GT LE Blog : Labor & Employment Lawyers & Attorneys : Greenberg Traurig Law Firm : Discrimination & Class Action Matters

By James M. Nelson of GT Sacramento. Thanks and welcome to James!

The legislative session came to a close at midnight on September 1, 2010.  California still does not have a budget and that suggests that there will be more activity (and perhaps a few deals cut); however some things are known.  The farm labor overtime bill was vetoed by the Governor.  The employment-related bills that have cleared both houses and are up for the Governor’s consideration are summarized below.  We will continue to monitor and report on these developments.

AB 482:

Would create Labor Code Section 1024.5; declaring that an employer shall not use a consumer credit report for employment purposes unless “the information contained in the report is substantially job-related, meaning that the position of the person on whom the report is sought has access to money, other assets, trade secrets, or other confidential information.”   There is an exception permitting continued use of such reports for managerial positions.

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A part-time female hospital employee complained about her new male boss. Her complaints -- mainly generalized criticisms -- included disapproval of his "presentation of himself in public," his "remarks and appropriateness," his "obvious attraction to/fear of women" and his "leadership in relationship to women." The hospital, worried about potential hostile work environment implications, investigated. During an interview, the employee explained that because her boss was a Southern Baptist and a "good ole boy," she felt he therefore had "inherent sexist attitudes." "For the comfort of all concerned," the hospital fired the complainant, who then filed a Title VII retaliation claim.

The Seventh Circuit, through Judge Posner, rejected the employee's claims, finding not only that her comments did not suggest sex discrimination, but also that she was fired for "harping on" irrelevant sensitive issues and because her comments demonstrated bad judgment and a preoccupation with her new boss's "superficial characteristics." Judge Posner further reasoned that the employee's concern that her boss "might become a problem in the future" because, as a Southern Baptist, he harbored inherent, albeit unexpressed, "sexist attitudes" was not only irrelevant, but also itself stereotypical.

This case highlights a significant, and often overlooked, point. The fact that an employee complains should not necessarily mean that he or she is automatically insulated from appropriate discipline. We all know the potential consequences of failing to act on legitimate complaints of harassment, but overreacting or giving unwarranted credence to baseless complaints without the benefit of thorough and objective investigation also can give rise to workplace or legal problems. Thus, it is important for all parties involved that investigations are conducted in an impartial manner by investigators who are knowledgeable of the law and are able to fairly and objectively gather and analyze the facts.
 

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From Terence P. McCourt of GT Boston.  Thanks and welcome to Terry!

Two new bills recently signed into law by Massachusetts Governor Deval Patrick contain important provisions affecting personnel practices for employers doing business in Massachusetts. The new laws regulate criminal record inquiries on job applications, and create new notification requirements related to employee personnel files.

Terry has prepared prepared a GT Alert containing a detailed analysis of these changes.  

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A new decision from the U.S. Court of Appeals for the 7th Circuit provides a stark reminder to employers of the ease with which a former employee can get a lawsuit before a jury. Berry v. Chicago Transit Auth., Case No. 07-2288 (7th Cir. Aug. 23, 2010). Cynthia Berry alleged that a coworker sexually harassed her on a single occasion. She complained to a supervisor and then to a CTA EEO investigator. She also called the police. In addition to the harasser, there were three witnesses to the alleged harassment. None supported Berry’s version of events. The police concluded that Berry had been the aggressor. The CTA investigator reached the same conclusion and also concluded that Berry had not been sexually harassed.

Berry sued. The CTA moved for summary judgment, arguing that the court should enter judgment in its favor because there was insufficient evidence for a jury to enter a verdict for Berry. The trial court found that Berry’s uncorroborated assertions were not sufficient to create a genuine issue as to material facts, and entered judgment for the CTA. But on appeal, the 7th Circuit rejected “the misconception that uncorroborated testimony from the non-movant cannot prevent summary judgment because it is ‘self-serving.’ If based on personal knowledge or firsthand experience, such testimony can be evidence of disputed material facts. It is not for courts at summary judgment to weigh evidence or determine the credibility of such testimony; we leave those tasks to factfinders.” Berry at 6 (citations omitted). Because (at least according to Berry) her account was based on firsthand experience, the 7th Circuit held that it was sufficient to create a genuine issue as to the material facts and, thus, to avoid summary judgment.

