The Scott Pelley Debacle

 

Just a relatively short comment regarding the Scott Pelley debacle at CBS. Regardless of how you feel about Mr. Pelley's criticisms of his management or his performance on 60 Minutes, this situation is a clear demonstration of one of the fundamental principles of employment relationships and also a demonstration of what I consider to be an iron law of employment legal advice.

A quick summary-Scott Pelley decided to take his complaints about CBS management to an employee town hall meeting, where he confronted his immediate supervisor and called the CBS News editor-in-chief, Bari Weiss, unqualified, and his immediate supervisor barely qualified. He wrapped his very public criticism in the words “you'll never be welcome here,” directed at his immediate supervisor. CBS fired Pelley for cause shortly thereafter.

Pelly's conduct was clear, direct, intentional insubordination; an open and personal denigration of management made in front of other employees. Under these circumstances, CBS had every right (and based on its relationship with its owner, an obligation) to terminate Pelley's contract.  That's the fundamental principle being demonstrated.

The iron law of employment advice is a little more nuanced. But it goes something like this-when you have a troublesome employee that you would like to get rid of, whose performance doesn't provide you with a clear basis for termination under the terms of his contract or otherwise, who gives you a drop-dead, bona fide, unrelated-to-anything-else, reason to fire him, take it. And take it immediately. Do not perseverate, do not pass Go, do not investigate any further than necessary to establish a good faith belief that the conduct occurred.  You, as an employer, have been given a gift-a reason to get rid of this person that is unlinked to any dubious basis and that provides a complete challenge to any allegations of discrimination or otherwise wrongful discharge.  

That's what CBS did, and from a legal perspective, it was the smart thing to do.

The "Mansfield" Firm Craters

A nice piece of news ends the week for HR Law Guy- Diversity Lab LLC, a for profit DEI consultancy, has shut down. The California-based company specialized in “certifying” law firms as properly diverse under its so-called Mansfield certification program.

From their earliest days, I've maintained that diversity, equity, and inclusion programs violate the most basic tenets of US anti-discrimination law.  Virtually every one of these programs, which rely on the concept of intersectionality (the idea that there is a sliding scale of righteousness in life decisions that is measured by individuals’  race, gender, sexual orientation, religion, and other protected categories), ultimately devolve into some kind of quota system using suspect classes as a determinant in hiring, firing, promotion or other employment decisions. 

Jumping on the post-George Floyd racial equity bandwagon, Diversity Lab set up a certification program for law firms requiring them to have candidate pools made-up of at least 30% of individuals with protected characteristics, and a “certification plus” program requiring firms to certify that they actually implemented the 30% employment goals in their final employment decisions.  These quota systems were called “Mansfield certifications”, and were embraced by a number of major law firms anxious to showcase their bona fides as true participants in the social justice movement.

There were two problems with this approach. The first was that it relied on using protected categories as a basis for employment decisions, in violation of federal and state laws. The second was that this type of coordinated and collusive conduct by businesses, even under the social justice umbrella, had the potential to run afoul of antitrust laws.  

These programs work fine under a federal administration that regularly turns a blind eye to bigotry of the proper kind. When a new administration that was actually focused on enforcing federal discrimination law came into office, things began to change quickly.  DOJ, the EEOC, and the FTC all began investigations into these protected factor based hiring systems. The end result was that law firms began backing away from Diversity Labs and rethinking their quota systems in an effort to avoid federal scrutiny. That was the end of the company.

I can’t be too upset about the result—the irony of law firms jumping on the discrimination train was almost too much.

Deli Platter Discipline

Personal use of company expense accounts or outright fraud on company expense accounts is not that uncommon and it usually results in severe consequences. Most businesses will not put up with employees who exhibit dishonesty in their basic financial dealings.  Even minor inconsistencies, under circumstances where there is little or no doubt about intent, can result in immediate termination for the most senior executives.  

But the same general rules that apply to any employee discipline situation apply here as well. Discipline that seems unfair or that is performed in a way that casts doubt on the employer's motives can have significant blowback.  

Such was the recent case of a California JP Morgan account manager who was terminated over a business expense of less than $700 for a deli tray that was ordered as part of a Super Bowl party. JP Morgan terminated the executive, a 20-year employee with major account responsibility, because the company believed he had expensed food for a private gathering for family members to his $10,000 personal corporate expense account.  

The circumstances surrounding the actual party are a little unclear. The executive invited a dozen people but only two or three actually showed up. The people who did show were related to the executive, although the key guest was registered on JP Morgan's potential client list and apparently was a bona fide business contact. Given the uncertainty, you would think that a company would think carefully before terminating a two-decade, recently promoted senior manager over an expense item that was less than 10% of his annual account expense. Apparently, that didn't happen. Instead, during the internal probe of the claim, the company began assigning the executive's clients to other brokers even before he was formally interviewed about the expense issue.

The executive's wrongful termination claim went before an arbitration panel under the FINRA (Financial Industry Regulatory Authority) rules for employment disputes.  The arbitrators took a dim view of the bank's actions, as evidenced by the $4.2 million award to the executive, as well as an order recommending the expungement of the bank's reason for termination and termination explanation in the official records.  

JP Morgan indicates it will appeal the arbitration decision, but that will be an uphill fight. I suspect there is some serious reflection about personnel decisions based on expense accounts taking place in the bank's human resources department as a result of this decision. 

Lifting the Robe a Little Too Much?

Every now and then, a story comes along that is likely to dominate the blogosphere and, because it relates to an employment situation, demands HR Law Guy's attention. 

Here is such a case. 

The 11th Circuit, which is headquartered in Atlanta and administers the federal courts in the southeastern part of the United States, issued an order recently, following a judicial complaint about one of its judges (who is not identified), alleging conduct that under almost any other circumstance would be disqualifying. Amazingly, the judge has not been recommended for impeachment or removed from hearing cases but merely given a private reprimand for: engaging in multiple sex acts inside chambers, doing so with a high-ranking police official (who is also not identified), having such a good time that it was audibly apparent to the clerks that the judge was having sex in chambers, lying about it to judicial investigators when this conduct was reported, and then targeting the clerk that the judge believed made the initial report of judicial misconduct.  

A couple of points.  In addition to providing a new definition for the legal term "noisy withdrawal" (sometimes the jokes write themselves, folks), this situation raises a host of fairly serious issues.  First and foremost is why the 11th Circuit Judicial Council, which acts as a kind of human resources department for federal judges, felt it was appropriate to just reprimand a judge who lied about crucial matters being investigated by his/her employer.  In almost any other corporate setting, mendacity like this gets you terminated.* This is particularly true when the potential fallout from the misconduct is so wide-ranging; depending on the actual role of the police official, the judge's romantic involvement could put at risk dozens, if not hundreds, of criminal convictions in which this official or his/her reports were involved.  

If that wasn't enough, you have the relatively straightforward issue of illegal retaliation directed against a clerk who was simply doing the right thing in reporting judicial misconduct. That also should get you more than a wrist-slap.

And it's not like this is the first time a situation like this occurred. Fairly recently, a federal judge in Alaska who engaged in a tryst with one of the attorneys that appeared before him was forced to resign.  Why the different result?

Finally, I'm hoping that some enterprising attorney who knows the identities in this matter files a bar complaint against the judge. There should be some kind of professional and permanent hit for this type of conduct on the part of an official that the public relies on for guidance and temperament.  

*Federal judges are appointed for life, and can only be removed by impeachment and trial in Congress.

UPDATE:  As predicted, once the judge at issue was identified as U.S. District Judge Eleanor L. Ross, the motions to remove her from cases began rolling in.  In addition, a Georgia Congressman indicates he will start impeachment proceedings.  That seems appropriate.

NFL Fumbles DEI Policies

An interesting blend of sports and employment law is developing down in Florida, where the attorney general has launched an inquiry into the National Football League's hiring practices. 

No, this isn't a challenge to the Dolphins’ lousy draft picks over the last several years. Rather, it relates to the NFL’s so-called “Rooney Rule,” which mandates that clubs seeking to hire for certain positions must interview minority candidates as part of any hiring process. The intent of the Rule originally was to diversify NFL coaching ranks, allegedly in light of the fact that although the majority of the league's players were African American, only about 10 to 15% of the head coaches were black.  The Rule has since expanded to require NFL teams to interview at least two candidates who are either persons of color and/or women for open head coach, general manager and offensive and defensive coordinator positions.  The League used the same principle to encompass several other hiring requirements, some of which the AG maintains were clearly discriminatory because they required teams to hire minority or women staff members or game officials.

 In response to the AG’s challenges, the NFL immediately modified some of its policies' language, which didn't make them look guilty or anything, and which simply aroused the suspicions of the AG investigative team. The Attorney General also points to other statements from the NFL indicating that it was looking to increase the number of minorities hired across its senior management positions. 

 You can read the letter here . What seems to be happening to the NFL is the same thing that is happening to a number of corporate entities across the country that embraced DEI policies over the last 10 years. Outright expressions of racial or gender preferences in those DEI policies now make those companies targets for both federal investigators and state Attorneys General looking for high profile cases with relatively straightforward evidence of illegal preferences in hiring or promotion.

