KEY CASES

3rdCir: No private right of action for employees under FICA, Third Circuit holds

A regional marketing director for a financial services company who alleged she was misclassified as an independent contractor could not recover the equivalent of half of the 15.3 percent of her income that she paid in federal self-employment taxes by asserting breach of contract and unjust enrichment claims against her employer. Nor could she recover the 7.65 percent of her income corresponding to the employer's share of FICA taxes that the employer withheld after she was reclassified as an employee. The claims were preempted by federal income tax law, the Third Circuit held. To allow the employee to proceed with her state-law class action would interfere with the administrative remedy established by the IRS to recover such monies—namely, filing a claim for a refund of self-employment taxes. "Individuals would have less incentive to follow IRS procedures if they could simply bring common-law claims for misclassification as an independent contractor in [court]," the appeals court wrote, adding that the breach of contract claim attempted "to use state common law to circumvent the absence of a private right of action under FICA." (Umland v Planco Financial Services, Inc, September 9, 2008).

3rdCir: Employer must pay nurses for time spent seeking needlestick treatment

A nursing home operator was required to pay two nurses for the time they spent during non-work hours receiving initial and follow-up treatments at an off-site facility, including their travel time and expenses, after they received "needlesticks" at work, the Third Circuit ruled, vacating an order of the Occupational Safety and Health Review Commission. OSHA had issued a citation for the nursing home's failure to provide the post-exposure treatment "at no cost to the employee," as the bloodborne pathogen standard (BPS) requires. Finding the language of the BPS to be ambiguous, the appeals court deferred to what it concluded was OSHA's reasonable interpretation of its regulation. The court also concluded that the employer had fair notice of OSHA's broad interpretation of its standard, reversing the employer's claim that it was deprived of fair notice because of an FLSA opinion letter that it asserted was in "direct conflict" with the interpretation here. That opinion letter "was issued by a different agency and concerned a different regulation, which was promulgated under a different statute," the appeals court noted (Sec'y of Labor v Beverly Healthcare-Hillview, September 4, 2008).

3rdCir: Trial court must consider whether punitives for union privacy violations

A trial court erroneously granted summary judgment to a union defendant on the issue of whether Cintas workers were entitled to punitive damages for the union's violation of the workers' rights under the Driver's Privacy Protection Act (DPPA), the Third Circuit found. The workers filed suit after the union used state motor vehicle records to gain access to their personal information during an organizing drive. The lower court granted summary judgment against the union on liability and the appeals court affirmed, rejecting the union's contention that it had obtained and used the private information for the purpose of litigation, a permissible use under the DPPA. The union's conceded end goal was labor organizing, the appeals court noted, and the union's use of litigation was merely a tactic toward that end. However, as to punitive damages, the Third Circuit reversed summary judgment to the union and remanded the issue, instructing that if the lower court finds "a genuine issue of material fact regarding the willfulness or recklessness" of the union's conduct, the Seventh Amendment requires a trial by jury on the issue. The court also rejected the union's claim on appeal that the court erroneously allowed the plaintiffs to recover liquidated damages without showing some measure of actual damages (Pichler v UNITE, September 9, 2008).

6thCir: Constructive discharge claim may arise from failure to accommodate

A dollar store cashier who suffered from degenerative ostheoarthritis created a genuine issue of fact as to whether she was constructively discharged when she involuntarily resigned because her employer would not reasonably accommodate her disability by allowing her to sit on a stool while working behind the register, the Sixth Circuit ruled, reversing summary judgment to the employer. In so doing, the appeals court adopted the Fourth Circuit's recognition of the principle that a "complete failure to accommodate" could result in a cognizable constructive discharge claim. However, the court emphasized that its holding "does not pave the way for an employee to assert a claim for constructive discharge every time an employer fails to accommodate her disability." Here, the employee raised sufficient evidence that the employer's repeated refusal to reasonably accommodate her disability or engage in the interactive process made her working conditions intolerable and was the impetus behind her resignation (Talley v Family Dollar Stores of Ohio, Inc, September 11, 2008).