This case illustrates the importance of discovery in the litigation process. Defendants’ counsel should be able to tailor deposition questions in such a manner as to uncover the truth and to avoid creating disputed issues of material fact. Of course, despite defense counsels’ best efforts, an occasional plaintiff who is willing to lie under oath during a deposition may succeed in getting his or her case to a jury just by saying the right things, but that plaintiff’s credibility easily can be attacked at trial.

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There have been many significant legislative enactments in the last couple of years that are critical to employers (i.e., the ADA Amendments Act, the new health care law). The most recent enactment is the Dodd-Frank Wall Street Reform and Consumer Protection Act (commonly referred to as the Dodd-Frank Act or Dodd-Frank). We blogged about Dodd-Frank when it was signed by the President. One section of the legislation that cannot be overlooked is the new whistleblower provision.

This provision provides financial incentives for whistleblowers who come forward with information about securities law violations. The financial incentives consist of a financial bounty that a whistleblower may receive if the information provided leads to an enforcement action in which a monetary sanction is obtained of at least one million dollars. Notably, in order to collect the bounty the employee must provide “original information”, which is information not already known to the SEC. Additionally, the provision provides remedies for whistleblowers who believe that they have been subjected to retaliation.

Significantly, under Dodd-Frank a whistleblower can file an action directly in Federal Court. Additionally, the statute of limitations is lengthy, either six years from the violation or three years after the facts become known or should have become known (but no more than 10 years in total).

Will the Dodd-Frank whistleblower provision lead to an increase in whistleblower complaints? Apparently, the SEC thinks so. According to one SEC official, the SEC is expecting a tremendous response to the law. By creating financial incentives for an employee to bypass an employer’s internal compliance process, that official may be right.

Employers should consider taking several steps in light of this legislation. First, employers should review their internal reporting policies and structures to make sure that employees can report problems. Employers should also think about ways to communicate to employees to encourage employees to raise any issues to the company. Indeed, one concern about Dodd-Frank is that employees will forego bringing their concerns to management and instead report the information to the SEC. To avoid this scenario, employers should publicize their corporate compliance and reporting mechanisms so that employees will raise concerns internally before going to the SEC. Employers may also want to consider providing their own incentives for employees to utilize internal reporting processes. Additionally, employers may want to promote that conducting business in an ethical manner is an integral part of the corporate culture. It goes without saying that the best way to avoid a litigation is to never have one in the first place.

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According to a report issued this week by the Treasury Department, employers who have hired previously unemployed workers this year are eligible for an estimated $10.4 billion in tax breaks under the Hiring Incentives to Restore Employment (HIRE) Act. The Act, which was enacted in March of this year, provides payroll and business tax incentives to qualified employers who hire and retain new workers. To be eligible for these incentives, employers must have hired workers who were unemployed (or worked no more than a total of 40 hours) in the 60-day period leading up to their employment. Affidavits, which qualified workers must complete and sign certifying their unemployed status in the prior 60-day period, are available on the IRS website. For each worker hired after February 3, 2010 and before January 1, 2011, qualified employers may claim a 6.2 percent payroll tax exemption for wages paid to these workers after March 18, 2010. In addition, as an incentive for employers to retain workers hired under the Act, the law allows eligible employers to claim an additional general business tax credit of up to $1,000 for each worker retained for at least a year.

According to the Treasury Department report, between February and June 2010 employers hired an estimated 5.6 million workers that would be covered by the Act’s provisions. The report explains that if these workers remain employed for the remainder of 2010, their employers will be eligible for $6.2 billion in tax exemptions under the Act, and if three-quarters of them remain employed for a year, their employers will be eligible for an additional $4.2 billion in tax credits. For employers who are already planning to increase their workforce, or are looking for reasons to do so, there is still time to take advantage of these tax incentives, which will apply through the remainder of 2010.

