Friday, October 25, 2013

A Cheap Shot at Injured Professional Athletes

One thing I can say for California political leadership-it knows on which side its bread is buttered. Employees (i.e. voters, who outnumber manager voters by a considerable margin) have one of the most friendly legal environments in the country as result of California political largess. But the entertainment industry, long a source of California revenue, prestige, and political donations, has usually enjoyed a privileged spot with respect to California labor laws, employment rules, and the like.

And by entertainment industry, I'm including the National Football League, and professional sports teams generally. California has three NFL teams, four NBA teams, three NHL clubs, and five Major League Baseball teams. And that doesn't even include USC with its questionable amateur athletes.  Professional sports puts up a lot of ticket sales, television revenue, parking, and a much high-powered athletic talent to show up at your party, fundraiser, and film premiere. So it's perhaps not too surprising that the state recently modified its workers compensation law, one of the most generous in the nation, to cut off claims from retired athletes who did not work for California-based teams, but played some of their games in California. Specifically, because California's liberal standard allows workers to get compensation for accumulated trauma (that is, injuries that resulted from repetitive stress or impacts over a long period), approximately 4500 NFL players who played games in the state are filing claims for workers compensation under California law.

Now the state of California is not on the hook for these claims-they revert back to the individual workers compensation insurance carried by the various teams. But California law allows an avenue for injury compensation that is not available in many states, and so players who could not get compensated in their states of employment are filing in California (here are links to claims from the various pro sports leagues filed in California). Under heavy pressure from the major sports leagues, but particularly the NFL (which sees the repetitive brain injury issue looming large), the legislature and the governor passed a law closing out the ability of these players to file for compensation.

I find this highly troubling-this is not a situation where uninjured players are scamming the workers compensation system for money that is undeserved (California has a long history of this type of problem). Virtually all of these individuals are suffering the effects of athletic injuries that did not manifest themselves until years after their playing careers ended. This is precisely why states enacted workers compensation systems, and I think it's highly dishonest of the NFL, and of California political leadership, to cut off a perfectly ordinary and proper vehicle for these gentlemen to be compensated for their injuries.

UPDATE:  Remember when I said that California has a history of people filing undeserved workers compensation claims? Here is a somewhat sarcastic take on a classic example.

Thursday, October 24, 2013

An Employer Created Disability, or, The Self Licking Ice Cream Cone

A case out of South Dakota shows how encompassing the Americans with Disabilities Act has become under the new amendments. Specifically, this case is an example of an employer using its progressive discipline policy and actually creating a disability that it is then charged with accommodating.

The plaintiff, a K-12 art teacher, was assigned additional duties teaching a remedial class for which she did not feel qualified. After she complained, the school district began monitoring her teaching performance and identified areas of concern where her supervisor expected performance improvement. Her supervisor routinely monitored her classes and placed her on a formal “plan of assistance” requiring her to improve performance in certain areas  by a specific deadline.

Allegedly as a result of this supervision, plaintiff developed anxiety symptoms, depression, weight loss, and sleep pattern deficits. The plaintiff’s physician sent a letter to the school administration requesting some 13 changes in her work environment, including cutting off the observations of her classes, having an “impartial” representative at any meeting that she had with her supervisor, tentative breaks whenever the plaintiff felt necessary and providing coverage available at no notice so that plaintiff could leave whenever she felt overwhelmed by her work environment. The school district responded with a letter agreeing to provide some of these accommodations rejecting some and requesting clarification. The parties exchanged letters again regarding clarification on the accommodations, but the matter went no further after the district's last letter went unanswered. Ultimately, the school district failed to renew the plaintiff’s contract. She had taken a medical leave of absence several months earlier.

The district court determined that plaintiff had a disability given the physical and psychological reaction she had to the employer's progressive discipline system. The court then determined that the school district, although it had some interaction with plaintiff, did not make  a "good faith" effort to resolve plaintiff’s request for an accommodation. The facts on this are, quite frankly, disturbing for employers. Plaintiff specifically failed to respond to the school district’s last letter, and the school district argued that plaintiff simply shut down the discussion, obviating any finding of liability on the part of the school district. But the court noted that the school district, via plaintiff’s supervisor, advised her at almost the same time it sent the last letter that it was recommending that her contract not be renewed. Given that this recommendation was pending, and plaintiff knew about it, the court surmised that plaintiff and a jury could conclude that this school district was not acting in good faith.

