2. UNITED STATES SUPREME COURT
Employment Cases Decided by the United States Supreme Court
A. States May Mandate Employer Participation in E-Verify.
Chamber v. Whiting, 131 S. Ct. 1968 (2011). On May 26, 2011, the
Supreme Court upheld an Arizona law that mandates employer participation
in E-Verify and provides for the suspension or revocation of business
licenses of employers who knowingly or intentionally employ unauthorized
workers. In a 5-3 opinion, the Court held that federal immigration laws do
not preempt the Arizona law and upheld the statute as constitutional.
E-Verify is a computerized employment eligibility verification system that
the federal government implemented in 1996. The federal Illegal
Immigration Reform and Immigrant Responsibility Act grants employers
who use E-Verify to confirm a worker’s eligibility a rebuttable presumption
that the employer did not hire undocumented workers in violation of federal
law. The employer can raise this rebuttable presumption in court as a defense
to charges that the employer violated federal law prohibiting the hiring of
unauthorized workers.
In 2007, Arizona enacted the Legal Arizona Workers Act (LAWA) which
prohibits employers from knowingly or intentionally hiring undocumented
workers to perform services in Arizona. Employers who violate the law may
have their business license suspended for the first offense, and face the
mandatory revocation of their license for the second offense. LAWA also
makes the use of E-Verify mandatory for employers doing business in
Arizona. An employer who does not use E-Verify forgoes the rebuttable
presumption that it did not knowingly or intentionally hire an unauthorized
worker.
Several other state legislatures, including Georgia, have also implemented
their own laws imposing sanctions for employing unauthorized workers and
mandating the use of E-Verify by employers.
The Court’s decision in Chamber gives all states the “go ahead” to enact
separate legislation similar to LAWA, aimed at penalizing employers for
employing undocumented workers. Whether Congress will attempt to unify
states’ approach – possibly through a nationwide mandate on E-Verify –
remains an open question.
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
3. B. Oral Complaints Are Sufficient Under the FLSA’s Anti-Retaliation
Provision.
Kasten v. Saint-Gobain performance Plastics Corp., 131 S. Ct. 1325 (2011).
On March 22, 2011, the Court held that that anti-retaliation provision of the
Fair Labor Standards Act (FLSA) included oral, as well as written,
complaints.
The FLSA provision at issue in Kasten prohibits an employer from
discharging or in any other manner discriminating against an employee
because he has “filed any complaint” or instituted any proceeding under or
related to the FLSA. Prior to the Court’s decision, there was a split in the
circuits concerning the following issues: (1) whether the term “filed any
complaint” includes complaints to the government only or internal
complaints to the employer as well, and (2) whether “filed any complaint”
requires that the complaint be in writing.
The plaintiff in Kasten worked at a manufacturing plant. He claimed that his
employer issued him warnings and suspended him in retaliation for a
complaint he had made, i.e., he told his supervisors and a human resources
generalist that the location of the time clocks was illegal because it prevented
employees from being paid for time spent donning and doffing their required
protective gear. On review, the Court held that oral complaints are protected
activity under the FLSA’s anti-retaliation provision. Still, the Court found,
the term “filed any complaint” contemplates “some degree of formality,
certainly to the point where the recipient has been given fair notice that a
grievance has been lodged and does, or should, reasonably understand the
matter as part of its business concerns.” Thus, the Court held that a
complaint is “filed” when “a reasonable, objective person would have
understood the employee to have put the employer on notice that the
employee is asserting statutory rights under the Act.”
The Court stated that it expressed no view as to whether the FLSA’s anti-
retaliation provision protected only complaints filed with the government or
also encompassed internal complaints made to the employer.
The Kasten decision likely will result in increased retaliation claims under
the FLSA. Because the Court did not decide whether internal complaints are
covered by the anti-retaliation provision, the most conservative approach is to
assume that internal complaints concerning potential FLSA violations are
protected and to update policies and complaint procedures accordingly.
C. California Class Action Arbitration Waiver Enforceable.
AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011). In a 5-4
decision, the Court upheld the enforceability of class action arbitration
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
4. waivers. Prior to this decision, the enforceability of such waivers was often
challenged. The California Supreme Court previously held that a consumer
arbitration agreement prohibiting class arbitrations was unconscionable. In
Concepcion, the Court found it improper for a court to impose class
arbitration where an agreement expressly prohibited it. State law rules such
as these, the Court concluded, ran counter to the FAA’s objectives of
enforcing arbitration agreements in accordance with their written terms.
Further, the Court noted, class arbitration is inconsistent with the main goal
of arbitration, i.e., to “facilitate streamlined proceedings.” Another key
feature of arbitration, the Court recognized, is “that parties may agree to limit
the issues subject to arbitration … and to limit with whom a party will
arbitrate its disputes.” The “informality of arbitral proceedings is itself
desirable, reducing the cost and increasing the speed of dispute resolution.”
Imposing class arbitration upon unwilling parties interfered with that goal.
D. Plaintiffs Will Find It More Difficult to Certify Employment Class
Actions.
Wal-Mart, Inc. v. Dukes, 131 S. Ct. 2541 (2011). A nationwide class of
approximately 1.5 million female employees of Wal-Mart brought a Title VII
action against the company alleging sex discrimination and seeking
injunctive and declaratory relief, back pay, and punitive damages. The
employees claimed that local managers exercised discretion over pay and
promotions disproportionately in favor of men which had an unlawful
disparate impact on female employees, and that Wal-Mart’s refusal to control
its managers’ authority constituted disparate treatment.
At issue in the case was whether the lower courts properly granted the
plaintiffs’ class certification. Rule 23(a)(2) of the Federal Rules of Civil
Procedure provides the requirements that plaintiffs must meet to obtain class
certification. One requirement is that plaintiffs show that the class has
common “questions of law or fact.” As the Court recognized, this
requirement is “easy to misread, since ‘[a]ny competently crafted class
complaint literally raises common ‘questions.’” Rather, the Court ruled,
“claims must depend upon a common contention – for example, the assertion
of discriminatory bias on the part of the same supervisor. That common
contention, moreover, must be of such a nature that it is capable of classwide
resolution – which means that determination of its truth or falsity will resolve
an issue that is central to the validity of each one of the claims in one stroke.”
In the Dukes case, the Court observed, the plaintiffs sued Wal-Mart based on
millions of employment decisions at once. “Without some glue holding the
alleged reasons for all those decisions together, it will be impossible to say
that examination of all the class members’ claims for relief will produce a
common answer to the crucial question why I was disfavored.”
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
5. One way in which plaintiffs may connect all of the decisions at issue is to
provide “significant proof that Wal-Mart operated under a general policy of
discrimination.” However, the Court found, such proof was entirely absent.
Wal-Mart’s policy forbids sex discrimination, and the company imposes
penalties for denying equal employment opportunities. The only corporate
policy that the plaintiffs established is Wal-Mart’s “policy” of giving local
supervisors discretion over employment matters. This, the Court reasoned,
“is just the opposite of a uniform employment practice that would provide the
commonality needed for a class action; it is a policy against having uniform
employment practices. The Court also recognized that delegating decision-
making authority is a “very common and presumptively reasonable way of
doing business.”
The Court found that the plaintiffs failed to identify “a common mode of
exercising discretion that pervades the entire company,” and concluded that
“it is quite unbelievable that all managers would exercise their discretion in a
common way without some common direction.” In an attempt to make such
a showing, the plaintiffs relied on evidence of statistical disparities between
pay and promotion rates for men and women across multiple job groups and
locations. On the other hand, Wal-Mart highlighted the absence of any
disparity at most individual locations. The Court rejected the plaintiffs’
statistical evidence, concluding that disparities at the regional and national
level did not establish disparities at individual locations. Further, even if the
plaintiffs established pay or promotion disparities at all of Wal-Mart’s 3,400
stores, they still could not identify a “specific employment practice” that
caused the disparities. The Court also rejected the plaintiffs’ reliance on
anecdotal evidence to establish commonality because they had only provided
statements from about one in every 12,500 class members relating to 235 out
of Wal-Mart’s 3,400 stores.
