For the Week of October 26, 2009

KEY CASES

2ndCir: Contract non-renewal was an adverse employment action under the ADEA, Title VII

The non-renewal of a female professor's employment contract itself was an adverse employment action under the ADEA, Title VII and New York state and local law, held the Second Circuit, reviving her age and sex bias claims against the university. "Employers subject to the strictures of the ADEA and Title VII may not discriminate on the basis of age or [sex] in deciding whether or not to hire prospective employees," wrote the circuit court, and an employee seeking to renewal an employment contract, just like a new applicant, suffers an adverse employment action when denied that employment opportunity for unlawful discriminatory reasons. "The mere fact that the employer's decision not to renew is completely discretionary does not mean that it is not an 'adverse' employment [action]," wrote the court. Joining five other circuit courts of appeal (1st, 3rd, 6th, 7th and 10th), the Second Circuit concluded "where an employee seeks renewal of an employment contract, non-renewal of an employment contract constitutes an adverse employment action for purposes of Title VII and the ADEA." Therefore, regardless of whether the professor was "laid off," "terminated" or her employment was "not renewed," she suffered an adverse employment action because "'she was denied the requested continued employment.'" The Second Circuit also found that the professor presented sufficient facts to establish an inference of discrimination to meet her burden of establishing a prima facie case of age and sex bias; among other things, she presented evidence that the university laid off six women at least 50 years of age, reassigned her duties to male instructors and did not consider her for any vacant positions. She also raised triable issues as to pretext, presenting evidence that the budgetary exigencies cited by university were not so dire as to warrant her contract non-renewal (Leibowitz v Cornell Univ, October 23, 2009).

2ndCir: Fractional test in benefit plan did not violate ERISA

A company's conversion of its defined benefit plan into a cash balance plan did not violate ERISA's benefit accrual requirements or ERISA's notice requirements, which require that participants be given advance notice of plan amendments that reduce the rate of future benefit accruals, held the Second Circuit. The company's use of a fractional rule to regulate the rate at which pension benefits accrued did not violate ERISA. The fractional test is essentially a pro rata rule under which, in any given year, the employee's accrued benefit is proportionate to the number of years of service as compared with the number of total years of service appropriate to the normal retirement age. The district court erred in holding that fractional rules may only be applied to participants with ten or fewer years of service, concluded the circuit court, finding that ERISA is an instruction as to how to calculate the accruals, not a prohibition on the type of plans that can use the fractional rule; accordingly, the fractional test is not per se illegal. The circuit court also held that the employer's notice of the benefit reduction was sufficient. ERISA doesn't require that notice describe how plans will comply with minimum benefit accrual rules, but does require a summary of the change that an average plan participant can understand. In this case, the notice alerted participants that the amendments could result in a reduction and, thus, the notice was adequate (Lonecke v Citigroup Pension Plan, October 19, 2009).

5thCir: Continuing violations doctrine could not save employee's sex harassment claim

A female employee who alleged she was sexually harassed by her male supervisor, the same supervisor she was reassigned away from by her employer more than a year earlier, only to once again be placed under his control, failed to make out a Title VII hostile work environment claim, held the Fifth Circuit. The almost 16-month period while she was reassigned, during which she was not harassed, constituted an "intervening action" cutting off her employer's liability for the earlier harassment, and the supervisor's alleged harassment that occurred after the reassignment was not sufficiently severe or pervasive to create a hostile work environment affecting the terms, conditions or privileges of her employment. Nor was she retaliated against for reporting the harassment, held the court, because she was not subjected to a "materially adverse action." While the continuing violation doctrine allows courts to consider acts of harassment occurring outside the 300-day limitations period when those separate acts are part of the same unlawful practice, it did not save the employee's claim, concluded the Fifth Circuit. The employer's response to the earlier harassment was prompt and effective and she experienced no harassment during the sixteen months that she worked for the other supervisor. Thus, the two periods of alleged harassment were severed by the intervening acts of the employer. "That the harassment may have resumed due to a subsequent decision entirely unconnected to the remedial action is of no moment," the court wrote. "To hold otherwise would cast doubt on the safe harbor of prompt remedial action." Dividing 2-1, the Fifth Circuit dismissed the employee's claim based on the supervisor's conduct post-reassignment because, while they were "unwanted and offense, the supervisor's occasional statements were not severe, physical threatening or humiliating (Stewart v Mississippi Trans Comm'n, October 21, 2009).

6thCir: Sixth Circuit broadens MPPAA withdrawal liability

Although a district court relied on authority from three circuit courts that narrowly interpreted the Multiemployer Pension Plan Amendment Act's definition of "employer" to be that of an employer who has a contractual obligation to contribute to a multiemployer plan, the Sixth Circuit recently held that an employer's multiemployer pension fund liability may also arise under applicable labor-management relations law. Under an agreement that International Comfort Products (ICP) entered into with Top Transportation Services (Top) to provide truck drivers, Top paid driver's salaries and benefits—reimbursement for which it later sought from ICP—and handled all labor contracts and negotiations. After ICP terminated its relations with Top, Top subsequently ceased all operations, triggering withdrawal liability under the MPPAA. The pension fund demanded payment from both ICP and Top, but neither paid the $570,694.35 assessment. After the fund brought action against ICP, asserting that ICP owed withdrawal liability under the MPPAA and breached its agreement with Top, the district court granted summary judgment to ICP with respect to the fund's claims. Noting that Congress made unmistakably clear in the MPPA that an obligation to contribute to a plan may arise not only from a contract but also from applicable labor-management relations law, the circuit court concluded that "the mere accumulation of contrary precedent in three other circuits does not give us license to disregard the plain language of [the Act] or the Supreme Court's equally plain interpretation of it." Accordingly, the district court's judgment with respect to the fund's MPPAA claim was vacated and remanded for a determination whether ICP had an obligation to contribute to the fund (Central States v International Comfort Products, LLC, October 23, 2009).

