The “Cat’s Paw” is alive and well in the 6th Circuit -- Pro se plaintiff’s trial win affirmed by Sixth Circuit

File this case under the category of never underestimate your opponent. The 6th Circuit has affirmed a trial court’s $120,000.50 verdict in a race discrimination case in which the plaintiff appeared pro se (without an attorney). In Madden v. Chattanooga City Wide Service Dept. (6th Cir. 11/25/08), the plaintiff was fired by management after a supervisor reported him for setting off firecrackers at a work site. The problem for the employer is that the plaintiff happened to be black, and he knew of two white employees who had done the exact same thing without being reported by the same supervisor.

The appellate court was unfazed by the fact that the person with the discriminatory animus, the reporting supervisor, was not the ultimate decisionmaker in Madden’s termination. Instead, the Court imputed the supervisor’s animus to the decision makers under what is known as “cat’s paw” liability. Cat’s paw liability is when an adverse employment decision is made by a person who lacks impermissible bias, but was influenced by another individual who was motivated by such bias.[1] The court found that the employer was liable because the supervisor discriminatorily decided which employee to report for identical misconduct.

There is the problem posed by the fact that Madden was fired not by his supervisor, Templin, but by senior managers—Templeton and Leach—who were unaware of incidents in which white workers set off fireworks without facing discipline. … We have held that when a plaintiff challenges his termination as motivated by a supervisor’s discriminatory animus, he must offer evidence of a “causal nexus” between the ultimate decisionmaker’s decision to terminate the plaintiff and the supervisor’s discriminatory animus. … In the instant case, there was an investigation of the events for which Madden was fired, which was conducted by Boyd and Templeton. This investigation led to Templeton’s recommendation that Madden be fired, which Leach accepted. … There was evidence that Templin discriminated in the information that he provided about employee misconduct to senior managers by reporting the misconduct of a black employee, but not the virtually identical misconduct of white employees. By relying on this discriminatory information flow, the ultimate decisionmakers “acted as the conduit of [the supervisor’s] prejudice—his cat’s paw.”

Because the decisionmaker acted on the supervisor’s word, without any additional investigation, the court imputed the supervisor’s animus to the decisionmaker.

There are two important lessons for employers to take from this case:

1. Never underestimate your opponent. It’s impossible to know whether Chattanooga acted out of hubris in taking this case all the way to trial. What we do know is that bad facts are bad facts, whether or not the plaintiff is represented or acting pro se.

2. As long as cat’s paw liability is a valid theory of discrimination, it is imperative that decisionmakers verify the information upon which they are relying. Unless the decisionmaker has first-hand knowledge of the reasons justifying the action, he or she should undertake some investigation and independently verify that the decision is the result of a legitimate non-discriminatory reason and not an unlawful animus.

The Blawg is taking the rest of the week off for the Thanksgiving Holiday. Everyone enjoy your turkey. I’ll be back on Monday with thoughts on the aggressive advertising campaign started by labor organizations in support of the Employee Free Choice Act. What I’m Reading This Week will return next Friday with a supersized edition.

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[1] “Cat’s paw” derives from a fable in which a monkey tricks a cat into scooping chestnuts out of a fire so that the monkey can eagerly gobble them up, leaving none left for the cat. It generally describes a situation where one is unwittingly manipulated to do another's bidding. See Read Book Online.

Do you know? Year-end bonus payments may affect overtime rates

Do you know? Year-end bonus payments could count as part of a non-exempt employee’s regular rate of pay, thereby increasing the overtime premium owed to that employee. Given the current economic state, fewer companies are likely to pay bonuses this year, but these rules are important to heed when bonuses are paid to hourly and salaried non-exempt employees.

Section 7(e) of the Fair Labor Standards Act requires the inclusion in the regular rate of pay all remuneration for employment except seven specified types of payments. Bonuses that do not qualify for exclusion from
the regular rate under one of the seven exceptions must be totaled with other earnings to determine the regular rate upon which the overtime premium rate must be based.

A bonus could fall under one of two exceptions: discretionary payments, or gifts made at Christmas time or on other special occasions. Each of these two categories, however, has specific criteria that must be met before a bonus payment can be excluded from the regular rate.

Discretionary Bonus Payments

For a bonus to qualify for exclusion as a discretionary bonus, the employer must retain discretion both as to the fact of payment and as to its amount. Consider the following examples:

• An employer promises at the beginning of the year to pay a bonus at year-end in some undetermined amount. It has given up discretion as to the fact of the bonus, but not as to its amount.

• An employer promises employees that they will receive a bonus based on some mathematical formula, but if the company determines that it can afford to make the payments at that time. It has given up discretion as to the bonus’s amount, but not as to the fact of payment.

In both examples, the bonus is not discretionary, albeit for opposite reasons. For a bonus to be truly discretionary, the employer would have to retain complete discretion as whether to make the payment, and if so, in what amount. The employer cannot rely on any prior promise or agreement in making the payment or determining its amount.

Gifts, Christmas and Special Occasion Bonuses.

To qualify for exclusion under this exception, the bonus must be a bona fide gift. If it is measured by hours worked, production, or efficiency, is so large that employees would reasonably consider it part of their wages for hours worked, or is paid pursuant to some agreement or policy, then the bonus cannot be considered to be a gift.

According to the Department of Labor, the following circumstances will not disqualify a year-end payment as a gift:

• If an employer pays it with such regularity that employees are led to expect it from year-to-year.

• The amounts paid vary among employees or groups, or are tied to salary, wage, or length of service. For example, a Christmas bonus paid in the amount of two weeks’ salary to all employees and an equal additional amount for each 5 years of service with the firm would be excludable from the regular rate.

The key factors are whether there is a contract, and whether the amount is specifically tied to hours worked, production, or efficiency.

Calculating the Regular Rate with a Bonus Payment

Where a bonus payment is considered a part of the regular rate at which an employee is employed, it must be included in computing the regular hourly rate of pay and overtime compensation. For purposes of calculating the regular rate of pay, the bonus does not have to be included in its entirety in the week it is paid. Instead, an employer can apportion the bonus amount back over the workweeks of the period during which it was earned. The employee must then receive an additional amount of compensation for each workweek that he worked overtime during the period equal to one-half of the hourly rate of pay allocable to the bonus for that week multiplied by the number of statutory overtime hours worked during the week. If it is impossible to allocate the bonus, an employer can select some other reasonable and equitable method of allocation.

If a bonus payment already accounts for the overtime premium, then no additional payment is required. For example, a bonus plan may pay, as a bonus, a 10% premium of an employee’s total compensation, including overtime premiums. In this instance, the payment already covers overtime, and no additional overtime is required.

Conclusion

Like most wage and hour issues, the handling of bonus payments to non-exempt employees is complex, and presents a real trap for the unwary employer. If you are considering paying a year-end or other bonus to hourly and salaried non-exempt employees, seriously consider running it past employment counsel before making the payments.

New FMLA Regulations: What do they mean to notice and designation obligations to employees?

Administration of FMLA leave probably causes more headaches for HR professionals than any other facet of their jobs. As if the FMLA is not complex enough, the new regulations radically revamp the notice and certifications processes for employers to follow when an employee seeks FMLA leave. The following summarizes these new responsibilities.

Required Postings and Policies

All covered employers who are required to post the prescribed FMLA notice in the workplace, even if they do not have any eligible employees. Employee handbooks will still have to contain FMLA policies. Companies that do not have a handbook, however, will be required to deliver a written FMLA notice at the time of hire. This written notice is separate from the FMLA posting discussed above.

The Eligibility Notice

Under the current iteration of the FMLA, employers only have one designation requirement to employees seeking FMLA leave – Form WH-381 – which is the employer’s response to an employee seeking FMLA leave. The new regulations break this process into two steps, requiring the use of several different documents. After January 16, 2009, old Form WH-381 will no longer be valid and should not be used.

Under the new regulations, when an employee requests FMLA leave, employers must notify employees of their eligibility to take FMLA leave. Employers must provide this notice of eligibility within five business days of the employee’s request for leave or the employer’s other notice of the need for leave, absent exigent circumstances. If an employer is going to seek medical certification for the leave, the employer can provide a copy of the medical certification form along with the eligibility notice. Additionally, the eligibility notice accomplishes the following:

1. It tells the employee the date the leave was requested and the employer’s understanding of the reason supporting the leave.
2. It tells if the employee is eligible to take FMLA leave, and if not, why.
3. For eligible employees, it gives a date certain for the employee to return any requests documentation for the leave, such as a medical certification.
4. It discusses arrangements for payment of health insurance premiums while on leave, the use of concurrent paid leave, whether the employee is considered a “key employee”, and any requirements for periodic status reports.
5. It gives the employer’s chosen method for calculating the FMLA leave year.

Eligibility is determined, and this notice must be provided, at the beginning of the first instance of leave for each FMLA-qualifying reason in the applicable 12-month period. All FMLA absences for the same qualifying reason in the same FMLA year are considered a single leave, and the employee maintains eligibility as to that reason during the entire 12-month period. 

If an employee is eligible for FMLA leave, at the same time an employer provides the eligibility notice the employer must also provide a written notice of “Rights and Responsibilities” under the FMLA. This notice details the specific expectations and obligations of employees under the FMLA.

The old form WH-381 (which was optional, but preferred), will be replaced by a new, mandatory WH-381. The new WH-381 encompasses both the eligibility notice and the “Rights and Responsibilities” notice. The new forms are already available as Appendices C & D to the new FMLA regulations (at pp. 191-193).

The Designation Notice

Once an employer has received sufficient information to determine whether an employee’s leave is covered by the FMLA, the employer must notify the employee within five business days that the leave is designated as FMLA leave, absent exigent circumstances. Note that the five business days is a ceiling, not a floor, and employers can provide the designation notice sooner, or even concurrently with the eligibility notice, if the employer has sufficient information available to do so. A copy of the designation form is available as Appendix E to the new FMLA regulations (at p. 194).

The designation notice tells employees one of five things:

• The leave is approved;
• More information is needed to determine if the leave can be approved;
• The leave is denied;
• The FMLA does not cover the leave request; or
• The employee has exhausted his or her FMLA leave entitlement for that 12-month period.

If the leave is approved, the employer must designate how much leave is expected to be taken, whether paid leave will be taken concurrently with the FMLA leave, and whether a fitness-for-duty certification will be required before the employee will be permitted to return to work.

If more information is necessary for an employer to make a determination, the employer must advise either what information is needed and give the employee at leave seven calendar days to provide it, or notify the employee that a second or third medical opinion, at the employer’s expense, is required. If an employee fails to meet these requests, the employer can then deny the FMLA leave.

In considering whether to approve an FMLA leave, employers can consider, in addition to the employee’s medical certification, any information received during an ADA interactive process or an employee benefit program.

The new regulations permit retroactive notice if the employer fails to provide timely notice and the delay does not cause employee harm or injury. If, however, an employer fails to provide a written designation notice, the new regulations make clear that such failure can be considered “interference” with an employee’s FMLA rights, for which the employee can seek damages included “any other relief tailored to the harm suffered.”

What this means for you

These new regulations provide a fundamental change in how employers will manage FMLA leave requests. The process is now bifurcated, splitting eligibility and designation. It eliminates the problems employers faced in having to conditionally certify leave as FMLA leave before having all of the information necessary to make a proper determination. Coupled with the new medical certification rules, employers will have much greater access to information in making FMLA decisions. While these regulations are largely a benefit to employers, they do pose significant new requirements with which employers must comply. It is incumbent on all HR professionals to learn these new rules and be prepared to implement them on January 16, 2009.

WIRTW #57

Two topics dominate the employment law headlines this week – the new FMLA regulations and the continued debate over the prospects for the Employee Free Choice Act. I’ve covered the former in depth earlier in the week (here and here). The following blogs all wrote this week on the latter, the EFCA: Today’s Workplace, Jottings By An Employer's Lawyer, World of Work, and Work Matters. In related news, Overlawyered happily reports that employment lawyers are busier than ever.

As always seem to be the case, we have a couple of interesting wage and hour posts: George’s Employment Blawg on wage and hour implications for telecommuters, and the Workplace Prof Blog on whether time spent booting up one’s computer is considered compensable work time.

The Trade Secrets Blog reports on a case before the Ohio Supreme Court on whether certain customer-related information qualifies as a trade secret.

The MMMG Law Blog discusses a 10th Circuit case, which may be the first of its kind to apply the Supreme Court’s Holowecki standard of what constitutes a “charge” of discrimination.

The Delaware Employment Law Blog gives some helpful guidance on how to properly make deductions from a salaried employee’s pay without jeopardizing an FLSA exemption.

BLR’s HR Daily Advisor properly advises that when management hears a rumor about inappropriate or discriminatory workplace conduct, it should investigate and not ignore it.

Finally, the Toronto Employment Lawyer points out a key difference between American and Canadian employment law – apparently north-of-the-border management-level employees have an affirmative duty to provide a reasonable notice of resignation.

Hidden cameras pose potential problems

The D.C. Circuit is considering an appeal by 16 former Anheuser-Busch employees who were disciplined or fired after the company installed hidden cameras without first bargaining with their union. Among the violations caught on video – sleeping on the job, peeing on the roof, and smoking marijuana. It is fairly settled law that in a unionized setting, the installation of security cameras is a mandatory subject of bargaining. Thus, Anheuser-Busch violated federal labor law by unilaterally installing the cameras. At issue in the appeal is whether an employer’s own violation of labor law should require it to ignore the employees’ misconduct.

The union argues that the employer should not receive any benefit from its misconduct. The employer argues that the remedy for its unfair labor practice is to remove the cameras, and that the employees should not receive a free pass for their misconduct. I’m curious to see how this case comes down, because both sides have compelling arguments, although I think the employer has the stronger position. It could have discovered the misconduct without the cameras and taken the same actions against the employees. The cameras were coincident to, but not the cause of, the discipline.

In a non-union setting, the use of hidden cameras pose their own unique problems. First, to avoid any potential illegal wiretap issues, cameras should be video-only. Surreptitious voice recordings could violate state and federal wiretap laws. Secondly, cameras should not be placed in any areas in which employees have an expectation of privacy. Bathrooms and locker rooms are per se off limits. Work areas, lunch rooms, smoke holes, and other areas in which employees cannot reasonably expect to have any privacy are all fair game for surveillance cameras.

[Hat tip: The Blog of LegalTimes]

Summary of new FMLA Regulations: Military Family Leave

Yesterday, I examined 10 key changes in the new FMLA regulations to the legacy FMLA provisions. Today, I’ll break down the new regulations’ effect on Section 585(a) of the National Defense Authorization Act for FY 2008. That provision amended the FMLA to provide eligible employees working for covered employers two important new leave rights related to military service: military caregiver (or covered servicemember) leave and qualifying exigency leave.

Military Caregiver Leave (also known as Covered Servicemember Leave):

1. Eligible employees who are family members of covered servicemembers will be able to take up to 26 workweeks of leave in a “single 12-month period” to care for a covered servicemember with a serious illness or injury incurred in the line of duty on active duty.

2. This provision also extends FMLA protection to additional family members (i.e., next of kin) beyond those who may take FMLA leave for other qualifying reasons.

3. When leave is taken to care for a covered servicemember with a serious injury or illness, an employer may require an employee to support his or her request for leave with a sufficient certification, which includes certain necessary military and medical information support the request for leave.

Qualifying Exigency Leave:

1. This provision makes the normal 12 workweeks of FMLA job-protected leave available to eligible employees with a covered military member serving in the National Guard or Reserves to use for “any qualifying exigency” arising out of the fact that a covered military member is on active duty or called to active duty status in support of a contingency operation.

2. The Department’s final rule defines qualifying exigency as any of the following categories for which employees can use FMLA leave: i)Short-notice deployment; ii) Military events and related activities; iii)Childcare and school activities; iv) Financial and legal arrangements; v) Counseling; vi) Rest and recuperation; vii) Post-deployment activities; and viii) Additional activities not encompassed in the other categories, but agreed to by the employer and employee.

3. Employers will be able to require an employee to provide a copy of the covered military member’s active duty orders or other documentation issued by the military which indicates that the covered military member is on active duty (or has been notified of an impending call or order to active duty), and the dates of the covered military member’s active duty service.

4. Each time leave is first taken for a qualifying exigency, an employer may require an employee to provide a certification that sets forth information pertaining to the exigency.

Summary of new FMLA Regulations: 10 Key Changes

On Monday, November 17, 2008, the Department of Labor (DOL) published its final rule to implement the first-ever amendments to the Family and Medical Leave Act (FMLA). The new regulations update and clarify certain key issues under the FMLA, in addition to providing guidance on the law’s recent coverage changes for military family leave.

These changes become effective January 16, 2009. A full copy of the new regulations is available for download from the DOL.

Today begins a three-part series on these new regulations, beginning with the top 10 substantive changes to the old FMLA scheme. Tomorrow, I’ll take a look at the military leave regulations, and next Monday I’ll provide my thoughts on the pros and cons of the new regulations.

