Rebuffed Coworkers With Influence Create Liability

If you read this blog enough, you will know that intra-office romances seem to come up frequently as a catalyst for some type of lawsuit. In fact, sexual attraction between coworkers is a dominant theme in any number of workplace problems, from harassment of all types to compensation problems to unfair labor practices.  Companies are routinely sued for harassment, discrimination or some other real or imagined slight in situations where a supervisor is attracted to an uninterested (at least at the time of the illegal conduct) subordinate.

But what about a situation where a manager, who is not a supervisor, wants to be get romantically involved with another employee, but is rebuffed?  A federal case out of the First Circuit provides some useful guidance on how the Title VII model of proof plays out in these unusual circumstances.

The male plaintiff was hired as a manager for a company in Puerto Rico. In the course of his position as a regional general manager, a position into which he was promoted less than six months after he was hired, he interacted extensively with a female human resources manager. The two had apparently a friendly, casual flirting relationship that lasted until the woman expressly began indicating she wanted a romantic relationship with him, something in which the plaintiff was not interested. He raised her romantic interest, which she expressed in a number of e-mails, with his supervisors, and in response was told that he should send her a conciliatory e-mail because if he did not, the woman was going to get him fired.

True to this prediction, the HR manager began a systematic campaign against the plaintiff with his supervisors, who then determined to put him on a performance improvement plan. The HR manager was not satisfied with this, and sent a message to company headquarters indicating that she thought any additional opportunity for work improvement was unwarranted and that the plaintiff should be terminated immediately. This is exactly what occurred.

The plaintiff sued for harassment, gender discrimination, and retaliation.  The trial court granted summary judgment to the company on all counts, but the First Circuit reversed with respect to the gender discrimination claim, determining that the plaintiff's termination was a violation of Title VII. The court determined that even though there was no supervisory relationship between the spurned HR manager and the plaintiff, a jury could find that she was effectively engaging in quid pro quo gender discrimination and that she was the proximate cause of the plaintiff's firing for his failure to comply with her wishes. The court set the following test for what is effectively a cat's paw discrimination claim: the plaintiff's coworker must make statements or take actions maligning the plaintiff for a discriminatory reason and with the intent to cause the plaintiff's termination or other adverse employment action; the coworker's discriminatory acts must proximately cause the plaintiff to be fired; and the employer acts negligently by allowing the coworker's actions to achieve their desired effect, though the employer knows or should have known of the discriminatory motivation.

The court noted that the female manager's motivation here was discriminatory-she was responding to being rebuffed on a sexual basis, something that had she been a supervisor would have resulted in strict liability for the company.  Her actions were a direct factor in the termination of the plaintiff. And, most importantly, the people actually making the decision were aware of her conduct and the basis for it. Under the circumstances, the company could be held liable for gender discrimination.

An interesting case, and a useful one for the analytical steps demonstrated by the court in funding liability.

Footnote: because the relationship did not appear to affect the plaintiff's work performance, the court determined that the romantic come-ons were not harassment, and that the retaliation claim failed because the plaintiff could not show that he was terminated as a result of his complaints about the female manager. This is consistent with a limited view of the evidence; I think I would've found harassment under the circumstances.

Is Telecommuting Now A Mandatory Accommodation for Disabled Workers?

It’s been an axiom of disability discrimination law that the courts will not overrule an employer's legitimate workplace judgment and that employers can structure jobs and establish job qualifications as they see fit.  But some recent decisions have started to erode that doctrine, as judges begin to take issue with what they perceive to be unreasonable employer requirements. This is a troubling trend-most judges do not have experience with mainstream employment workplaces, coming up as they do in either either civil service or law firm practice.  Moreover, these same judges seem to vary in their opinions as to what constitutes a proper job description. Frequently they base their opinions not on  a company's assessment of the requirements of the position, but rather their personal belief as to whether it would be too much trouble for an employer to modify its job requirements in particular circumstances.  These kinds of ad hoc assessments make it very  difficulty for employers to establish reasonable policies, or even assess whether their activities are lawful.  And judicial second guessing ultimately imposes financial cost on employers as they try to keep pace with whatever the latest judicial perceptions seem to be.

Case in point:  a recent federal Sixth Circuit decision in which the EEOC challenged Ford Motor Company’s job description for resale steel buyers.

The fundamental dispute arose over  whether the plaintiff, who served as an intermediary between steel suppliers and auto parts manufacturers producing products for Ford, needed to be physically present at work to properly complete her job.  The court described the essence of the job as "problem solving"-the position required a resale buyer to be able to deal with regular and emergency supply issues between steel suppliers and the manufacturers.  This type of problem solving required the resale buyer to interact with members of the resale team, suppliers and others in the Ford system whenever a supply issue arose.  Ford managers made the fairly uncontroversial business judgment that they wanted these interactions to occur face-to-face whenever possible and that email and teleconferencing were insufficient substitutes for in-person team interaction.

The plaintiff suffered from irritable bowel syndrome, which in its severe manifestation can be absolutely debilitating.  Unfortunately, her symptoms became worse over the course of her employment with Ford and she began to take intermittent and irregular FMLA leave when she experienced significant symptoms.  The company tried to accommodate some of the attendance problems by allowing the plaintiff to work a flex time telecommuting schedule, but the trial routine was unsuccessful because the plaintiff could not make regular appearances at the office.  The company did allow her to do some remote work from home on an informal basis to keep up with her paperwork, but continued to require her to meet in-office hours requirements.

Ford had a telecommuting policy authorizing employees to work up to four days a week from a telecommuting site, although it noted that not all salaried employees eligible to apply for telecommuting would have jobs that were appropriate for those kinds of arrangements.  Some other buyers, not in plaintiff’s position, telecommuted one scheduled day per week.  But when the plaintiff requested telecommuting, Ford determined that her position was not appropriate for it, including that because her absences were unscheduled and unanticipated, the telecommuting policy would not be effective.  The company offered the plaintiff several other potential accommodations at work including seeking another position, that would be suitable for telecommuting, but the plaintiff rejected each of those options.

The district court granted summary judgment to Ford noting that the plaintiff was unable to meet the basic requirements of her position, and stating that the court would not second guess the employers’ business judgment regarding the essential functions of the job with respect to irregular telecommuting up to four days a week.

But the Sixth Circuit reversed.  Instead of deferring to the employer's assessment of its own job requirements, the court required Ford to demonstrate that physical presence in the workplace was an essential function of the plaintiff's job, or alternatively, that the proposed telecommuting arrangement would create an undue hardship for the company.  The court found that Ford could not show that regular attendance was an essential part of the resale buyer position, and in an exercise in sophistry( I find the court's deliberate contortion of its analysis to be quite disingenuous), the court noted that a physical worksite can now mean simply a place where the employee is capable of performing the job. The court said that Ford had established by uncontroverted testimony from its managers that physical presence was required for the resale buyer position.  But the court simply rejected this evidence.  In fact, the court looked at Ford’s efforts to accommodate the plaintiff, including the fact that it allowed her to actually work from home for a while, as well as the telephonic and email centric nature of the communication with the clients, and said that Ford hadn't put on enough evidence to show that the job could not be done by telephone or email.

As noted above, I find this decision very troubling.  Basically, the Sixth Circuit simply rejected the employer’s business judgment on how it wants its work accomplished.  Any employer that has a telecommuting policy needs to be very careful about taking any action with respect to an employee whose disability requires her to be absence from the workplace, but where remote work might be possible.  I can see companies eliminating telecommuting policies entirely (which would strengthen the argument that people need to be in the workplace, but reduce the flexibility companies routinely like to maintain), or at the very least resetting job descriptions so that telecommuting policies will simply not apply.  At the end of the day, an appellate court’s rejection of what had heretofore been considered an employers’ fundamental right to structure jobs the way it sees economically fit, may ultimately result in less options for employees rather than more.

The Tricky Case of the Third Party Harassment Claims

Actually, this is not that tricky.  The 4th Circuit recently affirmed something that employment lawyers have been telling their clients for years – an employer's work environment extends throughout the span of the company’s control, and includes customers, vendors and other third parties that come onto the premises.  In this case, a female receptionist and customer service representative was subjected to a multi-year exposure to sexual and racial slurs by an independent sales representative for another company.  Plaintiff interacted with this gentleman (I use the term loosely) more than once a day over the course of the several years that he was representing his company.  The male sales representative continuously made racist and sexist comments, displayed lewd pictures, and engaged in just about ever other vile type of behavior you can imagine in the presence of the plaintiff and other women in the office.  Some of this conduct took place in front of the plaintiff’s supervisor, who also observed the immediate and stressful emotional effect that this individual’s conduct had on the plaintiff.   In addition, the plaintiff reported the offensive conduct several times to other members of her employer’s management team.

