Updated – Breaking News: Obama makes recess appointment of Craig Becker to the NLRB

A few weeks ago I asked, “Who is Craig Becker and why should you care?” It looks like we are all about to find out. President Obama has made Mr. Becker a recess appointment to the NLRB, along with another Democratic nominee. The lone Republican nominee has been left on the sidelines.

For more coverage of this important story, I recommend the following, all who have coverage:

• The Chamber Post
• LaborUnionReport.com
• LawMemo
• EFCA Report
• Jottings By An Employer’s Lawyer
• Washington Labor & Employment Wire
• Workplace Prof Blog
• Manpower Employment Blawg
• LaborPains.org
• Washington DC Employment Law Update
• HR Lawyer’s Blog
• The Employment Law Post
• Hunton Employment & Labor Perspectives
• The Ohio Labor Lawyers
• Workplace Horizons
• American Rights at Work
• Wyatt Employment Law Report
• PointofLaw.com
• Employer Law Report
• World of Work
• New York Labor & Employment Law Report

I am certain others will have more to say on this story as the week goes on. I’ll continue to update this post with new links as they become available.

 

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

WIRTW #120

Last July, I reported on Kasten v. Saint-Gobain Plastics, in which the 7th Circuit held that the anti-retaliation provision of the Fair Labor Standards Act does not cover unwritten, verbal wage and hour complaints. At the time, I said:

Employers should not get overly excited about this decision. The 7th Circuit’s holding in Kasten appears to be the minority view. Indeed, the 6th Circuit [has] found that an employee’s oral complaints to a supervisor were protected. Employers act at their own peril if they fire employees who make oral wage and hour internal complaints.

This week, the Supreme Court agreed to review the Kasten decision. Some time next year we’ll get the final say on whether the FLSA covers oral complaints. In the meantime, here’s what my fellow bloggers have to say about this important development:

• Retaliation and the FLSA: U.S. Supreme Court Grants Cert – from Molly DiBianca at the Delaware Employment Law Blog

• SCOTUSblog

• Supreme Court to Decide Whether Complaint Must be Written in Order to Be Covered under the FLSA's Anti-Retaliation Provision – from Wage & Hour Counsel

• Supreme Court to Decide Whether Complaint Must be Written in Order to Be Covered under the FLSA's Anti-Retaliation Provision – from Washington D.C. Employment Law Update

• Retaliation for Oral Wage Complaints Now up to the Supreme Court – from Maryland Employment Law Developments

• Supreme Court To Hear Another Retaliation Case: Do Oral Complaints Receive Protection – from Dan Schwartz’s Connecticut Employment Law Blog

• Supreme Court Grants Cert in Saint Gobain FLSA Case – from Paul M. Secunda at the Workplace Prof Blog

• Kasten v. Saint-Gobain Performance Plastics Corp., No. 09-834 (U.S. S. Ct. Mar. 22, 2010) – from Daily Developments in EEO Law

• Oral Complaints as Protected Conduct Under the FLSA – from Fitzpatrick on Employment Law

• SCOTUS to decide whether oral complaint is protected conduct under FLSA ant-retaliation provision – from LawMemo Employment Law Blog

• Another Retaliation Case in the Supreme Court: Deja Vu All Over Again? – from Michael Fox’s Jottings By An Employer's Lawyer

The other big story of the week – also at the Supreme Court – was the oral argument in New Process Steel v. NLRB, which will decide the legality of decisions rendered over the last couple of years by a two-member NLRB. The following blogs have this issue covered from every angle:

• NLRB Member Schaumber Expresses Concern, Suggests Alternative Labor Law Reforms – from EFCA Report

• Supreme Court Hears Oral Arguments Over Legality of Two-Member NLRB Decisions – from Washington Labor & Employment Wire

• 2-Member NLRB Hits SCOTUS – from Lawffice Space

• Reading the Tea Leaves of New Process Steel Oral Argument – from Workplace Prof Blog

• SCOTUS oral argument on authority of two-Member NLRB to decide cases – from LawMemo Employment Law Blog

In other developments this week…

Social Media

• Who's the Mayor of Your Company? What Employers Need to Know About Location-Based Networks Like Foursquare – from Dan Schwartz’s Connecticut Employment Law Blog

• Facebook More Popular Than Google: E-discovery Implications – from Ride The Lightning

• Social Media Sites: A Useful Tool For Exposing Violent Employees? – from Prima Facie Law Blog

Labor Relations

• Looking More Likely Becker Will Be Recessed Appointed to the NLRB – from Workplace Prof Blog

• BREAKING: Sen. Tom Harkin Confirm’s Craig Becker Easter Recess Appointment to NLRB – from LaborUnionReport.com

• Reports Claim Craig Becker Likely to Receive Recess Appointment – from Washington D.C. Employment Law Update

• NLRB Nominee Craig Becker Back in the Spotlight – from WorkplaceHorizons

Harassment & Investigations

• Top 10 Workplace Investigation Snafus and Fubars (Part 1) andTop 10 Workplace Investigation Snafus and Fubars (Part 2) – from Minnesota Labor & Employment Law Blog

• When it comes to harassment complaints, too little too late can be fatal – from Sindy Warren at the Warren & Hays Employment Law Blog

EEO & Discrimination

• $10K to be had “just by rattling the saber of age discrimination” – from Overlawyered

• Diversity Training Gone Wrong? – from The Word on Employment Law with John Phillips

• The Importance of Statistical Evidence - Randall v Rolls Royce – from Stephanie R. Thomas, Ph.D.

• Inquiry into Person’s Medical History can Result in a Private Right of Action – from San Antonio Employment Law Blog

HR Stuff

• Business Travelers Are Landing In Hot Water At Work – from Workplace Diva

• Let’s Stop Blaming Lawyers For Business Decisions – from YourHRGuy.com

• 12 Management Mistakes That Make a Lawyer’s Day – from HR Daily Advisor

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

A little courtesy goes a long way

On Sunday I drove my in-laws down to Columbus for Ohio State’s graduation. Upon arriving at the Schottenstein Center, stopped to ask a traffic-directing cop if I could turn in for disabled parking. He asked to see the handicapped placard, which my father-in-law showed him. The cop followed with the following, in the most patronizing and condescending voice possible: “Do you see that little hole at the top? That’s so you can hang it from your mirror so I can see it and don’t have to ask you for it.” That’s 25 more words than it would have taken him to simply say, “Thank you sir. Turn here.”