The regulations change the FMLA in the following key areas:

Serious Health Condition:

1. One of the definitions of serious health condition involves more than three consecutive, full calendar days of incapacity plus “two visits to a health care provider,” which now must take place within seven days of the first day of incapacity.

2. Another definition of serious health condition involves more than three consecutive, full calendar days of incapacity plus a regimen of continuing treatment. The new regulations clarify that the first visit to the health care provider must take place within seven days of the first day of incapacity.

3. The new regulations define “periodic visits” for chronic serious health conditions as at least two visits to a health care provider per year.

Light Duty: 

1. Time spent performing “light duty” work does not count against an employee’s FMLA leave entitlement.

2. An employee’s right to restoration is held in abeyance during the period of time the employee performs light duty (or until the end of the applicable 12-month FMLA leave year).

Substitution of Paid Leave: FMLA leave is and remains unpaid, although employer can require that employees use any and all paid time off (sick days, vacation, personal days, etc.) concurrently with FMLA leave. Under the new regulations, all forms of paid leave offered by an employer will be treated the same, regardless of the type of leave substituted. An employee using paid leave concurrently with FMLA leave must follow the same rules of the employer’s policy that apply to other employees for the use of such leave.

Perfect Attendance Awards: Employers will now be allowed to deny a “perfect attendance” award to an employee who does not have perfect attendance because of taking FMLA leave, as long as it treats employees taking non-FMLA leave identically.

Employer Notice Obligations:

1. Employers will be required to provide employees with a general notice about the FMLA (through a poster, and either an employee handbook or otherwise upon hire); an eligibility notice and a rights and responsibilities notice (given when leave is requested); and a designation notice (given when leave is designated as FMLA-leave).

2. The new regulations extends the time for employers to provide these various FMLA notices from two business days to five business days.

All of these forms are available from the DOL in the new regulations.

Employee Notice: The new regulations provide that an employee needing FMLA leave must follow the employer’s usual and customary call-in procedures for reporting an absence, absent unusual circumstances.

Medical Certification Process

1. During the medical certification process, the employer will be permitted to speak directly to the employee’s health care provider, so long as the employer’s contact person is a health care provider, human resource professional, a leave administrator, or a management official. It can never be the employee’s direct supervisor.

2. Employers may not ask health care providers for additional information beyond that required by the certification form.

3. The DOL will provide separate medical certification forms for the employee and covered family members. The forms will also allow, but not require, health care providers to provide a diagnosis of the patient’s health condition as part of the certification.

4. If an employer deems a medical certification to be incomplete or insufficient, the employer must specify, in writing, what information is lacking, and give the employee at least seven calendar days to cure the deficiency.

5. Employers may request a new medical certification each leave year for medical conditions that last longer than one year.

6. In all cases, employers are now permitted to request recertification of an ongoing condition every six months in conjunction with an absence.

Fitness-For-Duty Certifications:

1. An employer may require that the certification specifically address the employee’s ability to perform the essential functions of the job.

2. Where reasonable job safety concerns exist, an employer may require a fitness-for-duty certification before an employee may return to work from intermittent leave.

The Ragsdale Decision/Penalties: Ragsdale v. Wolverine World Wide  ruled that an employer’s failure to properly designate leave as FMLA leave cannot result in the grant of additional leave to an employee without a specific showing of harm to the employee from the missed designation. The new regulations clarifies that where an employee suffers individualized harm because the employer failed to follow the notification rules, the employer may be liable for the additional FMLA time.

Waiver of Rights: Taylor v. Progress Energy held that no FMLA waiver, whether retrospective or prospective, can be valid unless first approved by a court or the DOL.The new regulations clarify that employees may voluntarily settle or release their FMLA claims based on past conduct without court or agency approval. Prospective waivers of FMLA rights continue to be prohibited absent prior approval.

Do you know? Compensation for travel time

Do you have employees that travel for work? Do you know that only certain travel time may be considered compensable and therefore paid for? As a general rule, time spent traveling from home to work and back again to home does not have to be compensated.

Like all rules, however, there are exceptions.