For some inexplicable reason, the company did not react immediately to this, but let it continue over a period of several years.  The plaintiff ultimately took medical leave because of the stress, and then resigned, but not before she filed a charge of race and sexual harassment with the EEOC.

The 4th Circuit had little trouble in reversing the trial court’s determination that the male sales representative's conduct did not rise to the level of harassment, and even if it did, the employer was not liable because the conduct was by a third party.  Using the standard that the employer must “know or should have known” of the third party’s action to impose liability on the employer, the court quickly determined that there was plenty of evidence that the company knew of the harassing conduct, knew it was unwelcome, and knew it was having a significant effect on the plaintiff.  The plaintiff’s supervisor herself referred to the third party sales rep as a “pig” and acknowledged to the plaintiff on several occasions that his conduct was inappropriate.  The court also noted that it was only after three years of this that the company finally woke up and determined that it needed to act against the harasser by banning him from the premises.

That late recognition was not enough to escape liability.  The message here is the same as it has always been – do not allow your employees to be subject to actionable behavior, whether it comes from co-workers, supervisors or third parties.

Federal Regulatory Law Trumps State Law Wrongful Termination Claims

As the federal regulatory scheme expands in covering various industries, it's important to remember that these regulatory systems frequently act to preempt state coverage of employment law issues, particularly in the area of retaliation.  The federal government maintains anti-retaliatory legal regimes in aviation, energy, securities, banking, and a host of other areas.  Frequently it is to the advantage of the employer to be able to move a case from state court and to either a federal court or federal administrative law forum.

That’s what happened in a federal Ninth Circuit Court of Appeals case involving a flight engineer (pilot) and his employer, Japan Airlines.  The plaintiff alleged that a fellow pilot was not medically qualified or fit to operate an aircraft.  This is a classic safety of flight complaint, and an employee who raises such an issue is protected under FAA law and regulations as a whistleblower.  The plaintiff alleged that following his complaint, JAL in retaliation required him to undergo psychiatric evaluation and prevented him from working as a flight engineer.  The flight engineer sued claiming a violation of the California state law whistleblower statute, along with a wrongful termination in violation of public policy count (another state claim), and a violation of AIR21, a federal statute which deals with retaliation protection for whistleblowers under the federal aviation law.

The Ninth Circuit determined that the FAA whistleblower law and its retaliation provisions preempted any state law claims because of the nature of the plaintiff’s allegations.  Specifically, by complaining about pilot qualification and medical standards, two areas where the federal regulatory framework is so pervasive and federal interest so dominant that states are presumed to have no interest, the plaintiff pleaded himself out of state court.  The court noted that there was no such federal preemption with respect to employment law or related aviation claims such as race or gender discrimination, but that safety of flight issues were solely a federal matter.  Just something to keep in mind if you work in a highly regulated federal arena.

The New York Times Will Need to Start Using Its Online Thesaurus

To find similes for the word "hypocritical". Really, the irony here is just too rich-the Gray Lady, ostensible supporter of equal rights, slayer of the patriarchy, champion of political correctness everywhere, can't handle a single request by its executive editor for equal pay.

Seriously, you can't make this stuff up.

The NFL Hits Just Keep On Coming

Tortious interference with a contract, anyone?  I can understand why South Florida University suspended its strength coach after he made comments that probably reflect some deep frustration with the former player.  But his knock on the 49ers' draft pick expose him and his employer to a potential lawsuit for interfering with this kid's livelihood.

Just another bad Twitter outburst--seriously, teams should start getting policies in place on this stuff.

Employers Increasingly Turn to Social Media for Unfiltered Information About Their Workforces

Companies that are not using Facebook and other social media to screen hiring candidates will soon be in the minority. The very thoughtful discussion in this article contains survey data indicating that almost 40% of employers are using social media as an aid in hiring. More importantly, almost half of those screening with social media found something on a candidate's site that disqualified her from the position she sought.

50% is a pretty big number. And it's more than twice the number of employers that discovered something that caused them to want to hire a candidate.

Moreover, given the firestorm that is breaking over what several professional football players tweeted about the NFL's first openly homosexual player, many companies view their employees' social media posts as a ticking time bomb of liability. The article notes that healthcare professionals, for example, discussed private patient information on their social websites, sales employees e-mailed or posted customer credit card and account information to sites outside the company firewall, and any Google search will show dozens of examples of inappropriate comments about jobs, bosses, coworkers, company leadership, etc. leading to unwanted publicity and legal exposure.

