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).

New Decision Roundup – Cat’s Paws, Investigations and Comp Time

I usually devote each post to one decision or some part of recently introduced legislation. Several court decisions were released last week but none, in its own right (especially in light of my prior blog posts) justifies my usual (too-involved) devotion. That said, I thought I would just give a short description of the decisions and say why each merits some short attention.

Proctor Hospital fired a reservist (for "insubordination, shirking, and attitude problems) who the sued it under USERRA, claiming his military service was the real reason for his firing. A jury agreed with him but the court of appeals in Chicago set the verdict aside because the court improperly admitted "anti-military" evidence that was not shown to have influenced the final firing decision. The decision has some excellent legal points for employment defense lawyers about whether the judge or the jury determines whether statements should be admitted but for employers (especially for those who read this blog), the message should be familiar. The issue here was whether the decision-maker was free of the anti-military statements made by the subordinate because the decision-maker conducted an "independent investigation" by "look[ing] beyond" the reports of misconduct from the biased supervisors and determined, based upon the employee's poor employment history with the hospital. Interestingly, while the Seventh Circuit essentially coined the "cat's paw" phrase in the discrimination context and other courts have used the phrase, the Seventh Circuit's approach to it is pretty demanding as compared to the Sixth Circuits. Under the Seventh Circuit decisions (and other courts as well), the decision-maker must truly rubber stamp the biased decision of a subordinate. The court says the standard requires the employee to show the decision-maker was blindly reliant on the report. The standard on this issue in the Sixth Circuit is far less clear but for the reasons I've given in prior posts, employers won't err by conducting in-depth investigations.

The Sixth Circuit has brought some needed clarity to what evidence is required before an employee can show the employer's reason for firing is so unreasonable as to be pretextual. One of the Home Depots in Nashville fired an assistant store manager ("ASM") because, on two occasions, she violated the company "no-self-service" policy that prohibits employees from ringing up their personal transactions. The ASM knew of the policy and its purpose (preventing employee theft) but had not been disciplined between the first and second infractions. Home Depot – wait for it – conducted an investigation, met with the ASM, reviewed security camera footage of the infraction and the decision to fire the employee was consistent with its practice in 18 other similar situations. This isn't a "cat's paw" case, however, because there was no evidence that any manager had made sex-based comments. The ASM's argument was that her firing was "unreasonable." While the "fairness" of a firing decision is not the issue in a discrimination claim, pretext can be shown under Sixth Circuit decisions where the firing is so unreasonable that it tends to show the employer was not being honest about its reasons. Prior decisions have, however, muddied the water somewhat giving the ASM the opportunity to argue that firing her for only two violations was so extreme it was unreasonable. That argument failed here, the court said, because Home Depot's "overly strict interpretation" of its "no-self-service" policy was not alone enough to show pretext. What had to be shown was that the ASM's interpretation of Home Depot's rule was "far superior" to how Home Depot interpreted it. In other words, Home Depot might not have won if its interpretation was a pretty-good stretch under terms of its policy; an example of this appears in Mickey v. Zeidler Tool & Die Co., 516 F.3d 516, 527 (6^th Cir. 2008). It also helped, the court said, that Home Depot conducted a "reasonable investigation prior to [the ASM's] termination, which strongly supports the view that it made an honest rather than a pretextual decision when it relied on the self-service rule to terminate her." So, aside from the obvious help the investigation made, before terminating someone based upon a policy violation, be sure the policy language can be reasonably interpreted to prohibit the conduct for which you are going to terminate the employee. This case shows the policy doesn't have to explicitly prohibit the conduct but your interpretation of the policy must still be reasonable.

Turning to a completely different subject, the Seventh Circuit has clarified the DOL Wage and Hour rules on how cities must grant requests to use compensatory time ("comp time) for police officers under the FLSA. The dispute concerned Chicago taking the position that it, not the police officers, was entitled to name the date and time the officers could use their comp time. The officers, Chicago said, could only submit requests and the police department simply needed to offer some leave within a reasonable time of the request. It left the decision as to what was a reasonable time to the shift supervisors. The DOL regulation, 29 C.F.R. §553.25, says employee who request using comp time must be permitted to use the time off within a reasonable period after making the request unless that would unduly disrupt operations. Unlike other courts, the seventh circuit rejected Chicago's attack on the regulation and held that Chicago had improperly denied leave requests. The proper method, the court said, is that the "employer must ask whether leave on the date and time requested would produce undue disruption, and only if the answer is yes may the employer defer the leave—and then only for a 'reasonable time.'" Governmental employers should note that the DOL has proposed amendments to § 553.25 (among other things) which would no longer require employer to grant the leave on the date requested (you can keep up with the status and read comments about the proposed regulations at regulations.gov). Instead, the regulations as proposed would not require a public agency to allow the use of compensatory time on the day specifically requested, but only requires that the agency permit the use of the time within a reasonable period after the employee makes the request, unless the use would unduly disrupt the agency's operations. The lesson to be learned, whatever the new regulations say, is don't refuse comp time leave requests if they are inconvenient. There is a process that must be followed.