 This one's going to drag on for a while. Stay tuned.

Follow-up:  Just in case you thought this wasn't going to reach any other major corporate players, the Attorney General of Texas just announced that his team is going after CVS with an eye to cutting their Medicaid participation because of their announced DEI policies.  We're talking some real money here now.  

Zion Williamson Case Finally Ends?

The 4th Circuit recently closed down a long running legal case involving the NBA's New Orleans Pelicans star Zion Williamson and a problematic sports agent. I followed this case with particular interest because Williamson played his one year of college basketball at Duke (where I matriculated a long time ago) and I was an NFL agent for several decades. 

This case had all of the elements that make sports agency, and particularly sports agency representing college players about to turn pro, such a messy business.  Williamson was heavily recruited out of high school and widely identified as a potential superstar in the NBA. Or, in layman's terms, a “cash cow.” These kinds of players attract all the wrong attention as agents vie for their business and the potential to make millions. Frequently this vying involves under-the-table cash payments to the player, his family, his friends, or anyone else the agent thinks is likely to help secure the business. And it often involves an unseemly haste to get ink on a deal, often in violation of school recruiting policy and occasionally state law. 

That's what happened here. Williamson signed an agreement with a sports agent who was not licensed to do business in North Carolina. Mistake one. The agent had Williamson sign a representation agreement that did not comply with the requirements of North Carolina law. Mistake two. Court filings indicated that the agent sent Williamson's father $100,000 as an advance on their sports marketing agreement, and obviously as part of an inducement to sign. Mistake three. 

Then Williamson backed out of the agreement and signed with somebody else. The agent sued Williamson for $100 million in federal court. Mistake four. The trial court quickly ruled that the agent's failure to comply with even the most basic elements of North Carolina law rendered her agreement with Williamson void and denied her any recovery of the money she allegedly paid Williamson's father. That decision was upheld on appeal, here.

Lots of morals to this story. I guess the first is not to let greed override your judgment in pursuing that golden calf. That's very likely what happened here- the rush to get to Williamson and sign him to a multi-year agreement that effectively guaranteed a huge payoff for the agent caused her to simply ignore basic legal requirements, about which I'm sure she was aware. Now she's out the 100 grand, her attorney's fees, and very likely her reputation as someone who knows what she's doing. Given how every other sports agent will use this little episode against her, she's likely thinking of some other line of marketing work in the near future. 

Here's where DEI leads you in practice

As you will note from my previous entries in this blog, I believe DEI ("Diversity, Equity, and Inclusion") programs to be problematic and virtually impossible to implement legally under the laws of the United States. Here's an example of how DEI plays out in practice: a media company that committed itself to DEI practices gets sued because, in trying to maintain its writing standards, it did not give black employees full creative control over content creation. 

As is typical with DEI programs, there is no mention of merit with respect to the claims made by the minority writers. Their selection for the jobs in question was to be based solely on their race. 

I can't square this with the requirements of federal civil rights law and I suspect no one else can, either. 

Addendum:  A sure sign that this practice is opening companies up to legal liability (and apparently has adherents who view it like some religion they must defend) is a corporate attempt to rebrand the concept.

No More Non-Competes?

The Federal Trade Commission took the extraordinary step last week of issuing a nationwide ban on non-competition agreements.  The implications of the FTC's actions are significant and worth a quick discussion.

First of all, there is serious doubt whether the Commission has the constitutional authority to rewrite law across the country in such a manner. There is no statute from Congress authorizing such a move; the Commission made this sweeping change based on its determination that non-compete agreements, which are matters of individual employment contracting, fall within the Commission's purview to regulate anticompetitive actions between businesses. Given the Supreme Court's recent and pronounced disfavor with federal executive actions that effectively usurp congressional power, I think it's unlikely that this action will survive even an initial court review. Although it is highly likely to be in effect at least through the presidential elections this fall, which I suppose is the actual goal of the Commission's action.

Secondly, the Commission's action removes an irreplaceable tool for employers to protect their investment in senior management employees. There are very few means for a company to prevent the loss of corporate and business expertise when a manager intimately familiar with product development, marketing demographics, sales strategy, and the like, departs for a competing business.  Often the business expertise of the departing manager developed over years with a particular company and is a direct product of the company's efforts to train and develop her talent. A transferring senior manager instantly makes the gaining company a formidable competitor, but without the time and investment made by the former employer.  

The Commission asserts that current trade secret law is sufficient to protect the losing company's interests.  Sometimes I wonder if the federal bureaucrats making these decisions spend any time working in the private sector. There is no way to extend trade secret or other intellectual property protection to the kind of long-term business practice expertise that non-competes, properly employed, are designed to protect.  The Commission's actions, like the actions of so many of our federal executive agencies, simply add to the burden and risk of hiring employees for the long term.

