Sixth Circuit Holds Employee Did Not Agree to Arbitration When Handbook Simply Referred to Dispute Resolution Procedure

Bickford Senior Living Group fired Maureen Hergenreder, a nurse, in early January 2007 and she filed a lawsuit alleging her firing violated the Americans with Disabilities Act.  Bickford moved to compel arbitration.  None of the documents Hergenreder signed when she started employment (only a few months before she was fired) mentioned arbitration.  Bickford's employee handbook, as is typical, said it was not a contract of employment, but that it was a summary of policies and procedures that apply to employment.

The handbook made no mention of "arbitration" as such.  Instead, it stated: “Dispute Resolution Process Please refer to the Eby Companies Dispute Resolution Procedure (DRP) for details.”  The Dispute Resolution Procedure, of course, required employees to submit all disputes to arbitration.  While Hergenreder acknowledged receipt of the employee handbook, she submitted an affidavit in which she stated she had "never seen or signed" for the Dispute Resolution Procedure.  Bickford did not produce any acknowledgment form signed by Hergenreder for the Dispute Resolution Procedure.  Instead, it provided an affidavit from its Vice President of Employee Relations, Jerry Knight, who states that the DRP “is distributed to employees.”

Absent evidence that Hergenreder had actual knowledge of the arbitration clause or at least was advised of the significance of the Dispute Resolution Procedure, the Sixth Circuit held Hergenreder could not be compelled to submit her ADA claim to arbitration (emphasis added):

There was neither an offer nor an acceptance. The objective signs that Bickford made Hergenreder an offer to be part of the arbitration agreement are few in number. The best Bickford can say is that Hergenreder was informed that, for “Employee Actions,” she should “refer” to the DRP. In Bickford’s view, Hergenreder “was or should have been aware of the DRP and so is bound by it.” Bickford Br. at 13 (capitalization removed). Yet she was not required to refer to the DRP; the “handbook does not constitute any contractual obligation on [Hergenreder’s] part nor on the part of Bickford Cottage[.]” Hergenreder Br. at Ex. 6 (Receipt of Employee Handbook Form). Moreover, the simple reference in the Handbook to “the Eby Companies Dispute Resolution Procedure” for “details” is not “the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.” Kloian, 733 N.W.2d at 770 (internal quotation marks omitted). This statement says nothing about arbitration, and it says nothing that would indicate to Hergenreder that accepting or continuing her job with Bickford would constitute acceptance. Indeed, it is incorrect to conflate the fact that Hergenreder knew generally of the DRP with the notion that she knew of the arbitration language—and Bickford’s desire to create an arbitration agreement—contained within the DRP. Were Hergenreder required to read, or even notified of the importance of reading, the DRP, the analysis here might be different. But this court’s inquiry is focused on whether there is an objective manifestation of intent by Bickford to enter into an agreement with (and invite acceptance by) Hergenreder, and we are not convinced that there is any such manifestation made by Bickford in the record in this case.

It turns out the holding is relatively narrow.  If the employee handbook or any other document the employee signs does not expressly require arbitration of employment disputes, then the document must at least emphasize the "importance of reading" the document that contains the arbitration clause.  The decision serves as a good reminder that the best course for employers is to have the employee sign a document consenting to arbitrate all employment disputes.  While the Sixth Circuit may require less than this, there's no reason to beat about the bush on something like this.

In fact, I'm having a hard time understanding why the employer didn't mention the arbitration clause here.  Perhaps it was just a clerical oversight.  In any event, employers are generally free to draft policies and procedures how they want.  In drafting employment contracts, policies and even benefit plans, I often advise clients to "take the easy road" and include language that will avoid a dispute if at all possible.  It is relatively easy to add a sentence to a policy when drafting a document especially if it might avoid costly litigation.

Sixth Circuit Addresses "Associational Discrimination" Under the ADA

A little used provision in the ADA prohibits "excluding or otherwise denying equal jobs or benefits to a qualified individual because of the known disability of an individual with whom the qualified individual is known to have a relationship or association." 42 U.S.C. § 12112(b)(4).  Under this provision, the EEOC has explained,

an employer may not treat a worker less favorably based on stereotypical assumptions about the worker’s ability to perform job duties satisfactorily while also providing care to a relative or other individual with a disability. For example, an employer may not refuse to hire a job applicant whose wife has a disability because the employer assumes that the applicant would have to use frequent leave and arrive late due to his responsibility to care for his wife.  