So the short answer for employers is to have a social media policy that doesn't excite the folks over at the NLRB, but delineates employee responsibilities and company standards. At the same time, the company should have an operations policy that describes for managers how the company social media policy will be monitored and enforced.

Once again, it's good to be an employment lawyer.

Leaked Johnny Football Scouting Report Raises Some EEO Concerns

Call me hypersensitive, but if I had a client that was using prehire reports like the allegedly legitimate scouting report on Texas A&M star quarterback Johnny Manziel, I'd be on the phone to them with some advice. Starting with, "Set aside some money for employment litigation expenses."

The overall tenor of this thing is troubling, and some of the language is outright problematic. I'm thinking specifically of the comment that Manziel has "outlaw bloodlines", which clearly implies that some of his reckless behavior is attributable to a genetic quality on his father's side. This is, as we say in the business, "a smoking gun" for genetic discrimination, which violates the federal Genetic Information Nondiscrimination Act.

As with any entertainment business, character issues are a crucial hiring factor in the NFL. But attributing character traits to some type of genetic anomaly (at least without an ironclad medical basis) is just idiotic. And it's especially idiotic to put your prejudices in writing, in a nonprivileged document that could readily be discovered in litigation.  I'm not sure that Mr. Manziel has a case personally, since he was taken earlier in the draft and New England did not have a chance to effectuate the bias contained in the report. But if this is the kind of information that is routinely placed in the scouting reports, NFL clubs are opening themselves up to potential litigation.

Know Your Evidence, Part 10

I really can't explain the results in this particular case from the Northern District of Illinois, except to say that somehow the company just didn't bother to look at its own internal timekeeping system, with the result that it failed to realize it wrongly terminated an employee for tardiness when, in fact, the record showed that she had been at work on time. The result was a reversal by the Seventh Circuit Court of Appeals of summary judgment, followed by this Title VII retaliation case making its way back to the trial court where it will be heard by a jury, unless it settled. Which is what I recommend for the employer.

The company kept saying that it terminated the plaintiff for a single reason-tardiness-sometime after she filed an EEOC complaint alleging she'd been discriminated against on the basis of race when she was denied a promotion. True to form, she then sued for retaliation, and also true to form, the original race discrimination claim was dismissed on summary judgment. But because the alleged basis for the company's decision--i.e. the fact that the plaintiff was late to work--was inconsistent with the company's own time punch records, the Court of Appeals found that there was a factual dispute, and sent the case back for trial.

This type of error should be picked up in the initial factual investigation when a company decides an employee should be terminated. As you read the court's opinion, the company (and to a certain extent its counsel) simply looks like it did not understand its own rationale for the termination.  The end result is predictable.

Federal Statute Creates New Burdens for Employers Filing Unemployment Claims

A little noticed federal statute – the Unemployment Insurance Integrity Act – has the potential to create some big problems for employers who deal with unemployment insurance claims.  The statue was passed in 2011 to little fanfare.  It was focused on trying to deal with unemployment insurance fraud, but seems to have focused on relatively minor employer fraud issues, rather than the much larger and pervasive employee fraud problem, and basic government mismanagement of the unemployment insurance programs at the state level.

The statute provides that states' unemployment compensation schemes must require employers and their agents to timely and adequately respond to a state unemployment agency's request for information.  This is true regardless of the state of the employee's claim, and includes the initial unemployment claim, something that is frequently ignored by employers who do not wish to contest unemployment claims by their terminated employees.  The statute requires that if an employer engages in a pattern of non-existent or inadequate responses, the state is to charge the employer's unemployment insurance account for all benefits claimed, even when the claimant is determined to be ineligible.  In other words, an employer can lose the right to challenge frivolous unemployment claims if it supplies bad information, or no information, in response to an initial unemployment charge.  States are also required to put civil and criminal penalties in place for these failures to respond.