7thCir: Cat's paw theory did not implicate employee's FMLA reprisal clam

A state retirement system employee, who was discharged for poor job performance nearly five months after she began taking intermittent leave, could not make out an FMLA reprisal claim, held the Seventh Circuit, because the warnings about her absenteeism and job performance occurred before she even applied for the leave. While the employee asserted that her direct supervisor harbored a retaliatory animus toward her for what he considered her "many absences," which the supervisor attributed to her performance problems, any comments he made regarding her absences were made before she even applied for FMLA leave and could not have been evidence of a retaliatory intent on his part, held the court. Even if the supervisor had such an animus, held the court, the employee failed to demonstrate a causal connection between a protected and the adverse employment action. The supervisor did not have any authority to make disciplinary decisions; the executive director of the retirement system was tasked with such authority and he discharged the employee, a payroll clerk, for member complaints and misdirecting checks. Here, the employee asserted that because her supervisor recommended her discharge to the director, his alleged retaliatory animus should be imputed to the employer, the Seventh Circuit disagreed. While the circuit court has allowed bias claims to proceed under the "cat's paw" doctrine (in which a biased subordinate exerts significant influence over the employment decision of a nobiased decision maker, there was no excessive influence here. "Nothing in the record suggests that the [supervisor] exerted singular influence over [the executive director's] decision or that [the executive director] merely 'rubber-stamped' director's recommendation," wrote the court. "To the contrary, the undisputed facts show that [the executive director] received multiple sources of information on his own, held at least three meetings, and received [the HR director's] independent recommendation before deciding to fire [the employee]." (Long v Teachers' Ret Sys of Ill, October 23, 2009).

7thCir: ADA "regarded as" claim reinstated for route manager with MS

A former food service manager diagnosed with multiple sclerosis (MS) may proceed with his ADA claim alleging that he was discharged by his employer because it regarded him as disabled, the Seventh Circuit ruled, partially reversing a district court's granting of summary judgment for his employer. After experiencing symptoms of slurred speech, dizziness, lightheadedness and headaches that made it difficult for him to write, walk, speak and drive, the manager's doctor requested that he avoid driving until the cause of dizziness was diagnosed. After he was placed on disability leave, the manager was diagnosed with MS, but was given only minor restrictions when he returned to work. During his subsequent trip to the Mayo Clinic for tests, a supervisor drove the manager's route and claimed that he had not been servicing hundreds of his customers and had falsified his daily records. When the manager returned to work two weeks later, he was discharged for "unsatisfactory performance and for being "unable to perform essential job functions." While the company regarded the manager as being disabled in the major life activities of walking, caring for himself and speaking, the circuit court agreed with the district court's conclusion that the evidence showed only "intermittent" difficulties rather than a substantial limitation in a major life activity. Since there were sufficient facts presented to create a triable question as to whether his company regarded the manager as disabled when it fired him, the court ordered the disability bias claim to be remanded for further proceedings (Brunker v Schwan's Home Service, Inc, October 22, 2009).

9thCir: Non-disabled teacher had stand standing to sue for retaliation under disability laws

Reviving her claims, the Ninth Circuit held that a non-disabled teacher had standing under Title II of the ADA and Section 504 of the Rehab Act to sue for retaliation after she was allegedly subjected to a hostile work environment and constructively discharged for filing a complaint with the US Department of Education's Office of Civil Rights, which asserted that her employer denied the students a free appropriate public education as required by federal and state law. The employer argued that Title II and Section 504 are not intended to provide redress of employment claims for persons who are neither disabled themselves, nor have any close relationship to persons with disabilities. Rejecting the employer's arguments, the circuit court held that "the anti-retaliation provision of Section 504 grants standing to non-disabled people who are retaliated against for attempting to protect the rights of the disabled." Explained the court: Section 504 incorporates Title VII's anti-retaliation provision, which forbids discrimination against "any individual" because that individual made a complaint under the Act. The statutes do not include language requiring such individuals to have disabilities in order to have standing, nor do they require the individual to have any close relationship to the person with a disability. Therefore, held the Ninth Circuit, Section 504 grants standing to non-disabled people who are retaliated against for attempting to protect the rights of the disabled, even if they themselves are not disabled or closely related to a person with a disability. Similarly, Title II of the ADA forbids discrimination against "any individual" because "that individual" made a charge under the Act. As with its analysis of Section 504, the circuit court determined that "the language employed in Title II's anti-retaliation provision does not "evince a congressional intent to limit standing to individuals with disabilities," so individuals need not be disabled or closely related to a person with a disability to have standing to sue under Title II (Barker v Riverside County Office of Educ, October 23, 2009).