Acronym Soup-NPR and the NLRA

The saga of Uri Berliner, a senior editor at NPR, has some interesting angles from an employment law perspective.

Berliner published an article in The Free Press that detailed a lack of political and intellectual diversity at NPR that he claimed significantly damaged its journalism. He criticized the monoculture and groupthink mentality that supposedly permeates NPR's decision-making with respect to the stories that it covers and how it covers them. NPR's new CEO came in for specific criticism in the article, which was published without prior coordination from NPR management, and which violates NPR's internal policies.

The organization's reaction was immediate- it suspended Berliner for five days without pay and warned him that if he spoke or provided content to another outside media entity without prior NPR approval he would be fired.

My first reaction upon reading this was that NPR's actions were almost certainly a violation of Section 7 of the National Labor Relations Act, which prohibits employers from retaliating against employees who engage in so-called “protected concerted activity.” “Protected concerted activity” has two elements- the activity, typically a complaint or other demonstration of dissatisfaction, must relate to the terms and conditions of employment, and it must relate to circumstances that affect other members of the organization, not just the individual raising the concern. The term has recently been litigated before the National Labor Relations Board which adopted a “totality of the circumstances” analysis to determine whether employee conduct falls under the coverage of Section 7. 

It's clear that Berliner’s comments fall within the ambit of this term. The issue is whether NPR suspended him for this conduct or for the alleged violation of its internal policies. And here I think NPR has some problems. For one thing, there are apparently other instances where NPR members either granted interviews or wrote for other outside media without facing disciplinary action. Perhaps more importantly, the immediate response by NPR management against a long-time senior employee with little or no investigation and only a whiff of progressive discipline is indicative of a response based on the content of the column and not its lack of coordination.

Berliner has indicated he will not challenge the suspension but this widely publicized story is a cautionary tale for management. In situations like this, avoid the immediate, knee-jerk response to hit back at the employee. NPR would have been better served by taking its time, performing an investigation (and especially an investigation that looked at other examples of this conduct and the discipline meted out), and then dealing with the employee. The company may have dodged a bullet here.

EEOC Goes After An AI As An Employer

There's an interesting employment law case developing in California (it's always California) involving the status of a software company as an employer or employment agency for one of its clients.  The case potentially represents a major expansion of employment law liability for companies supplying services that involve employee screening, hiring, or any other kind of concrete employment decision. The implications for artificial intelligence programs in particular look to be very serious. 

The facts are straightforward. An individual made over 100 applications to various employers that used an online application template provided by a company named Workday.  Potential hires would apply online to companies through various hiring sources (e.g., LinkedIn) and were then directed to the Workday app where they would input a resume and personal details, and in some instances take an aptitude test. The plaintiff in this case was rejected for all of his applications (we have no indication of whether he was qualified for the jobs for which he applied). He is now claiming that these rejections were based on his race and disability, which he apparently was revealing as a matter of course in the application process. 

Important safety tip here- while I have not seen the Workday template, I'm reasonably certain that it does not ask for the race and a list of disabling conditions on the part of applicants, At least as part of an initial hiring process. How and why this information was being input at this stage raises an interesting question about whether these were bona fide employment applications. 

In any event, the Workday app reviews the templated information and then forwards qualifying applications on to the employer. There is no interview interaction or any other kind of personal evaluation of the applicant- the software simply screens the application for job requirements and determines if this is a potentially good match based on the criteria from the employer. 

Given its relatively mundane function, imagine Workday's surprise when it found itself in the crosshairs of an employment discrimination lawsuit filed not by one of its employees, but by one of its customer's employees. And to make matters worse, the EEOC has now jumped into the fray, arguing that the company is in fact acting as an employment agency and therefore is subject to Title VII for the employment decisions that are, in essence, being made as a result of the criteria Workday receives from its customers. 

The motion detailing these arguments is here. The implications are much broader than simply whether Workday is acting as an employment agency. Many companies are moving to artificial intelligence algorithms to assist them in making employment decisions involving hiring, firing, promotions, etc. Under the EEOC's theory, the manufacturers of these software systems could find themselves in the Commission's sights either as employers outright or as some kind of quasi-employer. I'm reasonably certain the Commission is attacking AI systems as discriminatory across the board because their widespread use will likely mean the end of affirmative action as we know it.

Imagine you manufacture an AI system that helps employers assess talent for internal promotions. Suddenly you are subject to Title VII liability not only for the employees in your own company, but for the tens of thousands of employment decisions for which your application is used throughout the United States. Sound crazy? I agree. But this is the logical outgrowth of the EEOC's position in this Workday case. 