So employers should pay attention to these new requirements, particularly since state unemployment insurance agencies only allow a limited period for filing responses.  The required state laws penalize an employer for willfully making a false statement or willfully failing to disclose a material fact related to termination of an employee with penalties that are imposed based on repeated instances this conduct.  Traditionally, states have not required an employer to respond to an unemployment notice under circumstances where eligibility for the unemployment insurance is not in dispute, such as in a layoff situation.  Under the new statute, a response is likely required, regardless of the circumstances.  For employers that have traditionally elected to simply not contest a claim for benefits (for whatever reason) the statute works a major change.  Simply put, employers should now never ignore a request for information from an unemployment insurance agency, even in situations where the employer is electing not to challenge the claim for benefits.  Depending on the state, the company could find that two failures to respond (or a failure to respond that is late by more than a day) could constitute a pattern of failure under the state statute, and subject the employer to the loss of its ability to challenge bogus claims in the future.

So, some quick advice: do not provide written separation agreements to terminating employers providing that an employer will not contest an unemployment insurance claim.  Regardless of whether the employer wants to, a response is now required, with accurate information.  Employers must consider that their payroll service or unemployment insurance contractor will be faced with accelerated requests for information and may lean heavily on the employer to provide this information quickly.  Accordingly, employers should review their state laws and train their staffs to recognize these claims and notices for unemployment insurance so that they can be flagged for quick follow-up action.  To facilitate processing, the employer should consider using a system similar to that for managing workplace absences (and if you don’t have such a system in place for workplace absences, you should get one) involving a single or limited point of contact for all unemployment insurance inquiries and responses.  Finally, employers should consider eliminating the offer of not contesting unemployment compensation from their severance plans.  This will require some thought with respect to severance terms and offers, given that unemployment compensation is frequently a significant economic benefit to a departing employee.

Some Thoughts on the Unionization of College Athletes

The recent decision by a Regional Director of the NLRB to find that Division I college football players at a private university are, in fact, employees for purposes of union organizing is potentially a watershed event for college athletics. If this decision is not reversed during the appeal process, then it will mean the end of college athletics, at least as we know them here in the United States.

Some of the early commentary on the decision reflects a view that the analysis is a tightly crafted piece of legal wordsmithing that is likely to stand up on review by the NLRB as a whole and the federal appellate courts.

I have no idea what those early commentators were reading, but I don't think it was the NLRB decision. The document itself contains what I consider gigantic holes in terms of its reasoning and legal support. It flat-out ignores certain key aspects of the college-student relationship that I think will prove fatal to the analysis on appeal. But mainly, it simply proves too much with respect to the employee status of the college athletes.

The NLRB decision uses a lot of ink detailing the amount of control the coaching staff has over Northwestern's scholarship football players. In fact, that's one of the key weaknesses of the decision-what is described throughout these paragraphs is not an employer-employee relationship, but a relationship between students and the people responsible for their education and welfare, who stand in an in loco parentis status rather than a boss status. No employer in the United States maintains the kind of control the Northwestern coaches have over their charges. To me, that argues more heavily in favor of their student status than anything else in the decision.

The Regional Director simply glosses over the key question of whether students at a university on scholarship are performing work subject to a contract of hire, for remuneration by their employer. There's no discussion about whether the scholarships and associated room and board payments even resemble wages. For example, scholarships are a fixed value, independent of the quality or amount of work performed by the recipient. Second or third string scholarship players at Northwestern get just as much money as the guys on first team. That doesn't resemble any wage scale that I'm aware of.

The Regional Director discounts the key aspects of a college’s academic emphasis with respect to eligibility, postseason activities, and the like. He notes that during certain times of the year participation in the football program involves a lot of hours, in some cases perhaps more hours than the players spend hitting the books. I have no idea whether that's true-there was no objective evidence cited for that proposition, just anecdotal testimony-but I do know that if you're not hitting the books to a certain degree, you can't play. So whatever the emphasis on scholarship, it is in a very real sense at least as important as athletics given that your athletic performance does not determine your scholastic eligibility, but rather, the other way around. Graduation rates also dictate postseason play, a concept totally foreign in any employment relationship.

Even something as fundamental as the burden of proof in the case is contorted in the Regional Director's analysis. I'm unconvinced that a group of people who walk into an NLRB office claiming to be employees can somehow shift the burden of proof instantly to the target employer, which then must put on evidence to show that, whatever the claims, these people are not employees.

It will be very interesting to see what happens to this case on appeal. But for a minute, imagine the impact if college players are found to be employees rather than students. The value of their "wages", i.e. their tuition, books, living expenses, etc., becomes instantly taxable. Moreover, the fact that colleges would be free to pay additional "wages" would, in a real sense, very quickly spell the end of college athletic programs at a number of universities that simply would not be able to compete with the economic prowess of the major college football and basketball schools. It might also mean the end of most nonrevenue sports, because the dollars flowing into those sports from the football/basketball programs would have to be diverted to maintain the football or basketball edge.