There is a lesson to be learned from this little parable. It often takes a lot more effort to be an ass than it does to be nice. The next time you feel bothered by something an innocently-intentioned employee says or does, think of this story. And then think of which response will more likely result in resentment and division, emotions that lead employees to sue or form unions. And then rethink your response.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Ohio Supreme Court (finally) upholds the constitutionality of a workplace intentional tort statute

In two anticipated opinions, the Ohio Supreme Court has finally found an intentional tort statute that passes muster under Ohio’s constitution. The opinions – Stetter v. R.J. Corman Derailment Servs. and Kaminski v. Metal & Wire Prods. Co. – confirm the constitutionality of R.C. 2745.01. This statute provides:

(A) In an action brought against an employer by an employee, or by the dependent survivors of a deceased employee, for damages resulting from an intentional tort committed by the employer during the course of employment, the employer shall not be liable unless the plaintiff proves that the employer committed the tortious act with the intent to injure another or with the belief that the injury was substantially certain to occur.

(B) As used in this section, “substantially certain” means that an employer acts with deliberate intent to cause an employee to suffer an injury, a disease, a condition, or death.

(C) Deliberate removal by an employer of an equipment safety guard or deliberate misrepresentation of a toxic or hazardous substance creates a rebuttable presumption that the removal or misrepresentation was committed with intent to injure another if an injury or an occupational disease or condition occurs as a direct result.

To understand the importance to Ohio’s businesses of these decisions and the statute they uphold, we first need to take a little trip back in time to see where we’ve been. Workers’ compensation generally provides employers with immunity from civil lawsuits for workplace injuries. A limited exception exists for what is known as an “intentional tort.” The Ohio Supreme Court first recognized this exception in 1982 in Blankenship v. Cincinnati Milacron Chems., Inc. Supreme Court developed this theory over the years in in cases such as Jones v. VIP Dev. Co., Van Fossen v. Babock & Wilcox Co., and Fyffe v. Jeno’s, Inc.

Under these prior cases, to establish the requisite “intent” for a workplace intentional tort, one would have to show:

1. knowledge by the employer of the existence of a dangerous process, procedure, instrumentality or condition within its business operation;
2. knowledge by the employer that if the employee is subjected by his employment to such dangerous process, procedure, instrumentality or condition, then harm to the employee will be a substantial certainty; and
3. that the employer, under such circumstances, and with such knowledge, did act to require the employee to continue to perform the dangerous task.

As the Fyffe court further explained:

To establish an intentional tort of an employer, proof beyond that required to prove negligence and beyond that to prove recklessness must be established. Where the employer acts despite his knowledge of some risk, his conduct may be negligence. As the probability increases that particular consequences may follow, then the employer’s conduct may be characterized as recklessness. As the probability that the consequences will follow further increases, and the employer knows that injuries to employees are certain or substantially certain to result from the process, procedure or condition and he still proceeds, he is treated by the law as if he had in fact desired to produce the result. However, the mere knowledge and appreciation of a risk – something short of substantial certainty – is not intent.

On at least two occasions after Fyffe, the Ohio Supreme Court struck down as unconstitutional statutes that attempted to tighten the Van Fossen/Fyffe common law rules for workplace intentional torts. Thus, until the enactment in 2005 of the current R.C. 2745.01, courts often liberally applied the the Van Fossen and Fyffe decisions to remove a variety of workplace accidents and injuries from the workers’ compensation system and hold employers liable in tort.

This week’s decisions in Stetter and Kaminski upholding R.C. 2745.01 as constitutional are huge victories for employers. Van Fossen and Fyffe’s fuzzy “substantial certainty” standard, which courts liberally applied to the detriment of many employers, has been conclusively replaced with a much tighter statute. Now, all workplace injuries are covered by the workers’ compensation system unless the employer deliberately intended to injure the employee. The Ohio Supreme Court has reaffirmed that workers’ compensation really is supposed to be an employee’s exclusive remedy for workplace injuries in all but the most egregious of cases.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Do we really need to pump up workplace lactation rights?

Philly.com ran a story last week by Philadelphia attorney Beth Thorne, who recounted her lack of privacy at work to express breast milk. Ohio, like Pennsylvania, is in the majority of states that do not have a law that requires employers to accommodate lactating moms. Some Ohio legislators want to change this omission.

A bill has been drafted – but not yet introduced – that would amend Ohio’s discrimination statute to include “lactation” as a protected class. This law would expand the prohibition against discrimination because of or on the basis of sex to include discrimination because of or on the basis of lactation. It would also require employers to provide lactating employees “reasonable, unpaid time each day” for the expression of breast milk, and further require employers to make a reasonable effort to provide a sanitary room or area (other than a toilet stall) for this purpose.

While this law is noble in purpose, I question whether it is needed in the first place.

• Ohio’s law against sex discrimination likely already covers lactation. In Allen v. totes/Isotoner Corp., two of the most conservative justices of the Ohio Supreme Court concurred that lactation is covered by Ohio’s proscriptions against employment discrimination on the basis of sex/pregnancy. While the majority dodged this issue, the Court gave clear direction of how it rule if the issue arose again. We should not be in the business of unnecessarily amending laws.

• Is this really a problem that needs to be fixed? Are lactating employees really being denied the opportunity to pump? The empirical evidence would suggest that the answer is no. In my 13 year career I’ve never come across the issue. LEXIS reveals scant few cases on this topic, even in jurisdictions that have workplace lactation laws. So, if this is not a problem that needs correction, what reasons – other than placating certain special interests – call for the passage of workplace lactation legislation?

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

House passes Health Care Bill – What does this mean for employers?

I have not read any version of the health care bill. In fact, anyone outside of Capitol Hill, the White House, lobbyists, or some major news agencies who tells you otherwise is probably lying to you. So, I don’t have a lot to say about this legislation. In fact, I’m not embarrassed to say that I have not yet formed an opinion pro or con about it. What is embarrassing is the partisan politics that this issue has created. No one can honestly say that they are in favor of the bill because they are blue or against it because they are red. They are dishonest opinions based solely on party lines.