The court leaves a lot out of its discussion  - I suggest that the nonrenewal letter timing was mandated by district procedures and that it could not have provided a basis for a reasonable plaintiff to refuse to participate in the interactive process any further.  There was a full school board hearing that had to take place before plaintiff's contract could be terminated, so the non-renewal letter was more of a preliminary procedural step rather than a final adjudication.  But all this was lost on the court.

So what this case stands for is that an employer can undertake a good faith disciplinary process, and find itself saddled with an ADA claim as a result of its efforts, and then have the plaintiff unilaterally close off the interactive process as the employer moves through its disciplinary process requirements. I would think at some point that the plaintiff has to bear some responsibility for keeping her job. For whatever reason, the South Dakota court skewed what should have been a fairly straightforward determination far too much in the Plaintiff’s direction and favor.

Wednesday, October 23, 2013

5th Circuit Notes Title VII is Not a Civility Code, and Then Decides It Is

A recent same sex sexual harassment case out of the 5th Circuit potentially opens the door for a significant expansion of what constitutes a hostile work environment under federal law.

In terms of parsing federal court decisions, any time you see federal judges start off by quoting the Supreme Court’s aphorism that Title VII is not a general civility code for the work place, you should be suspicious that they are about to  enforce Title VII as if it is a general civility code for the work place. That is precisely what happened here. The plaintiff was an iron worker who, by virtue of several comments during a lunch discussion about using baby wipes instead of toilet paper (I guess I really didn't know what iron workers talk about at meal times), was thought to be not quite masculine enough for his supervisor. As a result of this, the plaintiff suffered a fair amount of derisive and personal comments while at work, although none related to baby wipes specifically. He complained, filed a charge of discrimination, and went to trial. The jury believed his harassment claims, but the 5th Circuit Court of Appeals on its first review reversed the jury, determining that there was not enough evidence to support a verdict of sexual harassment. The EEOC, which was prosecuting the case on behalf of the plaintiff, appealed for a full 5th Circuit review.

In the full review, the Court started off by quoting the only same sex sexual harassment case to be decided by the Supreme Court, Oncale, and noting that Title VII is not a statute designed to enforce civil speech codes in the work place. The Court then noted that gender stereotyping (i.e., discriminating against someone because they do not meet the stereotypical behavior associated with a particular gender) is a valid basis for a sexual harassment/hostile work environment claim. So far, so good, this stuff is pretty well established law.

The Court noted initially that the allegations of conduct by the plaintiff – almost daily put downs and occasional physical demonstrations relating to homosexual or feminine characteristics– were enough to establish a hostile work environment. The Court then took on the company’s failure to establish the affirmative defenses to a sexual harassment case allowed by the Supreme Court’s decisions in Farragher and  Ellerth. The Court determined that the company had not undertaken a comprehensive training of its supervisors on sexual harassment, nor had it done a good job of putting the word out for its work force on how to properly report harassment to the company’s HR staff. Moreover, the company’s investigation of Plaintiff’s initial allegations was not terribly effective – the investigation was a 20 minute interview with the plaintiff resulting in him being sent home with no pay for 3 days. There was no disciplinary action against the alleged harasser, although it was clear that some improper conduct had occurred. In short, the Court found that there was both a failure to put into play proper prevention steps, and a failure to follow up on plaintiff’s allegations, both of which effectively denied the employer the ability to use the affirmative defense.

The real meat of the case is found in the surprisingly long and detailed dissent, most of which focused on a  fairly straight forward point – that the EEOC had no evidence to infer discriminatory intent based on gender. The dissenting judges keyed on a subtle aspect of the Supreme Court’s decision in Oncale – that the normal practice of inferring gender animus in male-female sexual harassment claims applies to same sex sexual harassment claims only if an additional step is taken to demonstrate that the basis of the inference is gender. In same sex harassment cases, in other words, a plaintiff must prove that the harassment is because of sex, the motivation is not assumed as it is in opposite gender cases.

The dissent noted that the only basis for establishing that the supervisor felt the plaintiff was not manly enough was the fact that he used baby wipes in lieu of toilet paper and this didn't fit a stereotype. There was no other evidence to show that anyone felt that Plaintiff was being singled out because he was a man, as opposed to being an iron worker just like the rest of them. In fact the supervisor testified specifically that he did not consider the Plaintiff unmanly.  The plaintiff  himself did not testify that he was being treated the way he was because he was not “manly.”