7thCir: Despite FMLA violation, plaintiff comes up empty on damages, fees

Despite a jury finding of FMLA interference in a bifurcated trial, an employee who was rendered unable to work due to a serious car accident could not recover damages under the statute because he could not show that he was prejudiced by the employer's violation of the law, the Seventh Circuit ruled. "Overwhelming evidence" showed the employee was unable or unwilling to return to work upon conclusion of his FMLA leave, the appeals court noted. Moreover, while the statute's fee-shifting provision requires an award of attorney fees to a prevailing FMLA plaintiff, attorney fees were not required here, as the court did not enter a judgment in favor of the aggrieved employee. Although there was a jury verdict in his favor on the issue of liability, the appeals court emphasized the distinction between a "verdict" and a "judgment," and affirmed the lower court ruling in the employer's favor (Franzen v Ellis Corp, September 10, 2008).

7thCir: Typo not enough to overturn H1-B visa holder's deportation order

A typographical error made by an arresting officer for the former Immigration and Naturalization Service (INS) on a Form I-213 (Record of Deportable/Inadmissible Alien) was not enough to overturn an H1-B visa holder's deportation order, held the Seventh Circuit. Whether the visa holder, who worked for a food company, started working for his employer in March 2000 or March 2002 did not matter because both dates were still before June 27, 2002, the date in which the company filed its H1-B petition on the employee's behalf. Therefore, the employee could not have started working for the company on either date. That the employee had a valid H1-B visa for a consulting group since May 15, 2002, did not foreclose the possibility that he had been engaged in unauthorized work for the food company. While the employee also alleged that his INS arresting officer violated immigration law by also examining him, the Seventh Circuit did not reach the merits of his claim, finding that the employee failed to exhaust his available administrative remedies (Ali v Mukasey, September 8, 2008).

7thCir: Employee was 1.2 hours shy of FMLA eligibility

An employee was not eligible for FMLA leave after it was shown she had only worked 1,248.8 hours, and not the statutorily required 1,250 hours, in a 12-month period. The employee argued that a previous suspension in which she had to leave work two hours early was improper, and that she should be credited with those two hours. However, the Seventh Circuit found that she never grieved the suspension within the allotted 15-day period; rather, she did so only after she was fired more than a month after the suspension. The employee was left with only "an unsubstantiated subjective belief that her…suspension was wrongful," and this was not enough to create a genuine issue of material fact for trial, the court reasoned. Although she was only 1.2 hours shy of FMLA eligibility, the statute is clear that employees must work at least 1,250 hours to be eligible. Thus, the lower court's grant of summary judgment was affirmed (Pirant v US Postal Service, September 4, 2008).

9thCir: Lower court correctly refused to admit damages evidence

A district court did not abuse its discretion in refusing to admit evidence regarding damages as a sanction against opt-in FLSA plaintiffs for their failure to disclose damage calculations under Rule 26(a) of the FLSA. The Ninth Circuit rejected the plaintiffs' assertion that they were substantially justified in failing to disclose damage computations because the law was unsettled as to whether they were obligated to disclose on an individual basis. Moreover, the plaintiffs' failure to disclose was not harmless. Finally, the appeals court held the lower court was not required to find willfulness or bad faith before imposing the sanction—even where the litigants' entire cause of action was precluded as a result (Alam v Construction Protective Services, Inc, September 4, 2008).