The Sixth Circuit appeal involved an employee, Stansberry, who managed the employer's, Air Wisconsin, operations at the Kalamazoo Michigan Airport from 1999 until he was fired on July 26, 2007.  In the mid-1990s Stansberry’s wife developed Polyarteritis Nodosa, a very rare and debilitating autoimmune disorder. The treatment for this condition "involves medications to suppress the immune system, including prednisone and cyclophosphamide."  It is expensive.  Costing Air Wisconsin's insurer some $4,000 every six weeks.

At some point in 2007, Air Wisconsin increased it operations in Kalamazoo, growing from eleven employees to twenty-five. Stansberry was responsible for ensuring all employees properly carried out their jobs and there were several significant problems with the new hires. Between February and May 2007, six different employees received a total of nine security violation letters from the Kalamazoo airport director. Stansberry failed to notify Air Wisconsin’s corporate headquarters about the violations, they learned about the violation only when the Transportation Security Administration sent a letter of investigation to Air Wisconsin’s headquarters.

Stansberry, already had issues with his boss, Mulder.  When Mulder reviewed the security violations, he let the TSA know he would be taking "severe disciplinary action" against Stansberry.  Air Wisconsin asserts that it terminated Stansberry for poor performance based on his failure to stay within budget, failure to report security violations, and improper supervision of employees, which led to the security violations in the first place. The prepared termination letter Mulder brought with him to the meeting, however, simply mentioned the security violations.

Relying on a Seventh Circuit decision, Larimer v. Int’l Bus. Machs. Corp., 370 F.3d 698, 700 (7th Cir. 2004), the Sixth Circuit decision summarized the types of theories under which an associational discrimination claim could be brought:

Several circuits, including this Court in an unpublished opinion, have relied on Larimer’s outline of three theories into which “association discrimination” plaintiffs generally fall: (1) “expense”; (2) “disability by association”; and (3) “distraction.” The “expense” theory covers situations where an employee suffers an adverse employment action because of his or her association with a disabled individual covered under the employer’s health plan, which is costly to the employer. The “disability by association” theory encompasses two related situations. Either the employer fears that the employee may contract the disability of the person he or she is associated with (for example the employee’s partner is infected with HIV and the employer fears the employee may become infected), or the employee is genetically predisposed to develop a disability that his or her relatives have. The “distraction” theory is based on the employee’s being somewhat inattentive at work because of the disability of someone with whom he or she is associated. Id. at 700.

Stansberry relied only on a “distraction” theory.  Stansberry, who lacked direct evidence, argued that the court should infer discrimination because he was discharged shortly after his wife's condition worsened.  The court rejected the argument:

although her condition grew worse immediately before Stansberry was terminated, Air Wisconsin had been aware of her illness for many years. Because Air Wisconsin knew of her disability for a long period of time, this undercuts the inference that Stansberry’s termination was based on unfounded fears that his wife’s disability might cause him to be inattentive at work.

While the court held Stansberry couldn't establish a prima facie case, it also held he could not show his discharge was because of his association with his wife:

Importantly, while Stansberry’s poor performance at work was likely due to his wife’s illness, that is irrelevant under this provision of the Act. Stansberry was not entitled to a reasonable accommodation on account of his wife’s disability. Cf., e.g., Larimer, 370 F.3d at 700. Therefore, because his discharge was based on actually performing his job unsatisfactorily, and not fears that his wife’s disability might prevent him from performing adequately, Air Wisconsin’s conduct is not prohibited by this section of the Act.

There is an important caveat to the decision.  While the ADA does not require an accommodation in these circumstances, the FMLA (which may not have applied to Stansberry) might require time off from work.  