1. Time spent by an employee traveling as part of the principal work activity, such as travel from job site to job site during the workday, or travel between customers, is counted as hours worked and must be paid.
2. Travel that keeps an employee away from home overnight must also be compensated, but only when the travel time occurs during an employee’s normal workday. Thus, if an hourly employee's normal work day runs from 8 am to 5 pm, only out-of-town travel during those hours must be paid. This rule applies whether the travel occurs on a regular work day or a normal day off. So, if the same employee travels during regular work hours on a Sunday, but regularly has Sunday off, the time must still be paid.
3. Out-of-town travel that is completed all in one day receives different treatment. The employee is compensated for the travel from home to the out-of-town worksite, less the amount of time it would have taken the employee to drive to work during a regular workday. The rationale is that the employee should not have to be compensated for the time he or she would have spent traveling to and from work on a regular work day.

The swift hand of justice

Next time you consider whether you really want to litigate a case, consider the following case study.

On Friday, I reported about a case in which a jury vindicated a city administrator whose secretary accused him of sexual harassment for staring at her breasts. She filed her case in December 2002. In July 2006, the trial court dismissed the lawsuit on the employer’s motion for summary judgment. In February 2008, the court of appeals reversed that ruling. The trial was finally held on October 31, 2008, nearly six years after the case was originally brought. On Point reports this saga has cost the employer nearly $400,000 to defend. And, it’s not over yet. The plaintiff has filed a motion for new trial, and when that is denied, she’ll likely go back to the court of appeals. Everyone had their day in court, but at what cost?

ALERT: New FMLA regulations to be published Monday

The title says it all. Once I've had a chance to digest the new regs (they're over 700 pages) I'll have more to say.

WIRTW #56

The Employee Free Choice Act remains the hot labor and employment law topic. The stat of the week comes courtesy of the Delaware Employment Law Blog. During the first half of 2008, labor unions won an astounding 66.8% percent of secret ballot elections conducted by the National Labor Relations Board, as compared to 58.5% during the same period in 2007. At this clip, do unions really need help from the EFCA? It seems like they are doing just fine all on their own.

This rest of this week’s review touches on four themes important in today’s workplace – layoffs, bullying, technology, and discrimination:

1. Layoffs

Downsizing is a popular topic these days. The ABA Journal correctly points out that more layoffs equates to more employment lawsuits. Meanwhile, Bob Sutton plays some word games in trying to find the right nomenclature for a workforce reduction.

2. Bullying

The Laconic Law Blog discusses some possible common law remedies for employees who are bullied at work. George’s Employment Blawg asks if we really need anti-bullying laws at all. Case in Point talks about the workplace dangers of salty language. On Point reports on a real live case of bullying at work – a case in which a jury found that a manager’s staring at a subordinate’s breasts did not constitute sexual harassment. He claimed that he could not help himself because of an eye disorder.

3. Technology

The Connecticut Employment Law Blog opines on the use of social networking sites (such as Facebook) to uncover facts in discovery. If you need a good example of how this might play out, The HR Capitalist gives us an interesting case study on 13 flight attendants fired by Virgin Airways for inappropriate comments on their Facebook pages. Electronic Discovery Law reports on a case in which an employee was found to have no expectation of privacy on a workplace computer, even for personal information stored there.

4. Discrimination

World of Work brings us news of a settlement of case challenging an English-only workplace policy. Workplace Horizons talks about what “passive discrimination” means and why plaintiffs’ lawyers might target some of your workplace policies because of it. BLR’s HR Daily Advisor discusses rules for employee medical exams under the ADA.

8 common employee handbook mistakes, and how to avoid them

HR Legal News provides a list of its top common mistakes in employee handbooks. The following discusses some of the list, offers some tips on how to avoid common trouble spots, and adds a few more mistakes that should be avoided.

1. Illegal overtime policies: For example – “All overtime must be authorized by a manager or supervisor and the company will only pay authorized overtime.” Such is policy is illegal if it is applied as written. All overtime, whether its authorized or not, should be paid. A better rule to control unauthorized overtime is to prohibit unauthorized overtime and discipline those employees who violate the rule.

2. Vague FMLA language: The FMLA is rife with traps for employers who do not specify certain eligibility requirements. Otherwise, a company leaves itself open to be sued by otherwise ineligible employees. A handbook should also be clear on the interplay between FMLA leave and other paid leave policies, and to make sure that employees cannot double-dip by first exhausting paid leave before turning to unpaid FMLA leave.

3. Bans on salary discussions: The National Labor Relations Act makes it unlawful for any employer, whether union or non-union, to interfere with, restrain, or coerce employees exercising their right to engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection. One such protected activity is discussing terms and conditions of employment, such as wages. A policy that could be construed to prohibit discussions of wages or other terms and conditions of employment would violate the NLRA. A safer rule would limit confidentiality to information about corporate information and customers, and would not interfere with disclosure of information about employees’ terms and conditions of employment.