Firing an Employee on His Return from FMLA Leave

As lawyers, we sometimes have a non-practical view of the workplace. For example, to us the FMLA is about "leave" when in reality, the more fundamental point of the FMLA is to project the employee's job when the need for leave ends. The right to medical leave would be worthless without the right to reinstatement, a point the Sixth Circuit made last August.

A court of appeals decision last week, however, addressed a situation where the employer discovered performance problems while the employee is on FMLA leave. Mr. Cracco worked as a Service Center Manager for Vitran Express, a trucking company, at one of its Illinois terminals. He took approved leave for a medical condition and Vitran hired "several replacements" to cover his job while he was gone. The replacements discovered numerous problems, disorganization, not following of procedures, freight sitting on the dock, damaged fright hidden, safety concerns, customers complaining, overtime not being handled properly, and discrepancies in freight records. Based on these reports, the company launched an investigation, determining that Cracco had not simply made mistakes but had engaged in "deliberate attempts to disguise late and damaged deliveries." For that reason, Vitran then fired Cracco the day he returned from FMLA leave.

Cracco sued, claiming retaliation and interference under the FMLA. The court rejected all of his arguments. On the retaliation claim, the court held that the FMLA did not per se prohibit an employer from terminating an employee because, while the employee was on leave, the employer learned of misconduct. Notice the "but for" connection here. If the employee had not gone on medical leave, the employer might never have learned of the faked records. But that is not enough in itself to show legal causation under the FMLA.

Cracco's FMLA inference claim foundered because of that portion of the FMLA which provides that an employee's right to reinstatement is not absolute and the employee is not entitled to "any right, benefit, or position of employment other than any right, benefit, or position to which the employee would have been entitled had the employee not taken the leave." 29 U.S.C. § 2614(a)(3)(B). So, an employee is not entitled to reinstatement if the employer can "present evidence to show that the employee would not have been entitled to his position even if he had not taken leave." Now here is the important point about Cracco v. Vitran.

Vitran presented "substantial evidence" that Cracco had faked records, of its investigation and how it learned of the misconduct in the first place. In contrast, the employee presented "no evidence" that the reports were not made or that Vitran's investigation was not an honest attempt to ascertain the accuracy of the allegations.

There's no question that an employer may take employment action against an employee for what the employer discovers while the employee is on FMLA leave. The real issue is what is behind the discovery. Honest investigations, as I have stressed elsewhere, are the key. Even on the interference claim, the issue in this case wasn't whether or not the misfeasance had occurred but whether or not the employer honestly believed it occurred. The employer showed this by conducting a thorough investigation – though oddly enough, the court never mentioned whether or not the employee had been interviewed as part of the investigation. (There would have been good reasons for not interviewing the employee: he was on medical leave and the performance issues were self-evidence in the delivery records). There was also a lack of evidence regarding how the employer had treated similarly situated employees and this evidence can be quite crucial in any discrimination lawsuit.

A word to the wise. Because the taking of FMLA leave is itself protected, the timing of any employment action is going to look bad so a smart employer will be extra-careful in documenting the investigation, the basis for the decision and whether any other remotely similar incidents are distinguishable or not.

The Dangers of Quantifying Performance

Last week, the Sixth Circuit affirmed a six million dollar compensatory damages award (most of which was back pay and front pay) in an age discrimination claim case against New York Life. (The court awarded an additional $6 million in punitive damages but I will focus only on the merits of the age discrimination claim).

I've written on a related topic in a prior post, involving an appeal of another age discrimination claim where Sears terminated a store manager for poor performance. That store manager argued she was treated worse than other younger store managers but Sears relied upon two key facts, that the fired store manager was truly the worst performer of the lot and that the comparisons the fired store manager drew were mixed, in the sense that she tried to cherry-picked the comparators.