The EEOC also points out that "an employer must avoid treating an employee differently than other employees because of his or her association with a person with a disability."   It gives two examples:

Example J:  Kyung, an employee at an accounting firm, requests a week of unpaid leave and is told by her supervisor that there will be no difficulty in granting the leave.  Kyung then mentions that she will be using the leave to care for her mother with a disability, who is coming into town for medical treatments.  The supervisor denies the leave request, telling Kyung that the firm's leave policy is not intended to cover this type of situation and that she should hire someone to look after her mother.  A few days later, the supervisor approves Diego's request for a week of unpaid leave to attend a father-son camp with his son.  If the firm grants requests for unpaid leave for certain personal or family reasons, it is a violation of the ADA's association provision to deny Kyung's request because she wishes to use the time to assist her mother with a disability.  

Example K:  A law firm permits its attorneys to use 100 hours of administrative leave a year to provide pro bono legal services.  One attorney, Sylvia, wants to use these hours to work with a non-profit organization that provides legal and other services to individuals with psychiatric disabilities.  The law firm denies her request because it does not believe that this type of work will reflect well on its image.  If the firm allows attorneys to use administrative leave to provide pro bono legal services, it is a violation of the association provision of the ADA to deny Sylvia's request because she wishes to use the time to assist individuals with disabilities.

DOL Wage and Hour Division Looking to Hire 6 New Investigators for Tennessee

I like to follow local (Knoxville for me) openings for federal employees.  It is not tempting personally but I do a lot of business with the federal government and it is a good barometer of hiring activity. 

I was intrigued by the fact that the U.S. Department of Labor today announced openings for six new Wage and Hour investigators working out of Nashville, Memphis and Knoxville (here is a link to all six openings).  The position vacancy posting encouraged applicants (who pretty much must be federal employees already) to "Begin a challenging career with the U.S. Department of Labor (DOL), and you will help shape the workforce of tomorrow." I thought Tennessee employers might benefit from seeing the minimum objective qualifications required for the position.

The job duties are described:

The incumbent conducts complete investigations and negotiations involving routine issues and situations to obtain the compliance of business enterprises and State and local governments with the provisions of Federal labor laws, regulations, and orders pertaining to minimum wage rates, overtime pay requirements, child labor provisions, wage garnishments, employment eligibility, domestic service in households, and similar matters pertaining to conditions of employment, wages, and hours worked.  Develops information required to resolve issues in cases requiring a full investigation through: interviews with employers and workers; analysis of pertinent business records; and review of laws enforced by the Wage and Hour Division, related interpretive bulletins, and precedents to identify specific provisions that are applicable to the case peculiarities. Conducts negotiations with the firm owner or manager, attorney, or other firm representative at the appropriate authority level to: (1) advise the employer that there is a violation of the law; (2) fully explain requirements needed to achieve and maintenance compliance; (3) persuade the employer to accept computed back wages found due to employees; and (4) obtain agreement to pay the back wages due employees involved within prescribed monetary limitations.  Prepares case reports, including recommendations for closing the case or any further administrative actions that should be taken.  The above duties are developmental assignments, and as the incumbent progresses, the assignments will become more difficult and complex, leading to progression ultimately to the full performance level of GS-12.

 The qualifications (forgetting the ones unique to being a federal employee) are:

1. General knowledge of Federal wage and hour labor laws, industrial occupations, wage scales, employment practices, or salary and wage administration practices.
2. Skill in analyzing written/verbal information and numerical data and making decisions on issues based on interview, records review, reconstruction of missing or fraudulent records and applying legal or regulatory provisions, precedents, and principles to specific investigative matters.
3. Skill in personal contacts requiring the ability to explain requirements or rights and obtain information and cooperation from people with diverse backgrounds and levels of understanding, reconcile conflicting interests, and persuade others to comply voluntarily with requirements.
In addition to the criteria specified above, applicants must have knowledge of and ability to apply the provisions of Federal wage and hour labor laws pertaining to wages, hours of work, or related conditions of employment.  Examples of qualifying specialized experience include:   
Developing, interpreting, or applying policies, procedures, and operating standards in determining compliance for an organization or government based program.  Conducting interviews and providing information about laws and/or regulations.  Industrial personnel or salary and wage administration or responsible work in a certified public accounting firm.  Analyzing or apply labor legislation.  Reviewing and evaluating operations and procedures through analysis, audits, or surveillance inspections.  Federal, State, or self-regulatory agency work involving obtaining compliance with appropriate program requirements.

I have almost always gotten along with the DOL investigators with whom I have dealt.  I don't necessarily agree with them all but that is the nature of the business anyway.  Here is hoping the new hires are well-qualified for the job.

Governor Signs Bills Restoring Summary Judgment to Employment Discrimination Claims in Tennessee

The Governor has now signed both bills passed by the General Assembly designed to restore summary judgment standards in Tennessee.

The General Assembly's website indicates that on June 10, 2011, the Governor signed HB 1641, which, as I explained in a prior post, codifies the McDonnell Douglas / Burdine analysis at all stages of the proceedings, including, on a motion for summary judgment.  While the Act takes effect as of June 10, 2011, it also provides that it applies “to all causes of action accruing on or after such effective date.” Thus, employment decisions made after this date, will have summary judgment decisions adjudicated using the McDonnell Douglas / Burdine analysis.

My prior post mentioned another bill. This one is not directed at employment discrimination claims but applies to all civil claims. It legislatively overrules Tennessee Supreme Court decisions that made it much more difficult (if not impossible) to obtain summary judgment.  The governor signed this bill on June 16, 2011.  The summary judgment bill, by the way, would not take effect until July 1, 2011, and states that it only applies to “actions filed on or after that date."

These bills will certainly be good news to employers who have been sued for discrimination or retaliation in state court where the evidence of discrimination or retaliation is weak or non-existent.   Prudent employers shouldn't take the passage of these bills as a "get out of jail free" card.  Courts will still have the responsibility to deny summary judgment when the material facts are disputed.  As I have said several times on this blog, the dumbest thing employers can do is run their mouths.  Loose lips are a sure fire way to be forced to defend an employment decision before a jury.

U.S. Supreme Court Reverses Wal-Mart Class Certification

The largest class action ever certified in a discrimination claim is history.  The decision is interesting if you like issues that arise under the federal rules of civil procedure class action but that makes it pretty wonkish from the employer's point of view.  At first read, the Court's decision (it was unanimous in part) will spell doom for large employment based class actions where the evidence does not present a policy or practice of intentional discrimination or a practice that unintentionally causes a disparate impact.

What really hurt the employees trying to get their claims certified was that they took inconsistent positions in trying to establish that their claims of discrimination had an important point in common.  They claimed Wal-Mart had a policy of providing store management with unchecked discretion.  The Court didn't buy it, saying the employees failed to identify "a common mode of exercising discretion that pervades the entire company:"

we have recognized that, “in appropriate cases,” giving discretion to lower-level supervisors can be the basis of Title VII liability under a disparate-impact theory—since “an employer’s undisciplined system of subjective decision making [can have] precisely the same effects as a system pervaded by impermissible intentional discrimination.” Id., at 990–991. But the recognition that this type of Title VII claim “can” exist does not lead to the conclusion that every employee in a company using a system of discretion has such a claim in common. To the contrary, left to their own devices most managers in any corporation—and surely most managers in a corporation that forbids sex discrimination—would select sex-neutral, performance-based criteria for hiring and promotion that produce no actionable disparity at all. Others may choose to reward various attributes that produce disparate impact—such as scores on general aptitude tests or educational achievements, see Griggs v. Duke Power Co., 401 U. S. 424, 431–432 (1971). And still other managers may be guilty of intentional discrimination that produces a sex-based disparity. In such a company, demonstrating the invalidity of one manager’s use of discretion will do nothing to demonstrate the invalidity of another’s. A party seeking to certify a nationwide class will be unable to show that all the employees’ Title VII claims will in fact depend on the answers to common questions.

The decision reduces the risk that an employer will have a class action filed against it alleging all of its decisions are discriminatory.  This decision will require a pretty good showing that the discrimination claims have facts or decision making in common.  As I said earlier, employers that have discriminatory policies or who permit neutral practices to have a discriminatory effect are still at risk. 

Eighth Circuit Remands Dismissal of Retaliation Claim Where Employer Refused to Consult Lawyer

Today, the Eighth Circuit upheld the dismissal of a racial hostile work environment claim but reversed the dismissal of a retaliation claim. Even recognizing that there are disputes over the facts, the case is a good lesson in how not to respond to a complaint about racial comments even if you believe the employee to be lying.

In July 2007, NuAir hired Lionel Pye as a temporary employee doing metal finishing work.  It was entry level work.  He was made a regular employee in October 2007, at which point he asked the company payroll administrator to fill out a form so he could get housing assistance from the county government.  The payroll administrator was apparently rude to Pye, and uttered a racial slur in his hearing (she disputed this).  Pye complained about it to the HR manager (Johnson) who met with Pye and his supervisor.  What was said at the meeting was disputed.  After the meeting, Johnson reported to the Vice-President (Peters) that Pye was trying to shake down the company by making an implied threat to sue.  The court explained what happened next:

Johnson suggested to Peters that a lawyer be consulted to see if NuAire could fire Pye for making threats. Peters responded that he did not need to consult a lawyer, and directed McKnight [the supervisor] to fire Pye when Pye next returned to work on Monday, November 19, 2007. The only information Peters had at the time he made the decision to terminate Pye pertained to Pye’s allegations of discrimination, and to the investigation; he had no information regarding Pye’s performance on the job.

The court's decision shows the employer made a critical error.  "There is no evidence that NuAire had any concerns regarding Pye’s performance before he engaged in protected conduct.  Indeed, Peters acknowledged that he had no information regarding Pye’s work performance when he made the decision to terminate him."  This led the court to hold that, if Pye's version was true, a jury could "believe that NuAire’s assertions of intimidation, coercion, and threatening behavior were pretext for -- if not further evidence of -- NuAire’s true prohibited reason for Pye’s termination."

Making false accusation of racial misconduct is not protected any more than are using those false accusations in an attempt to shake down an employer.  Even so, the standard, as I said in a prior post about a decision from this same court, is very high.  Most of the time, the employer's decision will have to be defended to a jury.  The employer could hopefully have saved itself some grief and expense by consulting with an attorney before firing Pye.  

Given this post's title, I suppose I should say what I would have recommended had I been called after the meeting.  In a situation like this, I would have recommended the employer document the statements made at the meeting in a memo to the employee.  I would ask the employee to confirm that the memo is accurate or get the employee's version of events (in writing, if possible).  Only then would I make a decision about whether to fire or otherwise discipline the employee for making threats.  A little patience goes a long way.  (And yes, I realize the title is self-serving and hope it is taken with the humor in which it is intended.)

Court Clarifies Federal Summary Judgment Standard in Employment Discrimination Claims

The topic of summary judgment, being procedural, is not frequently a topic of a post.  It is discussed, of course, because, short of settlement, summary judgment is the way most employment-related claims avoid going to trial.

But summary judgment has recently been in the news with the General Assembly's passages of two bills that would override Tennessee Supreme Court decisions on summary judgment and how to analyze employment discrimination and/or retaliation claims in ruling on a motion for summary judgment.

For that reason, I thought the perspective of the federal court of appeals in St. Louis on summary judgment in employment discrimination claims would be of interest.  (It is also a slow employment news day.)  Two applicants brought a failure to hire claim against the Rochester, Minnesota fire department.   After losing the claim in the trial court, they appealed and a three judge panel ruled in their favor.  The full court, on the city's motion, agreed to reconsider the panel's ruling.  The decision on the merits divided the court; one judge made the difference in affirming the dismissal of the failure to hire claims.  

While they split on whether a trial was needed, all of the judges agreed that the same summary judgment rules apply to a discrimination or retaliation claim.

Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed “to secure the just, speedy and  inexpensive determination of every action.”

Celotex Corp., 477 U.S. at 327 (quoting Fed. R. Civ. P. 1). Because summary judgment is not disfavored and is designed for “every action,” panel statements to the contrary are unauthorized and should not be followed. There is no “discrimination case exception” to the application of summary judgment, which is  a useful pretrial tool to determine whether any case, including one alleging discrimination, merits a trial.

