Defining “Illegal Activities” for Whistleblowers

Today, the Tennessee Court of Appeals issued a decision that addresses what are "illegal activities" as meant by the Tennessee whistleblower statute, Tenn. Code Ann. § 50-1-304. The statute defines "illegal activities" as "activities that are in violation of the criminal or civil code of this state or the United States or any regulation intended to protect the public health, safety or welfare." That leaves a lot of room for interpretation and Tennessee courts have fleshed in some of answers.

The court of appeals' decisions agree on several important points. First, does the activity, as reported violate a "regulation intended to protect the public health, safety or welfare." Second, not every regulatory violation constitutes an "illegal activity" under the statute. Employees must prove "more than that their employer violated a law or regulation. They must prove that their efforts to bring to light an illegal or unsafe practice furthered an important public policy interest, rather than simply their personal interest."

This decision goes slightly further in making explicit what it had held previously, an employee is not protected simply because the employee believes the conduct is illegal. Rather, the conduct must actually be illegal; if it not, the employee complaints are not protected.

The issue in this case was whether the employee's reports of his supervisor viewing "scantily clad women, sometimes not clothed" on the supervisor's work computer was an "illegal activity." The images themselves were not outright "illegal" (as in child pornography or something else) and the court was a complaint about seeing these kind of images at work was a report of illegal activity.

While the court held for the employer, employers should act with caution; without counsel's advice, it is easy to be wrong about what is illegal activity. It is just as easy for an employer as an employee. So, employers should not base employment decisions solely on whether the employee's assertions constitute "illegal activities." The risk is too great. For example, here the plaintiff (a male) did not assert he thought the images on the computer were sexual harassment. Without saying that the images would have been harassment (there are decisions saying these probably would not have been), had a female employee complained and then been terminated, the complaint about the images might have been protected under the Tennessee Human Rights Act or Title VII.

So while the decision helps bring clarity to a vague statute, as a practical matter, the issue is only relevant after litigation ensues.

Employee Improvement Plans, Adverse Action and Retaliation

A month after taking FMLA, Dynetta Cole's employer, the State of Illinois, told her she had to agree to an employee improvement plan or she would be fired. She refused and was fired. Cole worked in the governor's office, filing and responding to correspondence. Before she took FMLA, Cole's supervisors had problems with and received complaints about Cole. Cole then took FMLA to recover from a car accident. She returned part-time but the problems remained, leading her supervisors to create an employee improvement plan designed to improve her attendance, attitude and job performance. The attendance portion of the plan focused on having Cole better communicate when she needed to be out of the office and suggested she write out her daily and weekly schedule for her supervisors. The attitude section was based upon multiple complaints from constituents and co-workers and suggested Cole be 'more aware of her tone" and work on being a "better listener." The job performance section noted Cole generally completed her duties but she had let her filings fall behind causing a strain on her co-workers (who apparently had trouble finding documents due to Cole's part-time status). Cole refused to sign the plan asserting she had received good performance evaluations and that any difficulties she had were due to cultural differences. After refusing a second opportunity to sign, Cole was fired. She sued contending retaliation under the FMLA.

The court initially held that Cole failed to show her termination was motivated by her taking FMLA leave as opposed to her twice-refusal to sign the improvement plan. The timing of her firing, two months after her FMLA leave was not enough. Cole also argued forcing her to sign the improvement plan was itself discriminatory, arguing that the plan was a "negative factor" for her using FMLA leave and was thus absolutely prohibited by the FMLA regulations. The court disagreed, holding the improvement plan was not a retaliatory adverse employment action in that it would not cause a reasonable employee to forego exercising rights under the FMLA. (More on that in a minute.) The court reasoned that the plan was not "onerous" the most it did was require Cole to submit daily and weekly schedules (which could be altered with advance notice). That was not enough because "a reasonable employee plans her day" and this task could actually improve work habits and productivity. The other requirements, saying she needed to be a better listener and be aware of her tone, were minor impositions at most.

The court's decision is significant because it applies the Supreme Court's 2006 decision in Burlington N. & Santa Fe Ry. v. White, 548 U.S. 53 (2006), to employee improvement plans. Before Burlington several decisions (including a Sixth Circuit decision) had held improvement plans were not adverse action but Burlington changed the legal criteria for what is a retaliatory adverse employment action. This decision construes the pre-Burlington decisions as entirely consistent with Burlington's holding.

One of the key points of the decision was that the plan itself did not put Cole intractably on the path to termination, had she signed it, she may have satisfied her supervisors and been able to keep her job. That distinguished it from situations where the employer had given the employee the choice of resigning or taking a lower paying job.

Employers in Tennessee are stuck with some pretty ridiculous caselaw on temporal proximity so the approach in Cole is a welcome alternative to taking immediate adverse action when an employee's performance lags after the employee returns from FMLA leave (or engages in some other protected activity). It is important, however, not to make the plan too "onerous;" but any plan that simply says to an employee, do your job, let us know when you will be at work, and don't be rude to customers and co-workers is hardly likely to be onerous.