In addition to meeting the requirements of Rule 23(a), the class must also be
certified under one of the categories set forth in Rule 23(b). The Court
concluded that the plaintiffs’ individualized claims for backpay were
improperly certified under Rule 23(b)(2). According to the Court, Rule
23(b)(2) applies “only when a single injunction or declaratory judgment
would provide relief to each member of the class.” It does not apply when
each individual class member would be entitled to a different injunction or
declaratory judgment against the defendant, or to an individualized award of
monetary damages. Rather, plaintiffs’ individualized monetary claims
belonged in Rule 23(b)(3) which contains additional procedural safeguards
that plaintiffs could not meet.
Thus, the Court’s ruling in Dukes will make it more difficult for plaintiffs to
certify employment class actions where the decisions of multiple supervisors
and managers are at issue.
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
6. NATIONAL LABOR RELATIONS BOARD
A. Mandatory Arbitration Clause Not Applicable To Class Actions.
In a decision issued on January 3, 2012, in D.R. Horton & Michael Cuda,
Case 12-CA-25764 (dated Jan. 3, 2012), a two-member panel of the NLRB
held that an employer violates the National Labor Relations Act (“NLRA”)
when it requires employees covered by the NLRA (i.e., most non-supervisory
and non-managerial employees of most private sector employers, whether
unionized or not) to agree, as a condition of employment, to binding
arbitration of any disputes or claims arising out of their employment if the
arbitrator is restricted to hearing only an individual claim, not a class or
collective action. The Board found that a compulsory waiver of a class or
collective action unlawfully restricts the rights of employees to engage in
concerted activity for their mutual aid and protection, notwithstanding the
provisions of the Federal Arbitration Act.
D.R. Horton appears to conflict with Supreme Court and federal case law
precedent on the matter. However, if upheld, it may affect employers that
have not considered themselves vulnerable to the NLRB’s reach in at least
three significant respects:
First, the decision is not restricted to assessing “protected concerted activity”
in terms purely within the NLRA. Rather, it transcends the NLRA to examine
whether there has been interference with the exercise of employee rights
under the Fair Labor Standards Act, a statute interpreted and vigorously
enforced by the Department of Labor but not the NLRB.
Second, it may presage even greater interest by the NLRB in matters that
have been regarded as the exclusive province of other administrative agencies
charged by Congress to interpret and/or enforce legislation, including the
assertion of substantive rights and protections against retaliation.
Third, D.R. Horton stands to affect all employers covered by the NLRA –
even if none of the employer’s employees are represented by a union.
What Employers Should Consider Now
Employers should note that the NLRB decision only affects employees
covered by the NLRA (whether they are union-represented or not). While
“covered employees” can include individuals in addition to members of a
collective bargaining unit, the term does not cover supervisors or certain
other employees in an organization. Thus, even if the D.R. Horton panel
decision stands, employees who are who are not covered by the NLRA could
still be required as a condition of employment to agree, in writing, to use only
individual arbitration proceedings to pursue employment claims.
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
7. Following are some considerations for an employer’s covered employees:
• As a precaution in the event of challenge to a mandatory individual
arbitration policy, some employers may decide to include specific
language in their arbitration agreements to allow individual binding
arbitration to go forward under the terms of the agreements should a
ban on class and collective arbitration be found unenforceable.
Nevertheless, this position could be rejected by the NLRB unless
there is a shift in its prevailing view.
• Employers may wish to act in consonance with D.R. Horton but
attempt to rewrite their arbitration agreements for covered employees
to be as procedurally restrictive as possible, such as in defining the
standards for a class. However, great caution would be required, as
such measures as shifting expenses for class and collective actions to
the parties seeking class status, or adding damage restrictions that
could minimize exposure to large awards, might contravene the
procedural safeguards required by courts for enforcement of
arbitration clauses covering statutory employment rights and
remedies.
Employers may wish to bide their time, hoping for a reversal of D.R. Horton
by a federal appellate court.
B. Employers Required To Post A New Notice For Employees.
A new rule issued by the NLRB requires that all employers subject to NLRB
jurisdiction post a notice, both physically and possibly electronically,
advising employees of their rights under the NLRA. The content of the
Notice can be found at https://www.nlrb.gov/poster. The date when the
Notice was required to be posted was November 14, 2011; following legal
challenges it has been postponed to April 30, 2012.
C. Easier For Unions To Organize Small Groups Of Employees.
In a decision released on August 30, 2011, the NLRB signed off on a
decision making it easier for unions to organize small groups of employees.
Specialty Healthcare & Rehab. Ctr., 357 NLRB No. 83. The Board’s
decision states that when a group of employees or union petitions for an
“identifiable” group of employees, that unit should be an appropriate unit
unless the employer (or another interested party like another union)
demonstrates that excluded employees in a larger unit share “an
overwhelming community of interest with those in a petitioned for unit”.
The NLRB is signaling that a union’s expressed desire to represent some
subset of the employee population - such as one job classification, or one
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
8. department - should control absent overwhelming evidence that the requested
unit would constitute a “fractured” unit.
D. Second Social Media Report Issued By General Counsel’s Office.
Cases related to social media continue to confront the NLRB. On January
24, 2012, the acting General Counsel of the NLRB issued a second social
media report to help provide further guidance to practitioners and human
resource professionals. The report is important because, ultimately, it is the
NLRB General Counsel who decides which employee charges of unfair labor
practices to prosecute.
The report reiterated two main principles set forth in an earlier report issued
by the General Counsel’s office:
1. Employer policies should not be so broad such that they prohibit,
discourage or chill activity that is protected by Section 7 of the National
Labor Relations Act (“NLRA”) (e.g., discussion of wages or working
conditions). Specifically, the report made clear that:
• Specific examples of the type of conduct prohibited should be included in
any social media policy (i.e., do not disclose “trade secrets”, as opposed
to do not post “sensitive information” about the company).
• The policy should carefully carve out and protect employee’s specific
rights under NLRA; a general saving clause is insufficient.
• The policy should not use vague terms like “appropriate” or
“professional” without providing clear definitions for those terms.
2. Employee comments on social media networks generally are not
protected if those comments are mere complaints about or general
dissatisfaction with the job (e.g., “I hate my job!” or “My boss is mean!”).
According to the report, the comments will be protected if they are associated
with an expression of shared concern, such as a dialogue about how bad the
work environment is and what employees can do to fix it in response to a
single employee’s wall post about the job.
FEDERAL LAW DEVELOPMENT
A. Record Number of EEOC Charges Filed In 2011.
For the fiscal year ending on September 30, 2011, the EEOC reported a
record number of charges filed with the Commission. Following is a
summary of the statistics reported by the EEOC for 2011:
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
9. • The EEOC received a record 99,947 charges of discrimination, the
highest number of charges in the agency’s 46-year history.
• EEOC staff also delivered historic relief through administrative
enforcement, totaling more than $364.6 million in monetary benefits
for alleged victims of workplace discrimination. This is also the
highest level obtained in the Commission’s history.
• 5.4 million individuals in both the private and federal sectors
benefitted from changes in employment policies or practices in their
workplace during the past fiscal year because of the EEOC’s
enforcement programs.
• Public outreach and education programs reached approximately
540,000 persons directly.
• EEOC field legal units filed 261 lawsuits: 23 of which involved
allegations affecting large numbers of people; 61 had multiple victims
(less than 20); and 177 were individual lawsuits.
• The EEOC’s private sector national mediation program obtained more
than $170 million in monetary benefits for complainants, and secured
the highest number of resolutions in the history of the program -
9,831. This is five percent more than the number of resolutions
reported in fiscal year 2010.
• In the federal sector, the EEOC resolved a total of 7,672 requests for
hearings, securing more than $58 million in relief for parties who
requested hearings. It also resolved 4,510 appeals from final agency
determinations.
The statistics are a stark reminder that a poor economy may contribute to an
increase in discrimination-based lawsuits. Employers should protect
themselves by implementing policies and procedures that are compliant with
federal, state, and local law, and providing discrimination training for
managers, supervisors, and other relevant personnel.
B. Maintaining Employee Privacy for Multi-State Employers.
Employers should be aware of their obligations and restrictions regarding the
collection, storage, use, and transfer of an employee’s personal information.
However, for multi-state employers, the laws, rules, and regulations can be
difficult to navigate because requirements may vary from state-to-state.
Following is a summary of some of the basic rules that all multi-state
employers should follow:
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
10. 1. Protected Employee Information.