4. Unnecessary probationary periods: Probationary periods are typical in union contracts, but have no place in a non-union setting. Such a policy is counter-intuitive to the at-will nature of the employment, and could set an unreasonable expectation of continued employment after the 90 days expire. A better policy would simply re-affirm that employees are at-will and can be terminated at any time for any reason, and that all new employees’ performance will be evaluated after 90 days.

5. Too many details: A handbook should be a set of guidelines for the company to follow. It should not be intended to account for every situation that could arise, not should it be written in stone. Companies should write handbooks to leave enough flexibility to change policies when the situation dictates.

6. Missing no-solicitation policies: These policies are necessary to try to limit union solicitations in the workplace, but cannot be specifically directed at union activities. Instead, companies can draw any reasonable line, so long as the line drawn is not specifically tied to union solicitations. Moreover, the rule should include the use of bulletin boards and corporate computer systems (e-mail, intranets, etc.).

7. Lack of an at-will disclaimer and signed receipt: In litigation, a handbook is only as good as being able to prove that an employee received it on a certain date. The best proof is a signed, dated receipt in all employees’ personnel files, with enough information in the receipt itself to link it to the handbook (such as a date for the issuance of the handbook). Also, handbooks should clearly state that employees are at-will, that the handbook is not a contract, and that employees should not rely on any statements in the handbook. These simple measures will help protect against breach of contract and promissory estoppel claims.

8. Missing Harassment Policy: An anti-harassment policy is necessary to take advantage of the Faragher/Ellerth affirmative defense. It is one of the most important policies a handbook should contain, and no handbook is complete without having such a policy.

Handbooks are a necessary evil in today’s workplace, but present myriad dangers for employers if they are not carefully drafted with a keen eye to legal compliance.

“Laying the smackdown” is not an adverse employment action

An adverse employment action in a discrimination case is an action by an employer that effects a significant change in one’s employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.

In Mathirampuzha v. Potter (2nd Cir. 11/3/08), the 2nd Circuit decided that an employee who had been physically assaulted by a supervisor had not suffered an adverse employment action. Ron Sacco, a supervisor but not Mathirampuzha’s direct supervisor, grabbed his arm, punched him in the shoulder and the chest, spit in his face, and poked him in the eye. Mathirampuzha’s direct supervisor immediately intervened to separate the parties. After a union official filed a complaint on Mathirampuzha’s behalf, the employer issued Sacco a formal written warning a transferred him to a different facility.

The court held that Sacco’s physical assault of Mathirampuzha did not rise to the level of an adverse employment action:

Only in limited circumstances does a single, acute incident of abuse qualify as an adverse employment action. In the context of hostile work environment claims, we have stated that a single event, if “extraordinarily severe,” could alter the conditions of a working environment…. A “single incident of rape,” for example, “sufficiently alters the conditions of the victim’s employment and clearly creates an abusive work environment for purposes of 29 Title VII liability for sex-based discrimination.

Sacco’s aggressive conduct toward the plaintiff … was not an adverse employment action. After the incident took place, the plaintiff continued to work at the Wallingford plant in the same position, at the same pay, and with the same responsibilities. Indeed, there is no evidence that the assault brought lasting harm to the plaintiff’s ability to do his job. The physical encounter itself, while understandably upsetting, was not so severe as to alter materially the plaintiff’s working conditions -- unlike, for example, a rape, … or an obscene and humiliating verbal tirade that undermines the victim’s authority in the workplace…. The Postal Service’s response to the incident, moreover, while not immediate, ultimately ameliorated the plaintiff’s working conditions, as Sacco was eventually disciplined and transferred to another work assignment for at least one year.

Nobody is a bigger proponent than me of not turning our anti-discrimination laws into a general workplace civility code. But, do we want to draw a bright line in the sand, with grabbing, punching, poking, and spitting on one side, and rape on the other? Do we want African-American employees who are targeted with violence to be scuttled out of court on a summary judgment motion? Do we want women browbeaten by their male co-workers to have to raped before they can file a claim? The line drawn by the court in this case simply seems unreasonable.