Stand by for more exciting news from Northern California. 

The NFL and the End of Race-Norming Benefits

The NFL concussion protocol and the legal issues surrounding how to compensate several generations of players who sustained cumulative neurological trauma continue to evolve, albeit at a slower pace than when the litigation was originally started 15 years ago. 

The latest round involves a practice known as "race-norming," which is a methodology of assessing cognitive damage that is as mercenary as it is offensive. In a nutshell, a number of NFL players applying for benefits under the concussion protocol were not subject to the cognitive baseline assessments that are now performed on NFL players at the start of every season. And although these former players were now presenting with clear evidence of cognitive decline as a result of thousands of head impacts, without knowing the individual cognitive starting point, it's impossible to determine the extent of the overall injury and thus the NFL concussion benefit plan's liability. 

To make up for this lack of baseline knowledge, the insurance plan administrators did what they always do-they used an average cognitive baseline for players given their demographic characteristics, which included race. These averages lowered the cognitive baseline for black players based on practices used in a variety of other medical specialties. The upshot of this was that black football players without the individual cognitive baseline assessment had to show a steeper decline in cognitive ability to get the same level of benefits that a white player would receive with a similar cognitive score. 

This all came out in litigation over concussion benefits in 2020 and the picture wasn't a pretty one. The NFL formally stopped the practice in 2022. It looks like the last lawsuit over this issue is now about to be settled, which I'm sure is a very welcome result at the NFL's Park Avenue headquarters. 

Once Again, Basic Management Principles Would Have Helped Avoid A Lawsuit

Occasionally,  I run across a case that is such a model of management missteps that it practically begs to be included in the blog. Here is there another example. 

A female employee had worked her way up through the ranks at Aramark to a senior management position. Her problems started when a new manager came in, one whose actions went apparently unmonitored.

You can read a more complete version of the facts here, but let me summarize a couple of timeless lessons that apply to virtually every employee management situation.

1. Long-term employees, and in particular long-term employees who have worked their way up through the ranks into management positions in the company, are entitled to a basic level of respect in how management deals with them. That respect normally takes the form of some kind of extended due process, especially in termination situations. A company terminating a long-time employee should be particularly diligent in reviewing the circumstances surrounding the termination, and management's actions in dealing with the employee.

2. While employers may generally expect the workforce to adapt to the requirements of new leadership, a radical change in subordinate performance evaluations may well indicate a problem with the leadership rather than the subordinate employees. Company leadership should be sensitive to a new manager finding significant faults with established performers. See, #1, above.

3. Complaints from management-level employees should never be ignored, but instead investigated carefully. That doesn't mean that the employer accepts as true every allegation from a manager, but the company must establish a rational basis for not taking corrective action in response to those allegations.

4. No termination decision should take place in a vacuum. The employer must be aware of all the circumstances within its span of knowledge surrounding an employee who is about to be fired. In this case, someone should have noted that the employee filed an HR complaint days before the termination was effected.

This is relatively common sense stuff, or put another way, Smart and Legal Employee Management 101.  Not following these basic principles gets expensive very quickly.

Thoughtcrimes Now in Vogue at Air Force?

Here's a strange and disturbing story out of the Air Force Academy. It seems that in an effort to police what it believes are incidents of bullying, disinformation, or extremist commentary the AF leadership has set up a social media monitoring mechanism that reviews the personal, off-duty activities of cadets in places like Instagram, TikTok, Facebook, X and the like. 

Now, military members have significantly fewer protections under the Constitution than civilians. This has been clear since the founding of the Republic. Service members are prohibited by law from openly criticizing certain elected officials, for example. But airmen, soldiers and sailors don't forfeit all of their constitutional rights, and the open-ended nature of this monitoring program sounds a clear signal that Academy officials are not interested in just correcting incidents of illegality that might be revealed on social media. Those officials are interested in discovering people who have improper thoughts about, well, who knows? The originator and overseer of the project is quoted as saying, "The goal of monitoring social media is to educate cadets, prevent them from spreading harmful material online and respond when someone is posting content that academy leaders consider harmful to the base’s culture."  

Well. Nothing overreaching or potentially problematic about that. The Air Force cadet squadrons already contain what most of us familiar with the program refer to as political officers- cadets who have been stewed in the military's version of  DEI - to report their wrong-thinking peers for reeduca-, uh, counseling when they express opinions inconsistent with DEI theology. It's not much of an intellectual leap to see how monitoring off-duty and private social communications can greatly assist in ferreting out wrongthink.  