Contrast that with what happened in the New York Life ("NYL") case. NYL also quantified its managers' performance. Instead of relying, as Sears did, on store sales metrics (that is, figures that were largely objective), NYL's metrics were a mix of subjective and objective factors. NYL used "an index that it calls Growth Profitably and Accountability ("GPA") as one means of measuring a manager's performance." (The GPA scores could range from 0 to 4.) I won't go into how GPAs were derived, it is enough to say that when NYL fired the plaintiff, it said it was because he missed reaching a goal (hiring a certain number of sales employees), a goal he missed hitting by one (debatable) point. So, (a) comparatively low GPA + (b) missing a goal by one point = (c) termination of employment.

Aside from attacking the accuracy of his GPA, the fired manager presented strong evidence that NYL had deviated from applying its "normal rules" (remedial action procedures for when a manager has a low GPA) to other, younger managers, without doing the same for him. Unfortunately for NYL, the GPA calculations made it easy for the plaintiff to demonstrate the favoritism of younger managers. The court devoted several pages to discussing how the younger managers (in other geographic areas) had GPA's similar to the fired manager but received promotions or were not put on "performance warnings" and were not terminated. Of course, NYL argued the fired manager's comparisons were invalid but the court of appeals rejected that argument out of hand (perhaps too readily, I would argue) largely because the GPAs for the younger managers were every bit as bad as the fired managers' GPA. They were, in reality, so stark, NYL's attempt to explain them away them fell flat.

I wanted to write about this decision to make several points.

First, consistency is crucial. If there are reasons to make distinctions, make sure to document them clearly in the appropriate document.

Second, if you are going to quantify performance, don't try to quantify subjective factors and then make fine distinctions between close numbers. That is, if the numbers you use are going to be relatively close together (say 12 versus 13 on a 20 point scale), that distinction isn't going to come across all that well when a court looks at the raw numeric score. (Recall Sears not only used objective figures –poor store sales – it also included several anecdotes which demonstrated why the fired store manager didn't have a clue how to effectively manage a store.) When the numbers are close – or when the employee misses a goal by a small amount – quantification makes it much easier for the employee to effectively argue that the employer failed to accurately evaluate the employee's performance.

Third, don't fall into the trap of thinking that putting numbers on an employee's performance necessarily makes that performance assessment "objective" or easier to defend. Neither is true, unless you are perfectly entirely consistent (an almost impossible outcome). Don't get me wrong, if the numbers are based on objective factors (or even largely objective factors), they can be quite useful (as long as you treat similarly situated employees the same). But when employers try to turn subjective factors into objective-seeming figures, they simply change the focus of the argument from the accuracy of the performance assessment to whether the individual's performance "factors" were properly scored vis-à-vis the other employees. Simply put, I would much rather defend a detailed explanation of an employee's performance written in plain English than one where the employer has developed 12 different performance factors and put a number next to each factor for each employee.

Job Reassignments and Reasonable Accommodations

One of the more controversial topics under the ADA is to what extent is an employer obligated, as a reasonable accommodation, to transfer an employee to another (vacant) job. It is controversial because, by definition, reassignment only comes into consideration when the employee (the EEOC says), because of a disability, "can no longer perform the essential functions of his/her current position, with or without reasonable accommodation" or undue hardship. It doesn't help that the EEOC takes the position that "The employee does not need to be the best qualified individual for the position in order to obtain it as a reassignment" leading some courts to disagree with the EEOC.

With passage of the 2008 amendments to the ADA, employers are going to find themselves having to address many more requests for accommodations, a good number of which are going to be job transfer requests. I'm not going to go into all of the rules and considerations that go into whether to accommodate such a request. If you want a refresher, the EEOC's Enforcement Guidance on Reassignments, gets close enough.

What I want to talk about is some of the reasons why, not too long ago, Liberty Mutual Insurance Company found itself on the losing end of a failure to reasonably accommodate ruling by the United States Court of Appeals for the First Circuit (governing primarily the New England States) and will, it looks like, have to pay a former insurance salesman more than $1.3 million in damages (attorney fees will be additional). Of course, what I know of the case is based solely on what is written in the court's decision.

Kevin Tobin worked for Liberty Mutual selling insurance for nearly thirty-seven years. Mr. Tobin has bi-polar disorder, diagnosed several years before his termination, and it ultimately appears to have prevented Tobin from performing up to standards in his current sales position. In fact, the court of appeals, in an earlier ruling, upheld Liberty Mutual's decision to terminate Tobin because of his "longstanding performance difficulties" but ordered a trial on Tobin's accommodation claim. At the trial, Tobin argued a reasonable accommodation would have been to assign him to manage "mass marketing" accounts, accounts that are group insurance programs offered to businesses and other institutions in which employees or members are able to purchase insurance policies at a discount. These "MM" accounts are highly sought-after because of the volume and ease at which some can be managed. Liberty Mutual refused, saying that Tobin's sales record made him ineligible for the MM assignments because they were awarded as perks to the best performing agents and that Tobin, because of his disability, could not have handled the stress of the MM accounts in any event. (Stress, the evidence showed, tended to worsen Tobin's mental problems.)

Where Liberty Mutual's case fell apart was in asserting reasons that were not supported by the facts.

It may be true that MM accounts were largely (or even overwhelmingly) assigned as perks for the best performers. There was evidence, including from Tobin's former manager and other sales employees, that MM accounts were not uniformly so assigned. So, while it is true that uniformly applied seniority rules do not have to be ignored in making an accommodation, US Airways, Inc. v. Barnett, 535 U.S. 391, 404-05 (2002), the catch is that where "one more departure [from the practice] will not likely make a difference," the employee may be able to show a deserved accommodation was wrongly denied.

So in deciding whether or not to transfer an employee with a disability to a vacant job, never look to what you think the transfer standards should be. You must look at your actual past practice in filing the position before denying the accommodation.

Liberty Mutual's other argument – that Tobin's disorder rendered him incapable of handling some of the MM accounts – also fell flat. Sure, the court acknowledged, Liberty Mutual could point to MM accounts that Tobin probably could not handle due to the pressure but that didn't mean, the court said, Tobin could not manage any MM account. There was testimony that some MM accounts were "easy" to manage. Again, the thoroughness of the evaluation at the time was what hung out to dry Liberty Mutual.

Reading between the lines, my take on this case is that Liberty Mutual finally ran out of patience with Mr. Tobin. The court said Liberty Mutual had engaged in the "interactive process" and made other accommodations than the ones at issue in this lawsuit. The provided accommodations, it appears, were geared toward helping the employee perform his old job, there was no indication, Liberty Mutual offered any other accommodation (in this instance, some other vacant job Tobin could have performed). Remember, once an employer offers an accommodation that is reasonable, the employee cannot reject it and demand the employer provide a preferred accommodation.

An employer does not always have to have the patience of Job (it helps, of course) but just a little more patience – in the form of giving Tobin at least the opportunity to fail in working on the MM accounts (or some other job) - could have possibly avoided the outcome in this case.

One of the best services an employment attorney can provide a client is to say when the client is about to make a mistake. It isn't easy or fun to give that message (there is an art to the delivery) but it often saves the client years of heartache, worry, significant money and the risk inherent in litigation. A good defense lawyer also knows how important it is to ask probing and "difficult" questions in rendering advice. So too must an HR manager. If you are going to bet the farm on a position, don't simply ask, "what is the rule," also ask, "what exceptions have been made to that rule." (And take it as a given that no rule is without some exception, even if only a potential one.)

Not every exception or potential exception will require you to grant the accommodation request, however. Under Barnett, the test is whether "one more exception" would make a difference. To determine that, you must examine all the facts, not simply those that might fit the desired outcome.

Poster for The Stimulus Bill Whistleblower Provision

In an earlier post, I mentioned that after it came out of the conference committee, section 1553(e) of the Stimulus Bill (the "American Recovery and Reinvestment Act of 2009") included a provision that requires employers who receive stimulus funds ("covered funds") to "post notice of the rights and remedies provided under this section.

Congress often requires employers to post notices of rights under various employment statutes but those statutes are almost always enforced by the United States Department of Labor. The DOL, however, has no authority under the Stimulus Bill whistleblower statute, (even to draft a poster) so I thought I would try to fill the void. I take the posting requirement at its word, that is, the poster must state the rights and remedies under section 1553.

NOTICE OF RIGHTS PURSUANT TO SECTION 1553 OF THE

American Recovery and Reinvestment Act of 2009

Section 1553 of the American Recovery and Reinvestment Act of 2009 ("Recovery Act") prohibits employers from retaliating against any employee because the employee provided information to Congress, a State or Federal regulatory or law enforcement agency, a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct), a court or grand jury, the head of a Federal agency, or their representatives, information that the employee reasonably believes is evidence of—

(1) gross mismanagement of an agency contract or grant relating to covered funds;

(2) a gross waste of covered funds;

(3) a substantial and specific danger to public health or safety related to the implementation or use of covered funds;

(4) an abuse of authority related to the implementation or use of covered funds; or

(5) a violation of law, rule, or regulation related to an agency contract (including the competition for or negotiation of a contract) or grant, awarded or issued relating to covered funds.

The term "covered funds" means any contract, grant, or other payment received by any non-Federal employer if the Federal Government provides any portion of the money or property that is provided, requested, or demanded at least some of the funds are appropriated or otherwise made available by the Recovery Act.

If you believe you have been retaliated against because you provided information regarding covered funds, you should promptly seek relief by submitting a complaint to the inspector general of the agency for whom the work was performed or the agency that funded the work.

The Inspector General investigates your complaint and submits a report to the Agency. If the Agency finds in your favor it may:

(A) Order the employer to take affirmative action to abate the reprisal.

(B) Order the employer to reinstate the person to the position that the person held before the reprisal, together with the compensation (including back pay), compensatory damages, employment benefits, and other terms and conditions of employment that would apply to the person in that position if the reprisal had not been taken.

(C) Order the employer to pay the complainant an amount equal to the aggregate amount of all costs and expenses (including attorneys' fees and expert witnesses' fees) that were reasonably incurred by the complainant for, or in connection with, bringing the complaint regarding the reprisal, as determined by the head of the agency or a court of competent jurisdiction.

If the Agency denies your complaint or if it has not rendered a final decision within 210 days or if it declines to render a decision, you have bring a civil action against the employer to seek compensatory damages and other relief available in the appropriate district court of the United States.

Your rights under Section 1553 of the Recovery Act are in addition to any other rights you may have under any other federal, state or local law.

Preparing for Fair Pay Legislation - Part 9A

In my prior post, I emphasized the need to only group similar situated employees together. I should have mentioned another reason for this.

When defending a compensation discrimination claim, one of the initial battles that must be fought is over who are the proper comparators to the employee. In Ledbetter v. Goodyear Tire & Rubber Co., 127 S. Ct. 2162 (2007), for example, the district court upheld the jury's verdict of discrimination saying that the jury could have based its decision on Ledbetter's comparison to the highest paid of four managers (one other was, of course, Ledbetter).

Understand that the battle is not over who is the proper comparator but who are the proper comparators. If there is more than one comparator, the court should not permit the employee to make a comparison to only the highest paid or a higher paid employees. There is ample precedent for this in discrimination decisions:

"A plaintiff who wants a court to infer discrimination from the employer's treatment of comparable cases has to analyze a goodly sample.” Kuhn v. Ball State Univ., 78 F.3d 330, 332 (7th Cir. 1996). Another court of appeals refused to permit a plaintiff to rely upon a single comparator in an Age Discrimination in Employment Act case explaining that courts cannot view a comparison to a single member of a protected class in a vacuum. Simpson v. Kay Jewelers, 142 F.3d 639, 645-47 (3d Cir. 1998). And in Bush v. Commonwealth Edison Co., 990 F.2d 928, 931 (7th Cir. 1993), the Seventh Circuit opined that "a black plaintiff cannot establish racial discrimination by singling out one white person who was treated more favorably when there were other white persons who were treated less favorably than other black persons.”

To get to the point, when employers group similarly situated employees together "on the same page" that makes it much easier for a revewing agency or court to agree that the comparison to the group not to just the highest paid individual is the appropriate comparison.

Preparing for Fair Pay Legislation - Part 9

This is the fourth part of guidance on how employers can better protect themselves from compensation discrimination claims.

#5 – Group employees into similarly situated job groups

The very first instruction the EEOC states in the Compensation Discrimination Compliance Manual is “Investigators should identify similarly situated employees both inside and outside the charging party's protected class.”

Therefore, in setting salaries or salary increases, if comparisons are made between or among employees (as they almost always are), the employee groupings should be unambiguously defined and the grouping should be limited to employees who are similarly situated.
Avoid the expediency of lumping employees into one or two ill-defined categories in which the employees do not perform the same or similar work.

Why? The Equal Pay Act looks to whether the compared employees are performing “equal work;” Title VII examines whether the plaintiff’s job is “similarly situated” to the jobs worked by the comparators. Employers who “compare” the salaries of employee “A” with employee “B” will have a more difficult time proving that they were not really working in comparable jobs. If you must group dissimilar jobs (say, for purposes of dividing up a finite pot of money), make sure the paperwork unambiguously states the reason for the grouping.