What made the decision interesting (at least to legal wonks like me) was that the court specifically and unequivocally disavowed a number of the court's previous decisions that had said summary judgment in employment discrimination cases should “seldom” or “sparingly” be granted, not in “very close” cases, only “with caution,” or after being “particularly deferential” to the employee.

I suppose it always depends on your point of view.

Courts Finds Account Manager for Media Buyer Meets FLSA Administrative Exemption

The administrative exemption from the FLSA overtime requirements presents a challenge for many employers, so much so that some employer don't try to use it.  It is much less clear and therefore more difficult to apply than the professional or executive exemptions (and contrary to the latter's name, the exemption applies to supervisors who have some meaningful input into hiring or firing).  A decision issued today (Verkuilen v. MediaBank) from the federal court of appeals in Chicago helps to better define the rather vague DOL regulation that governs the administrative exemption.

In general terms (from a DOL fact sheet on the subject) the administrative exemption requires that:

• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
• The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
• The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

The court of appeals sitting in Chicago dealt with the "primary duty" questions.  The employer was in the business of selling a software package to advertising firms that would help them place advertising in media outlets.  The software was complex, the court explained, "because it integrates so many functions, and it must be customized to the needs of each client, which vary. The complexity and variance are where the account manager comes in. The manager of a customer’s account has to learn about the customer’s business and help MediaBank’s software engineers determine how its software can be adapted to the customer’s needs."

The account manager's job was "to learn about the customer’s business and help MediaBank’s software engineers determine how its software can be adapted to the customer’s needs."  She is

on the customer’s speed dial during the testing and operation of the customer’s MediaBank software. As the intermediary between employees of advertising agencies struggling to master complex software and the software developers at MediaBank, she has to spend much of her time on customers’ premises training staff in the use of the software, answering questions when she can and when she can’t taking them back to MediaBank’s software developers, and then explaining their answers to the customer and showing the customer how to implement the answers in its MediaBank software. Identifying customers’ needs, translating them into specifications to be implemented by the developers, assisting the customers in implementing the solutions—in the words of MediaBank’s chief operating officer, account managers are expected to “go out, understand [the customers’ requirements], build specifications, understand the competency level of our customers. Then they will build functional and technical specifications and turn it over to . . . developers who will then build the software, . . . checking in with the account manager, making sure what they are building is ultimately what the customer wanted.”

 This, the court held, meant that the account managers "primary duty was directly related to the general business operations both of her employer and (as in a consulting role) of the employer’s customers."  It didn't matter, the court further held, that the account manager did not perform all or even many of the functions listed in the DOL regulation on what makes a job administratively exempt. See 29 C.F.R. § 541.202 (listing numerous "[f]actors to  consider when determining whether an employee exercises discretion and independent judgment with respect to matters of significance.")

General Assembly Passes Bill Legislatively Overruling Deeply Flawed Gossett Decision

A prior post addressed a bill pending in the Tennessee General Assembly which would have the effect of over-ruling the Tennessee Supreme Court's decision in Gossett v. Tractor Supply.  (My post on Gossett can be found here).

Last week, both houses of the General Assembly voted to send the bill (as amended) to the governor.  If Governor Haslam approves the bill, it becomes law immediately, but would only apply to causes of action that accrue after the Governor signs the bill (more on that in a minute).

The version of the bill that passes can be found here: http://www.capitol.tn.gov/Bills/107/Amend/SA0598.pdf.  This is an amendment the Senate adopted to clarify the effective date. The Senate passed the bill on May 20, 2011. The House approved the amendment a day later.

The purpose of this bill was to require application of the McDonnell Douglas Burdine (MDB) analysis in all THRA claims and retaliatory discharge claims (common law and statutory) including on summary judgment motions. (“The foregoing allocations of burdens of proof shall apply at all stages of the proceedings, including motions for summary judgment.”) Remember that Gossett held that McDonnell Douglas Burdine was inconsistent with the Court's summary judgment precedent.