As you can see from the article, several constitutional and privacy law specialists who are real lawyers are raising 4th Amendment questions about this program. My hope is that the monitoring system gets cut before it provides Academy officials with information that their DEI programs aren't being taken seriously by the cadets. If that happens, the program will expand dramatically unless it's curtailed by legal challenge. 

COVID Vaccine Aviation Cases Continue to Lose

One of the major disappointments among the many arising out of the COVID vaccine mandates was the almost complete failure of the US legal system to adequately respond to this unprecedented breach of employment law. There were a couple of big wins- Biden was unable to force virtually the entire US workforce into getting a shot with an unlicensed vaccine against its will, for example- but for the most part employer vaccine mandates have been approved by state and federal courts. This notwithstanding the fact that almost every one of the mandates, and the questions being asked leading up to the mandates, were a clear violation of the Americans with Disabilities Act ("ADA") and Title VII in cases where religious exemptions were in play. 

Examples include cases involving pilots for United Airlines (the only airline that actually terminated employees for refusing to get vaccinated) and Kalitta Air, a cargo carrier. In both cases, pilots who refused the vaccine on religious grounds had their claims disposed of on procedural grounds before any meaningful litigation could take place. 

The story of COVID vaccine employer mandates is one that needs to be explored in much greater detail. Here's my summarized take: The US set up a legal regime under the ADA specifically designed to prevent precisely what happened with the COVID vaccine mandates, namely, a presumption by employers that their employees were disabled because they were contagious, accompanied by unauthorized inquiries into the vaccination status of the workforce. Because no judge wanted to be the one who authorized a shutdown of vaccine mandates in the face of a supposedly terrifying epidemic, these legal issues went basically unexamined. The irony, of course, is that as we learn more about the nature of the disease and the vaccine development itself, there is less reason to support these mandates. I'll hope at some point this story gets the coverage it deserves. 

The Next ERISA Litigation Frontier--Drug Plans and Fiduciary Duty

The Employee Retirement Income Security Act, better known as ERISA, was enacted to provide protections for employee benefit plans that companies were setting up as inducements for hiring and employee retention.  ERISA's requirements are highly technical and involved, part of ERISA's protection scheme against nefarious employers and plan administrators who just don't seem to be able to keep their mitts off the significant amounts of money controlled in these benefit plans. 

As an employment lawyer, my perception of ERISA is that it is a never-ending source of plaintiff's litigation as plan administrators seem to make one misstep after another in handling employee investments and returns. The latest round of endless ERISA litigation involves drug plans and the entities set up by employer health insurance plans to monitor drug costs. Most of this litigation involves an alleged failure by the plan administrators to ensure that drugs covered by employer health insurance plans are the cheapest, most effective, and most readily available. There's a very detailed and boring description of the litigation here-- it looks like the plaintiff's bar has discovered another relatively untapped source of money to exploit with huge class action claims. 

As with most litigation claims under the statute, this new variety should serve as a warning that employers cannot simply dump responsibility for the management of their benefit plans - health, retirement, etc. - to third parties without some type of oversight. Remember, the statute does not require that everything be done on the lowest cost basis, but rather that plan decisions are based on rational and justifiable reasons. It wouldn't hurt to sit down with plan administrators annually and get an explanation for the decisions they are making on your retirement and health insurance programs. 

IDF Pictures and Free Speech in Illinois

One of the first issues I ever dealt with as an employment lawyer involved a personal photograph in a private office. A manager had a picture of his wife in a very skimpy bathing suit displayed on his desk. My recollection is that this was an 8 by 10 photo, large enough for the details to be obvious to anyone who stuck their head in the door. There were the usual complaints from several women in the office who objected to having to look at a mostly uncovered female form every time they had business with this manager. 

We dealt with the problem by telling the manager that the company really didn't want pictures of scantily clad women prominently displayed in the office as a matter of professionalism. That seemed to quell the issue. 

The latest round in the office photo wars is taking place in Illinois, where a female public defender prominently displayed a picture of herself holding an M16 in front of the Israeli flag, taken when she was serving as a volunteer reservist in the Israeli army. 

Apparently, the picture had been in her personal office for some time but after the events of October 7, 2023, she moved the photo to a public area where people in the office displayed personal photos and awards. This drew an immediate and ignorant response from office management who were offended by the Israeli flag as much as they were by the automatic rifle. They initially ordered her to remove the photo from the public display, and then without permission entered her office and removed the photo from there. All of this was done under the guise of some kind of anti-violence policy because the photo could be perceived as “threatening.” Or perhaps it was the Star of David. As is typical with these decisions, the actual rationale gets murkier when people are asked to explain it. 