9thCir: Altering regular rate of pay to provide more desirable schedule did not violate FLSA

A hospital did not violate the FLSA when it implemented a pay plan providing nurses with the option of working a much-desired 12-hour shift schedule in exchange for receiving a lower base hourly salary than that paid to nurses who worked a standard eight-hour shift, the Ninth Circuit ruled in a case of first impression. Pursuant to the pay plan, nurses who volunteered to work the 12-hour shift made approximately the same amount of money as they made on the eight-hour shift. Moreover, their base hourly salary at all times exceeded the minimum wage set forth by the FLSA and they received time-and-a-half pay for all hours worked in excess of eight hours per day. The court rejected the argument that the pay plan violated the FLSA because it was designed to make overtime payments "cost neutral" and that such a scheme is lawful only when implemented before an employer becomes subject to the FLSA. According to the court, the arrangement was not prohibited under the statute nor did it contravene the FLSA's purpose of protecting employees from "the evils of overwork and underpay." The court also rejected the argument that the pay plan was unlawful because nurses working both the eight-hour and 12-hour shifts performed the same work, but were paid at different rates. "We find no authority that suggests employees cannot be paid different rates for different shifts," the court stated, concluding that the employer was "justified in responding to its employees' requests for an alternative work schedule by adopting the sought-after schedule and paying the employees the same wages they received under the less-desirable schedule," wrote the Ninth Circuit (Parth v Pomona Valley Hospital Medical Center, October 22, 2009).

EDPenn: Sexual emails relevant to female employee's sex harassment suit

A female employee who alleged she was subjected to sexual harassment by her male supervisor was unable to exclude certain sexually explicit email exchanges found on her workplace computer that her employer sought to use at trial, held a federal district court in the Eastern District of Pennsylvania, rejecting the employee's motion in limine asking that the emails be deemed inadmissible under Federal Rule of Evidence 412, which calls for an in camera hearing to evaluate admissibility. The emails were exchanged between the employee and other individuals, most of whom were company personnel, using the employer's hardware and software, during the employee's regular hours of employment at the office. Most of the emails consisted of various stories, jokes, photographs, cartoons and the like, along with occasional commentary from the employee or others along the specific email chain. While the emails included sexual content and used sexual words, metaphors, puns, double entendres and other innuendo in an attempt to amuse, the employee's sexual history was not at play here, as none of the emails expressly discussed the sexual "behavior" or "predisposition" of the employee or anyone else involved in this case, nor did any of the emails have a bearing on the employee's sexual reputation or involve her actual or alleged personal sexual activity, according to the record. Rather, the emails involved sexual banter between coworkers. Because sexual harassment plaintiffs must show that their work environment was both objectively and subjective hostile, the company was "entitled to pursue the argument that the emails were relevant to employee's "possible appreciation of this type of humor, and specifically, whether she was subjectively offended by [her supervisor's] comment[s]," held the court (Seybert v International Group, Inc, October 15, 2009).

MDTenn: Triable issues of fact in internal investigation reprisal case remanded by Supreme Court

On remand from the US Supreme Court, a federal district court in the Middle District of Tennessee held that a payroll coordinator raised triable issues as to whether her county employer discharged her in retaliation for cooperating in an internal investigation of sexual harassment. Even though the Supreme Court held that Title VII's "opposition clause" protects employees who speak out about discrimination, not of their own accord, but when answering questions during an employer-ordered internal investigation, the county asserted that the coordinator could not establish that the decision maker who discharged her even knew she engaged in protected activity before making the adverse action or that a causal connection existed between the adverse action and the protected activity. Rejecting the employer's arguments, the court found the coordinator presented evidence that the decisionmaker knew, at the time of her disciplinary hearing, she made statements in response to the county's internal investigation. "Whether, when and to what extent [the decisionmaker] was aware of [the coordinator's] protected activity is a question of fact which must be determined by a jury," held the court. As to the causal connection, the coordinator was investigated for payroll irregularities less than two months after making her statements to the county about the director's alleged sexual harassment. "Although temporal proximity alone rarely is sufficient to establish a causal connection, where an adverse employment action occurs very close in time after an employer learns of protected activity, such temporal proximity between the events is significant enough to constitute evidence of a causal connection for the purposes of satisfying a prima facie case," wrote the court. Causal connection was also evidenced by the fact that three individuals who gave statements during the investigation were all investigated and then discharged. The coordinator also raised triable issues to whether her discharge was just a pretext, held the court, presenting evidence that all of the "complaints" lodged against her came from the subject of the internal investigation (Crawford v Metropolitan Gov of Nashville/Davidson County, Tenn, October 15, 2009).

SDNY: Court lacked jurisdiction to hear SOX whistleblower claim

A federal district court in the Southern District of New York dismissed an AIG compliance manager's claim that she was unlawfully discharged in violation of the Sarbanes-Oxley Act's (SOX) anti-retaliation provisions after she told a corporate officer she was concerned about the company's potential violations of the Foreign Corrupt Practices Act. The employee filed a complaint with the trial court seeking de novo review after an OSHA Regional Administrator, acting on behalf of the Secretary of Labor, issued a preliminary decision dismissing her administrative action. The employee asserted that the court had jurisdiction under the legislation implementing SOX (18 USC §1514A), which provides that an employee can bring an action in federal court if the Secretary has not issued a final decision within 180 days of the filing of the administrative complaint. However, the court found that because the employee failed to file objections with the Administrative Law Judge within 30 days of receiving the Regional Administrator's preliminary order, the order became final pursuant to 49 USC §42121(b) governing whistleblower actions and, thus, was not subject to judicial review. The court rejected the employee's argument that §1514A's grant of jurisdiction trumped §42121(b)'s prohibition against judicial review of final orders, noting that "[t]his interpretation forecloses any administrative finality when the Secretary does not issue a final order within the 180-day limit." Rather, the court stated, §42121(b)'s prohibition on judicial review of final orders must be read as a limit on Congress' grant of jurisdiction to the district courts under §1514A. "Under this reading, if the Secretary does not issue a final order within 180 days of the filing of the administrative complaint, the complainant has 30 days from receiving a preliminary order to either file a claim in district court or appeal the preliminary order to the ALJ and thereby preserve the option to file a district court claim at a later date. If the complainant … takes no action within 30 days, the preliminary order becomes final and the district court no longer has jurisdiction to review the claim de novo." Thus, the court dismissed the employee's complaint for lack of subject matter jurisdiction (Lebron v American Int’l Group, Inc, October 19, 2009).