The operative language in the bill is (similar language is used for wrongful discharge claims) is:

In any civil cause of action alleging a violation of this chapter or of Tennessee Code Annotated, Section 8-50-103[which prohibits disability retaliation], the plaintiff shall have the burden of establishing a prima facie case of intentional discrimination or retaliation. If the plaintiff satisfies this burden, the burden shall then be on the defendant to produce evidence that one or more legitimate, nondiscriminatory reasons existed for the challenged employment action. The burden on the defendant is one of production and not persuasion. If the defendant produces such evidence, the presumption of discrimination or retaliation raised by the plaintiff’s prima facie case is rebutted, and the burden shifts to the plaintiff to demonstrate that the reason given by the defendant was not the true reason for the challenged employment action and that the stated reason was a pretext for illegal discrimination or retaliation. The foregoing allocations of burdens of proof shall apply at all stages of the proceedings, including motions for summary  judgment. The plaintiff at all times retains the burden of persuading the trier of fact that he or she has been the victim of intentional discrimination or retaliation.

To anyone familiar with employment discrimination litigation, the bill requires courts apply the McDonnell Douglas Burdine analysis to all discrimination and retaliation cases.  An interesting point about the language of the bill is that in some situations, such as where the employee claims to have so-called "direct evidence" of discrimination (e.g., an admission of discrimination by the decision-maker), this bill seems to require application of McDonnell Douglas/Burdine even where a federal court might not.  This isn't a big deal as an admission of this nature is probably going to be sufficient to require a jury trial even under the federal summary judgment rule.  The argument could also be made that this bill negates any hint of a dual motive analysis under the THRA (though that was probably not the intent). Again, this is not a huge issue, as I explained in my prior blog posts about the U.S. Supreme Court's decision in Gross.

As noted, the effective date is interesting:

This act shall take effect upon becoming a law, the public welfare requiring it and shall apply to all causes of action accruing on or after such effective date.

The word "accruing" means, in this context, "happens" but that can be somewhat uncertain in the employment discrimination context.  A termination of employment claim accrues when the employee is informed of the decision.  Easy enough.  But a hostile work environment claim accrues over time, not all at one.   These will not be insurmountable problems, just headaches for judges to work out over the next few years.

Note that the bill has not been enacted yet. It still needs Governor Haslam’s approval.

On another note, the General Assembly also passed a separate bill which would require the Tennessee courts to the federal summary judgment standards.  A full explanation of this issue would be beyond the scope of this blog.   

It is enough to say that both bills, if signed by the Governor, will restore a Tennessee employer's repeatedly dashed hope of obtaining summary judgment in state court when the employee has no competent evidence to warrant a trial.

Court of Appeals Holds Private Employer May Refuse to Hire Applicant Who Has Filed For Bankruptcy

It isn't one of the more familiar retaliation statutes but for years, the bankruptcy code has included a provision that prohibits employers (private and governmental) from taking certain types of employment action "against[] an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt."  11 U.S.C. § 525(b).

Today, the federal court of appeals in Atlanta held that the bankruptcy retaliation statute, as to private employers, does not prevent an employer from refusing to hire an applicant who has a pending or prior bankruptcy action (I'll call the applicant a "debtor" to use the bankruptcy code terminology).

The court's reasons were pretty simple.  Subsection (a) of section 525 applies to governmental employers.  It provides that governmental employers may not "deny employment" to a debtor.  This "deny employment" language is not found in subsection (b) which applies to private employers.  The court explained:

A comparison of the words used in subsections (a) and (b) demonstrates that subsection (a) prohibits government employers from “deny[ing] employment to” a person because of his or [her] bankrupt status, whereas subsection (b) does not contain such a prohibition for private employers. Rather, the private sector is prohibited only from discriminating against those persons who are already employees. In other words, Congress intentionally omitted any mention of denial of employment from subsection (b), but specifically provided that denial of employment was actionable in subsection (a). Thus, by its plain language, the statute does not provide a cause of action against private employers for persons who are denied employment due to their bankrupt status. “Where Congress has carefully employed a term in one place but excluded it in another, it should not be implied where excluded.”

One point should be stressed (for governmental employers).  As the court said, if the employer "were a governmental unit, [the applicant] would have a refusal to hire claim; because it is not, he does not."  A governmental unit under the bankruptcy code is pretty much any public employer, federal or state.   11 U.S.C. § 101(27).