Because this involves a public employee, the 1st Amendment is implicated, and the lawsuit the former soldier filed reflects this. But for private sector employers, there are additional issues immediately apparent, starting with the potential religious discrimination issue, as well as potential claims involving political discrimination under Illinois law.  I also suspect that there were lots of other potentially objectionable photos on display in that office that were not singled out for attention and didn't happen to involve Jewish artifacts.  

This is a lousy situation for an office that likely has some exposure.  Based on the allegations in the Complaint, I'm hoping that the case doesn't go away and that all of the biases get revealed over the course of discovery.

The Song Remains the Same-SCOTUS Decision Reminds Employers to Keep Better Records

 

A fundamental piece of advice that I give to my clients is to, “keep sufficient documentary records of an employment decision so that we can recreate the analysis that led to the decision several years later.”  In virtually every employment case that ends up in some kind of agency or court setting, the key to prevailing is the ability to convincingly show what transpired between employer and employee that led to the decision at issue. 

This is always crucial in discrimination cases where an employer is usually aware of the employee's protected factor (you can't credibly testify that you didn't know you were dealing with a black female, or a Hispanic male, for example) and is asked to demonstrate that the protected factor did not play a role in the ultimate decision. 

This type of analysis is also crucial in retaliation claims, where the employer has to argue, for example,  that it wasn't the fact that the employee was a gadfly/whistleblower but rather it was her poor performance that caused the company to fire her. Again, an employer must keep solid records of its thought process and the basis for termination, because while most jurors might have difficulty believing that race was a factor in an employment decision, very few of them will have difficulty believing that the company was motivated to strike back at an employee who was causing significant cost and or embarrassment by outing some problematic business practice. 

The Sarbanes-Oxley Act was designed to provide significant whistleblower protections for employees of publicly traded companies to report corporate fraud or securities violations. The SCOTUS recently handed down a decision that should provide plenty of incentive for employers terminating whistleblowers to make sure that they can demonstrate that they are cleaner than Caesar's wife's hound's tooth. 

Sorry for the mixed metaphor but you get the picture. 

The SCOTUS reversed a Second Circuit finding that the SOX Act required an employee to show so-called “retaliatory intent” on the part of an employer to sustain a SOX violation. Instead, SCOTUS unanimously held that all a whistleblower has to show is that the protected activity- in this case, a claim that supervisors at UBS Securities were attempting to pressure an employee to alter his independent reporting- was a contributing factor to the employer's adverse personnel action. In essence, SCOTUS stated that if the employer was aware of the whistleblowing activity, it would have to produce convincing evidence that it would have made the same decision absent its knowledge that the affected employee was a rat, er, whistleblower, to escape liability. 

As noted above, this is a very high bar for the employer. To overcome the perfectly understandable inference that an aggrieved employer would act by retaliating against a problematic employee, a company is going to have to provide substantial evidence that either the aggrieved employee was already almost out the door because of her conduct and that the decision was effectively made before the company became aware of the whistleblowing, or that the conduct for which the employee was terminated was so egregious that his whistleblowing was not even a blip on the employer's radar when it made the call. 

Both of these scenarios require very credible testimony, backed up by credible documentation to show that the whistleblowing was not a factor. 

So, if you find yourself in a situation where you have identified a whistleblower in a SOX environment, your notes, memoranda, and testimony had better be recorded and validated. Otherwise, your next documentation is likely to take the form of a check to the plaintiff.  

Back to the future--Are college athletes employees? Of What, and When?

I wrote about this story back in 2014 when the NLRB first tried to shoehorn college athletes into employee status with a poorly reasoned regional attorney memo out of Chicago. The issue has arisen once again, this time at Dartmouth where an NLRB office director now claims that men's college basketball players are employees of the university. 

I won't reiterate all the arguments I made eight years ago, but the short answer is this is an idiotic characterization and completely misses the unique status that collegiate athletes have with respect to their coaches and their schools. Specifically, college coaches exercise far more control over athletes than any employer does or would ever want to. Coaches dictate what players eat, where they live, when they go to bed, when they get up, and when they do any number of activities that extend beyond basic practice time and game time. A better characterization of a coach's status then that of an employer is one of a parent. 

If the NLRB ruling survives the inevitable court challenge, it will result in massive confusion and unintended consequences in the form of things like wage and hour claims for film study, training room time, weight training, study time, and the like. A determination that these kids are actually employees would technically expand their workday to 24/7, with all the associated liability, because that's when they are under the control of their coaches and the athletic staffs. 

This determination makes no more sense now than it did eight years ago. I hope the courts will reject this director's characterization. 