So, what can I tell you about this legislation? Employers are not required to provide health insurance to their employees. Instead, employers with 50 or more employees who do not provide health insurance will be fined $2,000 per employee. Employers smaller than 50 employees likely will not feel much of an effect from these changes.

For more on this important issue, I recommend reading Dan Schwartz’s post at the Connecticut Employment Law Blog.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

WIRTW #119

The best advice of the week comes from BLR’s HR Daily Advisors, which recommends that companies could save thousands by merely spending a few minutes with their employment lawyer. Here’s the rest of the best I read this week.

Big Verdicts

• Ohio MDV for Disability, Race, FMLA and Retaliation – from Michael Fox’s Jottings By An Employer's Lawyer

• $2 Million Dollar Consent Decree Against Tire Chain - What Lessons Learned for Employers? – from World of Work

Discrimination

• Employers watch out – There are new sheriffs in town – from Local Tech Wire

• Framing Discrimination Claims – from Compensation Today

• Hostile Work Environment – Single Incident of Harassment – from Fitzpatrick on Employment Law

• Can You Fire an Employee for Threatening Suicide? – from Mindy Chapman’s Case In Point

• Attention Shoppers: Blacks Get Out – from The Word on Employment Law with John Phillips (who launched a new website this week).

• Baseball scandal prompts thoughts on zero tolerance policies in the workplace – from Work Matters

• Could This Be News? Employee Fired Because She Was Too Old And Too Expensive Has Right To Age Discrimination Trial – from Workplace Fairness

• Why Employment Attorneys Should Care About Statistics – from Stephanie R. Thomas

• Use Caution When Accommodating a Disability – from Hunton Employment & Labor Law Perspectives™

Labor Law

• Identifying quorum requirements for the National Labor Relations Board – from SCOTUSblog

• Update of Union Activity – from Michael Haberman’s HR Observations

• Teamsters and Tea Party Activists: Kindred Spirits? – from LaborUnionReport.com

Wage & Hour

• Misclassifying Employees As “Managers”: The Wrong Way To Save A Dollar – from Overtime Advisor

• It's Baaack: Paycheck Fairness Act Returns to Capitol Hill – from Ann Bares at Compensation Force

• Employer Liability for Employee’s Internet Misconduct – Or When Surfing the Web can Wipe out your Business – from Defending The Digital Workplace

• The two best statements delivered Thursday in Congress – from PointOfLaw Forum

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

70% of hiring managers report rejecting candidates following internet searches

According to a recent survey conducted by Microsoft, 70% of U.S. hiring managers reject candidates based on information located online, while only 7% of consumers think that online information affected their job search.

The following are the most two most interesting findings from the study:

Do you review online reputational information about candidates when evaluating them for a potential job / college admission?

• All the time – 44%
• Most of the time – 35%
• Sometimes – 9%
• Rarely – 5%
• Never – 6%

What are the types of online reputational information that influenced decisions to reject a candidate?

• Concerns about the candidate’s lifestyle – 58%
• Inappropriate comments and text written by the candidate – 56%
• Unsuitable photos , videos, and information – 55%
• Inappropriate comments or text written by friends and relatives – 43%
• Comments criticizing previous employers, co-workers, or clients – 40%
• Inappropriate comments or text written by colleagues – 40%
• Membership in certain groups and networks – 35%
• Discovered that information the candidate shared was false – 30%
• Poor communication skills displayed online – 27%
• Concern about the candidate’s financial background – 16%

And yet, nearly 90% of recruiters and HR professionals surveyed report that they are somewhat to very concerned that the online reputational information they discover may be inaccurate. If you want to review the complete findings, Microsoft has made available a summary as a PDF, and its full research results as a PowerPoint.

What does all of this mean? Here’s what I’ve said previously on this issue:

There is a justified fear that a lot of the information on the internet is unreliable and unverifiable. I have another problem with HR departments willy-nilly performing internet searches on job applicants – the risk that such a search will disclose protected information such as age, sex, race, or medical information.

For more on developing a DIY internet background screening strategy for your company, see Googling job applicants. You can also check out what the Delaware Employment Law Blog has to say on this issue.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Whose opinion counts for determining “incapacity” under the FMLA?

The FMLA defines serious health condition as “an illness, injury, impairment, or physical or mental condition that involves … continuing treatment by a health care provider.” The FMLA’s regulations define “incapacity” as the “inability to work, attend school or perform other regular daily activities due to the serious health condition, treatment therefore, or recovery therefrom.” The regulations further define a “serious health condition involving continuing treatment by a health care provider” as requiring a “period of incapacity of more than three consecutive, full calendar days.”

How does an employee establish incapacity for three or more days? Is an employer required to take the employee and his or her word, or can the employer require the employee to support the claim of incapacity with medical evidence? Courts take three approaches.

Some courts hold that an employee’s own statements, without any medical support whatsoever, are sufficient to establish incapacitation to support a claim for FMLA leave. One court, for example, even allowed an FMLA claim to proceed when an employee’s statements about his health directly contradicted his doctor’s note, which permitted him to return to work without restrictions.

Other courts, including Schaar v. Lehigh Valley Health Services, Inc., a recent case from the Third Circuit, hold that an employee can support a claim of incapacity for FMLA-leave purposes with a combination of the employee’s own statements in combination with documentation from a health care provider. In the Schaar case, for example, the employee supported her claim for an FMLA entitlement with a doctor’s note, which said that she was incapacitated for two days, along with her own statements that she was incapacitated for another two days.

Both of these views give employees a tremendous amount of latitude to game the system by claiming FMLA-leave that may not be medically supported. Luckily for Ohio employers, Ohio’s district courts subscribe to the most restrictive view, that an employee can establish that he or she was required to be absent from work only upon the production of “evidence showing that a health care provider made a professional assessment of his condition and determined, based on that assessment, that an extended absence from work was necessary.”

Regardless of the legal standard employed in determining whether an employee is “incapacitated” and therefore eligible for FMLA leave, your best defense against potential liability is to use the FMLA’s medical certification process to verify the employee’s qualification for the statutory leave.