The decision is called Myers v. Toojays Management Corporation

DOL Develops iPhone App for Employees to Track Time

I received an email from the DOL today that made me scratch my head.  It seems the DOL Wage and Hour Division has developed an iPhone "app" that is a "timesheet" that lets employees record the hours that they work.  The DOL explanation of the app is that it will "help employees independently track the hours they work and determine the wages they are owed."  It will let employees "track regular work hours, break time and any overtime hours for one or more employers."

There is a "glossary, contact information and materials about wage laws" accessible through links to the Web pages of the department's Wage and Hour Division.  The time sheet the app generates can be reviewed and emailed as an attachment.

The purpose of the app seems to be to permit employees to "keep their own record" instead of "relying on their employers' records."  The DOL says: "This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records."

The app does not yet provide for calculation of tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials and pay for regular days of rest.  Android and BlackBerry versions are being considered.  

The reason I am skeptical is that, as anyone knows who has tracked time worked, the rules on when the work day begins and ends are not always easy to understand. Just yesterday, for example, I read about a court of appeals decision involving an employee who thought they were "working" when they drove to work because the employee had done some minor tasks at home.  I was also reviewing hand written timesheets where one employee added time for their commute from home to work and back, none of which was properly compensable.

In most instances, the start and end of the work day will not be difficult to discern.  This app, while well-intentioned, will permit employees to record their time based upon their own idea as to when the work day should start and end.  The glossary is no help; it simply instructs employees to record the hour "at what time you started working."  The app gives no caution to employees that there may be grey areas that must be considered, and worse, seems to imply that the DOL will regard the hours an employee records in the app as more accurate than the employer's official time records. 

If nothing else, the app serves as a reminder that employers should scrupulously keep accurate time records for their non-exempt employees.

Federal Court Holds EEOC May Subpoena Records For "Overall" Conditions In the Workplace

The federal court of appeals that sits in Chicago issued a decision today that lets the EEOC subpoena records relating to hiring practices from an employer (Konica Minolta) accused of wrongful termination in the employee's EEOC charge.  The decision serves as a lesson to employers about the broad subpoena power of the EEOC.  The only relevant facts are that Konica Minolta fired a minority employee ("Thompson") for poor sales performance after he had worked for 8 months.  He filed a charge alleging his firing was disparate treatment because of his race.  The EEOC then asked and later subpoenaed records of Konica Minolta's hiring practices.  

As a side note, the facts that led the EEOC to seek the hiring practices records were that it:

discovered that there were only six blacks employed at Konica, out of 120 total employees in the identified facilities, and all six were employed in Tinley Park. Of the approximately 100 employees at the other locations, only one was a person of color. The EEOC also learned that there were two sales teams at the Tinley Park facility, and those teams were segregated largely along racial lines. Thompson’s team was made up of five black employees and two white employees.

These facts were not, strictly speaking, necessary to the court's decision but they do show the EEOC's concern was not completely irrational, either.  The employer took the position that information on hiring practices in a termination claim was not relevant. The court disagreed, saying:

When the EEOC investigates a charge of race discrimination for purposes of Title VII, it is authorized to consider whether the overall conditions in a workplace support the complaining employee’s allegations. Racial discrimination is “by definition class discrimination,” and information concerning whether an employer discriminated against other members of the same class for the purposes of hiring or job classification may cast light on whether an individual person suffered discrimination. For that reason, the EEOC is authorized to subpoena “evidence concerning employment practices other than those specifically charged by complainants” in the course of its investigation.

* * * 

The Commission is entitled generally to investigate employers within its jurisdiction to see if there is a prohibited pattern or practice of discrimination. Here, Thompson alleged both a specific instance and such a pattern of race discrimination. He asserted that he was treated differently from white co-workers in the “terms and conditions” of his employment, and that he was unequally disciplined for not meeting a sales quota. It is true that Thompson was not saying that Konica had refused to hire him, but that does not make hiring data irrelevant. The question under Shell Oil and its progeny is not whether Thompson specifically alleged discrimination in hiring, but instead is whether information regarding Konica’s hiring practices will “cast light” on Thompson’s race discrimination complaint.

(I've omitted citations to other court decisions from these quotes.)