Unlike some other commentators, I don't think this decision has a very good chance on appeal. And if nothing else, I would expect a legislative fix to be engineered if it appears likely that colleges are going to lose a big chunk of that $11 billion of annual revenue they receive from their athletic programs. But if it does survive, I think we can say goodbye to most if not all of the practices that we recognize as integral to college athletics today.

Saving Non-Competes with Forum Selection Clauses

I have been counseling a lot of clients on the use of non-compete agreements lately, and given our firm-centric focus in California, the issue often arises as to whether non-competes can ever be enforced for California employees.

Typically, the answer is “no”; California law categorically rejects any type of post-employment restriction on an employee's ability to seek work, even with a directly competing company. In addition, California courts historically reject employer efforts to get around the California non-compete rule by using a choice of law provision designating a non-compete friendly jurisdiction to hear any disputes. But a recent Supreme Court decision might be giving some life to the ability of out of state employers to enforce their non-compete provisions on their California work force.

The Supreme Court case held that contractual forum selection clauses should be enforced unless particularly unfair or exceptional circumstances exist. The ruling follows the trend already established in some California federal court cases. In one case, a Washington-based employer was permitted to enforce its Washington forum selection clause and choice of law provisions against California sales employees who left for a competitor. When the employer filed suit in Washington, pursuant to the selection clause, the employees tried to block the action by suing in California federal court. But the California federal court determined that the forum selection clause was valid. Other California federal courts have found forum selection clauses valid, for example in the case of a Pennsylvania company seeking to transfer non-compete cases from California to Pennsylvania. In both cases those courts ruled that the possibility that Pennsylvania law might be applied to the non-compete clauses was not a sufficient basis to void the forum selection clause in the employment agreements.  And a recent state court decision applying Pennsylvania law to a California resident employee is here.

So for non-California based employers, don’t give up hope with respect to your non-compete agreements. But you should start now, drafting provisions, in your employment agreements that contain forum selections clauses as well as choice of law provisions. The tide may be turning in a way that allows you to protect your business.

Silicon Valley Job Searching Advice

Some potentially useful information for both employers and job seekers in the tech world is here.

A Bad Attitude Policy and the NLRB

Most companies will terminate an employee for a lousy attitude that has tangible effects with co-workers and customers.  Sometimes that prohibition is expressed in an employment policy, most times it is not.  A recent NLRB decision dealing with the former situation should provide some solace to employers who seek to discipline employees that would rather be working somewhere else and don’t care who knows it.

The case concerned a restaurant that had a rule in its employee manual that prohibited insubordination or lack of respect and cooperation with fellow employees or guests, including “displaying a negative attitude that is disruptive” to staff and customers.  For some reason, the general counsel of the NLRB took the position that the rule clearly encompassed an area of protected concerted activity, in that employees would assume that the rule would prohibit them from being critical of the employer, which would inhibit the employees from raising controversial topics, including terms and conditions of employment.  Fortunately, the majority of the Board (in this case, the two Republican appointees) determined in fact that the relevant policy language limits the policy to unprotected conduct that would interfere with the legitimate business concerns of the restaurant.  In this case, "unprotected conduct" meaning being a butthead, specifically using an obscenity in front of the restaurant patrons, a "fit of pique [that] wasn’t part of the service that guests reasonably would expect".

The NLRB has been on the warpath against employment policies lately, taking a position that I can best express as, “if there is any possible way that a provision could be interpreted in a way that violates federal labor law, then the policy is illegal and must be voided.”  Fortunately, there are some more rational heads on the Board, and they prevailed in this case.

New EEOC Guidance on Accommodating Religious Dress in the Workplace

The EEOC recently issued its interpretation of Title VII's requirements that employers accommodate religious practices of their employees.  The guidance is here. The only thing that I would note in this publication, which is merely a restatement of current law, is that the EEOC is using the words "undue hardship" into this guidance. However, the term "undue hardship" does not mean the same thing as the phrase does in the context of other employment statutes requiring accommodation, such as the Americans with Disabilities Act.

In fact, the law regarding religious accommodation has remained relatively stable for several decades-an employer is not required to accommodate a religious practice of an employee if doing so would create more than a "de minimis" effect in the workplace. This is a significantly lower standard of harm that an employer has to demonstrate than is found in the ADA. I'm not sure why the EEOC is using the same term, except perhaps in an attempt to get people to believe that the burden is somehow higher than it actually is.