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The ADA Amendments Act (ADAAA) became law on January 1, 2009, but in reviewing some recently reported decisions, you would not know it. That is because almost all courts have held that the ADAAA does not apply retroactively. Thus, many recent court decisions have been decided under the ADA as it was constituted prior to the amendments.

For instance, in Williams v. Brunswick County Board of Education, No. 08 CV 140-D, (E.D.N.C. July 2, 2010), the court held that an employee with diabetes did not have a covered disability. However, the court clearly noted that it was deciding the case on the ADA prior to the amendments. Similarly, in Boitnott v. Corning, Inc., No. 06 CV 0330 (W.D.Va. June 15, 2010), the court ruled that a plant worker with leukemia was not entitled to a reasonable accommodation because the employee was not disabled within the meaning of the ADA. Again, the court noted that it was deciding the case under the ADA before the amendments were enacted. Thus, until newer cases make their way through the court process, courts will continue to decide disability cases under the old ADA definitions. 

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       Laws prohibiting discrimination trump patient preference regarding the race of health care providers, the Seventh Circuit recently ruled in Chaney v. Plainfield Healthcare Center, a case decided July 20, 2010. 

       Brenda Chaney, a black certified nursing assistant (CNA), sued her former employer nursing home where a resident in her unit demanded white-only health care providers. Each day CNAs received an assignment sheet, and each day that Chaney worked at Plainfield, hers contained this patient’s name and the note “Prefers No Black CNAs.” Because she was afraid of losing her job, Chaney followed the policy, even to the point of searching for a white CNA on one occasion when she found the patient on the ground, rather than assisting her immediately herself. There were at least two other residents who also refused to be assisted by black CNAs.

      In addition to being given the daily written instruction reminding her that she was not to assist a white resident because of her own race, Chaney was also subjected to racial comments and epithets by two co-workers. Three months after she was hired, Plainfield fired Chaney, claiming that she had used profanity in front of a resident, even though Chaney’s supervisor, who investigated the incident, was skeptical that the event had occurred. 

      Reversing the lower court’s order dismissing the case, the appeals court held that Plainfield’s policy created a racially hostile environment which violated Title VII when, on a daily basis, it reminded her that her terms of employment were different from those of other CNAs because of her race. The Court rejected Plainfield’s argument that as a long-term care facility, it was required to honor patient rights to select health care providers secured by Indiana state law, even if it meant violating Title VII. Even if Plainfield’s reading of the state law were correct, the Supremacy Clause dictates that federal law prevails. The sex discrimination permitted in health-care settings where gender may be a legitimate criterion for selecting providers, resting on a privacy interest (not undressing in front of a member of the opposite sex) is not similar to a request for a health care provider to violate Title VII.

      This case is a cautionary tale to employers in any “customer service” business that violating federal discrimination laws, including those prohibiting different terms of employment based on an employee’s race, color, national origin, age and, in many cases, gender in the name of “customer preference” can result in costly litigation and potential money damages.
 

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From Dawn M. Lurie and Kevin Lashus of GT's Business Immigration & Compliance team

During last month's E-Verify redesign training, U.S. Citizenship and Immigration Services (USCIS) innocently "reminded" employers that companies have three days after an employee’s date of hire to open a case in E-Verify. Interestingly, USCIS also proposed that this four day or "Thursday rule" apply to the timing for completing Section 2 of the Form I-9.

Greenberg Traurig’s Business Immigration and Compliance Group has prepared a GT Alert discussing several concerns regarding this clarification and the way it has been disseminated. Link to the GT Alert here.
 