SDTex: Divorces may have been "shams," but retirement disbursements still allowed under ERISA

A federal district court in the Southern District of Texas denied a retirement plan committee's request for equitable relief under ERISA, finding that, although employees may have participated in "sham divorces" to gain access to retirement money early, the plain language of the statute did not allow the plan administrator to refuse to "qualify" their domestic relations orders (DRO). It was alleged that these pilots entered into sham divorces and got DRO's with the purpose of obtaining retirement money through ERISA's exception to the anti-alienation provision for divorce. Once obtained, the committee "qualified" the DRO's, and the spouses then requested, and received, lump-sum disbursements. The committee came to find out that these pilots obtained divorces simply to withdraw their pensions early, and so it stopped qualifying DRO's, and sought equitable remedies from the pilots that had received the payments. Denying the committee's request, the court determined that under section 1056(d)(3)(B)(ii) of ERISA, "an agreement meeting the definition of a DRO…must be qualified if it meets the criteria…stated in 1056(d)(3)(B)(i)." As such, since there is no catch all that allowed the committee to evaluate criteria not listed, it was never allowed to even consider whether these divorces were "shams" when qualifying the DRO's (Brown v Continental Airlines, Inc, October 19, 2009).

WDMo: "Donning, doffing time" non-compensable in turkey processing plant

Despite a substantial number of decisions finding that the compensability of time under the FLSA spent by employees "donning and doffing" clothing and protective gear is an integral part of the employees' principal working activities, a federal district court in the Western District of Missouri ruled that—in a case involving employees who work at Butterball, a Missouri turkey processing plant—there is the possibility of exceptions in certain circumstances. Bringing suit as a collective action under FLSA, and as a class action under Missouri minimum wage law and common law, the plaintiff sought compensation for the time the employees spent sanitizing, donning, and doffing clothing and protective gear, as well as walking to and from their work stations after changing clothes. Butterball primarily relied on 29 U.S.C. §203(o) of the FLSA, which provides that "hours worked" does not include "time spent changing clothes or washing at the beginning or end of each workday," if such time were excluded from compensable time "by the express terms of or by custom or practice under a bona fide collective bargaining agreement." Although the plaintiff contended that protective gear was not "clothes," the court determined that §203(o) was to be interpreted broadly to include both clothes and protective gear. Butterball had an established "custom or practice" of non-payment for sanitizing, donning and doffing time, the court wrote, noting that, during contract negotiations, the union had first proposed payment, but later abandoned its requests in order to come to amicable agreement (Hudson v Butterball, LLC, October 14, 2009).

STATE LAW CASES

CA: Illegally seized evidence can be used at state employee's discharge hearing

Weapons and drugs illegally seized by the California Highway Patrol (CHP) from a state transportation worker's car and person after CHP was called to the worksite because of an altercation between the worker and his supervisor could be considered at an administrative review of the worker's discharge, a California Court of Appeal ruled. Although the exclusionary rule operated to suppress the evidence in criminal proceedings for possession of a controlled substance and having a concealed firearm in a vehicle, the court held the rule did not apply to the worker's discharge proceedings. The purpose of the exclusionary rule is to deter the police from violating the Fourth Amendment prohibition on unreasonable searches and seizures. CHP was already punished when the criminal charges were dismissed and nothing further would be added by dismissing the disciplinary action. "Outweighing the minimal or nonexistent deterrent effect on the CHP are the significant risks posed to the public and [the employer's other] workers of suppressing evidence on behalf of an employee who carries illegal drugs and a concealed firearm." (Department of Trans v State Personnel Board, October 20, 2009).

IL: Appellate court dismisses sales VP's final compensation recovery complaint

An Illinois circuit court's grant of summary judgment to a lighting manufacturer that discharged its vice president of sales because of his failure to follow direct orders, ineffective management style and lack of interpersonal skills was affirmed by a state appellate court. The VP had filed a complaint seeking recovery of unpaid final compensation pursuant to the Illinois Wage Payment and Collection Act, alleging that his former company owed him a pro rata share of the 2006 performance bonus, as well as an additional four months of separation pay because his termination was not for "substantial cause." Although the VP contended on appeal that he was entitled to a pro rata portion pursuant to the parties' contract, the appellate court found that the language in the contract was clearly conditional and dependent on whether company sales increased over the previous year. As the bonus referred to in the agreement was not guaranteed to be paid, the court reasoned, the employee was not entitled to a pro rata share. With regard to the phrase "substantial cause," the court determined that the real issue was not whether the term was ambiguous, but whether the company reasonably exercised its contractual discretion in determining that the employee's discharge was for "substantial cause." Because there was nothing in the record to suggest that the company acted in bad faith in determining that the employee's termination was for substantial cause, the court rejected the argument that the trial court erred in granting the company's motion (McLaughlin v Sternberg Lanterns, Inc, October 16, 2009).

OBAMA ADMINISTRATION

Senate HELP Committee approves three NLRB nominees, McCain threatens hold on Becker

Despite protests from the business community and members of Congress, on October 21, the Senate Health, Education, Labor and Pensions (HELP) Committee approved, without hearings, President Obama's three nominations to the NLRB. The Board has been operating with two members since early 2008, issuing 256 decisions according to its FY 2009 case activity report. Easily passing muster were union attorney and former member of the New York State Industrial Board of Appeals Mark G. Pearce and HELP Committee Republican Labor Policy Director Brian E. Hayes. Running up against opposition, however, was the nomination of Craig Becker, who serves as Associate General Counsel to both the Service Employees International Union and the AFL-CIO. Becker's nomination proceeded to a separate, recorded voice vote; a 15-8 vote in his favor resulted. The other two nominees were voted on as a bloc and approved in a unanimous voice vote. The nominations will be sent to the Senate floor as a package for final approval. McCain, however, has threatened to place a hold on Becker's nomination. A hold would prevent the full Senate from voting on the nomination.

Executive pay at TARP firms cut, while Federal Reserve proposes incentive compensation rule

On October 22, the Obama Administration issued limits on executive pay at financial institutions and car companies receiving exceptional assistance under the Troubled Asset Relief Program (TARP). On average, cash compensation for the five most senior executive officers and the next 20 most highly compensated employees at these companies was cut by 90 percent from 2008 levels and their total compensation decreased by more than 50 percent, reported Kenneth Feinberg, the special master of executive compensation for TARP, who is tasked with reviewing their pay packages. Feinberg approved base salaries of $500,000 or less for more than 90 percent of the employees in this group. In addition, special benefits are capped at $25,000 and cash bonuses may no longer be paid to any of these employees. Feinberg's determinations affect seven companies: AIG, Citigroup Inc, Bank of America Corp, Chrysler LLC, General Motors Co, GMAC Financial Services LLC, and Chrysler Financial, which is becoming part of GMAC. Separately, the Federal Reserve issued a proposed rule on incentive compensation policies of banking organizations.

AGENCY DEVELOPMENTS

EEOC posts updated "EEO is the Law" poster on its website

On October 22, the EEOC posted on its website a revised "Equal Employment Opportunity is the Law" poster that reflects current federal employment discrimination law, including the ADA Amendments Act of 2008 (effective on January 1, 2009) and the Genetic Information Nondiscrimination Act of 2008 (effective November 21, 2009). The revised poster also includes updates from the Department of Labor. Employers are required to post notices describing the federal laws prohibiting job discrimination based on race, color, sex, national origin, religion, age, equal pay, disability and genetic information. The updated EEOC poster is available in English, Arabic, Chinese and Spanish.

DOL unveils tool to help unemployed homeowners verify income received from unemployment compensation

On October 22, the DOL announced the creation of a new Unemployment Benefit Estimation Tool that allows mortgage companies and housing counselors to project a homeowner's unemployment insurance income for loan modification purposes. The tool was created as part of collaborative effort among the DOL, Treasury Department, Fannie Mae, Freddie Mac, the Federal Reserve Bank of New York and the Hope Now Alliance.

DOJ announces formal medical marijuana guidelines

On October 19, Attorney General Eric Holder announced formal guidelines for federal prosecutors in states that have enacted laws authorizing the medical use of marijuana. The guidelines are contained in a memo from Deputy Attorney General David W. Ogden, which was sent to the US Attorneys. Since these state laws vary in their substantive provisions and in their regulatory oversight, the memo provides uniform guidance to focus federal investigations and prosecutions in these states on core federal enforcement priorities. The guidelines make clear that the focus of federal resources should not be on individuals whose actions are in compliance with existing state laws, while underscoring that the DOJ will continue to prosecute individuals whose claims of compliance with state and local law conceal operations inconsistent with the terms, conditions, or purposes of those laws. Fourteen states have enacted laws in some form addressing the use of marijuana for medical purposes. They are: Alaska, California, Colorado, Hawaii, Maine, Maryland, Michigan, Montana, Nevada, New Mexico, Oregon, Rhode Island, Vermont and Washington.

FMCSA conducts first national drug & alcohol strike force

On October 23, the Federal Motor Carrier Safety Administration (FMCSA) announced that 77 commercial bus and truck drivers were taken off the road and over 80 carriers face enforcement action as a result of FMCSA's first national drug and alcohol strike force. From September 8 to September 18, FMCSA safety investigators examined the drug and alcohol safety records of commercial drivers employed by bus companies, including school bus drivers, interstate passenger carriers, hazardous material transporters and general freight long-haul trucking companies as part of the agency's drug and alcohol strike force in order to identify motor carriers in violation of federal drug and alcohol testing requirements and to remove from the road commercial truck and bus drivers who jump from carrier to carrier to try and evade federal drug and alcohol testing and reporting requirements. The 77 commercial drivers face the prospect of civil penalties for failing to adhere to federal drug and alcohol regulations and can no longer operate a commercial motor vehicle and will likely face a monetary fine. Additionally, the 84 commercial carriers face pending enforcement action for violations such as using a driver that has tested positive for illegal drugs and for not instituting a drug- and alcohol-testing program. Both drivers and carriers will have an opportunity to contest the alleged violations and the amount of the civil penalties.

