/america.htm.  Note that the U.S. Dep’t of Labor-provided chart was last updated on January 1, 2009 so double-check your states’ legislative websites to ensure there is no intervening legislation providing for a different hourly rate. 
10. You Talkin’ to Me? Which One?-  Although an employee claimed his religion caused him to be three separate beings (i.e., a trust created by the Social Security Administration to generate assets for the U.S. Government, the trustee of that trust, and a steward who lends his consciousness and physical abilities to said trust), the employer was not required to accommodate this, um, unholy trinity where it amounted to undue hardship.  The employee would alternate between entities in his email correspondence internally and with customers and, of course, he claimed he was exempt from paying taxes.  Discharge from employment followed his disregard of counseling and subsequent flat refusal to comply with workplace standards for professional communications.  In holding for the employer, the court agreed that it would not be a reasonable accommodation to allow behavior that jeopardized customer relationships, risked IRS liability, caused problems with co-workers and took WAY too much of HR’s time to try and resolve.  Lizalek v. Invivo Corp. (7^th Cir. 3-09).
11. For the Birds– If you like being “tweeted” and want breaking news on employment law changes, follow me on Twitter.  I’m at @amross. 
     

Until next time,

Audrey E. Mross
Labor & Employment Attorney
Munck Carter LLP
600 Banner Place
12770 Coit Road
Dallas, TX  75251

972.628.3661 (direct)
972.628.3616 (fax)
214.868.3033 (iPhone)
amross@munckcarter.com
www.munckcarter.com

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