And, on a totally unrelated topic, in honor of St. Patty’s day here’s a very cool picture I took of O’Neill’s Pub in Dublin.

  

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Do you know? 12% of employees knowingly violate IT policies

According to a recent survey conducted by IT security company Fiberlink (H/T Workplace Diva), 12% of employees admit to knowingly violating IT policies. What types of violations might be occurring?

• Inappropriate or excessive use (YouTube, shopping, gaming, pornography).
• Misappropriation of confidential information.
• Harassment of co-workers or others.
• Moonlighting (e.g., checking Mary Kay sales).

I think the 12% number is light. I would bet that it’s closer to one-quarter to one-third of employees that misuse their employers’ technology. What can you do to best protect yourself. Let me suggest a seven-point plan.

1. Audit your internet and email systems. Take stock of how much time employees spend on-line, what types of sites are being visited, and the breakdown of personal use versus work use. Once you get a handle on how your systems are being used, you can figure out what type of policy you want for your workplace, and how restrictive it needs to be.

2. Draft and implement a Technology Policy. It should cover computers, email, social networking, and mobile devices. For more on how to draft this type of policy, see Do you know? 10 tips for drafting a workplace electronic communications policy.

3. Cross-reference the Technology Policy in your Harassment Policy and training, and in any confidentiality policies, business ethics policies, and non-competition agreements.

4. Require all employees to sign an acknowledgement that they received the policy, read it, had the opportunity to ask any questions about it, and understand it.

5. Train all employees on the ins and outs of the policy, including what you consider inappropriate use of the internet and email, and that violations will lead to discipline or termination.

6. Apply and enforce the policy fairly, consistently, and non-discriminatorily.

7. At least annually, review and if necessary revise policies to keep them legally up-to-date.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Beware these types of problem employees

Today is the Ides of March. For Julius Caesar, it meant a knife in the back from his best friend. Yet, Caesar had been warned to beware the Ides. I, too, provide the following warning. Beware these archetypes of problem employees in your organization:

• The chronically absent employee.
• The chronically late employee.
• The chronically ill employee.
• The insubordinate employee.
• The complaining employee.
• The bullying or harassing employee.
• The substance abusing employee.
• The thieving employee.
• The disloyal employee.
• The unhappy employee.

Each of these employees comes bearing a knife in the form of a potential lawsuit. At the same time, each is also loaded with legal landmines. For example, the absent or late employee may have an underlying medical issue causing their attendance issues. The harassing employee will put in a motion a chain of events under your harassment policy. The first step, though, in dealing with these issues is to recognize that they are issues at all.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

WIRTW #118

The big story that I missed this week is the refocused Congressional attention on the passage of the Paycheck Fairness Act on Capitol Hill. This law would make the following key changes to pay discrimination law:

1. Prohibits an employers from retaliating against employees for discussing wage information.
2. Permits uncapped punitive and compensatory damages for Equal Pay Act claims.
3. Requires employers to show “a bona fide factor other than sex, such as education, training, or experience” to establish a defense to a EPA claim (a much more difficult standard than the current “any factor other than sex” standard).
4. Changes classes in EPA class actions from “opt in” to “opt out.”

Take a look at the following posts from my fellow blawgers to catch up on what is happening with this important piece of legislation on the Hill:

• Paycheck Fairness Act, defining “fairness” as more litigation from PointOfLaw Forum

• Renewed Attention To Paycheck Fairness Act Puts Employers On Notice from Hunton Employment & Labor Law Perspectives™

Here’s the rest of the best I read this week:

Wage & Hour

• Department of Labor Announces New Initiative to Eliminate Independent Contractor Misclassification – from WorkplaceHorizons

• Beware the Phantom Class Action – from HR Daily Advisor

• Court Of Appeals Finds That Some Work Performed At Home Or While Commuting To Work May Have To Be Paid – from Labor Employment Law Blog

• Don't Be Blindsided with an Overtime Audit Due to Misclassifying Independent Contractors – from Overtime Advisor

• Happiness at Work: Hourly vs. Salaried – from Michael Haberman’s HR Observations

• Another Assistant Manager Case: The Time Bomb Keeps Exploding – from Wage & Hour - Development & Highlights

• AT&T Blindsided by Overtime Litigation – from Overtime Advisor

Labor Relations

• Teaching Kids About Labor Strikes: An Update with “Animal Strike at the Zoo!” – from Dan Schwartz’s Connecticut Employment Law Blog

• New Republic: President Should Recess Appoint Becker “To Mollify Unions” – from EFCA Report

• EFCA has become a proxy war – from LaborPains.org

• Implications of an NLRB Filled with Obama’s Recess-Appointees – from EFCA & Labor Law Reform Blog

• Update on the Status of Nominations to the NLRB – from New York Labor and Employment Law Report

• No Comment: Unions Upset With “Human Train Wreck” Eric Massa – from LaborUnionReport.com

Harassment

• 4/5 of an MDV, But It's the Subject Matter That Caught My Attention – from Michael Fox’s Jottings By An Employer’s Lawyer

• Second Circuit: Reporting Harassment to Harasser Alone May be Enough – from HR Briefcase

• Flirtation and Brief Touchings are Not Sexual Harassment -- Or are They? – from Florida Employment Law Blog

Other Discrimination

• A Case of Ironic Discrimination, Don't You Think? – from Workplace Prof Blog

• Using Gender at Work: Discrimination? – from The Word by John Phillips

• Fifth Circuit Distinguishes Comments Constituting Direct Evidence of Discrimination Versus Stray Remarks – from Texas Employment Law Update

• Length and Cost of a Lawsuit – from Tom Crane’s San Antonio Employment Law Blog

• Religious Discrimination: Some Fascinating Developments – from Fitzpatrick on Employment Law

• Absenteeism and Alcoholism – When can you fire? – from Jennifer Hays at the Warren & Hays Employment Law Blog

Technology

• Employees Who Check Smart Phones While Driving Aren't That Smart – from Workplace Diva

• 4 Social Media Commandments – from Rob Radcliff’s Smooth Transitions

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Playing 20 questions with the employee versus contractor distinction

As reported by the Washington DC Employment Law Update, the Treasury Department and Department of Labor have been jointly charged to eliminate legal incentives for employers to misclassify employees as independent contractors, and investigate potential misclassifications. Misclassifications carry potentially severe penalties. For example, employees are subject to wage and hour laws, and must have payroll taxes paid on their behalf. Contractors, on the other hand, do not have to paid minimum wage or overtime, and can be 1099’ed.

How do you know if you are misclassifying employees as contractors? Consider these 20 questions, none of which are dispositive, but each of which is an important part of the calculus. The more yes answers you have, the more likely the worker is an employee.

1. Is the worker required to comply with others’ instructions about when, where, and how to perform the work?

2. Is training part of the work experience?

3. Are the worker’s services Integrated into the business operations?

4. Do the services have to be rendered by the specific worker charged with the task?

5. Does the person or entity for whom the services are performed hire, supervise, and pay assistants?

6. Is there a continuing relationship between the worker and the person or entity for whom the services are performed?

7. Is the work on a full-time basis?

8. Is a regular and consistent schedule required?

9. Is the work performed on the premises of the person or entity for whom the services are performed?

10. Does the worker have to perform services in the order or sequence set by the person or entity for whom the services are performed?

11. Is the worker required to submit regular or written reports to the person or entity for whom the services are performed?

12. Is the worker paid on a set schedule, whether by the hour, week, or month?

13. Does the person or entity for whom the services are performed ordinarily pay the worker’s business and/or traveling expenses?

14. Does the person or entity for whom the services are performed furnish tools, materials, and other equipment?

15. Does the worker rely upon the person or entity for whom the services are performed to provide facilities for the work?

16. Is the worker’s base compensation unrelated to his or her performance or the performance of the enterprise?

17. Does the worker only provide services to one person or entity at a time?

18. Does the worker refrain from making his or her services available to the general public on a regular and consistent basis?

19. Does the person or entity for whom the services are performed retain the right to discharge a worker?

20. Does the worker retain the right to end his or her relationship with the person or entity for whom the services are performed at any time without incurring liability?

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Who is Craig Becker and why should you care?

Craig Becker is President Obama’s nominee to the National Labor Relations Board. He is also the Associate General Counsel of the Service Employees International Union, the country’s fastest growing labor union. SEIU President Andy Stern is one of the most outspoken proponents of the Employee Free Choice Act.

Prior to being the SIEU’s in-house lawyer, Mr. Becker was a law professor at UCLA. During his academic life, he authored a 1993 article in the Minnesota Law Review, in which he argued:

• Traditional notions of democracy should not apply in union elections.

• Employers should be allowed to challenge union elections, even with evidence of union misconduct.

• Employers should be prohibited from placing observers at the polls to challenge ballots.

• Employer captive audience meetings should be grounds for overturning elections, and must grant unions equal access to company property.

It is unclear which of these ideas – including the EFCA for which the SEIU so strongly advocates – Mr. Becker things he could accomplish by administrative fiat as a member of the NLRB.

On February 9, Senate Republicans successfully filibustered Mr. Becker’s nomination, effectively blocking his appointment. In the words of Senate Republican Ben Nelson:

Mr. Becker’s previous statements strongly indicate that he would take an aggressive personal agenda to the NLRB and that he would pursue a personal agenda there, rather than that of the administration. This is of great concern, considering that the board’s main responsibility is to resolve labor disputes with an even and impartial hand.

Now word has come that President Obama may make Mr. Becker a recess appointment to fill the three-year-old vacancy on the NLRB. This news comes on the heals of Vice President Biden’s comments to the AFL-CIO that the administration will “get [the EFCA] done.”

All of these developments should be sobering to businesses. And, the fact remains that statistics show that labor unions don’t need the help. According to recent NLRB data [pdf], labor unions win-rates in secret ballot elections is at its highest level in decades, at 66%. If Mr. Becker is appointed to the NLRB, expect his number to increase dramatically.

What can you legally do to prepare for the wave of union organizing that is on the horizon? Consider that according to the AFL-CIO Union Handbook for Organizers, the following 6 factors are likely to lower the chance of a successful organizing campaign:

1. A belief by employees that the boss is not taking advantage of them.

2. Employees who have pride in their work.

3. Good performance records kept by the employer, which reinforces the recognition and appreciation of employees’ efforts and their feelings of job security.

4. No claims of high-handed treatment, but instead firm, fair, and warranted discipline.

5. No claims of favoritism, other than that is earned through work performance.

6. Supervisors who have good relationships with subordinates.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Avoiding shifting explanations avoids claim of pretext

Rep. Eric Massa resigned from Congress last week. Depending on the interview and the day, he either resigned: for health reasons, because of allegations he inappropriately touched a male aide, or because he, a Democrat, voted against the health care bill. Three very different reasons over the course of a week. Can we believe any of them, given these shifting explanations?

You may be wondering, what does Massa’s political downfall have to do with employment law? It serves as an excellent illustration of the dangers of shifting explanations in discrimination litigation.

For a plaintiff to succeed in a discrimination case, he or she must show that the employer’s stated reason for the challenged decisions was a pretext (i.e., a lie or a cover-up) for discrimination. One of the easiest ways for a plaintiff to establish pretext is to show that the employer’s explanation for the decision changed over time. Shifting reasons cast a cloud of doubt over the veracity of the explanation and the legitimacy of the decision. Once the fact-finder has reason to disbelieve the employer’s explanation, the case is sunk. As the United States Supreme Court stated in St. Mary's Honor Center v. Hicks, “the factfinder’s disbelief of the reasons put forward by defendant (particularly if disbelief is accompanied by a suspicion of mendacity) may … show intentional discrimination.”

The takeaway – it is important to have your reason for the decision pinned down at the time the decision is made. Further, the reason must remain reasonably consistent for the lifespan of the case. You cannot offer the employee one reason, have another written in the personnel file, provide the EEOC another in the position statement, and have the decision maker tell yet another at deposition. At best, these shifting explanations will buy you a jury trial; at worst, they will result in a large jury verdict.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Hot off the press: 6th Circuit holds that discrimination laws apply to a teacher at a religious school

Certain employees of religious institutions are exempted from employment discrimination laws under what is known as the “ministerial exception.” It is an off-shoot of a religious institution’s constitutional right to be free from judicial interference in the selection ministerial employees. For this exception to bar an employment discrimination claim: (1) the employer must be a religious institution, and (2) the employee must be a ministerial employee. In EEOC v. Perich [pdf] (decided today), the 6th Circuit for the first time addressed the issue of the reach of this exception to a teacher at a religious school.

The court distinguished between an employee who primarily teaches secular subjects, and one who teaches primarily religious subjects or had a central role in the spiritual or pastoral mission of the church. The Court concluded that Perich –who only spent 30-45 minutes out of each 7-hour day on religious subjects – was not a ministerial employee. “The fact that Perich participated in and led some religious activities throughout the day does not make her primary function religious.” Thus, Perich was able to proceed with her ADA claim against her employer.

This case underscores that religious intuitions do not receive a free pass from discrimination laws. Instead, the application of these laws will depend on an individualized assessment of each employee’s job duties. Unless an employee’s primary function is “spreading the faith, church governance, supervision of a religious order, or supervision or participation in religious ritual and worship,” that employee is entitled to the protections afforded by the discrimination laws.

If parochial schools believed they were exempt from anti-discrimination laws, they should be working with their employment attorneys to update their handbooks with EEO and harassment policies, and to train all of their employees as soon as possible on these issues.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Sniffing out the dangers of the new ADA

OnPoint News and Overlawyered report that the City of Detroit has settled a disability discrimination lawsuit brought by an employee with a perfume allergy. She had claimed that the city failed to reasonably accommodate her allergy after she complained that a co-worker’s perfume made it difficult for her to breathe. Per the settlement, the employee will receive $100,000, and the city will adopt a policy prohibiting employees from wearing scented products. Even though this lawsuit was brought prior to the ADA’s amendments took effect, it nevertheless serves as a good illustration of the breadth of the new ADA.

The ADA amendments are intended to make it much easier for individuals to demonstrate that they meet the definition of “disability.” To have a disability, an individual must be “substantially limited” in performing a “major life activity” as compared to most people in the general population. An impairment need not prevent, or even significantly or severely restrict, the individual’s performance of a major life activity The determination is supposed to be a common-sense assessment based on comparing the individual’s ability to perform a specific major life activity with that of most people in the general population. Major life activities include daily functions, as well as the operation of major bodily functions (which would include, for example, the respiratory system).

If an employee has a chemical sensitivity to certain smells, that allergy will likely substantially affect the employee’s respiratory system, thus rendering the employee “disabled” under the ADA.

The focus in ADA cases has shifted from the legal argument of whether an employee’s medical condition rises the level of an ADA-protected disability, to the factual issue of whether the employer reasonably accommodated that disability. Employers need to be very aware of this change in focus. Managers and supervisors should be trained in their obligations to engage in the interactive process with employees to determine what reasonable accommodations – if any – can be made to enable the employee to perform the essential functions of the job. Lots more employees will be able to claim the protections of the ADA for lots more medical issues. How managers and supervisors respond to requests for reasonable accommodations will dictate the strength of an employer’s position in ADA lawsuits going forward.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

WIRTW #117

One story I missed this week was the extension of the federal and Ohio COBRA subsidies. These bloggers, however, are picking up the slack:

• COBRA Subsidy Extended...Again...And Again? – from Pennsylvania Labor and Employment Blog

• Obama Signs Bill Temporarily Extending COBRA, Unemployment Benefits – from Washington D.C. Employment Law Update

• President Signs Bill Extending COBRA Subsidy For One Month; To be Applied Retroactively – from Dan Schwartz’s Connecticut Employment Law Blog

• COBRA Subsidy Extended To March 31, 2010 and Retroactive to February 28, 2010 – from Minnesota Labor & Employment Law Blog

• Ohio extends State Mini-COBRA Health Insurance Continuation Coverage From 12 to 15 Months – from Employer Law Report

Wage & Hour

• Wage and Hour Litigation: Can Class Actions And Collective Actions Coexist? – from Hunton Employment & Labor Law Perspectives™

• Plaintiff’s Bar Seeks To Circumvent Class Action Fairness Act In FLSA Collective Actions – from Wage & Hour - Development & Highlights

• Tip Pool May Include Employees Not Customarily Tipped If No Tip Credit is Taken – from Wage & Hour Defense Blog

• Employers Should Conduct Internal Wage & Hour Audit: 250 New DOL Investigators Graduating – from Debra Reilly’s Workplace Investigations Blog

• Let's Stop Shooting Ourselves in the Foot, Compliance-Wise – from Ann Bares’s Compensation Cafe

Labor

• Recess NLRB Appointment Coming? – from Mark Toth’s Manpower Employment Blawg

• Union’s Win First Concession from Obama – from The Ohio Labor Lawyers

• The NLRA...Not Just for Unionized Workplaces – from Southwest Florida HR Law & Solutions

Litigation

• An Employer Cannot Control a Manager’s Lawyer – from Tom Crane’s San Antonio Employment Law Blog

• Perception and Third Party Retaliation Claims Still Alive in DC District Court – from Michael Fox’s Jottings By An Employer’s Lawyer

• Austin Surveillance Camera Maker Says “Hey, You Ripped Us Off When We Weren't Looking” – from Trade Secrets Blog

• SCOTUS Guns Down “Employment Law Blockbuster” – from Philip Miles’s Lawffice Space

• “Please Sue Me” (Your Managers Talking?) – from HR Daily Advisor

• Is The Recession Making Jurors More Anti-Plaintiff? from California Labor and Employment Defense Blog–

• Negotiating with Difficult People: Taking Your Own Part in It – from Victoria Pynchon’s Settle It Now Negotiation Blog

Human Resources

• What is email really costing your company? – from Jennifer Hays at Warren & Hays Employment Law Blog

• Tie handbooks’ rules and policies to underlying company values – from Work Matters

• Recruiting with Social Networking Sites: What you DO know can hurt you – from Nick Fishman at employeescreenIQ Blog

• Sign of the Economic Times: Firing Workers for Getting Snowed In – from The Business of Management

• Reasons Some HR Departments Make Disastrous Decisions – from Michael Haberman’s HR Observations

• If You Don’t Ask for Feedback, How Do You Know How You’re Doing? – from Molly DiBianca at Delaware Employment Law Blog

• Tiger, The Man Gene and ADAAA – from The Word by John Phillips

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

It’s time to bring Ohio’s discrimination law in line with its federal counterparts

At Jottings By An Employer’s Lawyer, Michael Fox discusses pending legislation in Missouri that would bring that state’s employment discrimination laws into line with their federal counterparts. Ohio needs the same reforms.

There are at least four key areas in which Ohio law is out of line with its federal counterparts. This dissymmetry creates an uneven playing field, in which employees are encouraged to forum shop their claims.

1. Exhaustion of administrative remedies. Under Ohio law, a plaintiff can proceed directly to court without first filing any claims with the state or federal agencies. The federal statutes require that an employee file a charge with the EEOC before filing a complaint alleging discrimination in court.
   
2. Time periods for filing claims. Under Ohio law, an employee has 6 years to file all types of discrimination claims except age claims, for which they have 180 days to file. Under federal law, an employee has 300 days to file an agency charge, and an additional 90 days to file a lawsuit after final disposition by the agency.
   
3. Supervisor and manager individual liability. Under Ohio law, managers and supervisors can be held personally liable for their own acts of discrimination. This type of liability does not exist under federal law.
   
4. Damage caps. Damages for employment discrimination claims are uncapped under Ohio law. Under federal law, compensatory and punitive damages are capped based on the size of the employer, and max out at $300,000 for each.
   

These reforms are needed to: i) eliminate the confusion that exists between two different procedural schemes to remedy the same alleged conduct; ii) remedy the problems created by employees shopping their claims between state and federal forums; and iii) remove disincentives for businesses to choose Ohio as their place of operations.

Employers often don’t stand alone in lawsuits – let’s talk about manager and supervisor liability

Ohio’s discrimination law is quirky when compared to its federal counterparts. For one thing, an Ohio employee does not need to exhaust his or her remedies with the Civil Rights Commission before filing a discrimination lawsuit in court. Also, under Ohio law, supervisors and managers can be held personally liable for their own acts of discrimination.

Discrimination laws, however, are not the only laws that provide for this individual liability. Other federal statutes – namely the FLSA, the FMLA, and the Equal Pay Act – also provide for manager and supervisor liability. The FMLA’s regulations [section 825.104(d)] explain why managers and supervisors can be personally liable under these statutes:

An “employer” includes any person who acts directly or indirectly in the interest of an employer to any of the employer's employees. The definition of “employer” in section 3(d) of the Fair Labor Standards Act (FLSA), 29 U.S.C. 203(d), similarly includes any person acting directly or indirectly in the interest of an employer in relation to an employee. As under the FLSA, individuals such as corporate officers “acting in the interest of an employer” are individually liable for any violations of the requirements of FMLA.

This week, a Pennsylvania federal court explained the scope of this individual liability. In Narodetsky v. Cardone Industries (as discussed on law.com), the federal court permitted FMLA claims to proceed against the defendant’s HR manager, benefits manager, and plant manager, as well as its president and CEO. The court concluded that anyone who exercises control over plaintiff in the termination or medical leave decisions can be liable under the FMLA. At least one Ohio federal court – in Mueller v. J.P. Morgan – reached this same conclusion. Extrapolating this rule to the FLSA, individual liability would extend to anyone who exercises control over a pay decision.

Individual liability has significant implications for how employers litigate FMLA and FLSA cases. If a supervisor, manager, or executive is named in a lawsuit, you and your counsel need to determine quickly whether the individual(s) can be represented by the same lawyer as the company, or if there is a conflict. This issue is complicated when an individual has left your organization, and exponentially complicated when the departure was on bad terms.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Do you know? The duty of loyalty: illegal competition vs. legal preparation

There are right ways and wrong ways for an employee to leave your company. Just because an employee is not subject to a noncompetition agreement does not mean that he or she cannot be liable for mistakes made on the way out the door. In fact, each and every employee owes his or employer a duty of loyalty up to the moment he or she ceases employment.

Your employee may prepare to compete against you while still in your employ without violating this duty of loyalty. There are many reasons why an employee may choose to prepare to compete while still employed. Some need the income provided by ongoing employment. Some want a degree of certainty that their new competitive venture will be ready to operate. Some may derive an eventual competitive advantage from continued association with their present employer (such as knowledge of pricing or business plans, or ongoing associations with key employees, customers, and vendors).

There are certain steps that an employee can legally take to prepare to compete without violating this duty of loyalty, even while still employed and even if done stealthily:

• Incorporating the new firm.

• Arranging for space and equipment.

• Securing financing.

• Making future business plans.

But, those preparation are subject to certain legal limits while still employed. The duty of loyalty prohibits employees from doing any of the following while still your employee:

• Using your property (computers, for instance) to prepare to compete.

• Using confidential information or trade secrets to prepare to compete.

• Starting the competing operation.

• Soliciting employees or customers for the new enterprise.

• Holding back business opportunities or diverting them to the new enterprise.

What can you do to prevent employees from engaging in these illegal activities? Consider these 6 ideas.

1. Require that key employees sign noncompetition agreements.

2. Consider requiring a wider subset of employees sign non-solicitation agreements.

3. Have all employees sign confidential information and trade secret policies, or, at a minimum, incorporate these policies into your employee handbook.

4. Incorporate statements about employee loyalty into the handbook.

5. Do not accept notice periods upon resignation for any employee who you think is a risk to compete.

6. Consider forensic examinations of computers and email accounts for any employee you reasonably believe was engaging in unlawful conduct during his or her employment.

These tips will not magically transform a disloyal employee into your lap dog. They will, however, place you in a position to hold the disloyal employee accountable for his or her actions.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Is it wrong to “friend” your boss on Facebook?