Moreover, there was no evidence that the plaintiff did not act in a masculine way. The dissent stated that without some objective evidence that the plaintiff was unmanly, or at least acting in an unmanly way, plaintiff's allegations were simply of mistreatment at work, and not nearly enough to support a Title VII violation.

In a same sex harassment case, with an all male work force where profane and obscene language is common, the dissent said that the reason for harassment (i.e., whether it is because of sex) must be separately proved by the plaintiff. Bad language and lewd actions are simply not enough. This is particularly true in a situation where the alleged harasser treated everyone at the worksite with derogatory comments, and homosexual insults. As the dissent notes, it make no sense at all that a heterosexual male can discriminate against another heterosexual male by simply calling him names indicating unmanliness, which both know not to be true by conduct or appearance.    

So this is a disturbing case, reflecting an analytical failure by a full federal court of appeals. With any luck the analysis won't get any further, because there are lots of bad words and conduct in a typical workplace, only a few of which are actually motivated by gender animus.

Friday, October 18, 2013

Boss's Day Thoughts

For National Boss's Day,  the WSJ put together some comments from staffing and consulting companies that show how bad bosses can damage workplace.

The comments are useful, if obvious, but I've always thought that to get real examples of bad management and how it affects people's work, you should talk to employment lawyers.  Let's face it, most of us have seen things that would curl the hair of those that still have some. The reported employment law cases are bad enough-the stuff that doesn't get reported is truly remarkable. So here are some hard won lessons regarding bosses from an employment lawyer:

1. Character matters. Supervisors who are dishonest, sleep around, and take advantage of people in their personal lives will, in my experience, infect the workplace with their lousy moral outlook. And notwithstanding our views that people can compartmentalize bad behavior (think Bill Clinton, for example), my experience is that who you are inevitably comes out around people with whom you spend most of your non-sleeping day.

2. Accountability is the hardest attribute to develop in a modern manager.  For whatever reason, people are loath to hold their subordinates accountable until things get absolutely intolerable. Front line supervisors and mid-level managers must be able to identify the strengths and weaknesses of their direct reports, and act appropriately in response to demonstrated instances of poor performance.

3. Supervisors should take care of their subordinates, both in terms of protecting them and ensuring they have physical necessities to perform their work, and to ensure that they develop professionally within the company. This aspect of leadership is often lost on American corporate managers. I saw the best example of its application when I was a cadet at the Air Force Academy. The officer in charge of my cadet squadron and I were getting ready to line up to get a meal at a field kitchen. He pulled me aside and we waited until all the cadets under my command were in the chow line and being served. Only after everyone had food on their plate did we get our meal. "As commander, you eat last," the officer said. The message was explicit-your job as a boss is to take care of the people underneath you first, and worry about your personal needs later.  In the same vein, the best bosses look to develop the professional strengths and mitigate the professional weaknesses of their subordinates so that they continue to grow as employees and develop skills that will make them more of an asset to the employer, and also better themselves.  By the way, the officer in question was easily the finest officer with whom I served in 27 years of active and reserve time.

May all of your bosses be good ones.

Friday, October 4, 2013

More on Convictions And Hiring, Wisconsin Style

A very troubling recent decision out of the Wisconsin Labor and Industry Review Commission should give pause to any employer that does criminal background checks for its Wisconsin employees.  The case is a very clear representation of how state employment commissions are working to undercut employers’ ability to minimize risk to their work force and customer base.

In this case, the Commission was faced with a claim of discrimination by Walmart when it fired one of its forklift drivers after discovering that he had been convicted of sexual assault, first degree reckless endangerment, and false imprisonment, stemming from a domestic incident with his then girlfriend.  The employee’s girlfriend tried to breakup with him and in response, the employee threatened her with a gun and a knife, threatened to commit suicide, and forced her to have sex with him against her will.  When it discovered these facts, Walmart terminated the employee from his warehouse forklift driver position.

Under Wisconsin law, an employer cannot discriminate against an employee because of a criminal conviction unless the crimes are “substantially related” to the particular requirements of the employee's job.  Amazingly, the Commission determined that because the crimes were committed at home, and not at the workplace, and occurred in response to a dating relationship, there was little danger of a repeat occurrence on the job.  The Commission also found that Walmart’s strict oversight of its warehouse operations would likely deter any sexual assaults by the employee in the future.  The Commissions reasoning is, shall we say, sparse – it does not explain why someone who sexually assaults a person in their home is not likely to do it at work, particularly when the evidence presented showed that the employee would be left unsupervised in the warehouse for extended periods of time.