As a general rule, personally identifiable information (commonly referred to
as “personal data” or “personal information”) is given special status and
protection by privacy laws. This type of information typically includes data
that identifies or is linked to an identifiable living individual, such as a name
or Social Security number, or that, when combined together, could
reasonably identify an otherwise unknown individual, such as a birth date,
gender, and postal code taken together.
Most privacy laws exempt personal data that has been encrypted. However,
certain types of “sensitive data” may be given enhanced protection,
including, but not limited to, race, ethnicity or national origin, political
opinions or associations, union membership, sexual orientation, marital
status, health-related information, and criminal history.
Note: Generally, privacy laws are not restricted to protecting active employee
information, but may require the employer to protect such information for a
stated period of time (e.g., 1 year, 3 years) after the employee’s employment
has terminated. In addition, the privacy laws may protect not just employees,
but applicants (regardless whether the applicant is hired or retained),
consultants, and independent contractors.
2. Applicable Law.
Most U.S. states and territories have enacted data breach notification laws in
some form. Many of these laws are identity-theft protection measures that
generally impose an obligation to protect Social Security numbers and similar
personal data against unauthorized use or disclosure and require secure
destruction of such data.
The laws of each state may vary, sometimes significantly. For example,
since March 1, 2010, Massachusetts requires most companies to adopt a
written security policy that meets certain standards to protect a broad range of
personal data collected from customers and employees who reside in the
state. A compliant plan requires not only security measures, such as
encryption of personal data stored on portable devices, but also training and
oversight of vendors who have access to the data.
In addition, a few U.S. federal statutes protect specific types of personal
information. The most important of these for employers are the (1) Health
Insurance Portability and Accountability Act, covering certain health-related
information (although employers that do not provide health services are not
generally covered by the HIPAA rules, they may nevertheless be subject to
the act’s restrictions in their capacity as administrators of a health plan); (2)
the Genetic Information Nondiscrimination Act, which applies specifically to
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
11. genetic information; and (3) the Fair and Accurate Credit Transactions Act
(“FACTA”), designed to protect consumer credit information.
Note: FACTA is an amendment to the Fair Credit Reporting Act that allows
consumers to request and obtain a free credit report once every twelve
months from each of the three nationwide consumer credit reporting
companies (Equifax, Experian and TransUnion).
3. Other Considerations.
Employers should consider all legal requirements, whether local, state, or
federal, that may impact their data privacy policies and procedures. For
example, employee record-retention rules, “whistleblower” statutes, and
restrictions on monitoring or surveillance of employee activities and
communications.
In addition, certain processing or handling of personal data, and changes to a
company’s privacy policies, may require disclosure to and/or consultation
with unions representing affected employees.
4. Penalties And Compliance.
Many data privacy laws explicitly provide affected parties with personal
rights of action for statutory violations. Civil fines are also common, and
some laws permit criminal prosecution for egregious cases.
For example, fines for a HIPAA privacy violation range from $100 to over
$50,000 per violation, up to an annual cap as high as $1.5 million, depending
on the level of culpability, but offenses committed knowingly can result in
criminal prosecution.
Further, employers whose employees’ identities are stolen due to knowing
violations of FACTA may be held responsible for minimum statutory
damages of up to $1,000 per employee, plus punitive damages and attorney’s
fees, and can be subject to civil fines of up to $2,500 per employee in
enforcement actions brought by the Federal Trade Commission and
additional amounts from state authorities.
5. Minimizing The Risk.
Companies seeking to minimize their exposure from legal violations and
security breaches involving employee personal data should:
• Consider adopting data privacy and protection best practices that aim to
limit the amount of personal data they collect, process, transfer and store;
• Secure personal data collected, in all formats in which it is kept;
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
12. • Limit access to personal data to the extent practicable and provide
training to staff who handle personal data;
• Ensure third parties receiving personal data are subject to and apply
appropriate security measures;
• Prepare for security breaches involving personal data;
• Maintain accuracy of the personal data collected and processed; and
• Monitor compliance with all applicable data protection laws and
regulations, as well as any safe harbor and contractual requirements
adopted by the company.
C. EEOC Issues New Guidance On The Application Of The ADAAA To
Veteran’s Employment.
On February 28, 2012, the EEOC issued new guidance respecting disabled
veteran’s employment rights which incorporates the changes made by the
Americans with Disabilities Act Amendment Act (“ADAAA”). According to
the guidance, “as a result of changes to the ADA made by the [ADAAA], it is
now much easier for individuals with a wide range of impairments to
establish that they are individuals with disabilities and entitled to the ADA’s
protections. For example, the term “major life activities” includes not only
activities such as walking, seeing, hearing, and concentrating, but also the
operation of major bodily functions, such as functions of the brain and the
neurological system. Additionally, an impairment need not prevent or
severely or significantly restrict performance of a major life activity to be
considered substantially limiting; the determination of whether an
impairment substantially limits a major life activity must be made without
regard to any mitigating measures (e.g., medications or assistive devices,
such as prosthetic limbs) that an individual uses to lessen an impairment’s
effects; and impairments that are episodic or in remission (e.g., epilepsy or
PTSD) are considered disabilities if they would be substantially limiting
when active.”
In addition, the EEOC issued the following specific guidance:
1. It is illegal for an employer to refuse to hire a veteran because he has
post-traumatic stress disorder (“PTSD”), because he was previously
diagnosed with PTSD, or because the employer assumes he has PTSD.
2. An employer may not refuse to hire a veteran based on assumptions
about a veteran’s ability to do a job in light of the fact that the veteran has a
disability rating from the U.S. Department of Veterans Affairs (VA).
3. Some service-connected disabilities, such as deafness, blindness,
partially or completely missing limbs, mobility impairments requiring the use
of a wheelchair, major depressive disorder, and PTSD, will easily be
concluded to be disabilities under the ADA.
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
13. 4. A private employer may give preference in hiring to a veteran with a
disability over other applicants.
The EEOC’s guidance underscores the expansive effect of the ADAAA and
the increased administrative impact it will have on employers.
D. Personal Liability For Employment Decisions Under the FLSA and FMLA.
Many officers, managers, and supervisors believe that they cannot be held
personally liable for employment related claims brought by employees or
former employees. However, individuals can be sued along with the
employer for money damages.
The Federal Fair Labor Standards Act (“FLSA”) and Federal Family Medical
Leave Act (“FMLA”) both provide that individuals may be held liable for
certain employment related decisions. And, the FLSA and FMLA are strict
liability statutes. Thus, no wrongful intent is required and individuals can be
liable for honest mistakes made under these laws.
Under the FLSA and FMLA an “employer” includes an individual executive,
officer, Manager, and supervisor and other individuals who act directly or
indirectly in the interest of an employer and therefore may be held liable for
their acts. What does this really mean? An individual who, for example,
makes a determination under the FLSA that a particular employee is exempt
from the overtime provisions of that law can be held personally liable to that
employee if it is later determined that the individual is not exempt and must
be paid 1.5 times their regular rate of pay for all hours worked in excess of
forty (40) hours in any workweek. Similarly, an individual who denies a
request for FMLA leave based upon an innocent belief that an employee does
not have a serious health condition may also find himself or herself on the
wrong end of an FMLA claim.
These situations provide only examples of what can go wrong when FLSA
and FMLA decisions are made. These statutes are among the most complex
and difficult to administer. Thus, those individuals who have authority to
make personnel decisions must ensure compliance with these laws.
Although individuals can be held liable for many employment decisions,
steps can be to avoid such liability:
1. Know the law. HR personnel should be well versed in labor and
employment law and be a resource to line management. If you are unfamiliar
with the law or the matter may lead to litigation, consult outside counsel who
specializes in labor and employment law for employers. Remember that
ignorance of the law is not a defense.
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
14. 2. Ensure that the organization has current and adequate HR policies and
procedures.
3. Train supervisory personnel in EEO compliance and harassment in
the workplace.
4. Organizations should have well publicized complaint and grievance
procedures.
5. Thoroughly document all employment decisions.
6. Enforce HR policies on a uniform and consistent basis.
Note: other employment laws provide for personal liability, but are not
covered herein.
FEDERAL CASE LAW
2ND CIRCUIT.
A. Second Circuit Clarifies 90-Day Limitation On EEOC Claims.
A claimant has 90 days from receipt of a right-to-sue letter to file an EEOC
claim. There is a presumption that a mailed document is received three days
after its mailing, absent sworn testimony or other admissible evidence from
which it could reasonably be inferred either that the notice was mailed later
than its typewritten date or that it took longer than three days to reach her by
mail.