NLRB memo instructs on how to use e-filing to expedite processing of petitions to revoke investigative subpoenas

In an October 23 memo (OM 10-11), NLRB Associate General Counsel Richard A. Siegel instructed regional office personnel to use the agency's e-filing procedures to expedite the processing of petitions to the Board revoking investigative subpoenas issued by the regional office. When a region issues an investigative subpoena, the person or entity upon whom the subpoena is served may file with the regional director a petition to revoke the investigative subpoena. The region should then prepare and file an opposition to the "petition…as soon as possible, generally within five business days after receipt of the petition to revoke," explained Siegel, because "time is of the essence since the investigation may be held in abeyance pending the Board's ruling on the petition to revoke." Therefore, using the agency's e-filing procedures will help "expedite a decision on the investigative subpoena and avoid casehandling delays," Siegel wrote. Included in the memo are instructions for compiling the relevant documents into one electronic document to send to the Board.

OSHA addresses need for combustible dust standard

OSHA has published an advance notice of proposed rulemaking (ANPR) in the October 21 Federal Register as an initial step in development of a standard to address the hazards of combustible dust. Combustible dusts are solids ground into fine particles, fibers, chips, chunks or flakes that can cause a fire or explosion when suspended in air under certain conditions; types of dust likely to combust include metal (aluminum and magnesium), wood, plastic or rubber, coal, flour, sugar and paper. OSHA has been conducting a Combustible Dust National Emphasis Program (NEP) since October 2007; a status report is available at here. The NEP has resulted in an unusually high number of general duty clause violations, indicating a strong need for a combustible dust standard. The general duty clause is not as effective as a comprehensive combustible dust standard would be at protecting workers. According to the ANPR, the existing regulatory regime addressing combustible dust is "fragmented and incomplete." Responses to the 69 questions posed in the ANPR will help the agency propose an effective combustible dust standard. The public has until January 19, 2010 to submit comments on the ANPR.

California AG sues bank for "unconscionable fraud" against the state's two largest pension funds

Seeking to recover more than $200 million in illegal overcharges and penalties, California Attorney General Edmund G. Brown Jr. announced that he has filed suit against State Street Bank and Trust—one of the world's leading providers of financial services to institutional investors—for committing "unconscionable fraud" against California's two largest pension funds - CalPERS and CalSTRS. The suit, which was unsealed October 20, 2009, by a Sacramento Superior Court judge, asserts that Boston-based State Street illegally overcharged CalPERS and CalSTRS for the costs of executing foreign currency trades since 2001.

NY, NJ and MT AGs announce intent to sue FedEx Ground over violations of state labor laws

New York Attorney General Andrew M. Cuomo, Montana Attorney General Steve Bullock and New Jersey Attorney General Anne Milgram announced October 20 their offices' intent to sue FedEx Ground for violations of state labor laws. According to a letter sent to FedEx Ground by the AGs on October 20, the company unlawfully misclassifies its drivers as independent contractors. As such, drivers do not receive workers' compensation coverage through FedEx Ground. Moreover, independent contractors are not protected by anti-discrimination laws, labor relations laws and other relevant laws that protect New York, Montana and New Jersey workers. At the same time, drivers are required to spend thousands of dollars out-of-pocket for their trucks, repairs, fuel and uniforms while being held to strict FedEx Ground rules that control the hours they work, the way they dress, and their ability to contract with anyone else outside the company, according to the letter.

NY AG files suit to recover more than $4 million in wages for NYC construction workers

On October 15, New York Attorney General Andrew Cuomo announced that he filed a lawsuit in New York State Supreme Court against a group of six construction and contracting companies for failing to pay its employees over $4 million in wages and overtime pay, as well as for discriminating against African-American, Brazilian and Latino employees in many terms and conditions of employment. The companies, which are all controlled by Michael Mahoney, of Pearl River, include: EMC of New York, Inc; FSC Construction, LLC; FSC General Construction, LLC; BMC Construction Contractors Corporation; Eastlake Industries, Inc; and Rigid Concrete Construction. All six companies provide carpentry and concrete services at construction sites throughout New York City. According to the complaint, Mahoney's construction companies consistently failed to pay millions of dollars in overtime wages to dozens of employees at over 10 construction sites since 2002. Though most employees often worked upwards of 50 to 60 hours a week, they allegedly were not paid the overtime rate of one and a half times their regular wage, resulting in some employees being underpaid by more than $600 per month.

LEGISLATION

Senate to begin debate on unemployment compensation extension bill Tuesday

The Senate is expected to begin debate October 27 on legislation (H.R. 3548) that would extend unemployment benefits by up to 14 weeks for jobless workers in all 50 states. The legislation would also extend benefits for six additional weeks in states with unemployment rates above 8.5 percent. Senate Majority Leader Harry Reid (D-Nev) filed a cloture motion on the bill late October 21. This means that bill supporters would need to have 60 votes in order to proceed to floor debate and a vote on final passage of the bill. The proposal includes a modification to the American Recovery and Reinvestment Act to allow families receiving the Supplemental Nutrition Assistance Program (SNAP), or food stamps, to remain eligible while receiving an additional $25 per week in unemployment insurance benefits. The bill would also update the Unemployment Insurance Modernization provision in the American Recovery and Reinvestment Act to allow victims of sexual assault who have left their job to be eligible for benefits under the "compelling family reasons" clause. Additionally, the legislation specifies railroad workers facing expiring unemployment benefits would be eligible for additional weeks.