Group employees by the job being performed – not by the characteristics of the employee who holds the job. Beck-Wilson v. Principi, 441 F.3d 353, 363 (6th Cir. 2006) (“the comparison at the prima facie stage is of the jobs and not the employees”). An employee who has worked for 10 years may rightly deserve (all other things being equal) to be paid more than an employee who has worked 5 years, but if they perform the same or similar job, they should be included in the same comparison group. The relative experience, of course, may be used to justify any salary disparity.

When investigating or prosecuting a claim of compensation discrimination, the EEOC (or OFCCP as the case may be) can and will "revise" an employer’s pay categories in order to compare employees who are performing the same or similar work. The EEOC instructs its investigators:

The investigator should determine the similarity of jobs by ascertaining whether the jobs generally involve similar tasks, require similar skill, effort, and responsibility, working conditions, and are similarly complex or difficult. The actual content of the jobs must be similar enough that one would expect those who hold the jobs to be paid at the same rate or level. Job titles and formal job descriptions are helpful in making this determination, but because jobs involving similar work may have different titles and descriptions, these things are not controlling. Similarly, the fact that employees work in different departments or other organizational units may be relevant, but is not controlling.
* * *
Factors other than job content also may be important in identifying similarly situated comparators. For example, minimum objective qualifications, such as a specialized license or certification should be taken into account. Persons in jobs requiring certain minimum objective qualifications should not be grouped together with persons in jobs that do not require those qualifications, even though the jobs otherwise are similar. Although minimum objective qualifications should be taken into account in defining the pool of similarly situated employees, employees' relative qualifications should not be considered at this stage.

Preparing for Fair Pay Legislation - Part 8

This is the third part of guidance on how employers can better protect themselves from compensation discrimination claims. I combine two shorter points into one post.

#3 – Use All of Factors Set Out In the Compensation Policy

The ultimate goal of most compensation policies is that employees who perform similarly within a similar rate range penetration should receive similar raises (typically measured in percentages) or similar salaries (depending upon other factors such as the value of longer experience).

To achieve this goal, make sure your written policy includes all of the relevant factors (dicussed in step number 1) and that all of these factors are fully evaluated in a consistent, non-discriminatory basis for every employee. If a certain factor does not apply or has not been met by the employee, the analysis should so state (see step number 4, below, for how to articulate this last point). Make sure the explanations given for pay decisions are consistent with the written compensation policy and what the employee is told at the time the compensation decision is announced.

Not following a written pay policy is usually worse than not having one. As addressed in step number 1, so I will again emphasize that your pay policy should be tailored to the employer’s actual practices.

Employers make mistake in compensation decisions they wouldn't make elsewhere. Employers that would never make the same mistake in a termination or promotion decision have been known, for example, to pay males more only because the employer viewed males as the “head of the household.” The legal theory is no different than the legal theory which condemns imposing a “no-premarital sex” policy on a non-married female employee once the employee becomes pregnant but never imposing any discipline on any unmarried male employee when the employer knows the male employee has engaged in pre-marital sex. Compare Cline v. Catholic Diocese of Toledo, 206 F.3d 651, 667 (6th Cir. 2000) with Boyd v. Harding of Memphis, Inc., 88 F.3d 410, 414 (6th Cir. 1996).

On the other hand, absent significant evidence that it causes a disparate impact, there is nothing wrong with a neutrally applied policy of paying “heads of household” more than others. EEOC v. J.C. Penney, Co., Inc., 843 F.2d 249 (6th Cir. 1988).

#4 –Articulate a Specific Rationale for Each Compensation Decision

An employer has no legal obligation to explain its compensation policies or its pay increase decisions to employees. Nevertheless, it is a good practice to have a compensation policy that is distributed to employees. The reasons for this are discussed in step number 1. There is also a strong benefit to offering to explain a particular pay increase decision to an employee. For one, an employer who knows it will need to explain its reasons will often put more thought into clearly articulating those reasons.

Compensation discrimination lawsuits are typically brought by employees who did not receive any explanation or a rational explanation for a particular pay decision. An explanation also provides the employee with concrete feedback on how the employee’s performance affects the employee’s salary. Of course, the discussion can be a trap for an employer who gives inconsistent or incomplete reasons for a particular salary decision.

Good business practices aside, courts, especially the Sixth Circuit, require employers to do more than simply state a bald-faced reason for a decision. Thus, it is legally insufficient to justify a salary differential merely by saying that employee “A” performed better than employee “B.” An employer’s “explanation of its legitimate reasons must be clear and reasonably specific.” Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 258 (1981); see also Wright v. Murray Guard, Inc., 455 F.3d 702, 708 (6th Cir. 2006) (employer must base decision on particularized facts before it at the time decision is made and employee can show pretext by showing employer failed to make a “reasonably informed and considered decision”); Chapman v. AI Transport, 229 F.3d 1012, 1034-35 (11th Cir.2000) (if an employer rejects an applicant because he gave a “poor interview,” the employer must explain what specific characteristic it perceived as “poor”).

The burden, which applies equally to compensation decisions, is not onerous. The employer should, however, be as specific as possible. Remember, under federal and state law, you can now be sued for ages old compensation decisions so it will benefit you in the long run to be specific and accurate in documenting the reasons for compensation decisions.

Finally, if the performance policy sets goals by which performance will (or may) be “measured,” an employer must also make sure that its compensation policy justifiably and equally accommodates employees who achieve these goals. Of course, the difficulty of meeting those goals can justify different results, just so long as employees who have comparably difficult goals are treated the same.

State Legislation affecting Tennessee Employers

I've been focusing as of late on federal law changes but last Thursday (Feb. 12, 2009) was the unlimited filing deadline for the Tennessee senators to submit proposed legislation. After Thursday, each senator is limited to proposing nine bills.

If there is one thing that our Tennessee government does well it is websites. The Supreme Court, the Governor and the General Assembly all have first class websites. For this post, I went to the Tennessee General Assembly website and searched for bills containing the word "employer." You can see the total results of the search here: http://wapp.capitol.tn.gov/apps/billsearch/billsearchadvanced.aspx?terms=employer&searchtype=all

Several bills struck me as interesting - bearing in mind that I am not attempting to forecast which of these has a chance at passing.

Senate Bill 0156 would codify the "at will" employment doctrine, preclude handbooks from being construed to create a contract of employment and permit discharges except for certain exceptions. It appears this bill has already been withdrawn.

SB0381/HB0873 would permit private employers to pay employees on a monthly basis.

SB0469/HB0480 would amend the THRA so that an "English only" employment policy is not a discriminatory practice if it is a legitmate business necessity. Current law at least arguably already permits this.

SB0682/HB1161 would amend the Tennessee Public Protection Act (which prohibits discharging employees for refusing to participate in or remain silent about illegal activities) but the changes appear to be largely cosmetic.

SB1442/HB0775 would enact the "Healthy Families Act" and require private employers who employ twenty-five (25) or more employees for twenty (20) or more weeks in a calendar year to provide at least seven (7) days of paid sick and vacation leave annually for employees who work more than thirty (30) hours a week. Employees who work not less than twenty (20) nor more than thirty (30) hours a week shall receive at least four (4) days of paid sick and vacation leave annually. Employees who work not less than one thousand (1,000) nor more than one thousand five hundred (1,500) hours annually shall receive at least two (2) days of paid sick and vacation leave annually. Leave would have to be approved in advance unless there is a "bona fide emergency or health condition which prevents the employee from giving notice in advance." Paid sick and vacation leave may be used to address the employee's own medical needs or the medical needs of the employee's immediate family.

SB1664/HB0776 would adopt the Pay Equity in the Workplace Act. This was introduced in 2007 but failed to pass despite receiving considerable attention. It would do much the same as the Paycheck Fairness Act pending in Congress (though, because of the way "employer" is defined, this bill would apply only to the smallest employers).

SB1731/HB0397 would prohibit employers from requiring employees to use vacation time while on family or medical leave.

SB1752/HB0826 would require employers to pay tipped employees at a rate not less than the standard federal minimum wage per hour but would permit credit for tips or gratuities received to be counted toward the minimum wage calculation. SB1902/HB0064 would also affect tipped employee wages. While the wording of this bill is somewhat different it would accomplish the same purpose as SB1752/HB0826. Neither bill does much more than what federal regulations already require except that federal law requires employers pay at least $2.13 an hour while this would require payment of half the minimum wage, the end result, requiring minimum wage, is the same. Unlike federal law, neither bill says anything about calculating overtime for tipped employees.

HB0311/SB0083 would prohibit local governments from adopting minimum wage laws.

HB0256/SB0661 would exclude from workers' compensation injuries that occur during recreational activities, are not required by the employer, and do not directly benefit the employer. This would address the confusion generated by the inconsistent decisions in Young v. Taylor-White, LLC, 181 S.W.3d 324, 330 (Tenn. 2005), which held that the employee's voluntary recreational activities were not within the course of employment and Gooden v. Coors Tech. Ceramic Co., 236 S.W.3d 151, 153 (Tenn. 2007), which "clarified" that the voluntary nature of an activity is only one factor to consider in determining whether an injury occurs in the course of employment. Golden then held that the employee's participation in the recreational activity in question was a regular incident of employment because the employer knowingly permitted the activity to occur several times a week.

Clicking on the bill numbers will take to a page that shows the current status of each bill so you can periodically check to see whether any of them might be moving toward passage.

Stimulus Bill Whistleblower Provision - Conference Version

I previously posted about the different versions of the whistleblower provision in the stimulus bill.

The stimulus bill whistleblower statute finally adopted by the conference committee (where members of both houses of Congress meet to resolve difference in bills both have passed), is quite different, better in some ways, worse in others, and still ambiguous (Congress gift to lawyers?) in troubling ways.

The link above is to the pages of the stimulus bill (this link is to Congress' website where I obtained the stimulus bill).

Here is a quite and dirty summary of the changes and a short commentary about them.

Protected activity is now tied to complaints about mismanagement, waste, and abusive spending of stimulus (what the statute calls "covered" funds). The bill stills protects complaints about public health but now those complaints must be about "a substantial and specific danger to public health or safety related to the implementation or use of covered funds." My concern with the provision as it came out of the Senate and House was that neither version specified that complaints must be related to stimulus spending. That ambiguity has been resolved.

I originally said neither version of the bill expressly covered "internal" complaints, that is, complaints by employees to supervisors. It now does. Complaints to "a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct)" are protected even if the employee's "disclosure [was] made in the ordinary course of an employee's duties."

It also means that if you do not receive stimulus money (directly or indirectly), complaints by your employees about your spending are not covered by the whistleblower provision. (They may be covered by other whistleblower statutes, however, depending on whether or not your company does business with the government.) The provision still covers state and local governments that receive stimulus money as well as the contractors and subcontractors who perform work for the state or local government using stimulus money.

Complaints must still be submitted to the inspector general ("I.G.") of the respective agency. My concerns about the I.G. and whether it has employees qualified to investigate retaliation claims still stands.

The conference added a section that addresses who has to establish what. The employee must show the protected activity "was a contributing factor" in the retaliatory action (don't get tied up about causation levels, there is no difference between a "because of" or "motivation" or "contributing" factor as humans are not capable of understanding these degrees of motive).

The provision goes on, however, to add that "circumstantial evidence" can be used to establish a contributing factor" and that includes "evidence that the official undertaking the reprisal knew of the disclosure" or that the reprisal occurred within a "period of time after the disclosure such that a reasonable person could conclude that the disclosure was a contributing factor." This is, of course, based upon the illogical "temporal proximity" causality. The irony is that a "reasonable" person (that is, a person who relies on "reason") would not, by definition, rely upon temporal proximity because it is an illogical doctrine.

Note that the statute does not say either knowledge alone or temporal proximity alone automatically satisfies the contribution factor test. It simply says either "may demonstrate" causation. That leaves it open for employers to argue other factors show there is no causation.

Employers may also defeat causation by showing with clear and convincing evidence that they would have made the same decision regardless of the even if the employee had not made the protected disclosure. Unlike the Title VII version of this defense, this is an absolute defense.

The I.G. still does not have to make a decision on the record so there is no requirement for a hearing at the agency level. The stimulus bill gives the parties the right to obtain a copy of the agency file (with limited exceptions) if the claim goes to litigation in federal court.

The conference committee added a new provision (not found in either version) that prohibits "any agreement" that would waive the "rights and remedies" in the statute. This includes a prohibition on arbitration unless the arbitration is authorized by a collective bargaining agreement. What Congress seems to be trying to do is prohibit predispute waivers of rights but read literally, this provision would make unenforceable any settlement of a stimulus bill whistleblower claim.

Because the provision still fails to include a statute of limitations, the prohibition against "any agreement" waiving rights or remedies is particularly troubling. Presumably, a court or agency approved settlement would be enforable but the provision does not authorize any agency or court to approve settlements. Without authorization, agencies and courts are unlikely to act (though a court could enter a "final" judgment). What employer (or employee) wants to wait some three to four years before knowing if a settlement is enforcable.

Finally, covered employers must post a notice about the "rights and remedies" under the whistleblower provision.