9thCir: Administrative subpoena enforceable even after charging party files suit

The EEOC may issue an administrative subpoena against an employer even after the charging party has been given a right-to-sue notice and has initiated private litigation based on that charge, the Ninth Circuit ruled, creating a circuit split. Under Title VII and the relevant regulations: (1) the EEOC's investigative mandate is triggered when a valid charge is filed; (2) the agency may either bring its own action or issue a right-to-sue notice to a charging party; and (3) although the EEOC usually stops processing a charge when a right-to-sue notice is issued, it can, under limited circumstances, continue investigating charge allegations, which includes authority to subpoena information relevant to the charge. In this case, the employee filed a charge alleging both personal discrimination and bias against other similarly situated African-Americans and Latinos. The EEOC issued a right-to-sue notice pursuant to the employee's request, but continued to investigate the charge because it involved a possible policy or pattern of bias affecting others. Nothing suggested the agency exceeded its authority in doing so. Thus, "the EEOC did not ‘plainly lack' the authority to issue the subpoena," there was at least a ‘plausible ground for jurisdiction,' and a district court did not err by enforcing it, said the Ninth Circuit (EEOC v Federal Express Corp, September 10, 2008).

STATE LAW CASES

MA: No whistleblower claim objecting to proposed staff-patient ratios

The director of a partial hospitalization program could not assert claims under Massachusetts' medical provider whistleblower statute based on a reorganization that resulted in her having to report to a new supervisor and her subsequent termination, the Massachusetts Supreme Court held. The employee's assertion that the adverse job actions were a result of her voicing objections to a proposed increase in patient-to-staff ratios did not give rise to a cause of action under the state law, which protects employees who object to existing policies or practices, not those who object to proposed practices. Moreover, there was no evidence the proposed staff ratio change violated any law, regulation or professional standards of practice anyhow. The plaintiff's "personal views" on the wisdom of the staff changes were not enough to sustain a claim, the high court held (Romero v UHS of Westwood Pembroke, Inc, MassSCt, September 8, 2008).

TN: Employer owed duty of care to employee's daughter in asbestos-related suit

A manufacturer could be held liable in a suit filed by a woman who contracted mesothelioma and died after her father, an employee of the manufacturer, was negligently permitted to wear his asbestos-contaminated work clothes home from work. "The employer owed a duty to those who regularly and for extended periods of time came into close contact with the asbestos-contaminated work clothes of its employees to prevent them from being exposed to a foreseeable and unreasonable risk of harm," the Tennessee Supreme Court ruled. Contrary to OSHA regulations, the employer failed to educate its employees about the risk of asbestos or how to handle materials containing asbestos, despite the employer's awareness of the dangers posed. Thus, the woman's estate could proceed on a wrongful death claim against the employer under a negligence theory (Satterfield v Breeding Insulation Co (Dissent), TennSCt, September 9, 2008).

WA: Employer waived "jeopardy" element of wrongful discharge claim

An employer who allegedly discharged eleven pipe fitters in violation of public policy after they either raised safety concerns or supported those who did waived its right to argue the "jeopardy" element of a wrongful discharge claim, the Washington Supreme Court ruled, upholding a jury award of more than $4.8 million to the pipe fitters. Pursuant to the "jeopardy element" a plaintiff in Washington must prove either that his or her conduct directly relates to the pubic policy or is necessary in order to enforce the policy. In this case, although the employer admitted the "jeopardy" element in the trial management report, it later argued that Korslund II, a case with similar facts that was decided four months after the jury verdict, created a "change in the law" exception to its waiver. In Korslund II, the court held that remedies available under the Energy Reorganization Act were adequate to protect the public policy at issue, and thus, the plaintiffs in that case could not satisfy the "jeopardy" element. According to the court, however, its holding in Korslund II was not a "change in law" for purposes of the employer's waiver because the conclusion reached in the case was an open question at the time of the waiver. The employer had the right to argue that the ERA remedies were adequate in this case but it chose not to do so. Thus, it could not claim that a change in the law excused its waiver (Brundridge v Fluor Federal Services, Inc (Dissent), WashSCt, September 4, 2008).