In Tiberio v. Allergy Asthma Immunology of Rochester, the claimant,
Tiberio, filed a disability discrimination claim in the district court on
February 28, 2011, 96 days after the right-to-sue letter was issued. Three
months later, the district court dismissed Tiberio’s claim as untimely, and
declined to exercise supplemental jurisdiction over her remaining state law
claim.
On appeal, the Court rejected Tiberio’s argument that the date her attorney
received the right-to-sue letter should control the limitations decision. The
Court found that Tiberio’s interpretation of the 90-day limitation would
afford a claimant represented by counsel an unfair extension of time beyond
her own receipt of an EEOC notice, simply by delaying delivery to her
attorney.
To avoid future confusion regarding the issue, the Court explicitly stated that
the 90-day period to file equal employment claims begins to run on the date
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
15. that a right-to-sue letter is first received either by the claimant or by counsel,
whichever is earlier. Since the court presumed Tiberio received the right-to-
sue letter 93 days before she filed her disability discrimination claim, her
claim was time-barred.
B. 2nd Circuit Disagrees with 9th Circuit: Pharmaceutical Reps Do Not Fall
Under The Outside Sales Exemption.
On Wednesday, January 25, 2012, Novartis, the second largest
pharmaceutical sales company in the world, agreed to pay $99 million to
settle the claims of a class of its pharmaceutical sales representatives
(“pharma reps”) who alleged that they were denied overtime pay. The
Novartis case is one in a series of cases brought by pharma reps around the
country. Pharma reps are employees tasked with visiting doctors and
providing information about their company’s drugs in order to convince the
doctors to prescribe the drugs to their patients. They may hand out
information about clinical studies, answer questions about insurance
coverage, and/or leave samples. However, pharma reps do not actually sell
pharmaceutical products to the doctors because such sale of drugs is against
the law. Pharma reps’ days can be long, consisting, for example, of nine hour
days out in the field and occasional evening work.
The pharmaceutical industry has until now generally taken the position that it
need not pay its pharma reps overtime pay under the Fair Labor Standards
Act (“FLSA”) or the state-law counterparts because they are “outside sales”
people and/or “administrative” employees who are exempt from the
requirements of those laws.
The Second Circuit rejected this position in Novartis. See In re Novartis
Wage & Hour Litig., 611 F.3d 141 (2d Cir. 2010). The Court held that
pharma reps do not fall under the outside sales exemption because they do
not actually make sales. In addition, the Court also held that the
administrative exemption did not apply to the Novartis pharma reps because
they were not allowed to exercise either discretion or independent judgment
in the performance of their duties.
In a similar case against GlaxoSmithKline last year, however, the Ninth
Circuit held that pharma reps do fall under the outside sales exemption
despite not making any actual sales. See Christopher v. SmithKline Beecham
Corp., 635 F.3d 383 (9th Cir. 2011).
The Supreme Court has granted certiorari and agreed to review the split
between the Second and Ninth Circuit decisions. The issue is currently being
briefed in the Supreme Court and will be heard this Term.
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
16. C. Increased Work Scrutiny Is Not Enough To Support Retaliation Claim.
Tepperwien v. Entergy Nuclear Operations, No. 10-1425 (2nd Cir. Oct. 31,
2011). In this case, at the district court level, the jury had before it two
claims: male-on-male sex harassment by a supervisor, and retaliation for
complaining about the harassment. The jury found in favor of the employer
on the first claim. However, the jury found in favor of the employee on the
second claim because, in their view, increased scrutiny at work, including a
disciplinary letter that was later withdrawn, constitutes a “materially adverse
action” for a claim under Title VII’s anti-retaliation provision. The jury
awarded $500,000 in punitive damages, but zero in compensatory damages.
On post-trial motions and despite the jury verdict, the district court directed
entry of a verdict for the employer on retaliation, holding that all of the
employer’s behavior added together was not great enough to deter a
reasonable employee from complaining about harassment. In particular, the
employer opened fact-finding investigations following several of plaintiff’s
complaints. In addition, in the midst of plaintiff’s complaints about the
alleged harasser, plaintiff was issued a counseling letter for failing to account
for a piece of equipment that went missing which was subsequently rescinded
after another employee admitted to liability, and plaintiff was investigated for
his use of sick time, both of which plaintiff complained were retaliatory
actions.
Notwithstanding, the Second Circuit affirmed the directed verdict as a matter
of law, holding that the employer did not recklessly disregard the employee’s
Title VII rights and took affirmative steps to correct incidents that he
complained about during the year before his resignation. In addition, the
Court held that an employer opening up an investigation, one that does not
cause the employee any expense or harm to his employment status, does not
subject itself to retaliation liability. It cites in particular the circumstances of
this case, that (1) fact-finding investigations “were not disciplinary in
nature,” (2) there was good reason for the company to initiate the fact-finding
investigations, and “thus no reasonable employee would have found them to
be materially adverse or stigmatizing,” and (3) “while the fact-finding
investigations certainly could lead to disciplinary action, they did not here.”
4TH CIRCUIT.
A. Title VII’s Religious Exemption Expanded.
Kennedy v. St. Joseph’s Ministries, 2011 U.S. App. LEXIS 18936 (4th Cir.
Sept. 14, 2011). In this case, St. Joseph’s Ministries, a tax-exempt
organization operating under the principles and beliefs of the Roman Catholic
Church, manages a nursing care facility. It employed the plaintiff as a
geriatric nursing assistant from 1994 to 2007. Because St. Joseph’s operates
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
17. the facility in accordance with Catholic principles, it engaged in numerous
religious exercises and practices, such as conducting daily facility-wide
prayers and maintaining the employee handbook, which confirmed St.
Joseph’s Catholic identity. However, the plaintiff was not Catholic, but a
member of the Church of the Brethren.
The Brethren practice at issue in Kennedy is the requirement for women to
wear modest, long dresses or skirts and to wear a prayer covering, such as a
veil, over their hair. At some point during the plaintiff’s employment, the
Assistant Director of Nursing Services allegedly told the plaintiff that her
long dresses, skirts, and head covering were inappropriate for a Catholic
facility and were making patients and their families uncomfortable. The
plaintiff also alleged that the Assistant Director continually told her she
needed to adhere to a more traditional mode of dress. The plaintiff then
communicated to the Assistant Director that her religious beliefs mandated
that she continue wearing such attire. As a result, St. Joseph’s terminated the
plaintiff’s employment on May 17, 2007, and the plaintiff then filed suit
under Title VII, alleging religious harassment, retaliatory discharge, and
discriminatory discharge on the basis of her religion.
Title VII contains an exemption for religious employers: “[Title VII] shall
not apply to . . . a religious corporation, association, educational institution,
or society with respect to the employment of individuals of a particular
religion.” Courts have interpreted this language to only mean hiring and
firing decisions. However, according to the 4th Circuit, “employment” also
includes conduct occurring during the employment relationship. Thus, the
Court held that “employment” was synonymous not only with employment
decisions like hiring and firing, but also must incorporate the entire
relationship between an employer and employee. On this basis, the court
denied all of the plaintiff’s claims.
The Fourth Circuit’s decision raises the possibility that other circuits will
adopt this holding if they are faced with a similar issue. It is also possible
that this case will discourage plaintiffs’ attorneys from bringing these types
of claims in other circuits because Kennedy is the first case of this kind and a
notable flag for defense counsel to raise and wave on summary judgment.
However, Kennedy is not a license for a religious employer to harass or
retaliate on the basis of religion. Although the plaintiff in this case brought
only Title VII claims, there are several tort claims (such as intentional or
negligent infliction of emotional distress) that could be part of a lawsuit
based on alleged harassment or retaliation. Therefore, it is still important to
maintain a policy and train your employees on anti- harassment and anti-
retaliation issues, including religion-based harassment and retaliation.
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
18. B. Plaintiff Need Not Identify Harassment As “Sexual” To Sustain A
Retaliation Claim.