Arbitrating Discrimination Claims

I was modestly surprised by the Supreme Court's arbitration decision this week. In 14 Penn Plaza LLC v. Pyett, the Supreme Court held that "a collective-bargaining agreement ["CBA"] that clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable as a matter of federal law." I had expected (assumed is more like it) the Court would do what it had previously done, find some way to avoid addessing the main issue. Let's start with some history.

In Alexander v. Gardner-Denver Co., 415 U. S. 36 (1974), the Supreme Court held that a union employee could pursue a Title VII claim even though the employee had already lost an arbitration at which the parties had disputed the same facts presented in the race discrimination claim. In its decision the Court distinguished between "contractual and statutory rights" and stated that "there can be no prospective waiver of an employee's rights under Title VII." This meant, to the "lower" courts, that employees could both arbitrate their contract rights under the CBA and pursue their discrimination claims with the EEOC and in court.

Subsequent decisions from the Supreme Court, however, undermined Alexander's statement that the discrimination statutes prohibited arbitration of discrimination claims. Those decisions, however, construed individual employment contracts, not collective bargaining agreements and for some time, the Supreme Court seemed content to permit the "tension" (the term a court uses to say "our decisions are not logically consistent") between individual arbitration agreements and CBA arbitration agreements.

Then, some 11 years ago, in Wright v. Universal Maritime Service Corp., 525 U.S. 70, 82 (1998), the parties raised the same issue decided in Penn Plaza. The Court ducked the issue, however, because clause in the CBA was not "clear and unmistakable." So even if an arbitration clause in a CBA could include discrimination claims, the clause in Wright would fail the clear and unmistakable standard primarily (but not only) because it required arbitration of "matters in dispute," did not explicitly incorporate any statutory antidiscrimination requirement or even have a no discrimination clause in the bargaining agreement. Picking up on these points, the Sixth Circuit in Kennedy v. Superior Printing Co., 215 F.3d 650, 654 (6th Cir. 2000), held that a "general anti-discrimination provision [in a bargaining agreement] that prohibits various forms of discrimination against employees" does not force union employees to arbitrate discrimination claims where the arbitration clause only applied to the interpretation of the contract and did not specifically require arbitration of discrimination claims. And in Bratten v. SSI Servs., Inc., 185 F.3d 625, 631 (6th Cir. Tenn. 1999), the court held that where the CBA arbitration clause "does not mention statutory claims, but only states in boilerplate fashion that it applies to "any grievance arising under the terms of this contract or an alleged violation thereof" was not a sufficient waiver of statutory rights.

The clause in Penn Plaza squarely presented the issue because it not only prohibited discrimination and listed the relevant state and federal discrimination statutes by name, it then said (in the no-discrimination clause) that "All such claims shall be subject to the grievance and arbitration procedures . . . as the sole and exclusive remedy for violations." The clause was, in fact, so clear that the employees' never argued that it was not a clear and unmistakable waiver until they filed their merits brief in the Supreme Court.

So the practical question employers should ask, after Penn Plaza, will be whether or not the no-discrimination clause or the arbitration clause contains a clear and unmistakable waiver of the right to pursue statutory discrimination claims in federal court. What Penn Plaza does is remove the final hurdle to this inquiry by saying that a CBA can, if sufficiently clear, require employees and employers to arbitrate discrimination claims. Penn Plaza does leave open the possibility that there may be some statutes which might prohibit arbitration but, so far, those statutes do not include Title VII, the ADEA or the ADA. Neither does USERRA, but there is a bill pending in Congress (H.R. 1474) which would prohibit arbitration of USERRA claims unless the agreement to arbitrate arises after the "dispute arises." Even here, the bill provides that the prohibition on arbitration does not "preclude the enforcement of any of the rights or terms of a valid collective bargaining agreement." And whether Congress might act to legislatively overturn the Penn Plaza decision remains to be seen.

So what does a CBA have to say to require (or not) discrimination claims be arbitrated? The clause in Penn Plaza is the clearest example. On the other extreme, Wright says a general "all disputes" arbitration clause is not enough. The Sixth Circuit decisions I mentioned earlier hold that unless the CBA specifically says (at a minimum) that discrimination claims are subject to the arbitration clause, they are not sufficient. Also, the decisions might be construed to say that a CBA arbitration clause must not just mention "age discrimination" claims (for example) but must also specifically mention the statute (the "Age Discrimination in Employment Act") in question. I am not so sure that it makes sense to require the statute be mentioned. Think about it, if your clause says that all rights protected by "Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e" must be arbitrated, that is not as informative (to a non-lawyer) as telling employees that all claims for race, sex, national origin and religious discrimination must be arbitrated. But, as the contract lawyers in my firm constantly say, when you draft a contract you use the language that you know works.

And remember, to quote the Penn Plaza decision, "[u]nion members may also file age-discrimination claims with the EEOC and the National Labor Relations Board, which may then seek judicial intervention under this Court's precedent. See EEOC v. Waffle House, Inc., 534 U. S. 279, 295–296 (2002)." In other words, no matter how clear the arbitration clause is, it will not prevent the EEOC or the NLRB from investigating or litigating a discrimination or NLRA claim against an employer (or union).