Service Academy Admissions and Race: The Next Affirmative Action Challenge

In its landmark decision essentially voiding race-based affirmative action admission programs at colleges, the Supreme Court in a footnote made a notable distinction for America's service academies. The court held that its affirmative action ruling did not apply to those unique academic institutions, implying that race considerations weigh differently because of the issues involved in the construction of an effective fighting force. 

Within several months of the court's ruling, a challenge to the use of race in admissions at the United States Military Academy (West Point) emerged (the Naval Academy, USNA, is also being sued). The plaintiffs, white applicants to USMA, are alleging through their counsel that West Point's use of race as a determining factor in admissions is unconstitutional, particularly in light of the SCOTUS holding regarding Harvard and the University of North Carolina. 

The usual legal skirmishing over a preliminary injunction demand from the plaintiffs reveals at least the outlines of the arguments to be raised by USMA and the other service academies.  Fundamentally, the service academies claim that it's essential to have an officer corps that racially mirrors the overall racial percentages of the force because that makes for a more motivated and therefore more effective military. The academies claim that this claim is unassailable because US courts traditionally defer to something called "military judgment" about the management of the Armed Forces in the context of national defense. USMA also claims that race is a minimal factor in its admissions determinations, something that I think is completely incompatible with its professed goal of establishing a perfectly race-harmonized officer corps. 

There's lots more data and argument to be developed on this topic, but as a service academy graduate myself, I raise the following objections to USMA's position: 1 ) there is very little credible evidence supporting a claim that people need to be commanded by people who look like them to be effective in combat. If anything, the primary attribute service members worry about in their commanders is job competence. There's absolutely no comfort in the thought that you are going to get killed as a result of the orders from someone who shares your genetic heritage. 2 ) the service academies provide approximately 20% of the officer cadre in the military. Given that 80% of the officer candidates are coming from civilian universities through the ROTC program, you would think the “we need a racially diverse officer corps for effective command” argument would have resonated much more significantly in the SCOTUS FFFA opinion. The argument was raised but apparently found unconvincing. Why would it be more convincing for a school that provides much fewer officer candidates? 3 ) There's a very strong argument for making the service academies the producers of the top officer candidates in all services.  The government invests hundreds of thousands of dollars in USMA, USNA, and USAFA graduates, training them not just in academic specialties but military culture and warfighting skills. The goal is to produce career officers capable of performing at the very highest level in the most serious undertaking a government performs- the defense of the country. Why would you not want the very best people in these programs, regardless of their genetic propensities? 

In fact, much of the argument in favor of affirmative action for the service academies seems to be motivated by the same credential-seeking mentality present in the affirmative action movements at elite colleges, namely, that the credential somehow guarantees upward mobility into the elite classes. However, this has not been the case for the military because of its relatively ruthless performance requirements. And in any event, discounting merit in support of questionable social engineering seems a guaranteed way to degrade the value of the certificate across the board. 

This case will likely be the subject of other blog entries but, at the outset, I think USMA and the others are going to be facing an uphill push. 

Gambling Takes Another NFL Player Down

 The institutional and cultural conflicts inherent in the professional sports leagues and NCAA with respect to gambling continue to take a toll on the people who generate the income from these activities—the players themselves. It seems that virtually all major sports activities in the US, collegiate and professional, are now reaping significant money from sports gambling. Every NFL game is loaded with sports book advertisements. As for the “amateur” NCAA, swing by Vegas on the first weekend of the NCAA basketball tournament to get a picture of how big gambling is on collegiate athletics.

Yet all professional sports leagues and the NCAA prohibit betting in one form or another by the athletes themselves. And enforcement of these prohibitions regularly results in the suspensions of players taking advantage of an activity that their leagues actively promote.

And sometimes, worse than suspensions. Case in point--Kayshon Boutte, formerly of the LSU Tigers and currently an NFL wide receiver with the Patriots. But, as so many coaches have said, NFL stands for “not for long”, and that is likely the situation with Mr. Boutte, who was arrested for making bets while a collegiate athlete, in some cases on games involving his own team. The details are in the story, but it's clear from the allegations that Mr. Boutte has a gambling problem, one that the NFL security people are likely aware of. Someone with this type of issue represents a clear threat not only to the integrity of the game but to potentially billions of dollars in advertising and betting revenue. All of that gambling revenue, as well as a significant portion of fan interest, would melt away in the face of demonstrated allegations that players were betting on each other and themselves, with the obvious impact on scores and performance.

I suspect this conundrum of needing the revenue from sports betting while at the same time limiting its reach into the player ranks will continue indefinitely. There is simply too much money in gambling and its potential taxation for the people who would normally regulate this kind of thing--the states and the leagues themselves--to close up the Pandora's box that's been opened.