The New Up and Coming "Money Ball"

Here's a recent article from the Journal concerning the new technology available to sports managers to assess performance. It's no surprise that this is starting out in baseball, with its discrete, individual plays, easily captured and measured by the camera systems. Presumably something similar to this will be coming shortly for sports like basketball, hockey, lacrosse, etc. (basketball already has a slightly less effective player/position measurement system in use; what's described in this article will refine it considerably).  I don't know if NFL football will ever get to the point of accurate measurement described in the article, because there are too many people moving in close proximity for precision tracking by the cameras.

This type of system poses an interesting question for employers generally. How much observation of the workforce makes sense for effective management? I've commented previously on employers using RFID tracking to follow employees around the office, in an effort to determine optimal seating arrangements, office usage, break times, etc. Some employers continually monitor computer workstation activity to measure employee performance. But at some point, doesn't this become self-defeating? A workforce that believes itself to be 100% monitored 100% of the time does not sound like a happy or productive group.  And while measurements of speed, strength, and reaction time lend themselves nicely to sabermetrics, the truth is that people are not continuously productive throughout their days at work. Some people get a lot of work done immediately and then coast through the afternoon; some people are more productive later in the day; some people are highly effective procrastinators who leave everything until the last minute. The observation systems described in this article would seem to move people in the direction of some type of continuous level of effort that would not accommodate their idiosyncratic strengths (or weaknesses).

Of course, professional athletes making a fair amount of money for playing a game usually understand that their effort level on the field is required to be a consistently high, and most of them have grown up being filmed from the time they were in middle school. Observation is probably less of an issue for these folks. But for the normal workplace, I would guess the act of generating this kind of data would create more problems than it solved.

Supreme Court Extends Sarbanes-Oxley Protections to Non-Public Company Contractors

The Supreme Court formally extended the whistleblower protections of the Sarbanes-Oxley Act of 2002, determining that whistleblowing employees of contractors performing work for public companies are covered by the Act's provisions against employment retaliation.

You may recall that Sarbanes-Oxley ("SOX") was enacted by Congress following the widespread malfeasance by executives of the Enron Corporation, as well as their accounting and legal service providers. The statute was enacted to control conduct of accountants, auditors, and attorneys who work with public companies. It contains fairly elaborate provisions to protect whistleblowers, who might face employer retaliation for reporting corporate misconduct such as mail or wire fraud, bank fraud or securities or commodities fraud or fraud affecting stock prices. The language relating to whistleblower protection specifically states that it applies to public companies, or officers, employees, contractors, subcontractors or agents of such companies. The question before the Court in this case was whether the statute shielded "only those employed by the public company itself" or employees of privately held contractors and subcontractors-such as investment advisors, law firms, or accounting enterprises-performing work for the public company.

This particular case involved contract employees who were performing services for mutual funds, which the Court noted typically have no actual employees. That was true in this case; the plaintiffs were hired by the defendant contractor under a contract between the defendant and the mutual fund and serving as portfolio managers for the various fund entities. After reporting what they believed was improper accounting or costing methods relating to management of the funds, the plaintiffs were terminated.  They filed administrative complaints under SOX, and then proceeded into federal court. A federal district judge initially denied the employer's motion to dismiss, but on appeal, the First Circuit granted the motion, finding that the SOX anti-retaliation provision was restricted to employees of public companies, and not third-party contractor employees.

The Supreme Court reversed, determining that the plain language of the statute indicated that it was to apply to the employees of contractors performing services for public companies. In its decision, the Court said that such an interpretation was consistent with the purpose of the statute, i.e., helping ferret out potential fraud in public company financial operation.

In an interesting side discussion, the Court noted the contractor's defense that the original statutory language was focused only on situations where a public company hires a contractor to effectuate terminations, something referred to as an "ax wielding specialist", and portrayed by actor George Clooney in the movie Up in the Air. The Court said that the history of SOX indicated that retaliatory axe-wielding specialists were not the real world problem that prompted Congress to add contractors to the statute.