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The Dodd-Frank bill signed by President Obama today significantly expands whistleblower protections under the Sarbanes-Oxley Act (SOX) and creates additional anti-retaliation requirements for employers. These whistleblower provisions, a small but important part of the law, respond to dissatisfaction with certain aspects of SOX and the general belief that existing laws did not adequately encourage whistleblowers to come forward.

• Stronger “participation clause” protections and double damages. SOX has been criticized for its “reasonable belief” requirement -- SOX only protects an employee who “reasonably believes” the information s/he reports constitutes securities, bank or wire fraud or a violation of an SEC rule or other federal law “relating to fraud against shareholders.” In response, Dodd-Frank (Sec. 922) expands protection to any employee who complains to the SEC, regardless of whether the employee reasonably believes the complained-of conduct violated the enumerated fraud provisions. This provision, in conjunction with existing SOX whistleblower provisions, establish a two-tier system akin to Title VII’s participation and opposition clauses, under which a complaint to the SEC is protected regardless of the validity or reasonableness of the complaint, while an internal objection is still subject to SOX’s “reasonable belief” standard. Dodd-Frank also provides for double back-pay damages to prevailing whistleblowers in “participation clause” cases.
• Subsidiary coverage.  Some SOX whistleblower claims have been dismissed because the purported whistleblower did not work for a “publicly-traded company,” even though the purported whistleblower was employed by a publicly-traded company’s subsidiary. Dodd-Frank amends SOX to expressly cover both publicly-traded companies and “any subsidiary or affiliate whose financial information is included in the consolidated financial statements of such company.”
• Extended statute of limitations and direct access to courts.  The most common basis for dismissal of SOX claims has been employees’ failure to file with the Department of Labor (DOL) within the 90-day statute of limitations period. Dodd-Frank (Sec. 922) doubles this period to 180 days for “opposition clause” type cases, and for “participation clause” cases, lengthens the statute of limitations period to six years from the date of the violation or three years from the date the employee discovers the violation (but no more than ten years from the date of violation). Also, in a significant amendment, an employee now may file a SOX complaint asserting a “participation clause” claim directly in federal court, bypassing the current DOL administrative process.
• Jury trial; invalidation of arbitration agreements.  Reversing judicial precedent, Dodd-Frank’s Section 922 provides that its anti-retaliation rights and remedies “may not be waived by any agreement, policy form, or condition of employment, including by a predispute arbitration agreement,” and that any such predispute arbitration agreement is invalid and unenforceable. It also clarifies that jury trials are available for SOX claims in federal court. 
• Whistleblower bounty program.  In an effort to encourage more whistleblowers to come forward, Section 922 allows the SEC, in any action involving sanctions in excess of $1 million, to compensate whistleblowers with up to 30% but not less than 10% of the amount of the sanctions. The amounts paid are within the sole discretion of the SEC, subject to judicial review. 
• Whistleblower protections for financial services employees.  Finally, Title X of Dodd-Frank creates the Bureau of Consumer Financial Protection, which is empowered to regulate the offering and provision of consumer financial products and services. The Bureau is granted certain enforcement powers, including the authority to investigate and commence civil actions. Section 1057 prohibits retaliation against financial services employees who engage in protected conduct, which includes: (1) providing an employer, the Bureau, or any state, local or federal agency any information the employee reasonably believes to be a violation of Title X; (2) participating in Bureau proceedings; (3) filing any proceeding “under any federal consumer financial law”; and (4) objecting to, or refusing to participate in, any activity, policy, practice, or assigned task that the employee reasonably believes to be in violation of any law, rule, order, standard or prohibition subject to the Bureau’s jurisdiction. Complaints must be filed with the DOL within 180 days of the alleged violation.

Although they have been overshadowed by the bill’s other provisions, the Dodd-Frank whistleblower provisions likely will have a significant impact on employers, not only those in the financial services industry and those previously covered under SOX, but also subsidiaries and "affiliates" of such companies. It is important to immediately familiarize yourself with these provisions and educate managers and human resources as appropriate regarding Dodd-Frank’s expanded prohibitions.

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