Arbitration agreements between employers and their employees, requiring that all disputes between them be submitted to arbitration instead of a court, can be legally binding, if they are written correctly. Whether a company should have such agreements with its workers is a business judgment, as the agreements have their pros and cons. A recent decision from the U.S. Supreme Court (5-4), however, offers employers a significant new reason to implement such agreements – the avoidance of class action claims. See, AT&T Mobility LLC v. Concepcion, No. 09-893 (U.S. April 27, 2011).
Supreme Court: Verbal Complaints Trigger FLSA Anti-Retaliation Provisions
The Fair Labor Standards Act (“FLSA”) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards. Among its employee protections, the FLSA prohibits employers from discharging or discriminating against employees because they have, among other things, “filed any complaint” related to the FLSA against the employer. In Kasten v.
Saint-Gobain Performance Plastics Corp., Case No. 09-834 (U.S. Mar. 22, 2011), the U.S. Supreme Court considered a narrow but significant question—whether an employee’s verbal complaint of a FLSA violation is sufficient to trigger the FLSA’s anti-retaliation provisions. The Supreme Court held that the complaint required to trigger the FLSA’s anti-retaliation protections may be made orally or in writing.
Supreme Court: Employer, Innocently Relying on Biased Supervisor's Recommendation, May Be Liable for Adverse Employment Action When a supervisor, acting with unlawful bias, recommends to higher management that an adverse employment action be taken against an employee, and higher management acts on that recommendation without any proven bias, should the employer be held liable for unlawful discrimination? Employers in cases with such facts have had some success contending that higher management’s purity of motive should absolve the employer of liability, especially in those cases where higher management conducts an independent investigation of the facts before acting on the recommendation.
In the long-awaited “cat’s paw” case, the U.S. Supreme Court recently rejected this argument, holding that an employer is liable for unlawful discrimination if it acts on a biased supervisor’s recommendation, notwithstanding higher management’s innocence in the decision-making. Staub v. Proctor Hospital, No. 09-400 (Mar. 1, 2011). Fundamentally, the Court decided that, in such cases, the biased supervisor is a proximate cause of the adverse employment action, and the employer is liable for the supervisor’s action, so long as higher management’s ultimate decision is based in any way on that recommendation.
Tenth Circuit: Employee, Coming Out of Drug Rehabilitation, Did Not Show "No Longer Engaging in Illegal Drug Use"
Although substance abuse is often a “disability,” the Americans with Disabilities Act does not protect an employee or job applicant who currently uses illegal drugs. The ADA specifically provides that a person is not “a qualified individual with a disability” if he or she “is currently engaging in the illegal use of drugs, when the covered entity acts on the basis of such use.” 42 U.S.C. § 12114(a). The ADA does, however, provide a so-called “safe harbor” for former users of illegal drugs, specifically exempting from § 12114(a) an individual who:
(1) has successfully completed a supervised drug rehabilitation program and is no longer engaging in the illegal use of drugs, or has otherwise been rehabilitated successfully and is no longer engaging in such use;
(2) is participating in a supervised rehabilitation program and is no longer engaging in such use; or
(3) is erroneously regarded as engaging in such use, but is not engaging in such use . . . .
42 U.S.C. § 12114(b). In Mauerhan v. Wagner Corp., Nos. 09-4179 & 09-4185 (10th Cir. April 19, 2011), the Tenth Circuit Court of Appeals considered whether an employee, having abstained from the use of illegal drugs during a one-month, inpatient, drug rehabilitation program, was “no longer engaging in the illegal use of drugs,” and therefore protected by the “safe harbor.” Refusing to set a “bright line” rule on the minimum period of abstinence required under § 12114(b), the Court held that, under the circumstances, the employee’s use of illegal drugs was sufficiently recent to justify the employer’s reasonable belief that his drug abuse remained an ongoing problem, and that the “safe harbor” was not available to him.
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Leniency, and the Crackdown on Black Employee's Misconduct to Avoid Reverse Discrimination Claims, Do Not Prove Race Discrimination or Retaliation
The Tenth Circuit Court of Appeals, which reviews federal court decisions in Colorado, has ruled that an employer’s past leniency or tolerance of an African-American employee’s misconduct does not forever preclude it from disciplining such continued behavior, and does not make the employee’s ongoing misconduct a pretext for race discrimination or retaliation. The Court also held that an employer’s expressed intention to prevent reverse discrimination claims by enforcing policies even-handedly among all employees, including those in a protected class, is not evidence of discrimination. Crowe v. ADT Security Svcs., Inc., No. 10-1298 (10th Cir. April 25, 2011).
Racial Harassment Complaint Investigation Not "Textbook in its Execution," but Nevertheless Sufficient
When discrimination or harassment complaints are registered, employers should promptly investigate the allegations, make findings, and if appropriate, take responsive action (often of a disciplinary nature) to stop the reported wrongdoing. One recent case demonstrates that even when an employer’s investigation is not performed in a “textbook” fashion, it is, nevertheless, valuable. Welford v. Caterpillar, Inc., Case No. 10-CV-2003 (C.D. Ill. April 21, 2011).