AGENCY DEVELOPMENTS

Senators concerned about DOL enforcement of SOX whistleblower provisions

Employees who work for publicly-traded companies or brokerage firms, or for contractors, subcontractors, or agents of publicly-traded companies, have special whistleblower protections under the Sarbanes Oxley Act (SOX). The authors of the statute's corporate whistleblower provision recently took issue with the Department of Labor's position that employees of subsidiaries are not covered by the law's protections. In a letter sent last week to Secretary of Labor Elaine Chao, whose agency has authority for enforcing SOX, Senators Charles Grassley (R-IA) and Patrick Leahy (D-VT) expressed concern about what they described as an "overly restrictive interpretation of this law to dismiss a majority of the complaints filed by employees of public corporations... who assert that they have been fired or treated unfairly because they reported fraud."

OFCCP posts new directive on enforcement of race and ethnic categories

The Office of Federal Contract Compliance Programs has issued a new directive to establish field enforcement guidance for evaluating the use of race and ethnicity categories in the Affirmative Action Programs prepared by federal contractors in accordance with Executive Order 11246. The directive details the OFCCP's enforcement policy, initially announced in August 2007, that until the agency provides final rules and guidance, it will not, as a matter of enforcement discretion, cite a contractor for non-compliance solely because the contractor utilizes the race and ethnic categories required by the revised EEO-1 Report when the contractor prepares its AAP.

NMB will not implement representation manual revisions

The National Mediation Board has scrapped proposed revisions to certain sections of its representation manual, the agency announced last week. The Board noted that its intent was to clarify existing policy and clear up some perceived confusion among constituents, but last week the agency said its review of the public comments received made it clear that "the Board's proposals have engendered more ambiguity than clarification."

EPA encourages employees to go green at work with new online tool

Energy Star @ Work, a new online tool from the Environmental Protection Agency, provides employers and employees with information on how to save energy and protect the environment in the workplace. Energy use in commercial buildings and manufacturing plants accounts for nearly half of US greenhouse gas emissions and nearly 50 percent of energy consumption nationwide, the agency noted. The workplace offers a unique opportunity for people to make a significant impact in the fight against climate change.

LEGISLATION

Senate passes ADA Amendments Act, sends bill to House

By unanimous consent, the Senate approved the ADA Amendments Act (S. 3406) on September 11. The proposed legislation amends the Americans with Disabilities Act by restoring the Act's original intent and protections, making changes to the Act's employment discrimination provisions, which prohibit bias against qualified individuals with disabilities in the private sector and in state and local governments. Avoiding the need for a conference committee to be formed over the differences between the House and Senate bills, House Majority Leader Steny Hoyer's (D-Md) office has confirmed that the House will take up the Senate's bill as early as September 17, likely on the House's suspension calendar.

Senate committee passes background checks bill for long-term care workers

The Senate Finance Committee approved a bill last week that would establish a nationwide system of criminal background checks for employees working in nursing homes, home health agencies, and other long-term care settings. The Patient Safety and Abuse Prevention Act (S.1577) would coordinate abuse and neglect registries with state law enforcement registries. The bill would also add a federal component to the background check process by screening applicants against the FBI's national database of criminal history records.

California High Court to let city's living-wage ordinance stand

The California Supreme Court last week rejected a challenge brought by Cintas Corp to the city of Hayward's living-wage ordinance, the San Francisco Gate reports, bolstering the authority of California municipalities to apply such wage laws to contractors based outside city limits.

Law protecting transgendered employees in Maryland county takes effect

A Montgomery County, Maryland ordinance prohibiting, among other things, employment discrimination on the basis of gender identity took effect last week, after the Maryland Court of Appeals (the state's highest court) rejected efforts by the Maryland Citizens for Responsible Government to block the ordinance.

CONFERENCE COVERAGE

EEOC regional attorney discusses race bias and the E-RACE initiative

The EEOC will increasingly focus on the use of arrest and conviction records and credit reports for employment purposes, and the racially disparate impact of these practices, according to EEOC regional attorney John Hendrickson, in comments before the CBA's Labor and Employment Law Committee at CBA headquarters in Chicago last week.