I don’t have a good response to the Commission’s very troubling decision.  Walmart presented the evidence required under the statute and older case decisions to justify its action.  The Commission simply rejected the evidence and precedents.  As a result, employers contemplating taking an adverse action based on a conviction record in Wisconsin should carefully articulate all possible connections between that conviction, and the job in question.  Perhaps if Walmart had demonstrated that the warehouse was opened to customers, or that the employee would be dealing with significant numbers of female employees, the result might have been different.

Some White Collar Concerns, And I Don't Mean Laundry

In a corporate compliance world, companies need to be constantly on the lookout for business practices undertaken by their employees that could expose the company to significant liability, even (or especially) where the company management is unaware of these activities.  A couple of recent cases drive this point home.

The Fifth Circuit held that a corporate entity could be gouged for the unauthorized kickback activity of its employees under the provisions of Anti-Kickback Act.  In this particular case, employers of the federal contractor were accepting meals, drinks and recreational activities from subcontractors in exchange for providing the subcontractors with, well, subcontracts.  Two employees brought a qui tam suit for the alleged kickbacks and the USDOJ intervened, filing its own complaint under the kickback statute.  The Fifth Circuit determined that the Anti-Kickback Act not only allowed recovery from a “person” , but that the term “person” was broadly enough defined to include corporations and other business entities.  The Court then held that the acts of the corporation’s agents and employees could be imputed of the corporation under a theory of vicarious liability.

This is a a new holding and a scary one.  Employers must assure that their employees are aware of the anti-bribery and anti-kickback statutes.  Moreover, companies should be taking steps to periodically monitor the conduct of their employees to insure problems (in this case routine acceptance of gifts), or even the opportunity for problems, is not arising.

Along these same lines, publicly held companies should be aware of the differing standards of liability that arise out of the Sarbanes-Oxley and the Dodd-Frank Acts.  Both statutes protect whistle blowers, i.e, employees who raise concerns about potential SEC violations with their employers and then suffer some type of adverse employment action.  Here is the key difference – Dodd-Frank requires a report by the employee not only to the employer, but to the SEC as well.  Sarbanes-Oxley only requires a report to the employer (although other Sarbanes-Oxley provisions are not quite as employee friendly as Dodd-Frank).  There is a good discussion in this recent Fifth Circuit case.

An employee who makes an internal complaint regarding the company’s securities practices should set off a red flag in any event, but be aware that Dodd-Frank liability only attaches under one set of circumstances, versus the easier reporting requirements of Sarbanes-Oxley .  There are differences in how you respond to each one.

Unpaid Internships Can Be Very Costly

Now that college students have returned to campus, effectively ending the summer season of cheap and relatively well-educated available labor, employers should examine their unpaid internship programs to make sure they are compliant with federal wage and hour law.  This is especially important because the Department of Labor has begun a campaign against these unpaid programs, and the interns themselves are filing lawsuits for back and overtime wages that were never within the contemplation of the parties when the working arrangement began.

Unpaid internships can be a valuable mechanism for an employer to train and recruit potential employees, while at the same time providing some much needed job assistance and experience to experienced workers.  Although the Fair Labor Standards Act specifically authorizes the use of unpaid internships, these positions are subject to some fairly strict requirements.  In April, 2010, the DOL published a fact sheet that detailed a list of requirements for unpaid internships that met the FLSA requirements.  Basically, these internships must:

1. Be similar to training that would be given in an educational environment.
2. Primarily be for the benefit of the intern.
3. Not displace regular employees and work under the close supervision of existing staff.
4. Not provide an immediate advantage to the employer from the activities of the intern; in fact, on occasion, the employer’s operation could be impeded by the intern’s activities.
5. Not be contingent on a job offer at the end of the internship.
6. Understand, along with the employer, that the intern is not entitled to wages.

Note that some of these requirements are not obvious-I've often said that if I have to pick a statute that my clients are most likely violating unwittingly, it's the FLSA.  Given the DOL’s push and scrutiny of these relationships, as well as the increased litigation pace around them, employers should scrub their internship offerings to make sure they are in fact being carried out with these requirements in place.

UPDATE:  Here's an interesting aspect of the internship issue-a federal court in New York has denied a sexual harassment claim by an unpaid intern on the grounds that because she was an intern and not a paid employee, law prohibiting sexual harassment did not apply.  Note that this position is consistent with the EEOC's interpretation of federal employment law, as well.