OFCCP Proposes Onerous Veteran Affirmative Action Rules for Contractors
On April 26, 2011, the Office of Federal Contract Compliance Programs (“OFCCP”) published proposed new rules that would significantly broaden federal contractors’ affirmative action obligations with respect to “protected veterans.” The proposed rules, 262 pages in length with accompanying commentary would revise the OFCCP’s Regulations at 41 C.F.R. Parts 60-250 and 60-300. The existing regulations pertain to pre-December 1, 2003 contracts of $25,000 or more; the proposed rules would apply to post-December 1, 2003 contracts of $100,000 or more. Among other things, the proposed rules would increase contractors’ affirmative action obligations, increase data collection requirements, and mandate that federal contractors and subcontractors establish hiring “benchmarks.”
SOX Extended to Public Corporation's Non-Public Subsidiary, Despite Claim Arising Before Dodd-Frank
In past newsletters, we’ve discussed how the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203 (signed July 21, 2010) (“Dodd-Frank” or “Act”), amended the Sarbanes-Oxley Act of 2002 (“SOX”), 18 U.S.C. § 1514A, so as to provide, expressly, that SOX whistleblower protections are available to the employees of non-public subsidiaries of publicly-traded companies, so long as those subsidiaries’ financial information is included in the consolidated financial statements of the publicly-traded parent companies. (Dodd-Frank Sec. 929A, amending 18 U.S.C. § 1514A(a).) See, New Financial Reform Law Provides Assorted Employee Whistleblower Protections (September 2010).
In a recent case, however, the Department of Labor Administrative Review Board ruled that Dodd Frank’s Section 929A did not signify a change in the prior law, but was merely a “clarification” of SOX, such that an employee of a public corporation’s private subsidiary may lawfully assert a whistleblowing claim that arose prior to Section 929A’s effective date. In the Matter of Johnson v. Siemens Bldg. Techs., Inc., ARB Case No. 08-032 (DOL Office of Admin. Law Judges Mar. 31, 2011).
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No Sarbanes-Oxley Protection for Employees Who Go to the Media
In another significant case under the Sarbanes-Oxley Act (“SOX”), 18 U.S.C. § 1514A(a)(I), the Ninth Circuit Court of Appeals recently ruled that SOX whistleblower provisions do not protect employees who report or disclose information about corporate fraud or securities law violations to the media. Tides v. Boeing Co., No. 10-35238 (9th Cir. May 3, 2011).
Arizona Legislature Reponds To Medical Marijuana Act's Anti-Discrimination Language With HB 2541 Employers received welcome relief when Arizona Governor Jan Brewer recently signed into law HB 2541. At first blush, this bill appears simply to amend (albeit significantly) Arizona’s existing Employee Drug Testing Statutes (Title 23, Chapter 2, Article 14 of the Arizona Revised Statutes). Those statutes establish certain procedures and requirements for employer drug testing programs and provide employers with legal protections when their programs comply with those procedures and requirements.
Far more importantly, however, HB 2541 gives back to compliant Arizona employers significant legal ground that they lost when Arizona adopted its Medical Marijuana Act (“MMA”), as discussed in
an earlier Sherman & Howard client advisory. For instance, HB 2541 protects these employers when they take adverse action against medical marijuana users and others suspected of being impaired by drugs or alcohol at work, and provides these employers with specific guidelines as to indicators of impairment. Moreover, HB 2541 provides such employers with definitive guidance (and substantial latitude) in excluding medical marijuana users from safety-sensitive positions.
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Sherman & Howard Successes
Patrick Scully and Matt Morrison, representing a mining client, recently persuaded the U.S. District Court for the District of New Mexico to vacate an unfavorable arbitration award. The award, based on the arbitrator's interpretation of an agreement between our client and the miners' union, would have required our client to pay overtime wages to certain miners who work less than 40 hours per week.. The judge granted our client summary judgment, finding: (1) that the arbitrator ignored the plain language of the agreement; (2) that the arbitrator improperly relied on extraneous evidence; and (3) that the arbitrator impermissibly altered and modified the terms of the agreement in rendering his award. Brooke Colaizzi and one of our clients successfully convinced a hearing officer in a Colorado Department of Labor and Employment proceeding to overturn an auditor's decision to reclassify, as employees, 117 language interpreters and translators engaged by our client. The hearing officer agreed that the interpreters were customarily engaged in an independent profession, were free from the client's direction and control in performing their services, and therefore, were independent contractors. While the interpreters provided services largely to hospitals, surgery centers, and other health professionals, they provided services to other industries, as well.
Brooke Colaizzi addressed the myriad legal restrictions on employee wellness programs at a meeting of the Colorado Bar Association Labor Law Committee on March 17, 2011.
If you have any questions, please contact any member of the Sherman & Howard Labor & Employment Team: