Learning from Others' Mistakes - Things Tennessee Employers can Learn from the Obama Administration's Handling of the Shirley Sherrod Matter

One of the primary reasons I started this blog was to help employers learn from others' mistakes.  It struck me in listening to the media coverage about Shirley Sherrod that the administration has given employers a great example of how not to go about firing someone.  No matter what your political affiliation, every employer can learn from the mistakes the Obama Administration made.

Of course, I'm only going on what I read or heard from the news media.  Some facts are debated (but I won't let a few debated facts stand in the way of good lesson).  Sherrod, of course, was the Agriculture Department official who was summarily fired when the Administration learned, presumably through the news media, that she had given a speech in which she admitted to discriminating against a white farmer.  As the story goes, the video of Sherrod's speech had been selectively edited to make her remarks appear more damning than they actually were.  Sherrod's entire speech showed she was not, in fact, biased but was relaying a story about overcoming bias.

First, as I understand it, Sherrod was fired without being given any opportunity to tell her side of the story.  She claims she was driving when she got a call from a deputy secretary in her department who told her he need her immediate resignation.  She then had to pull over the car and type her resignation letter into her Blackberry.  While there are times when an employer need not hear the employee's side of the story, those times are exceptionally rare.  The far better course, as I explained a while back, is to listen to the employee's version of events before making a decision.

Second, it seems reasonably clear that senior officials in the Agriculture Department decided to fire Sherrod without conducting any investigation, much less a meaningful one.  Sherrod maintains (as any employee would) that she told her supervisors to listen to the entire speech she gave but they ignored her.  The lesson here is, of course, that before an employer fires an employee (especially for  misconduct), the employer should conduct a pretty extensive investigation.  Knee jerk reactions, as I have explained, are likely to cause legal problems for employers.

Third, the Agriculture Department is in the midst of a lawsuit brought by African American farmers who alleged that they suffered racial discrimination in USDA farm loan programs.  According to the Congressional Research Service, the suit alleges that the USDA had discriminated against black farmers from 1983 to 1997 when they applied for federal financial help and again by failing to investigate allegations of discrimination.  One of Sherrod's contentions has been that the participants in this pattern of discriminatory conduct were never discipline for it but that she was fired for only one "offense." Let's suppose, for the moment, that this is true and that Sherrod had confessed to inappropriate conduct toward white farmers.  In meeting out discipline for misconduct, employers should always consider whether the current discipline is consistent with past discipline.

The interesting question this poses, however, is what does an employer do when it wants to change course and no longer follow a past practice?  The Agriculture Department, so the Congressional Research Service says, has been trying to address the discrimination issues for years.  It is not too much of a stretch to think that the Agriculture Department has tried in more recent years to prevent discrimination in loan applications.

To use a less serious example, suppose an employer realizes one day that its relaxed internet use policy is causing problems so it decides to prohibit all personal use of the Internet on work computers.  Absent a union, an employer is not ineluctably bound by its past practices (especially when they are unlawful ones).   But an employer that wants to make a "clean break" with its past practices should do so by unmistakably communicating that policy change to all affected employees.

Before the Sherrod matter, I would never have dreamed I would ever need to write a blog post about such an obvious subject.  But apparently there are employers, even big ones, who make some pretty stupid mistakes.

COBRA - In Case You Were Wondering

Unless you have been under a rock, you'll have noticed that last week, the President signed the Unemployment Compensation Extension Act of 2010.  In the past, similar bills also included an extension of the COBRA premium assistance program.  That did not happen this time.

The Department of Labor has updated its COBRA webpage to clarify that the COBRA premium reduction under ARRA is not available for individuals who experience involuntary terminations after May 31, 2010.

DOL issues Fact Sheet on Break Time for Nursing Mothers under the FLSA

From time to time, the Wage and Hour Division issues "fact sheets" on certain topics.  The latest topic addresses the provision in the Health Care Reform bill requiring employer to provide a "reasonable break time for an employee to express breast milk" for up to 1 year after the child's birth. The Wage and Hour Fact sheet does not go into too much detail.

The Fact Sheet states: "Only employees who are not exempt from the FLSA’s overtime pay requirements are entitled to breaks to express milk."  So exempt employees need not, as a matter of federal law, be provided with breaks.  That is not clear from the statutory language.

Tennessee law makes no such distinction but the federal provision has some teeth for non-exempt employees because it is an amendment to the minimum wage provision in the Fair Labor Standards Act. This means there is a private right of action but it is not clear what damages could be collected or whether any penalty could be imposed if the employer fails to provide the breaks.

Refusing to Return Employee to Work that Poses "High Risk of Re-Injury" Is Not Retaliatory

The Tennessee court of appeals has upheld the dismissal of a workers compensation retaliation lawsuit brought by an employee who was discharged when two board certified physicians determined that if she was returned to work she had a high risk of re-injuring herself. 

The idea that an employer need not return an employee to a job that would be likely to cause future injury is not new.  See Cannon v. Levi Strauss & Co., 29 Fed. Appx. 331 (6th Cir. 2002) (an ADA "regarded as" claim where employer terminated employee because her physician said continued work sewing pants put her at high risk for future carpel tunnel injuries).  What is relatively new is its application to workers compensation retaliation claims (though even here, a decision from years ago had held that an employer did not retaliate against an employee by firing the employee when the employee could not return to work because of a workers' compensation injury).

Yesterday's court of appeals decision today makes this point directly:

There is no evidence in the record that Plaintiff’s filing of workers’ compensation claims played any role whatsoever in the decision not to return her to work. The prohibition against retaliating against employees who file workers’ compensation claims does not guarantee an employee the right to return to work when such return poses a high risk of re-injury. Stated another way, the prohibition against retaliation does not guarantee employees the right to return to work and to continue reinjuring themselves until they are so disabled that they are permanently and totally disabled and can never work again.

Of course, getting to the point of proving that the employee's return to work is likely to cause the employee harm might take some work.  What impressed the court here was that the employer relied upon the advice of "two physicians who are board certified in occupational medicine" (one of whom was the employer's on-site physician).  While relying on a physician who is board certified in occupational medicine clearly helps, the decision does not say that board certification itself is necessary.

What should matter is that the physician has the expertise to make the decision (board certification certainly helps here) and the medical decision evaluates the employee's abilities (as opposed to making assumptions based upon labels).  

Ten years ago, Chattanooga found itself on the wrong end of a disability discrimination decision when it unreasonably relied upon a physician's advice that an HIV positive individual was not qualified to be a police officer.  There, the Sixth Circuit explained why the City's reliance was not reasonable:

Dr. Dowlen's "report" consists of two scribbled lines at the bottom of a boilerplate evaluation form. While the psychiatrist in Pesterfield clearly made an individualized determination as to the plaintiff's medical condition and its effect on his ability to fulfill his job requirements, there is no indication that Dr. Dowlen did anything of the sort. Moreover, the record is replete with factual evidence available to the City at the time --particularly Holiday's successful performance of police jobs that Dr. Dowlen claimed he was unqualified to do -- that flatly contradicted Dr. Dowlen's unsubstantiated conclusion. Under these facts, the City was not entitled to simply rely on the physician's recommendation as the basis for withdrawing its employment offer to Holiday.

Holiday v. Chattanooga, 206 F.3d 637 (6th Cir. 2000).

Employers are often presented with conflicting medical opinions (sometimes from the same physician).  Courts have held that an employer who fairly evaluates competing medical opinions do not discriminate against an employee because of the employee's disability.  Knapp v. Northwestern University, 101 F.3d 473 (7th Cir. 1996) ("in the midst of conflicting expert testimony regarding the degree of serious risk of harm or death, the court's place is to ensure that the exclusion or disqualification of an individual was individualized, reasonably made, and based upon competent medical evidence.").

Presented with conflicting medical information, the EEOC suggests employers consider: 

(1) the area of expertise of each medical professional who has provided information; (2) the kind of information each person providing documentation has about the job's essential functions and the work environment in which they are performed; (3) whether a particular opinion is based on speculation or on current, objectively verifiable information about the risks associated with a particular condition; and, (4) whether the medical opinion is contradicted by information known to or observed by the employer (e.g., information about the employee's actual experience in the job in question or in previous similar jobs).

Court of Appeals Recognizes Public Interest Exception to Retaliation Claims

The Court of Appeals in Atlanta issued an interesting decision today.  To simplify the facts to their essence (the decision is 34 pages long), no one was good enough for the employer's CFO.  The plaintiff was the third in a line of employees fired when their performance did not measure up to the CFO's impossible standards.  As the court said, the CFO "was indiscriminately persnickety."

Seeing the writing on the wall, the employee fired off an email complaining about discrimination.  She lost the discrimination claim because, the court said, there was no evidence this employee was treated better than her two predecessors.  (For this the court cited what it called the Vince Lombardi rule: "someone who treats everyone badly is not guilty of discriminating against anyone.")

But a meritless discrimination claim can spawn a meritorious retaliation claim.  Here, however, the evidence established that the CFO had decided to fire the employee before she sent the complaining email; the CFO had even started looking for another person to mistreat.

What turned this case into a problem was that the CFO fired the employee immediately upon learning about the employee's complaint instead of sticking with the plan to fire the employee once a successor was hired.

Rather than permit the employee to sue for the firing, the court held she could only sue for the premature firing.  She would been fired anyway, the court said, so the only thing she could recover for was the financial loss during the period she would have remained at work.

What made the case interesting is that the company argued the employee was fired when she complained because it was afraid that the employee might vindictively use her position (remember she worked for the CFO) and the access it granted her to sabotage the company’s operations.  That, the court said, could justify  firing the employee earlier than planned.  The court explained:

Discrimination laws do not require that their goals be pursued at the cost of jeopardizing innocent life or that employers tolerate a serious risk that employees in sensitive positions will sabotage the company’s  operations. We are confident that if an employer removes an employee because of a reasonable, fact-based fear of sabotage or violence, the anti-retaliation provisions of our laws will not punish that employer for doing so. 

What was a good theory failed in its implementation.  The company failed to show its concerns were justified enough to warrant dismissal of the retaliation claim.  The court observed that the employee's email made no threats.  The company also failed to show that it had any other basis for thinking she would try to disrupt operations, nor was there evidence that there were "no means short of firing [the employee] that it could have used to protect itself from the sabotage it feared, such as reassigning her to other duties until it found a replacement."

So while the court recognized an exception to a retaliation claim, it also made it clear that the exception will need to be supported by something more than speculation and unfounded fears by the employer.

What the decision also shows, however, is that rushing to judgment is never a good idea.  Without some well-founded basis for thinking there was an eminent danger or risk, the company should have had the strength of its own convictions and not altered its course.

You can read the decision on the Eleventh Circuit's website: Alvarez v. Royal Atlantic Developers.

Avoiding Pretext - Job Descriptions and EEOC Responses

A federal court of appeals recently upheld a jury verdict for an employee in an age discrimination claim.  The decision shows what happens when an employer explains a hiring or promotion decision by relying on a criteria not mentioned in the vacancy announcement.

National American University was hiring a director of admissions for its Rapid City, South Dakota campus.  The employee worked for the university and sought the promotion.  She was one of three finalists but was not offered the job when the two preferred candidates declined it.  Instead, the university broadened its search ultimately offering the job to a substantially younger candidate.

At trial, the University explained its refusal to promote the plaintiff on the ground that she lacked management experience.  While a director of admissions would seemingly need "management experience" the position vacancy announcements failed to mention it.

Worse, in its EEOC response, the University asserted the employee had "struggled" with her performance and had received "mediocre" ratings.  Yet, at trial, the University abandoned this explanation and its witnesses praised the employee's performance.

The lessons from the decision are pretty basic.  Make sure hiring or promotion decisions can be and are explained by reference to criteria stated in the job description.  While employers are not rigidly bound by what is in the position vacancy, it is a mistake to explain a promotion decision by citing criteria that are not in the job description.

The decision also illustrates the importance of making sure the response to an EEOC charge will be the reason asserted at trial.  It is often tempting, in responding to an EEOC charge, to "embellish" by asserting problems the employer had with the employee, even if the problems were not considered in reaching the decision at issue. If that is what the University did here, it backfired

Silently Revisiting Gross v FBL - Does the "Causation Standard" Make a Difference

I'm back.  The press of work and other good causes prevented me from updating the blog.  For that I apologize.

I was prompted to write a post because of a Sixth Circuit decision that came out today.  A teacher at a high school in Michigan sued the school claiming he had been retaliated against under the first amendment for having filed a prior lawsuit alleging harassment of his daughter by another teacher.  (While constitutional retaliation clams are sometimes different than statutory retaliation claims, those differences are unimportant here.)

What caught my eye was the court's description of the causation standard.  In 1977, in a case called Mount Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 285–86 (1977), the Supreme Court said that constitutional retaliation claims required the plaintiff to establish that the improper motive played a "substantial" or "motivating" factor in the decision.  The Court didn't explain but cited to a companion case decided the same day, Arlington Heights v. Metropolitan Housing Dev. Corp., 429 U.S. 252 (1977), which explained, among other things, that the constitution did not require a "sole cause" showing but that the evidence in that case failed to show a racial bias motivated the decision.

Skipping forward to today, the Sixth Circuit set out the "substantial or motivating factor" standard from Mt. Healthy saying "we have interpreted this inquiry to mean that a motivating factor is essentially but-for cause—without which the action being challenged simply would not have been taken." (Quotations omitted.)

That caught my eye because  the 1991 amendments to Title VII - which said a plaintiff can prevail if he or she shows discrimination was a "motivating factor" - have led many to argue that "motivating factor" is a lower or lesser standard than "but for" causation.  Most court decisions simply assume that there is a difference.  (But see Harper, The Causation Standard in Federal Employment Law: Gross v. FBL Financial Services, Inc., and the Unfulfilled Promise of the Civil Rights Act of 1991, 58 Buffalo L. Rev. 69 (2010) (discussing difference but ultimately drawing unsupported conclusion that Congress must have  intended there to be a difference between a "motivating" and "substantial" factor).  The Supreme Court decision in Gross didn't help this by contrasting the Title VII language from the language in the ADEA: "Unlike Title VII, the ADEA's text does not provide that a plaintiff may establish a discrimination by showing that age was simply a motivating factor."  Gross v. FBL Financial Services, Inc., 557 U.S. ____ (2009).  Loose language read out of context is the bane of any jurist or lawyer.  Read in context, the Court seems to have been attempting to explain its holding - that the dual motive theory does not apply to the ADEA.


So what does this mean, practically? Anyone who thinks they can coherently explain the difference (or that there is a difference) between a "contributing", "motivating", "substantial", "causal" or "because of" / "but for" factor is trying to sell you the Brooklyn Bridge.  I've been practicing employment law for 20 plus years and would not begin to try and explain it.  Employers certainly shouldn't get way-laid by concerns over causation or motivation.

Claryfing FMLA Service and Benefit Rules

The Seventh Circuit in Chicago issued an interesting FMLA decision today.  The decision addressed how to calculate the 1,250 hours of service requirement and whether removal of absenteeism "points" is a benefit of employment.

To be eligible for FMLA leave, an employee must have worked 1,250 hours in the preceding 12 months. The employee argued that the employer should have given her credit toward the 1,250 hours for the time she was on a prior FMLA leave.  Without these hours, she didn't have enough for her second leave to qualify for FMLA protection.  The court disagreed:

There is no basis for such a contortion of the statute—no hint in the statute or elsewhere that Congress envisaged and approved such a circumvention of the requirement that an applicant for FMLA leave have worked 1,250 hours in the preceding 12 months.

The second issue addressed in the decision was more interesting.  It takes a little explaining but it is worth it.  Employers commonly have absenteeism policies that accrue points for employees per absence.  Points are then  removed when the employee has worked a defined period of time.  The Seventh Circuit decision, the absenteeism policy provided for termination when the employee reached 8 absenteeism points in the preceding 12 months.  A point is then removed 12 months after it is imposed.  The 12 months period, however, excluded time spent on leave so that if an employee took a two month leave during the 12 months, the employee would have to avoid accruing 8 points over a 14 month period.  This practice has considerable  logical appeal.  If an employer cannot count the period an employee is on FMLA leave toward the absenteeism point system then it makes sense to exclude that period from the period counted.  It is crucial, of course, that the policy apply to all leaves not just FMLA leaves.

The employee argued that expanding the 12 month period for while she was on FMLA leave denied her a benefit and the FMLA provides that taking FMLA leave “shall not result in the loss of any employment benefit accrued prior to the date on which the leave commenced.” 29 U.S.C. § 2614(a)(2).  

The court agreed that removing points after 12 months was an employment benefit protected by the FMLA but ultimately ruled the employer had not retaliated against the employee by extending the 12 month period.  

The FMLA prohibits loss of benefits only when those benefits have "accrued prior to the date on which the leave commenced." 29 U.S.C. § 2614(a)(2) and the FMLA further provides that it does not entitle an employee to "the accrual of any  . . . employment benefits during any period of leave."  So, the court explained:

If removal of absenteeism points. . . is an employment benefit, it is one that accrues 12 months after an absence. Until then the employee has no right to have an absenteeism point removed. An employee who worked for 11 months and was on leave the other month (say he began work on January 1 and was still employed on December 31, but was on leave during the month of July) cannot add the month that he was on leave in order to obtain a benefit available to an employee who  worked for 12 months rather than 11, because the employee is not entitled to “the accrual of any . . . employment benefits during any period of leave."

While the decision upholds the employer's practice it also demonstrates that employers must be careful when  designing a "no fault" absenteeism program so that it does not run afoul of the FMLA.

Will Congress Extend Premium Assistance for COBRA Benefits Again?

As the law currently provides, the COBRA premium assistance program expires on March 31, 2010.  That is, any employee involuntarily terminated after March 31, 2010, must still be offered COBRA coverage but the employee will not be able to pay only the 35% and have the federal government reimburse the rest through a payroll tax credit.

There is, however, a bill pending in Congress that would extend the COBRA premium assistance program to cover involuntary terminations that occur on or before April 30, 2010.  The bill passed the house but a final vote in the Senate was filibustered and no vote is expected before March 31, 2010.

The Senate is, in fact, in recess and isn't expect to consider the bill until April 12, 2010, so neither employers nor employees will know until mid-month whether the COBRA premium assistance program will apply to involuntary terminations that happen in April 2010.  Should the program be extended, which seems probable, expect it to apply retroactively, to all involuntary terminations during April 2010.

A prior post addressed the COBRA notices employers will need to send out to affected employees.  Expect something similar to be required if the COBRA premium assistance program gets extended in mid-April.

DOL Changes its Position FLSA Exemption for Mortgage Loan Officers

Today, the DOL issued its first wage and hour opinion of the current administration.  The DOL has historically issued a number of opinion letters each year and the absence of any new opinion letters has been puzzling.  The DOL has decided to change how it issues official pronouncements.  In an email notice sent out today, the DOL explained:

In order to provide meaningful and comprehensive guidance and outreach to the broadest number of employers and employees, the Wage and Hour Administrator will issue Administrator Interpretations when determined, in the Administrator’s discretion, that further clarity regarding the proper interpretation of a statutory or regulatory issue is appropriate. Administrator Interpretations will set forth a general interpretation of the law and regulations, applicable across-the-board to all those affected by the provision in issue. Guidance in this form will be useful in clarifying the law as it relates to an entire industry, a category of employees, or to all employees. The Wage and Hour Division believes that this will be a much more efficient and productive use of resources than attempting to provide definitive opinion letters in response to fact-specific requests submitted by individuals and organizations, where a slight difference in the assumed facts may result in a different outcome. Requests for opinion letters generally will be responded to by providing references to statutes, regulations, interpretations and cases that are relevant to the specific request but without an analysis of the specific facts presented. In addition, requests for opinion letters will be retained for purposes of the Administrator’s ongoing assessment of what issues might need further interpretive guidance.

(Sorry for the long quote but for some of us, knowing the process is as important as the result.)

The first "Administrator Interpretation" takes the position that the typical duties of a Mortgage Loan Officer does not qualify the employee as being in an administrative exempt position.  In a lengthy, eight page analysis,  the DOL explained that "mortgage loan officers typically have the primary duty of making sales on behalf of their employer; as such, their primary duty is not directly related to the management or general business operations of their employer or their employer’s customers."  

The DOL did not take a position on whether Mortgage Loan Officers might be exempt under a different exemption.  It noted that employers had argued loan officers are exempt as commissioned employees but cautioned that the employer would need to qualify as a "retail or service establishment."

Perhaps what is more interesting about this administrative interpretation is that it "withdraws" (legalese for "rejects") a 2006 DOL ruling which had concluded mortgage loan officers could qualify for the administrative exemption if their primary duties were not "sales."  The difference in positions (between the 2006 and 2010 rulings) seems to be that the 2006 ruling had permitted officers who were making loans to individuals in their personal capacity to qualify as exempt.  The 2010 ruling explained:

work for an employer’s customers does not qualify for the administrative exemption where the customers are individuals seeking advice for their personal needs, such as people seeking mortgages for their homes. Individuals acting in a purely personal capacity do not have “management or general business operations” within the meaning of this exemption. However, if the customer is a business seeking advice about, for example, a mortgage to purchase land for a new manufacturing plant, to buy a building for office space, or to acquire a warehouse for storage of finished goods, the advice regarding such decisions might qualify under the administrative exemption.

Employers who have relied upon the 2006 ruling need to understand that they can no longer rely upon the 2006 ruling to establish that they made a good faith attempt to comply with the FLSA.  That doesn't mean an employer is now liable because they relied in the past on the 2006 ruling.  It simply means that they will have to re-evaluate their position in light of today's ruling.

DOL Releases Updated COBRA Notice For Recovery Act Extension

The DOL has released several model COBRA notices that employers may use when providing notices of the availability of premium reductions and additional election periods for health care continuation coverage.  The notices cover the March 2, 2010 premium assistance extension.

The DOL includes other model forms as well.  These are included in various packages the DOL has created to cover different situations.  The packages include the following disclosures:

• A summary of ARRA’s premium reduction provisions.
• A form to request the premium reduction.
• A form for plans (or issuers) that permit qualified beneficiaries to switch coverage options to use to satisfy ARRA’s requirement to give notice of this option.
• A form for an individual to use to satisfy ARRA’s requirement to notify the plan (or issuer) that the individual is eligible for other group health plan coverage or Medicare.

COBRA Premium Assistance Extended Again

Yesterday, Congress and the President extended COBRA premium assistance again.  The has updated the introduction on the COBRA webpage at http://www.dol.gov/COBRA to reflect the Temporary Extension Act of 2010. Hopefully, the DOL will soon release the new information as the TEA does more than simply extend the premium assistance period for a month.  I add links to the updated the fact sheet, FAQs and other materials when the DOL updates its COBRA webpage.

Religious Practices that Discriminate Because of Gender

Consider the following scenario:

You have recently hired a male employee.  When you are introducing him to his co-workers, an African-American co-worker offered her hand to greet him but he refused to shake hands. The new employee explained that he did not touch women because of his Muslim religion. When a human resources manager spoke with him about the incident, the new employee said that it was the co-worker’s female gender, not her race, which prompted his response.

What do you do?  You have an obligation to accommodate the new employee's religious practices but you also have to make sure that his religious practices do not create a hostile environment for women.

This scenario was presented to the EEOC for an opinion last year.  The EEOC's associate general counsel  responded by letter in an "informal" (non-binding) opinion.  Her answer was to say it depends on what is an undue hardship under the religious discrimination principles of Title VII:

• courts have found, and the Commission has stated, that encroaching on co-workers’ ability to perform their duties or subjecting or threatening to subject co-workers to a hostile work environment “will generally constitute undue hardship.
• a showing of undue hardship requires more than speculation about negative consequences or expressions of discomfort, irritation, or annoyance by co-workers.

What if the newly hired employee is a sales person?  Can the employer consider customer offense in deciding whether the new employee's refusal to shake hands with a woman is an undue hardship?

• The courts also are inclined to find undue hardship if the employee’s religious expression can be perceived by customers as the employer’s own message.

The employer, the EEOC said, should evaluate the actual impact the new employee has.  If he "conveys negativity about women" (or conveys "an intent to demean based on gender") then the employer can take action but if he get along fine with women, they should not.  The same rule would apply to interactions with co-workers.  

When an employer is faced with what we can call the "no win" scenario, there are at least two key points to remember.  

• I have never heard of a court criticizing or punishing an employer for providing appropriate training to its employees.  Bad training, of course, is a different story.
• It is far better to document observations than to make conclusory statements.  If you are like me, and don't well recall details, writing down what you observe ("just the facts") is crucial.  Getting in court and simply saying, to use this scenario as an example, the new guy didn't get along with women because of his religion, is only going to increase the fees you pay your attorney.