Okoli v. City of Baltimore, No. 08-2198 (4th Cir. Aug. 8, 2011). In this case,
the plaintiff was an executive assistant to a department head named Stewart,
the alleged harasser. Over the space of four months, “her boss forcibly
kissed her, fondled her leg, propositioned her, asked sexually explicit
questions, described sexual activities he wished to perform, and then, after
she spurned the advances and filed a harassment complaint, fired her.” Four
months into the alleged harassment, the plaintiff made her first complaint to
the city. Although the harassment ceased, the city took no apparent efforts to
correct or discipline the harasser. The plaintiff then filed a complaint with
the Mayor’s office. As soon as Stewart learned about the complaint, he fired
her.
The Court found that plaintiff had engaged in a protected activity when she
complained of harassment, even though she did not expressly state “sexual
harassment.” According to the Court, “it was enough for plaintiff to twice
complain of “harassment,” even if it might have been more ideal for her to
detail the sexual incidents she later relayed.” Relying on D.C. and 11th
Circuit opinions, the court stated that employees need not use “magic words”
to bring attention to concerns of sexual harassment, and that plaintiff’s
repeated reference to “harassment” and “degrading” behavior should have
been sufficient for the city to infer the seriousness of her complaint.
Okoli is another reminder that employers need to be vigilant and thorough. If
an employee complains about harassment, an employer should immediately
look into the matter.
5TH CIRCUIT.
A. A Memorable Case: Hostile Work Environment Based on Age And
Religion.
Dediol v. Best Chevrolet Inc., No. 10-30767 (5th Cir. Sept. 12, 2011). In this
case, Dediol, a Christian aged 65, alleged that a co-worker – a used car sales
manager - routinely threatened and cursed at him in the workplace. For
example, (1) the manager ripped off his shirt at work and told Dediol, “You
don’t know who you are talking to. See these scars. I was shot and was in
jail,” (2) when Dediol sought to take July 4 off to volunteer at a church-
related event, Dediol alleges that the manager told him, “You old
mother******, you are not going over there tomorrow” and “if you go over
there, I’ll fire your f*****g ass,” and (3) when Dediol arrived at work early
on July 4, Clay put his shoes on Dediol’s desk and stated: “Do you see these
shoes? Your God did not buy me these shoes. I bought these shoes.” Dediol
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
19. resigned, and filed a lawsuit claiming age discrimination and constructive
discharge.
The Court held, for the first time, that in the Fifth Circuit a plaintiff may
bring a hostile-work-environment claim for age (under the ADEA), as well as
religion (under Title VII). According to the Court, “a plaintiff advances such
a claim by establishing that (1) he was over the age of 40; (2) the employee
was subjected to harassment, either through words or actions, based on age;
(3) the nature of the harassment was such that it created an objectively
intimidating, hostile, or offensive work environment; and (4) there exists
some basis for liability on the part of the employer.”
The holding is significant because, in contrast to Title VII - which recognizes
and compensates emotional distress as an element of damages - the
federal ADEA has no provision for such relief, and thus an ADEA
harassment claim without a constructive discharge claim (which can be
compensated with back pay) would be practically valueless.
6TH CIRCUIT.
A. An Employee On Legal Prescription Medication May Be Fired For
Safety Reasons As Long As The Employee Is Not “Disabled.”
In a unanimous decision, the Sixth Circuit held that section 12112(b)(6) of
the Americans with Disabilities Act (ADA), which prohibits employers’ use
of tests that tend to screen out disabled individuals does not protect
employees who are not disabled. In Bates v. Dura Automotive Systems, Inc.,
decided November 3, 2010, the Court held that, although non-disabled
individuals may bring claims under some provisions of the Act, the plain text
of subsection (b)(6) concerning “impermissible medical examinations” only
covers individuals with disabilities.
In this case, plaintiffs were seven former employees of a Tennessee company
called Dura Automotive, which manufactures glass windows for motor
vehicles. The employees performed a wide range of jobs at Dura: driving
tow motors, assembling windows, painting primer on frames, and trimming
and performing water testing. The company became concerned over what it
viewed as a higher than normal rate of accidents, and banned the use of
several legal drugs that it believed had a negative impact on safety, company
property or job performance. Working with an independent lab, the company
screened employees for twelve substances, including those found in many
legal prescription drugs such as Xanax, Lotab, and Oxycodone.
The plaintiffs all tested positive for these types of drugs but had legitimate
prescriptions. The Company gave each employee the opportunity to
transition to other drugs but refused to consider notes from the employees’
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
20. doctors indicating that the drugs would not impact their work performance.
Eventually, the employees were terminated when they refused to stop taking
the drugs they had been prescribed.
The employees filed a lawsuit alleging that the company’s actions constituted
an “impermissible medical examination” under the Americans with
Disabilities Act (ADA). However, the Sixth Circuit held that Section
12112(b)(6) of the Americans with Disabilities Act (ADA), which prohibits
employers’ use of tests that tend to screen out disabled individuals, does not
protect employees who are not disabled.
The decision in Bates is significant because attorneys for employees would
now seem more likely to take the approach that the employee’s need for legal
medications makes the employee “disabled.” It then becomes an issue of fact
and the employer is free to present expert testimony at trial to show that the
employee’s need for medication does not make him or her “disabled.” This
is much less desirable, and more costly, for employers to litigate.
8TH CIRCUIT.
A. Employee Cannot Claim Discriminatory Failure To Promote Unless The
Employee Applies For The Position.
Culpepper v. Vilsack, No. 10-2627 (8th Cir. Dec. 28, 2011). In this case,
plaintiff, who had a disability, claimed that the district court erred in denying
her failure to promote claim. Plaintiff admitted that she did not formally
apply for the job, but argued that this formal step ought to be excused under
the doctrine of “futility,” given what the plaintiff claimed was a continuing
pattern of discrimination - and because of the allegedly discriminatory
inclusion of explanatory language in the job announcement referring to
“successful activity/experience in listening.”
Rather than take on the question of whether the job announcement suggested
a discriminatory animus against plaintiff because of her hearing disability,
the Court found that the employee more likely had a different reason for not
applying for the promotion: “the district court found credible the testimony of
plaintiff’s co-worker that plaintiff told her that she did not apply for the loan
specialist position because of the recent death of her father. . . . We see no
clear error in the district court’s finding of fact that the death of plaintiff’s
father caused her failure to apply for the loan specialist position, and we
affirm the district court’s determination that Culpepper’s failure to apply for
the position was not excused for futility.”
On a separate claim, the Court held that the employer’s failure to reclassify
plaintiff at a higher pay grade was not discrimination, even the promotion
process could be initiated by either an employee or a supervisor requesting a
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
21. desk audit (and, plaintiff’s supervisors had requested desk audits for other
similarly situated, non-disabled co-workers), because “an employee who does
not formally apply must make every reasonable attempt to convey his or her
interest in the job to the employer before he or she may prevail on a
discrimination claim.”
Plaintiff also admitted that, in addition to not requesting a desk audit herself,
she did not ask her supervisors to request a desk audit on her behalf. She also
admits that she never complained to the company that she was performing
duties above her grade level and that she should be reclassified.
This case is an important reminder for employees who believe they are not
getting ahead in their jobs because of sex, race, disability, age or other
factors: unless an employee actually applies for - or at the very least,
expresses interest in - a promotion, the employee may not have a claim for
discrimination. Such an application (or expression of interest) is an
important step to preserving an employee’s rights, even if the employee
thinks the outcome is preordained
B. Employer Must Have Evidence Of Poor Performance Before Employee
Engages In Protected Conduct.
Pye v. Nu Aire, Inc., No. 10-2243 (8th Cir. June 17, 2011). In this case, a
newly-hired black employee filed a complaint claiming that he overheard the
company’s payroll administrator mutter the words “n*****r goon” under her
breath, in response to his request for help on a form. The complaint was
investigated by the Director of Human Resources, but the employee reported
that his interview with the Director was adversarial. For example, the
employee claimed that the Director began by telling him that she did not
believe his allegation that the payroll administrator had referred to him as a
“n[******]r goon,” and stated that she had known the administrator for many
years and that he was not a racist. In addition, the Director suggested that the
employee’s claim was for money, a promotion, and a company-car, to which
the employee responded that he “wanted the matter handled in the usual
manner.”
Following the meeting, the Director reported to a Vice President, who made
the decision to terminate the employee. When the employee asked why he
was terminated, the Director told him that “he was terminated for attempting
to obtain a promotion and/or money and a company car through coercion or
intimidation.” However, in the course of litigation, the employer insisted that
the decision was based on poor performance.