Senate passes DOD Authorization bill, includes revisions to FMLA military family leave provisions

On October 22, the Senate voted 68 to 29 to approve the conference report for the National Defense Authorization Act for Fiscal Year 2010 (H.R. 2647), which contains provisions expanding the FMLA's military family leave entitlements. Expanding on the FY 2008 National Defense Authorization Act (NDAA) (P.L. 110-181), the bill extends the military caregiver leave provision to veterans. Under that leave, eligible employees, who are the spouse, son, daughter, parent or next of kin of covered service members in the Armed Forces, including members of the National Guard or Reserves, are entitled to 26 workweeks of leave during a 12-month period to care for that service member, who, because of a serious injury or illness, is undergoing medical treatment, recuperation, or therapy, otherwise in outpatient status, or is otherwise on the temporary disability retired list. The bill also expands coverage of exigency leave available under the FMLA to eligible family members of active-duty service members. The bill would also allow employees covered by the Federal Employees Retirement System to receive credit for unused sick leave toward their retirement annuity. The President is expected to sign the bill into law.

Senate approves conference report for Homeland Security Appropriations bill

On October 2, the Senate approved the conference report for the $42.8 billion Fiscal Year 2010 Homeland Security Appropriations bill (H.R. 2892) in a 79-19 vote. The bill includes various immigration measures, among them a three-year extension of the federal government's E-Verify program and $137 million to operate the program and further improve its accuracy and compliance rates. The House approved the bill on October 15 in a 304-114 vote. The bill also extends the Special Immigrant Nonminister Religious Worker Visa Program, the Conrad 30 J-1 program and the EB-5 Regional Center Pilot Program for three years. The bill next heads to the President for his signature.

TWITTER UPDATES

HEALTH CARE REFORM

Quality of US health care stuck in neutral, according to report

A report released October 22 by the National Committee for Quality Assurance finds that the quality of US health care was virtually stagnant in 2008. The across-the-board trend was seen in care provided to individuals with private insurance coverage as well as in Medicare and Medicaid. The report also examines the link between higher health care spending and quality, finding little to no connection, which has significant implications for the current health care reform efforts.

Employees will face 'shockingly higher' health costs in 2010

Prepare yourself—it's open enrollment time at work. Starting in 2010, your employer is making sure that when it comes to paying for your health care, you're going to be sharing much more of the burden, perhaps 10-20% more for insured workers, reports CNNMoney.com. Companies will be raising everything from deductibles, co-payments to employee out-of-pocket limits.

Senate bill likely to cut employer mandate…

Businesses would not be required to provide health insurance under legislation being readied for Senate debate, reports AP, but large firms would owe significant penalties if any worker needed government subsidies to buy coverage on their own, according to Democratic officials. For firms with more than 50 employees, the fee could be as high as $750 multiplied by the total size of the work force if only a few workers needed federal aid. However, no final decisions have been made on the details of the measure, expected to reach the Senate floor in about two weeks.

… but include a public option

Senate Majority Leader Harry Reid (D-Nev) announced today that the Senate’s health care legislation will include a government-run insurance plan, but states would be allowed to "opt out" of it, reports the New York Times. Pieces of the legislation will be submitted to the Congressional Budget Office for cost analysis. A number of senators in both parties have said that they will not vote on the bill unless they have had time to review the bill after a comprehensive cost estimate.

LITIGATION TRENDS

For in-house counsel, controlling outside legal spend surpasses compliance requirements

For the first time in three years, controlling spending on outside counsel has returned as the top priority for in-house counsel, topping compliance concerns, according to the results of the 2009 ACC/Serengeti Managing Outside Counsel Survey, a collaboration between the Association of Corporate Counsel (ACC) and Serengeti Law, released at ACC's Annual Meeting, on October 19. While compliance issues had reigned for three years, economic factors from the past year have altered the key focus for in-house counsel.

REPORTS

Study says California furloughs will save less than anticipated

Much of the savings from California state workers' three-day-a-month mandatory furlough will be offset by reduced revenue and increased costs to the state general fund in future years, according to a study released October 15, by the University of California, Berkeley's Center for Labor Research and Education. "The High Cost of Furloughs" analyzes the broad impact of furloughing state employees for three days a month, or the equivalent loss of seven weeks of pay, compared to requiring a single monthly mandatory furlough day, concluding that the expanded furloughs will save the general fund only 12 cents for every dollar cut in wages and benefits.

Lack of paid sick leave puts workers and the public at risk, according to study

An October 2009 study, "Sick in the City: What the Lack of Paid Leave Means for Working New Yorkers," released by advocacy groups, the Community Service Society and a Better Balance, found that low-income workers without paid sick leave are more likely to go to work sick, send sick children to school, be threatened by their employers and use the emergency room for medical care than similar workers with paid sick days. With widespread concerns about the flu, and legislation to require paid sick days pending before the New York City Council, this research provides important new data on the implications of lack of paid sick days for the spread of contagious illnesses and health care costs, according to the groups.

Tackling climate change would net 4.5 million jobs, according to report

A new report suggests that tackling climate change will be a major job creator for the US economy, netting up to 4.5 million new US jobs by 2030 and providing the greenhouse gas emission reductions necessary to tackle climate change. The report entitled, Estimating the Jobs Impact of Tackling Climate Change, revealed that industries showing the largest job gains include: construction, farming, professional services, public sector, retail, truck transportation, fabricated metals and electrical equipment.

Tuesday at 3:00 pm is the best time for a workplace meeting, according to white paper

Tuesday at 3:00 pm is the point in the workweek that people are most likely to be available for a meeting, according to a white paper from When Is Good, an online meeting scheduling service. When Is Good looked at 100,000 responses to 34,000 events logged to their service over two years, concluding that the worst hour to suggest for a meeting is right at the start of the workday. Flexibility jumps up at 10 am and 11 am in the morning, but peaks at 3:00 pm, falling off rapidly towards the end of the day.

IN OTHER NEWS

Jury awards $9.2 million in sexual harassment suit

On October 16, a federal jury awarded an account executive $9.2 million in damages resulting from sexual harassment and assault claims she made against her company CEO, reports the Fulton County Daily Report (via Law.com). The jury trial followed US District Senior Judge Owen D. Forrester's decision on October 2 to issue a default verdict in favor of the executive. Forrester issued what he described as "the ultimate sanction" for litigation misconduct after the executive's lawyers presented evidence that the CEO fabricated a declaration with the forged signature of a former company employee to bolster his case against the plaintiff. The apparently forged signature contradicted the executive's claim that the CEO had groped her at work in front of other employees. The jury was not told about the fraudulent affidavit. Instead, the judge told the jury that he had already made findings of law that the CEO sexually harassed and discriminated against the executive, among other things, adding "[I]n every cause of action, [the CEO] was acting as an agent or employee of the corporation while carrying out the duties of his office." The attorney for the CEO plans to appeal Forrester's issuance of the default verdict.

NY Governor suspends flu shot mandate for health care employees

On October 22, Gov. David Patterson announced that State Health Commissioner Richard F. Daines, M.D., suspended the mandatory flu and the H1N1 influenza immunization requirement for New York health care workers so that the limited vaccine supplies can be used for populations most at risk of serious illness and death – especially pregnant women and children and young people between the ages of 6 months and 24 years. One day later, the health care workers and two public employees' unions, who were granted a temporary restraining order preventing the state from mandating the requirement, all said they planned to withdraw their lawsuits, reported the Ithaca Journal. However, the unions and attorney Terence Kindlon, the attorney for the three nurses, said they are reserving the right to reopen their lawsuits. "I'm going to keep the papers warm in case I need them again," he said.

Can employers require H1N1 vaccinations for their workers?

With the H1N1 flu widespread in 46 states, and the vaccine lagging, President Obama declared the outbreak a national emergency October 24. And more lawyers are receiving questions from employers about mandating swine flu shots for workers, according to the National Law Journal (via Law.com). "Employers should not mandate that people get vaccinations, but they should strongly encourage it," said Steve Biddle, who heads San Francisco-based Littler Mendelson's recently formed H1N1 practice group. Yet, John Michels Jr., a partner in Chicago's Baker & McKenzie, said that in private employment, "the law is pretty well established" regarding an employer's right to mandate vaccinations. If an employer can establish the shots are job-related and a business necessity, such vaccinations can be a legitimate job qualification. However, he said, "employees may be able to challenge the newness of the H1N1 vaccine." Employers, don't forget to review the EEOC's guidance on pandemic preparedness in the workplace.

Utah's four-day workweek brings dividends

Closing Utah state offices on Fridays has delivered an unexpected bonus: a big saving on overtime pay, reports AP. New calculations show Utah saved $4.1 million in the first year of a government experiment with a four-day workweek. Initially envisioned to cut energy costs, energy saving came out to $502,000 for the year, only a sixth of the $3 million it expected to trim on energy costs. Utah was the first state in the country to shut down most of its services on Fridays.

Daylight Savings Time ends soon

This year, November 1 will mark the return to Standard Time, when clocks will be moved back one hour at 2:00 a.m. Shift workers on duty at that time who normally work an eight-hour shift will actually work an extra hour, for a total of nine hours of work on that day. Employees must be paid for all nine hours of work under the FLSA. They are also entitled to overtime for all hours in excess of 40 worked during the week, including the extra hour worked during the conversion to Standard Time.

San Francisco hotel workers overwhelmingly approve strike

San Francisco hotel workers voted overwhelmingly October 23 to authorize strikes against 31 of the city's upscale hotels, announced United Here Local 2, the union representing some 9,000 workers whose labor agreements expired August 14. Over 3,000 workers cast ballots, with 92.3% approving the measure. The union's 125-member bargaining committee now has the authority to call actions up to and including strikes if necessary. Workers will remain on the job unless and until the bargaining committee calls a strike, according to the union.

Nearly one in five employers plan to hire seasonal workers this year

The outlook for seasonal hiring in the fourth quarter of 2009 is projected to be similar to 2008, according to a new survey from CareerBuilder. Eighteen percent of hiring managers plan to hire seasonal workers to meet business needs associated with the holidays and end-of-the-year wrap-ups, on par with 17 percent in 2008. At the same time, competition for holiday work is heating up. In addition to unemployed workers pursuing seasonal employment, 12 percent of employed workers plan to take on a seasonal job to help make ends meet.

Employees will spend nearly two full work days holiday shopping using work computers

Employees plan to spend nearly two full working days (14.4 hours) on average shopping online from a work computer this holiday season, according to a survey conducted on behalf of ISACA, a nonprofit association of 86,000 information technology (IT) professionals. One in 10 plans to spend at least 30 hours shopping online at work. Convenience and boredom are the biggest motivators, according to those polled. The potential danger of shopping online is that it can open the door to viruses, spam and phishing attacks that invade the workplace and cost employers thousands per employee in lost productivity and potentially millions in destruction or compromise of corporate data.

Managers: Stop ‘friending’ your employees

Bosses who "friend" their subordinates on social networking sites may seem warm and harmless, but they've got liability risk written all over them, reports the National Law Journal (via Law.com), so warn employment lawyers. Managers sending friend requests to staff via Facebook, Twitter and other sites constitute a growing trend in the workplace. And it's one that needs to stop, employment lawyers stress, because online relations between boss and employee can trigger or exacerbate a host of legal claims, including harassment, discrimination or wrongful termination, as well as touch off cries of favoritism if the boss friends only a select few subordinates.

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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.