Your Basic Workers' Compensation Bar: It’s Pretty High

Workers' compensation cases typically are not the stuff of high-end legal analysis.  That’s mainly because much of the jurisprudence has been settled for years  Nevertheless, it's nice to see the occasional case that lays out workers' compensation issues as clearly as this one.  Moreover, the stakes on this case were very high, so there was a lot of incentive on the part of the injured party’s counsel to litigate even the most basic workers' compensation issues.

The case arose out of a tragic airplane crash that occurred in January 2006, which killed several financial advisors employed by Morgan Stanley, as well as the owner of the aircraft and a Morgan Stanley customer.  The Morgan Stanley employees were returning from a client pitch in Kansas City. Although the aircraft was not owned by Morgan Stanley, one of the Morgan Stanley passengers was apparently interested in purchasing the aircraft.

The estate of one of the deceased Morgan Stanley employees filed a a wrongful death action, going after Morgan Stanley and the aircraft pilot.  The trial court dismissed the case, finding it preempted by Illinois workers' compensation law and this appeal followed.

Workers' compensation law occupies a unique position in American personnel injury jurisprudence, because it specifically limits the recovery of an injured employee in exchange for strict liability against an employer.  Employees who are injured at work, or pursuant to work activities, are entitled to payment, regardless of fault, under the specific terms and limitations of a state workers' compensation statute.  Usually the employees receive compensation for lost wages at a specified percentage, as well as full payment for medical bills relating to their condition.  Injuries that are covered by workers' compensation statutes have exclusive remedies, in that an employee injured at work can only recover (or is "barred") under the terms of the workers' compensation act.

The trade-off, of course, is that the money paid out to the employee is only a fraction of what could be recovered in a typical personal injury case.  For that reason, injured employees generally look for some way to get around the workers’ compensation “bar” to individual personal injury lawsuits. That’s exactly what was happening in this case.

In Illinois, employee can sue and recover outside the limitations imposed by a workers' compensation statute if she can show that the injury was not accidental, did not arise out of employment, was not incurred during the course of employment, or was non compensable under the statute.  In this case, the estate of the one of the deceased Morgan Stanley employees tried to evade the compensation limitation by claiming that the injury was not accidental, and that the accident arose out of activity by the employer that was not related to its business operations, and therefore it was outside the statue.

The court made quick work of the argument that the accident was in fact an intentional tort by the employer.  The plaintiff was alleging that the employer, because it didn’t have rules in place for employees riding by private aircraft, had somehow intended (or at least was grossly negligent) for one of its employees to fly in what was supposedly an unsafe aircraft.  The court noted that this particular exception to the worker’s compensation bar requires more than even aggravated negligence or being ordered to perform hazardous work – it must show an actual intent to injure the employee on the part of the employer.  The plaintiff, of course had no such evidence.  The plaintiff also argued that Morgan Stanley was acting in the independent and distinct role of providing air transport services, a role that was unrelated to its status as an employer.  Specifically, the plaintiff alleged that Morgan Stanley’s practice of reimbursing its employees travel expenses showed that Morgan Stanley, a financial investment and consultant firm, was running a de facto transportation operation that was totally unrelated to its financial advising business.  Therefore, an accident resulting from that air transport business was outside the normal employer relationship and outside the coverage of the workers' compensation statute.

As I said, the amount of money at stake here made people creative.  Fortunately, it did not make the court that creative.  The appellate court found that the "dual capacity doctrine" voids workers’ compensation coverage when an employer is acting in two distinct capacities, such that the second capacity confers upon the employer obligations that are independent of those imposed on the company as an employer.  In fact, the doctrine requires a separate and distinct legal persona for the employer that was the ultimate source of the injury.  In other words, an employer has to be acting in two separate capacities such that the second capacity confers different obligations than the employer's business--the employer has to have a separate legal persona completely independent from and unrelated to its status as an employer such that by an established standard the law recognizes the other role as a separate legal person.

That obviously was not the case where Morgan Stanley had simply agreed to reimburse its employees for transport expenses.  The court also specifically determined that the fact that Morgan Stanley allowed a small group of its employees who were private pilots to fly to appointments did not constitute a secondary business activity sufficient to avoid the protections of the workers’ compensation statute.

Employers should be aware of these limitations to their workers’ compensation protection, but can draw plenty of comfort from the fact that courts view the workers’ compensation structure as sacrosanct.  Any legal constructions of the law that weaken or circumvent workers’ compensation protection will continue to be limited.