Company's Self-audits Support Willful OHSA Violations

• OCCUPATIONAL SAFETY AND HEALTH (OSHA)
• DISABILITY DISCRIMINATION (ADA)
• EMPLOYMENT DISCRIMINATION
• AGE DISCRIMINATION (ADEA)
• PENSIONS AND BENEFITS
• FAMILY AND MEDICAL LEAVE
• STATE ISSUES
• CALIFORNIA LEGISLATIVE UPDATE

OCCUPATIONAL SAFETY AND HEALTH (OSHA)

Company's Self-audits Support Willful OHSA Violations

Howard Sokol

In A.E. Staley Manufacturing Co. v. Secretary of Labor, the Circuit Court of Appeals for the District of Columbia held that the company's own internal safety reports were sufficient to put it on "heightened notice" as to the dangers of the exposed and unsafe electrical equipment and other safety and health violations in its operations. The court held that because the company failed to train its employees once the hazards were known, tried to suppress the recommendations of its safety engineer and placed the overhauling of its safety program as a low priority project, a finding of willful violations was appropriate in light of the Company's plain indifference and knowing disregard of the dangers. The court rejected A.E. Staley's arguments that it had made good-faith attempts to correct the dangerous conditions and comply with OSHA's safety requirements by establishing plant-wide and departmental safety committees, finding that canceled meetings, poor attendance at meetings and resignations by committee members was further evidence of the Company's indifference to the safety and health issues and dangers at its facility. This case underscores the importance of following through on self-audits because a failure to do so could have a significant negative impact in a subsequent OSHA inspection.

DISABILITY DISCRIMINATION (ADA)

Accommodation Cannot Be Denied Because of "Potential" Breach of Seniority System

A company violated the Americans with Disabilities Act by refusing to accommodate a truck driver because of a potential, but not actual, violation of a seniority system, the Tenth Circuit Court of Appeals (CO, KS, OK, NM, UT, WY) has ruled. In Dilley v. SuperValu Inc., the plaintiff sought to be placed in a non-lifting driver position as a reasonable accommodation for his disability-related lifting restrictions. Driving positions at SuperValu were subject to a seniority system, and Dilley had sufficient seniority to obtain a requested position. The company refused Dilley's request, however, claiming that he could have subsequently been "bumped" from any of the driving positions for which he might have been qualified, and that keeping him in the position would have violated the collective bargaining agreement. Acknowledging that the recent U.S. Supreme Court decision in U.S. Airways v. Barnett, does not require an employer to provide an accommodation that would constitute a "direct violation" of a bona fide seniority system, the court held this rule inapplicable because the company refused to accommodate the driver for a potential, not an actual, violation of the seniority system. The court found the company's concern regarding the breach of the seniority system was "speculative."

Employee Fired For Failing Vision Test Not "Regarded As Disabled"

A transit police officer fired after failing a visual acuity test was not "regarded as disabled" by his employer, a federal court in Philadelphia has ruled. In Knoll v. Southeastern Pennsylvania Transportation Authority, the plaintiff had what is commonly referred to as "lazy eye," which effectively resulted in monocular vision and affected his ability to judge depth. Despite this condition, Knoll was able to pass annual vision tests for the first 17 years of his employment. When his employer began using a new device to test vision, Knoll failed the test and was discharged. He sued, claiming he was fired because his employer regarded him as substantially limited in the major life activities of seeing and working. The court rejected Knoll's claim and explained that under the ADA there are two circumstances in which an employer regards an employee as being disabled. The first occurs when an employer makes "an innocent misperception based on nothing more than a simple mistake of fact as to the severity, or even the very existence, of an individual's impairment." The second circumstance occurs when an employer's action is predicated largely on "society's myths, fears, stereotypes, and prejudices with respect to the disabled." An employer does not fall into either category simply by requiring an employee to take and pass a physical examination.

EMPLOYMENT DISCRIMINATION (OTHER THAN AGE)

Another Mandatory Predispute Arbitration Policy Bites the Dust

An employer's mandatory predispute arbitration policy for employment discrimination claims was questioned by the Second Circuit Court of Appeals (NY, VT, CT) in Brooks v. Travelers Insurance. At oral argument, the appellate panel strongly questioned the enforceability of the policy, because of its provisions that: (1) limited the length of arbitration hearings; (2) restricted compensatory damage awards, limited the remedy of reinstatement, and prohibited awards of punitive damages and injunctive relief; and (3) required each side to pay its own attorney's fees. In response to this strong criticism, the employer moved to dismiss to employee's appeal, stating that it would no longer seek to enforce the arbitration policy. The Court granted the motion, and vacated the trial court's dismissal of the plaintiff's complaint. This case demonstrates the continued scrutiny by the courts of mandatory arbitration policies for employment discrimination disputes, and serves as a reminder to employers that such policies must be in compliance with federal law to be enforceable.

Bias Claimants Must Prove Knowledge by Decision-Maker

Two federal appeals courts have issued decisions that should make it more difficult for employees to win employment discrimination cases. The Eleventh Circuit (FL, GA, AL) in Lubetsky v. Applied Card Systems, and the Sixth Circuit (MI, OH, TN, KY) in Prebilich-Holland v. Gaylord Entertainment, both ruled that in order to sustain their claims, plaintiffs in discrimination cases must prove that the individual who made the alleged unlawful employment decision knew of the plaintiff's protected status. In Lubesky, the plaintiff's claim that his job offer was rescinded after the employer became aware he was Jewish was rejected because there was no evidence the manager who made the decision knew Lubesky was Jewish. Similarly, in Prebilich-Holland, the plaintiff's claim that she was fired after her employer learned she was pregnant was rejected because there was no evidence that the decision-maker knew she was pregnant. These cases help employers by placing the burden on claimants to show that the specific individual making the alleged discriminatory employment decision, and not merely someone in the company, was aware of their protected status.

AGE DISCRIMINATION (ADEA)

"Reverse" Age Discrimination Suit is Viable under ADEA

Christopher R. Nolan

The Sixth Circuit (KY, MI, OH, TN) recently held that there could be reverse age discrimination under the ADEA. In Cline v. General Dynamics Land Systems, Inc., a group of workers age 40-49 claimed their employer discriminated against them in a recent collective bargaining agreement by limiting retirement health benefits to workers age 50 and above. While the lower court focused on what it perceived as the legislative intent of the ADEA, i.e., that it was drafted to aid "older workers" and not those who suffer discrimination because they are too young, the Sixth Circuit stated that the statute's language is "plain and unambiguous," making it unnecessary to resort to legislative history to ascertain Congress' intent. Because the ADEA forbids employers from defining the terms and benefits of "any individual['s]" employment based solely on age and "any individual" is defined by Congress as "those individuals who are at least 40 years of age," 29 U.S.C. § 631(a), the court opined that employers cannot discriminate against any worker age 40 or older on the basis of age. They also relied on the EEOC's stance in 29 C.F.R. § 1625.2(a), which states it is unlawful to discriminate by giving preference because of age to individuals 40 or over.

PENSIONS AND BENEFITS (ERISA)

Employer Liable for Providing False Information about Future Benefits

An employer that promised to continue unreduced health benefits to induce employees to retire early was found to have breached its fiduciary duty to the employees who relied on the misleading information and whose benefits were later reduced. In James v. Pirelli Armstrong Tire Corp., the federal Appellate Court for the Sixth Circuit (KY, MI, OH, TN) found that corporate managers provided misleading information and that employees relied on that misinformation to their detriment. The managers falsely informed employees that their medical benefits would not change during retirement. In particular, when asked about the provision in the summary plan description that reserved the right for the employer to alter benefits, corporate managers responded that it only referred to the right to change insurance carriers. This case highlights the importance of providing accurate information about welfare and pension plan benefits.

FAMILY AND MEDICAL LEAVE (FMLA)

Termination of Employee Soon After Requesting FMLA Leave May Be Retaliatory

A car rental employee who was fired for abusing a company gas credit card may proceed with an FMLA retaliation claim. In Carter v. Enterprise Rent-A-Car, an Illinois federal district court held that the company's stated reason for firing the worker was a pretext to cover its disapproval of her request for leave time to care for her ill child. The court based its decision on the timing of the termination, just days after the employee requested two months off to care for her son. The company's explanation for the termination was undermined by evidence that several other employees had used the gas card for personal use and were never disciplined. This case highlights the importance of administering discipline uniformly and consistently.

STATE ISSUES

Employer's Suit To Recover Severance From Fired Worker Not Unlawful Retaliation in Massachusetts

The Supreme Judicial Court of Massachusetts has held that an employer's filing of a lawsuit against a former employee who has lodged a charge of discrimination is not an act of retaliation or interference in violation of the State's anti-discrimination laws where the lawsuit has a legitimate basis in law and fact. In Sahli v. Bull HN Information Systems, Inc., the plaintiff signed a release and severance agreement upon termination in which she agreed to release Bull from any "current or prior claims arising out of [her] employment with or termination from Bull," in exchange for severance pay. Following her termination, Sahli filed a charge of discrimination with the Massachusetts Commission Against Discrimination alleging that Bull had discriminated against her on the basis of her age. In response to Sahli's charge, Bull filed a complaint for declaratory relief in state court contending that Sahli's release barred her from pursuing her MCAD charge, and seeking return of Sahli's severance for her violation of the release agreement. Sahli replied by filing a new discrimination charge, alleging that Bull's action in filing suit against her constituted unlawful retaliation. The Supreme Judicial Court concluded that when an employer files a complaint seeking a declaration of its rights, duties, and obligations under a contract that it entered into with an employee, and the suit has a "legitimate basis in law and fact," the employer does not commit an act of unlawful retaliation.

CALIFORNIA LEGISLATIVE UPDATE

In an election year, with pressure from business and labor groups, California's Governor Gray Davis worked right up to the September 30 midnight deadline, signing into law bills that affect the workplace while vetoing others. Some of the most significant developments are as follows:

Paid Family and Medical Leave for California Employees Becomes Law

Effective January 2004 California becomes the first state to grant most workers paid family and medical leave, although benefits will not become available until July 2004.

Current federal and state law provide for 12 weeks of unpaid leave when an employee or an employee's family member suffers from a serious medical condition or the employee has given birth, adopted a child or had a foster child placement. The new law provides for up to six weeks of paid leave (compared to 12 weeks unpaid under federal law) and expands the definition of family members to include domestic partners. It also expands birth leaves to include the birth of the child of a domestic partner. The new law applies to employers regardless of the size of their workforce. Employers who self-fund their disability coverage may be exempt from the law if they provide an equivalent or greater benefit. Employees who take paid leave will receive income from the disability insurance fund. Employers may require an employee to use up to 2 weeks of unused vacation time to qualify for the leave.

“WARN” Bill Becomes Law

Governor Davis signed A.B. 2957, California's own “WARN” Act. This law requires covered employers to provide to employees and certain government entities, 60 days' notice prior to a mass layoff, relocation, as that term is defined, or cessation or substantial cessation of operations in a covered establishment. The California WARN Act differs from the federal version in several respects, and most significantly, because it applies when there is a lay off of 50 or more employees in a 30-day period, even though this number does not constitute 33 percent of the workforce. The law, effective January 1, 2003, applies to any person who directly or indirectly owns and operates an industrial or commercial facility, or part thereof, that employs or has employed 75 or more persons in the 12 months preceding the notice. Only employees who have worked at least six of the 12 months preceding the notice are covered. There is an exception under certain circumstances for employers actively seeking capital or business that would enable them to avoid or postpone the layoff, relocation or termination.

The law provides for back wages and lost benefits as well as civil penalties of up to $500 per day for each violation, costs and attorneys' fees.

Clarification of Employer Background Checks

Governor Davis signed an amendment to the California Investigative Reporting Act, A.B. 1068, and companion bill, A.B. 2868. These amendments now exclude from the definition of Investigative Reports investigations performed by employers or third parties retained by employers in connection with verification of a job applicant's work history, academic experience and professional references. Under the new law, the applicant is entitled to a copy of the report only if he or she checks a box on a form to be provided, and requests a copy of the report prepared.

The ICRA covered not just background checks on job applicants but also those reports used to evaluate a current employee for promotion or retention. Employers doing in-house investigations were required to comply with the ICRA. Employers failing to comply could have been liable for up to $10,000 in damages.

The just-passed A.B. 1068 specifically excludes from disclosure and reporting requirements investigations conducted for purposes of verifying a job applicant or employee's work history, academic experience and professional references from the ICRA. Under the amended law, employees may receive a copy of any report prepared, but only if they complete a check-the-box type of form requesting a copy of the investigative report. A.B. 2868 protects employers from liability for defamation, libel or slander arising out of reference inquires. Under this a law, statements by current or former employers about job performance or qualifications of an applicant that are made on credible evidence and without malice to someone the employer reasonably believes is a prospective or current employer will not subject them to liability. The law specifically authorizes the employers to state whether they would rehire a current or former employee.

Severance Pay Bill Vetoed

Much to the relief of the business community, Gov. Davis vetoed a bill that would have given severance pay entitlement to certain employees that were relocated terminated or laid off by the employer. A.B. 2989 would have expanded the existing provisions of the Labor Code that mandate that wages earned and unpaid at the time of an employee’s discharge are due and payable immediately. Had the bill passed, employees would have been entitled to severance pay of one week’s pay for each 12 months of employment if their employer employed at least 100 people at any time in the preceding 12-month period and were currently providing, or had provided in the preceding three years, severance pay or bonuses to its management in an amount equal to or greater than one week’s pay for each year worked.

Employment Arbitration Agreements Bill Vetoed

Gov. Davis also vetoed S.B 1538, which had sought to invalidate pre-dispute arbitration agreements between employers and employees as they relate to action for employment pursuant to the Fair Housing and Employment Act (FEHA). Current law generally provides that written agreements to submit controversies to arbitration are valid and enforceable provided they include certain protections.