Corporate lumberjacking aside, this decision potentially breaks a lot of new ground. Although, as noted by the majority, the Department of Labor already takes the position that contractors of public entities are covered by the whistleblower protections of SOX, the majority expands the scope of the coverage even further. Virtually all employees of private businesses that do business with a public company can now avail themselves of SOX protection.  And public company employees who hire other people to work for them (think babysitters and gardeners) theoretically extend SOX protection to those personal hires, as well.  The majority noted that these concerns were more theoretical than real, but employers should note that this decision now allows virtually anyone to trigger the highly invasive and expensive SOX charge investigative procedure.  So private employers must now put in place at least some of the mechanisms used by public companies to ensure compliance with SOX requirements.  Typically this takes the form of internal policies to identify potential retaliation issues and outside management of complaints that might trigger a SOX investigation.  Some of this should already be in place; virtually all employers must be aware that any type of retaliatory-like discharge opens up the potential for litigation, either under federal law, or under a variety state wrongful discharge claims. But the Court's decision broadens the range of employers who have to to examine carefully the bases for any termination decision, especially where the employee has raised a concern about the business activities of the employer in servicing the employer's customers.

Some Rational Thinking on Unemployment, Long-Term and Otherwise

Megan McArdle has a very nice article here on the causes of unemployment, and the causes of extended unemployment. The studies that she cites mirror what I've seen with respect to the unemployed workforce, both from a personal and professional standpoint. But very little of this type of rational, numbers-based discussion seems to make it into the mainstream debate about the issue.

Bottom line-extended benefits for unemployment, whether characterized as unemployment compensation, disability benefits, or whatever, seem to exacerbate the long-term unemployment issue. People are apparently willing to tolerate a lower standard of living for an extended time when getting reemployed becomes difficult.  Making it difficult to fire people makes employers unwilling to hire people; the United States has a much lower unemployment rate than most the countries in Europe, where job security exists as a matter of law.  And finally, programs that ease the emotional discomfort of job hunting (not unemployment, per se) seem to be the most effective at getting people back to work.

This article contains some very useful thoughts for public policy types dealing with what is starting to appear like an intractable problem.

A Clothes Question at the Supreme Court

Sometimes I wonder if the justices at the Supreme Court throw their hands up in frustration at some of the silly issues they have to decide. Such as in this case, when some of the arguably brightest people in the United States are asked to define the term "changing clothes".

In this Fair Labor Standards Act case, the stakes were reasonably high for the employer-compensation paid to employees over small increments of time that the employer, US Steel, quite reasonably thought it had dealt with through a collective-bargaining agreement. The FLSA requires employers to compensate employees for time spent putting on and taking off ("donning and doffing" in the FLSA vernacular) clothing or uniform items that are directly related to the specific work an employee is to perform. The FLSA contains a specific provision that allows employers and unions to exclude time spent changing clothes or washing up (which normally would be time for which the employee must be paid) from compensable time, presumably in exchange for a higher hourly rate of pay, or some other employee benefit.

Notwithstanding this provision, and the fact that US Steel had negotiated such a time exclusion into its collective-bargaining agreements, a group of steelworkers argued that putting on protective clothing required by their job, including shoes, helmets, eyeglasses, earplugs, work gloves, and a respirator, were not actually "clothes" within the meaning of the statute, but rather protective devices. Under the employees' argument, the time spent putting on protective devices, as opposed to "clothes",  is not included in the collective-bargaining agreement exclusion, and therefore is compensable time.

This sounds like a somewhat fatuous argument, and I think many of the justices agreed, although they did not say so precisely. What the Court did was unanimously find for the employer, determining that the time spent putting on protective clothing is properly excluded from paid time under the terms of the appropriate CBA provision. The court noted, however, that glasses, earplugs, and respirators-items that are not typically considered articles of clothing-were not covered under its definition, and time spent putting on these items would normally be compensable even in the presence of a collective-bargaining agreement exclusion. The court then determined that since the donning and doffing of these items was a negligible part of the total time putting on the protective clothing, the overall activity would be considered "changing clothes" within the meaning of the exclusion.

Because employers have generally become more compliant with their timekeeping obligations under the FLSA, lawyers for employees have increasingly shifted focus to find marginal activities that might not be compensated by the employer. These types of activities are typically found at the start or end of the workday, and have been the subject of a great deal of litigation, especially in states with highly restrictive FLSA requirements for employers. The court's definition of "changing clothes" appears to be a common sense one, but it may have some significant ramifications for employers in operations where putting on uniforms, or protective gear is an important part of the workday.

Open Offices Work About as Well As Open Classrooms

Here's an interesting discussion of studies about open offices and workplace efficiency.