Mashable reports on a recent survey conducted by Liberty Mutual’s Responsibility Project, in which 56% of Americans reported that “it’s ‘irresponsible’ to friend your boss on Facebook, while 62% of bosses agree it’s wrong to friend an employee.” These numbers simply beg the question – what does your social media policy say about this issue? Here’s 5 suggestions (with attribution for the first three to Molly DiBianca at the Delaware Employment Law Blog):

1. Anything goes. Any employee can friend any other employee regarding of rank or position.

2. Supervisors are prohibited from friending direct reports, but employees can friend their supervisors (who can choose whether to accept the request).

3. Supervisors and their reports cannot be Facebook friends, regardless of who initiates the request.

4. Employees are only permitted to be Facebook friends with their peers. No one can friend anyone higher or lower on the org chart.

5. Employees are expressly prohibited from being Facebook friends with any co-workers, regardless of position.

The option you choose has a lot more to do with your corporate culture than what is legal or illegal. Your choice, however, will impact certain legal issues, such as harassment liability.

Regardless of which option you choose, you should choose one to incorporate into your social media policy. You don’t have a social media policy? To get started, I suggest Drafting a social networking policy: 7 considerations.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

WIRTW #116

This morning on The Proactive Employer I had an engaging chat with Stephanie Thomas on the topic of statistics and reduction in force. To listen to or download Stephanie’s podcast, you can visit The Proactive Employer’s website. I also understand that Stephanie’s podcasts are available on iTunes. I also recommend reading Stephanie’s thoughts on Planning and Executing a Reduction in Force: A 10-Point inspection.

Here’s the rest of the best I read this week:

Discrimination & Harassment

• Ricci redux? Supreme Court hears another fire department race case – from Sindy Warren at the Warren & Hays Employment Law Blog

• Family Responsibilities Discrimination Litigation Update 2010 – from WorkLife Law Blog

• Sexual Harassment Investigation: Preserve the Evidence – from Debra Reilly’s Workplace Investigations Blog

• Second Circuit Addresses Effectiveness of Sexual Harassment Policy – from Employer Law Report

Competition & Trade Secrets

• Preparing to Compete with a Former Employer – from Trade Secrets and Noncompete Blog

• Steps to Minimize Chances of a Noncompete Fight – from Employment Law Blog

• Eight ways to guarantee yourself a noncompete lawsuit – from Jay Shepherd’s Gruntled Employees

• Average Trade Secrets Data Theft Costs $2 Million – from Trade Secrets Blog

Wage & Hour

• 5 Tips For Avoiding Wage & Hour Lawsuits – from Becky Regan at Compensation Cafe

• You Can’t Avoid Paying Overtime Wages By Splitting Up An Employee’s Tasks – from Overtime Advisor

• Unclassy Action Lawsuit? – from Abovethelaw.com

• Business Under Assault: Increased Regulations and Enforcement Proposed – from Michael Haberman’s HR Observations

Social Media

• GINA and Social Media – from Adria Martinelli at Delaware Employment Law

• More Jury Instructions to Deal With Social Media in the Courtroom – from Molly DiBianca’s Going Paperless

• Social Media Guidelines and Policies: Do Your Employees Know the Ground Rules Too? – from Dan Schwartz’s Connecticut Employment Law

• Americans time spent on social media sites up 210% in 2009 – from Real Lawyers Have Blogs

Background Checks

• Oregon Legislature Bans Workplace Credit Checks – from Dennis Westlind’s World of Work

• Cleveland Heights Women Forges Background Checks – from Jason Morris at employeescreenIQ Blog

Human Resources

• Two Predictors of a Good Hire: Passion, and How They Treat the Receptionist – from The Business of Management

• The Giving Tree: Treating Talent You've Outgrown with Respect – from Kris Dunn, The HR Capitalist

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Access to federal court just got a little bit easier for corporations

Employers like to be in federal court. According to a recent study by the American Constitution Society, plaintiffs only win 15% of the time on employment discrimination suits in federal court. Thus, it is often critical for employers to have their cases heard in federal court.

Federal courts, however, are courts of limited jurisdiction. There are two main avenues to get a case into federal court—lawsuits premised on a federal statute (known as federal question jurisdiction), and lawsuits with more than $75,000 in controversy where no defendants hail from the same state as any plaintiff (known as diversity jurisdiction). Whenever a party is sued in state court, that party may remove the suit to federal court, provided the federal court would otherwise have jurisdiction.

For purposes of diversity jurisdiction, a corporation is a citizen of its state of incorporation and the state where it has its principal place of business. When a large corporation does business in a number of states, however, determining its “principal place of business” often presents courts with a challenge. On Tuesday, in Hertz Corp. v. Friend, the United States Supreme Court decided what “principal place of business” means:

We conclude that “principal place of business” is best read as referring to the place where a corporation’s officers direct, control, and coordinate the corporation’s activities. It is the place that Courts of Appeals have called the corporation’s “nerve center.” And in practice it should normally be the place where the corporation maintains its head-quarters—provided that the headquarters is the actual center of direction, control, and coordination, i.e., the “nerve center,” and not simply an office where the corporation holds its board meetings (for example, attended by directors and officers who have traveled there for the occasion).

Why is this case important to employers?

1. As noted above, employers like to be in federal court. This case expands employer’s access to federal court by limiting the number of states in which it can be found to be a citizen for diversity purposes. By limiting a corporation’s principal place of business to the corporate nerve center, corporations will be able to remove a greater number of lawsuits.

2. Employers only have 30 days after receipt of a state court lawsuit to remove the case to federal court. The determination of whether to remove a case has to be made quickly. Therefore, it is important to get counsel involved in the litigation as early as possible so that the removal date—which cannot be extended under any circumstances—is not missed.

For additional analysis of this opinion, I suggest the following:

• Identifying corporate “nerve centers” – via SCOTUSBlog

• U.S. Supreme Court Breathes Life Into Removal Statute – via What’s New in Employment Law?

• Today, all 9 Justices embrace a clear rule over a more nuanced and litigation-breeding interpretation – via Althouse

• Nine-Zip for Common Sense – via The California Civil Justice Blog

• Supreme Court Applies "Nerve Center" Approach to Diversity Jurisdiction – via Washington DC Employment Law Update

• The Supreme Court and Federal Jurisdiction Law – via ChamberPost

• High Court Makes it Harder for Plaintiffs to Avoid Federal Court in Contract Cases – via Point of Law

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.