The Eighth Circuit held that there was no evidence that the company had any
concerns regarding the employee’s performance before he engaged in
protected conduct. The Vice President who made the decision to terminate
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
22. the employee admitted that he had no information regarding the employee’s
work performance when he made the decision. Further, viewed in the light
most favorable to the employee, the evidence showed that his termination
was a direct result of his complaint of discrimination and his suggestions of
remedies, prompted by the Director’s leading questions.
This case is a reminder that employees assigned to conduct an investigation
must remain impartial, and not presume any facts.
9TH CIRCUIT.
A. Employers’ Remedies for Data Misappropriation Limited.
U.S. v. Nosal, Case No. 10-10038, (9th Cir. April 10, 2012). The federal
government prosecuted David Nosal for violations of the Computer Fraud
and Abuse Act (CFAA), a federal statute that permits private parties to bring
a civil cause of action for theft or misappropriation of electronic information
and to recover compensatory damages and obtain injunctive or equitable
relief. Specifically, the CFAA permits a private right of action against a
person who accessed a protected computer “without authorization” or who
“exceeds authorized access” to a computer knowingly and with the intent to
defraud. The CFAA differs from trade secret misappropriation statutes in
that employers do not need to prove that the stolen information is a “trade
secret.”
The District Court dismissed the CFAA charges against Nosal, holding that
employees do not violate the CFAA unless they lack the authority to enter or
use the portion of the computer network at issue. Here, Nosal left his
employer and then encouraged his former coworkers to download source
lists, names and contact information from his old work computer for the
purpose of allowing Nosal to establish a competing business. The former
coworkers were authorized to access the source lists on the database, though
the employer had a policy preventing disclosure of confidential information
to third parties. The Ninth Circuit agreed, determining that the statute should
be read restrictively and that all ambiguities in the act should be resolved in
Nosal’s favor. In particular, the Court concluded that without any allegations
that Nosal’s co-conspirators lacked the employer’s authority to access the
information on his employer’s computer, he could not be liable. The Court
articulated that a broad reading of the CFAA would enable employers to
make any access on a computer that is not specifically authorized and work
related an actionable crime.
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
23. 10TH CIRCUIT.
A. A Migraine Is Not Necessarily A “Disability” Under The ADA.
Allen v. Southcrest Hospital, No. 11-5016 (10th Cir. Dec. 21, 2011). The
Tenth Circuit indicated that courts do not regard the 2008 amendments to the
Americans with Disabilities Act (“ADA”) as a basis to declare every ailment
or condition to be a “disability” under federal law.
In this case, the plaintiff, a medical worker in a private practice, claimed that
on days when she suffered migraines - even if she went to work - she
“crashed and burned” when she got home, taking medication and falling
asleep almost immediately. The plaintiff relied on this “crash and burn”
argument, claiming that her migraines limited her ability to care for herself in
the evening, as she was “compelled” to go to sleep, due to her migraine
medication. However, the Court did not accept the “crash and burn”
argument, holding that an allegation of “sleep disturbance” was not
sufficient, in and of itself, to prove a disability.
In addition, the Court addressed whether the migraines had substantially
limited the plaintiff’s ability to “work.” However, plaintiff’s admission that
she only suffered from migraines when she was working for one particular
doctor in the practice was fatal to her claim. The Court stated that to be
disabled in the major life activity of “working,” “an employee must be
significantly restricted in the ability to perform either a class of jobs or a
broad range of jobs in various classes.” While this language was eliminated
in the EEOC’s May 2011 regulations, there was no indication that the new
regulations were to have retroactive effect, and, therefore, the Court applied
the earlier version of the regulations.
This decision is a reminder that there is no such thing as an “automatic
disability,” and an employer should never assume that an employee who has
an impairment that is listed as a potential “disability” in the 2008
amendments to the ADA is indeed “disabled” under the law. Even under the
arguably looser definition of a disability created by the amendments, the
question of whether someone is “disabled” is a fact-intensive inquiry, which
depends on the effect the impairment has on the individual employee. In
order to demand the protections of the ADA, the employee must prove that
the impairment “substantially limits” them.
B. Plaintiff First Must Exhaust Administrative Remedies To Pursue A Title
VII Lawsuit.
McDonald-Cuba v. Santa Fe Protective Services Inc., No. 10-2151 (10th Cir.
May 09, 2011). The Tenth Circuit upheld the long standing rule that a
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
24. plaintiff must first exhaust his or her administrative remedies before filing a
Title VII lawsuit.
In this case, plaintiff sued her employer until Title VII. The employer filed
counterclaims against the plaintiff, which were later voluntarily dropped by
the employer. Subsequently, the plaintiff amended her complaint alleging
that the counterclaims were retaliatory, but failed to file a new or amended
charge of discrimination with the EEOC prior to asserting the new claim.
The 10th Circuit held that conduct occurring after an employee filed a Title
VII complaint in federal court involving discrete retaliatory actions required
the filing of a new EEOC charge. In addition, the Court determined that the
fact that the retaliation plaintiff alleged was a part of the district court
proceeding did not distinguish the case, so she must exhaust administrative
remedies as to discrete acts of alleged retaliation that involve the filing of a
counterclaim.
This decision is reminder that courts will not make exceptions for plaintiffs
that do not first exhaust their administrative remedies in connection with a
Title VII claim.
ELEVENTH CIRCUIT
New Case Law
A. Court Upholds Summary Judgment in Favor of Plaintiff On
Transgender Plaintiff’s Sex Discrimination Claims.
Glenn v. Brumby, 663 F.3d 1312 (11th Cir. 2011). The Eleventh Circuit’s
decision to affirm summary judgment on transgender plaintiff Elizabeth
Vandiver’s sex discrimination claims under the Constitution’s Equal
Protection Clause paves the way for potential sex discrimination claims
against private employers under Title VII. At its core, the decision holds that
discrimination on the basis of a person’s failure to conform to gender
stereotypes is sex discrimination.
In 2005, the Georgia General Assembly’s Office of Legislative Counsel hired
Glenn, who at the time presented himself as a man named Glenn Morrison.
Approximately a year later, Glenn told her supervisor that she was a
transsexual, and showed up to an office Halloween party dressed as a woman.
In 2007, Glenn announced to her employer that she would be transitioning
from a male to a female, and would come to the office dressed as a woman
from then on. Following that announcement, Sewell Brumby, the head of the
Office of Legislative Counsel, terminated Glenn’s employment.
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
25. Taking the position that the firing constituted government action, Glenn sued
under the Equal Protection Clause of the Fourteenth Amendment, claiming
that Brumby discriminated against her on the basis of her sex, including both
her gender identity and her failure to conform to the male sex stereotype.
After Glenn obtained summary judgment in the District Court for the
Northern District of Georgia, Brumby appealed to the Eleventh Circuit,
which affirmed, holding that Brumby violated the prohibition of sex-based
discrimination in the Equal Protection Clause by terminating a transgender
employee because of her gender nonconformity. Specifically, the Court held:
A person is defined as transgender precisely because of the
perception that his or her behavior transgresses gender
stereotypes. “[T]he very acts that define transgender people as
transgender are those that contradict stereotypes of gender-
appropriate appearance and behavior.” There is thus a
congruence between discriminating against transgender and
transsexual individuals and discrimination on the basis of
gender-based behavioral norms. Accordingly, discrimination
against a transgender individual because of her gender-
nonconformity is sex discrimination, whether it’s described as
being on the basis of sex or gender.
The Court found sufficient direct evidence of discrimination based on
Brumby’s deposition testimony that he fired Glenn “because he considered it
‘inappropriate’ for her to appear at work dressed as a woman and that he
found it ‘unsettling’ and ‘unnatural’ that Glenn would appear wearing
women’s clothing.” Brumby further admitted that the “decision to fire Glenn
was based on ‘the sheer fact of the transition.’” Significantly, the Court held
that were this a Title VII case, the analysis would end there. However, under
the Equal Protection Clause, the Court was required to examine whether
Brumby could show an “exceedingly persuasive justification,” for the
decision. The Court held Brumby could not, rejecting Brumby’s purported
concern, based purely on speculation, that women in the office might object
to Glenn’s use of the women’s restroom.