OFCCP deputy director: 1 in 50 FY 2009 audits will have on-site component

For compliance reviews conducted in fiscal year 2009, the OFCCP will have a mandatory on-site component on a randomized basis for one of every 50 establishments selected for review, said David Frank, OFCCP deputy director, during a recent webinar. Beginning the second week of October, OFCCP regional offices may schedule compliance evaluations of non-construction federal contractors from the first FY 2009 scheduling list. The list includes approximately 2,500 establishments that have either self-identified as being an establishment of a federal contractor or have been identified as such by OFCCP.

LITIGATION TRENDS

Proposed workplace bullying laws would lead to more suits against employers

Thirteen states have considered workplace bullying legislation that would prohibit employers from creating or permitting "abusive conduct" or an "abusive work environment." Although no state has so far passed the proposed statutes, if workplace bullying laws are enacted, employers will face lawsuits raising legal issues that have been easily dismissed under current laws against discrimination, said Susan K. Lessack, a partner in the labor and employment group of Pepper Hamilton LLP. "The proposed laws would invite courts and juries to scrutinize the way people treat each other at work. While respectful treatment in the workplace is a laudable goal, should it be legally required?"

IN OTHER NEWS

Employers sue Colorado over state's minimum wage law

Eight rural small businesses have banded together to stop Colorado Gov. Bill Ritter from enforcing a minimum-wage law that voters approved in 2006, according to the Denver Business Journal. Known as Amendment 42, the law increased the state minimum wage from $6.55 to $6.85 per hour and required an annual inflation adjustment. The plaintiffs say the amendment is unconstitutional and unfairly holds rural businesses to the same inflationary standards as businesses in metropolitan areas.

Child labor law charges filed against Agriprocessors

Agriprocessors, the nation's largest producer of kosher beef and poultry products—and the site of what had been one of the largest ICE enforcement operations in history last May—was charged with 9,311 misdemeanor violations (ip access user) of Iowa's child labor law in a complaint filed September 10 by the Iowa attorney general's office. That same day, US Immigrations and Customs Enforcement agents arrested (ip access user) two of the company's HR managers for immigration violations.

Steelworkers ratify four-year contract with US Steel

A new four-year labor agreement between the United Steelworkers and US Steel covering some 16,000 union members at 14 locations was ratified by the membership last week, in a mail-in secret ballot vote of 10,571 to 2,670. "This is an historic agreement that completes the restructuring of the steel industry following its near collapse five years ago when a global financial crisis plunged company after company into bankruptcy," said Leo Gerard, USW international president.

Industrial retailer settles assistant managers' overtime suit for $10 million

Fastenal Co, a Minnesota-based industrial and construction retailer, will pay $10 million to settle a class action lawsuit by former assistant general managers who sued for unpaid overtime and work-break pay, alleging they were wrongly classified as exempt from overtime under the FLSA and California, Oregon and under Pennsylvania state statutes. The suit also alleged the California plaintiffs did not receive sufficient meal breaks and paid rest periods under the California Labor Code.

LPGA changes course on implementing English requirement

WorkWeek recently reported that the Ladies Professional Golf Association (LPGA), a private membership organization for female professional golfers, had intended to institute an English proficiency requirement on its players. However, according to Workplace Prof Blog, the LPGA Tour has since backed off a proposed policy that would have suspended players who could not efficiently speak English. The policy was widely criticized as discriminatory, particularly against Asian players, who won three major championships this year alone. Although the policy is neutral on its face, it's questionable whether it is justified by business necessity, especially since the PGA does not have a similar policy.

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About CCH WorkWeek

This weekly newsletter provides corporate counsel and law firm practitioners with need-to-know employment and labor law information in a timely, yet manageable manner. Benefit from news and information in a broader context, with deeper analysis of recent developments and corresponding trends. Delivered to you every Monday, CCH WorkWeek offers timely coverage of breaking legislative developments, regulatory activity, state law changes, key case law and expert commentary by CCH editors.