Although the case was decided under the Equal Protection Clause, the
reasoning of the Court’s decision, including its specific reference to the Title
VII analysis, lays the groundwork for similar claims against private
employers under Title VII. As a result, employers should examine anti-
discrimination policies and practices with a view that taking adverse
employment action against transgender workers raises the risk of liability for
sex discrimination.
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
26. B. Private Employers May Deny Employment Applicant Because of a Prior
Bankruptcy.
Myers v. TooJay’s Mgmt. Corp., 640 F.3d 1278 (11th Cir. 2011). According
to the Eleventh Circuit, the Bankruptcy Code does not make it unlawful for a
private employer to deny employment to an individual on the grounds that
the individual is or has been in bankruptcy.
In this case, the employment applicant applied for a managerial position at a
restaurant in Florida, and authorized a background check, including a review
of his credit history. The applicant was not told that his employment was
conditioned upon a clean credit history. Notwithstanding, the applicant
successfully completed a 2-day, compensated on-the-job evaluation with the
restaurant. Soon thereafter, he received a letter from the restaurant informing
him he would not be hired because of “a financial matter.” The applicant
contacted the HR department at the restaurant and was told that his
bankruptcy filing was the only reason he was not hired, and that it was
company policy not to hire people who had filed for bankruptcy.
The applicant filed a lawsuit, claiming that the restaurant had discriminated
against him in violation of 11 U.S.C. §525(b) of the Bankruptcy Code by
refusing to hire him because of his bankruptcy filing. The district court
granted summary judgment to the restaurant on the grounds that Section
525(b) does not prohibit a private employer from refusing to hire someone
because of a bankruptcy filing. The 11th Circuit affirmed, holding that
discrimination protection under 11 U.S.C. §525 depends on whether the
employer is a “governmental unit” (subject to Section 525(a)) or a “private
employer” (subject to Section 525(b)). The earlier-enacted Section 525(a)
provides that a governmental unit “may not … deny employment to,
terminate the employment of, or discriminate” against a person based on that
person’s bankruptcy filings. In contrast, the later-enacted Section 525(b)
provides that a private employer may not “terminate the employment of, or
discriminate” against a person based on that person’s bankruptcy filings; this
section says nothing about denying employment because of bankruptcy.
Accordingly, the Eleventh Circuit found that the applicant had no claim
because the restaurant was a private employer.
The Eleventh Circuit’s decision is important for 2 reasons:
(1) While a private employer may lawfully adopt a rule that it will not hire
applicants who have prior bankruptcy filings, a private employer should not
apply that rule to an existing employee; the statute expressly bars termination
from employment because of a bankruptcy filing; and
(2) Any private employer should uniformly follow any rule that it adopts
against hiring applicants with bankruptcy filing histories; failing to apply the
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
27. rule uniformly may lead to pretext claims (e.g., an applicant may cite non-
uniform application in support of a claim that race or gender, not bankruptcy,
was the reason for non-hire).
C. FLSA: Attorneys Fees Avoided if Employer Tenders Overtime Pay.
Dionne v. Floormasters Entrs., Inc., 667 F.3d 1199 (11th Cir. 2012). The
sole issue in this case is whether an employer, who denies liability for
nonpayment for overtime work, must pay attorney’s fees and costs pursuant
to 29 U.S.C. § 216(b) of the Fair Labor Standards Act (“FLSA”) if the
employer tenders the full amount of claimed overtime pay, moves to dismiss
the claim as moot, and the employee concedes the claim should be dismissed
as moot. The Eleventh Circuit held that “under such circumstances, the
dismissal of the employee’s complaint, without an award of attorney’s fees,
is not erroneous pursuant to § 216(b) because the District Court did not
award judgment to the employee as the prevailing party.”
On February 10, 2012, the Middle District of Florida followed the Dionne
decision, and ruled in favor of the employer in Gilliam vs. WalMart Stores
East, LP, Case No. 2:11-cv-454-FtM-29SPC (M.D.Fla. Feb. 10, 2012). In
Gilliam, the employee sought a total of $583.50 plus liquidated damages for
unpaid overtime compensation under the FLSA. The employer did not admit
liability and tendered payment of $1,167.00, which included the liquidated
damages amount claimed. Thereafter, the court granted the employer’s
request to dismiss the Complaint with prejudice. The court reasoned that the
employee was never awarded judgment as the “prevailing party” so as to
trigger the attorney’s fees provision of the FLSA.
For employers, the Dionne and Gilliam decisions are important because they
indicate that employers should immediately engage in an assessment of an
employee’s claim of unpaid overtime compensation and, if valid, tender
payment. Under these circumstances, an employer may be able to avoid
payment of attorneys fees, which ultimately could prove substantial
depending on the size of the claim.
D. Pre-Eligible Request for Leave Under the FMLA Protected.
Pereda v. Brookdale Senior Living Communities, Inc., 666 F.3d 1269 (11th
Cir. 2012). According to the Eleventh Circuit in Pereda, an employee’s
Family Medical Leave Act (“FMLA”) request made before she is eligible is
protected when the requested leave would take place after she becomes
FMLA-eligible.
Plaintiff alleged she informed her employer that she would be requesting
FMLA leave after the birth of her child. However, at the time, she was not
yet eligible under the FMLA because she had not been employed for at least
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
28. 12 months. The plaintiff expected to give birth after the expiration of the
requisite 12-month period. Nevertheless, the employee was fired during her
eleventh month of employment. After being terminated, the employee filed a
lawsuit alleging the employer interfered with her FMLA rights and retaliated
against her for requesting FMLA leave.
The Eleventh Circuit concluded that without protecting against pre-eligibility
interference, a loophole would be created whereby an employer has total
freedom to terminate an employee before he/she can ever become eligible.
According to the Eleventh Circuit, such a situation is contrary to the basic
purpose of the FMLA: to balance work and family life by allowing
employees to take unpaid leave for certain periods of time for specific
medical and family related reasons. To hold otherwise would have allowed
employers to terminate employees who had a foreseeable medical condition
and gave employers notice of such condition.
In light of the Eleventh Circuit’s holding, when considering requests for
FMLA leave, employers must consider not only whether the employee is
eligible for leave at the time of the request, but whether the employee will be
eligible at the time the leave period will commence. Employers should
exercise caution when electing to terminate or take an adverse action against
an employee that has made a request for FMLA leave or indicated their
intention to make a future request for FMLA qualifying leave.
E. Employee’s Failure To Utilize Harassment Policy Aids Employer Victory
In Harassment Case.
Leeth v. Tyson Foods, Inc., 449 Fed.Appx. 849 (11th Cir. 2011). The
Eleventh Circuit affirmed summary judgment for Tyson Foods on an
employee’s sexual harassment and retaliation claims based on the employee’s
failure to take advantage of the employer’s anti-harassment policy, and
because the employer presented legitimate, non-retaliatory, and non-
pretextual reasons for taking alleged adverse employment actions against the
employee.
In 2005, Leeth sued Tyson Foods alleging that her shift superintendent had
sexually harassed her over a period of 20 years, from the time she began
employment in 1985 until the filing of her EEOC Charge in 2005. Her
allegations included that the superintendent made repeated sexual advances,
both in person and over the telephone, and tried to touch her inappropriately.
However, on the only two occasions when Leeth allegedly complained about
the harassment, her complaints were vague, and she specifically asked that
the employer not pursue the matter.
The Eleventh Circuit affirmed the District Court’s finding that the alleged
harassment was not sufficiently severe or pervasive to alter the terms and
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
29. conditions of employment and create a hostile work environment. “Certainly,
Leeth was annoyed by Bailey’s actions, but there is no evidence of threats,
quid pro quo offers, and overt sexual actions other than a few insinuating
comments.” More significantly, the Court found that Leeth failed to take
advantage of the employer’s anti-harassment policy, because she failed to
provide specifics regarding the alleged harassing conduct, and specifically
requested that the employer not investigate the matter. “We have held ... that
if the plaintiff did not want the harassing behavior reported or acted upon,
then the employer would not have been placed on proper notice of the
harassment.”(quoting Nurse BE v. Columbia Palms West Hosp. Ltd.
Partnership, 490 F.3d 1302, 1310 (11th cir. 2007)) As a result, the employer
asserted a successful affirmative defense under Faragher v. City of Boca
Raton, 524 U.S. 775 (1998) and Burlington Indus., Inc. v. Ellerth, 524 U.S.
742 (1998). Under Faragher/Ellerth, if the plaintiff has not suffered an
adverse, tangible employment action as a result of the alleged harassment, the
employer may establish an affirmative defense by demonstrating “(a) that the
employer exercised reasonable care to prevent and correct promptly any
sexually harassing behavior, and (b) that the plaintiff employee unreasonably
failed to take advantage of any preventive or corrective opportunities
provided by the employer or to avoid harm otherwise.”
Moreover, Tyson established legitimate nonretaliatory reasons for its
subsequent decision to (1) temporarily transfer Leeth to a different job,
because of staffing shortages and Leeth’s relevant experience as compared to
other employees, and (2) suspending Leeth for refusing to perform the work
requested, because although Leeth may have had legitimate medical reasons
for refusing to do the work, suffering from tendinitis, as she claimed, “is not
a protected activity under Title VII.” The Court specifically noted that
“Leeth’s attempts to demonstrate pretext are little more than conclusory
statements to the effect that the actions were retaliatory because they were
obviously done in retaliation.” With no specific evidence of pretext, the
Court found no basis for a fact finder to question Tyson’s legitimate,
nondiscriminatory reasons for its actions.
GEORGIA
New Case Law
A. Georgia District Court Strikes Portions of New Immigration Law as
Preempted.
Georgia Latino Alliance for Human Rights, et al. v. Deal, et al., No. 1:11-
CV-1804-TWT (N.D. Ga. June 27, 2011). Determining parts of Georgia’s
new immigration law (HB 87) were preempted by federal law, U.S. District
Judge Thomas W. Thrash, Jr., issued a preliminary injunction against two
sections of the state law. First, the court enjoined enforcement of Section 7,
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
30. which prohibits individuals who have previously committed a separate
criminal offense from: (1) knowingly and intentionally transporting or
moving an illegal alien to further the illegal’s stay in Georgia; (2) knowingly
concealing harboring or shielding an illegal alien from detection in Georgia;
and (3) inducing, enticing, or assisting an illegal alien to enter Georgia.
Second, the court enjoined enforcement of Section 8, which authorizes local
law enforcement officers to verify the immigration status of any suspect if the
officer has probable cause to believe the suspect has committed a criminal
violation. Both of these sections were to take effect on July 1, 2011. The
State has appealed the ruling to the 11th Circuit, where it remains pending.
The rest of the law’s provisions remain intact. Significantly, the ruling does
not affect requirements that businesses in Georgia register with and begin
using the federal E-Verify program and check the legal status of new hires.
Businesses with 500 employees or more must begin using E-Verify on
January 1, 2012. Businesses with 100 to 499 employees must begin on July 1,
2012, and those with 11 to 99 employees must begin on July 1, 2013.
B. Court Finds Exotic Dancers are Employees, Not Independent
Contractors.
Clincy v. Galardi Ents, Inc., 1:09-CV-2082-RWS (N.D. Ga. September 17,
2011). The court granted plaintiffs’ motion for summary judgment and
denied defendants’ cross motion, holding that plaintiffs- exotic dancers or
strippers- were employees of the defendant club owners, not independent
contractors. Accordingly, plaintiffs were entitled to minimum wages and
overtime pursuant to the Fair Labor Standards Act.
In reaching its determination, the court found significant that the defendants
set the prices for tableside dances and how much of their gross receipts
dancers were required to turn over in the form of “house fees” and disc
jockey fees. The court also noted that the defendants set specific schedules
for the dancers, created rules of conduct, disciplined, and had the dancers
check-in and check-out procedures and otherwise controlled the method and
manner in which plaintiffs worked. Finally, the court recognized that several
other courts had concluded that exotic dancers were employees, not
independent contractors. Thus, the court rejected defendants’ arguments that
the dancers were contractors because they were required to sign independent
contractor agreements, were paid directly by customers, because the club
purportedly did not profit from the dancers, and because the dancers did not
necessarily drive the club’s business.
Although not a novel decision, Clincy is significant because the majority of
strip clubs around the country continue to disregard court decisions that have
held that most strippers, employed under circumstances similar to those in the
case, are actually employees.
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
31. C. Georgia Court of Appeals Rejects Application of Trade Secrets Act to
Investor Lists.
Sutter Capital Management LLC v. Wells Capital Inc., No. A11A0649 (Ga.
Ct. App. July 13, 2011). In a decision clarifying the ambit of Georgia’s trade
secrets law, the Georgia Court of Appeals reversed the grant of summary
judgment to Wells Capital Inc. and Wells Partners L.P. in their action against
Sutter Capital Management LLC and Sutter Opportunity Fund 3 LLC,
holding that the plaintiffs’ investor lists did not constitute trade secrets. The
plaintiffs maintained that the defendants misappropriated a confidential list of
the plaintiffs’ investors in contravention of the Georgia Trade Secrets Act. In
finding that the investor lists did not constitute trade secrets, the court found
that the plaintiffs failed to show that the lists “derived economic value, either
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means, by other persons who could obtain economic
value from their disclosure or use,” as required by the Act.
Employment Law News
A. Georgia’s Governor Signs Garnishment Reform Bill.
On February 7, 2012, Governor Nathan Deal signed legislation immediately
repealing a court-imposed mandate that companies use lawyers to handle
garnishment responses filed in Georgia courts.
Last year, the Georgia Supreme Court ruled that responding to a garnishment
constitutes the practice of law, and thus requires a lawyer. The passage of this
legislation, however, means that effective immediately, employers may
resume the practice of relying on in-house human resources or payroll
employees to handle garnishments. “Reducing the amount of unnecessary
legal fees is just one step in making Georgia the No.1 place to do business,”
Deal said in a statement.
B. Georgia Lawmakers Pass Illegal Immigration Reform and Enforcement
Act.
Signed by Governor Deal in May 2011, the Georgia Illegal Immigration
Reform and Enforcement Act (the “Act”) substantially resembles Arizona’s
controversial Senate Bill 1070 and “creates new requirements for many
Georgia businesses to ensure new hires are eligible to work in the United
States and empowers police to investigate the immigration status of certain
suspects.”
Among the new regulations is a requirement for Georgia businesses with
more than 10 employees to use the federal E-verify program, which helps
companies confirm whether their new hires are eligible to work in the United
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
32. States. The Act gives companies found to have committed a “good-faith”
violation of the E-Verify mandate 30 days to comply with the law.
The Act also:
Empowers local and state police to arrest illegal immigrants and transport
them to state and federal jails; (see Georgia Latino Alliance for Human
Rights, et al. v. Deal, et al.)
Punishes people who use fake identification to get a job in Georgia with
up to 15 years in prison and up to $250,000 in fines;
Penalizes people who – while committing another crime – knowingly
transport or harbor illegal immigrants or encourage them to come to
Georgia. First-time offenders would face imprisonment for up to 12
months and up to $1,000 in fines; (see Georgia Latino Alliance for
Human Rights, et al. v. Deal, et al.)
Establishes a seven-member Immigration Enforcement Review Board to
investigate complaints about local and state government officials not
enforcing state immigration-related laws;
Directs the state Agriculture Department to study the possibility of
creating Georgia’s own guest worker program. Some Georgia employers
have complained the federal government’s guest worker program is too
burdensome and expensive.
Note that, although the law became effective in Georgia on July 1, 2011, two
particular provisions have been enjoined by a federal district court, subject to
the review of the Eleventh Circuit Court of Appeals. (See “Georgia District
Court Strikes Portions of New Immigration Law as Preempted” above.)
Georgia Restrictive Covenant Law News
A. The Georgia Restrictive Covenants Act Signed Into Law.
On May 11, 2011, Governor Nathan Deal signed into law the Georgia
Restrictive Covenant Act (the “Act”), which immediately took effect and is
codified at O.C.G.A. §13-8-50 et. seq. The Act dramatically changes the
enforceability of restrictive covenants in employment agreements and
corporate contracts entered into on or after the Act’s May 11, 2011 effective
date.
The Act changes current case law in five key areas by: (1) expressly
permitting restrictive covenants, including noncompete covenants; (2)
relaxing certain standards under existing case law for drafting enforceable
Jason D’Cruz
Morris, Manning &
Martin, LLP
rjd@mmmlaw.com
(404) 504-7601