Do you know? Preservation of personnel files

Do you know? In Ohio, employers should preserve personnel files for six years after an employee leaves an organization. Under Ohio Revised Code section 4112.99, an employee has six years to file a discrimination lawsuit for all types of discrimination other than age (which, for some unknown anomalous reason is only 180 days). Because of this long statute of limitations, companies should not alter, destroy, dispose of any employee files or records until that time period expires. Moreover, all employees should be instructed pursuant to a written record retention policy of this requirement.

The potential penalties for the premature alteration, destruction, or disposal of any employee’s files or records are severe. For example, if an employee files a lawsuit related to his or her termination, and the employee’s personnel file cannot be located, a court may bar the employer from presenting evidence of the employee’s poor performance that led to the termination. A court might also create an inference, binding for the case, that the employee was, in fact, a good employee and that the performance problems did not exist. If a court believes that the disposal was done willfully to hide evidence, it may even go so far as to enter judgment in the employee’s favor. Courts take these obligations seriously, and so should you.

Risks abound for businesses considering unpaid time off to save costs

Workforce Management and SlashGear both report that Dell is encouraging its employees to take an unpaid week off as a means to cut costs and avoid layoffs. Dell is not the only company considering such measures. Companies are going to four-day work weeks, or weeks off, to save enough cash to avoid having to cut staff. Times are getting scary, and many businesses are considering these drastic measures to meet their bottom lines while keeping as many people employed as possible. They assume, probably correctly, that employees would rather work less and keep their jobs than face layoffs.

These measures, however, must be carefully considered and implemented to avoid any wage and hour complications. One of the cornerstones of the FLSA’s exemptions is that the employee must be salaried. By definition, a salaried employee receives the same predetermined amount of money for each week worked. Employers can jeopardize exemptions by docking employees’ pay for hours or days missed from work. If an employer reduces an employee’s pay for hours or days missed in a week, the employee is not receiving a standard predetermined amount for all work performed during the week, and therefore no longer salaried. If an employee is not salaried, he or she cannot be exempt. Exemptions are bad things to lose, because it would make an employee eligible for overtime.

Thus, paying an employee four-fifth’s of his or her salary for a four-day work week might jeopardize that employee’s exemption. The employee is no longer receiving a static amount for all work performed during the week. The Department of Labor would probably take the position that the employer is treating the employee as hourly by reducing the salary by the hours missed during the week.

If, however, an employee is taking an entire week off, the employer can withhold an employee’s salary for that entire week without putting an exemption at risk. In that case, the employee is still receiving the same static weekly amount for all weeks in which any work is performed.

The bottom line – if your organization is considering reducing work hours to cut costs, consider doing so on a weekly basis, and not on a smaller increment. Also, discuss these measures with counsel to ensure that all legal implications are covered.

WIRTW #55

It only seems fitting to begin this week with a small roundup of some of the blog posts I’ve tagged about the election:

• Pennsylvania Labor & Employment Blog
• Workplace Prof Blog
• Wall Street Journal Law Blog 
• The Word on Employment Law with John Phillips
• Delaware Employment Law Blog

The Connecticut Employment Law Blog also points out that President-elect Obama’s Change.gov has gone live, and highlights the labor and employment initiatives his new administration will put forward.

This week also brings some other notable posts about issues other than the election.

Rush on Business (courtesy of an article on IowaBiz) reminds companies of the importance of EPL (Employment Practices Liability) insurance.

HRWorld discusses ways to protect your business when firing an employee.

The Word on Employment Law with John Phillips talks about the wave of layoffs that is likely during this down economy.

Human Rights in the Workplace brings a story from north of the border about a 44-year-old exotic dancer who is claiming age discrimination.

The Non-Compete and Restrictive Covenants Blog discusses IBM’s efforts to halt employee migration to Apple via non-competition agreements.

Trading Secrets, meanwhile, discusses the general trends related to non-compete litigation in the financial services sector.

World of Work reports on the latest case-handling trends at the NLRB.

Finally, Overlawyered brings us the bizarre story of the week, about a sham arbitration agreed to as part of sexual harassment settlement. All hell is breaking lose now that the plaintiff and the arbitrator are refusing to participate.

Religious accommodation for prayer becomes hot issue

As I've written before, Title VII requires employers to reasonably accommodate an employee whose sincerely held religious belief, practice, or observance conflicts with a work requirement, unless doing so would pose an undue hardship. Recently, the issue of accommodating employee’s prayer at work has gotten a lot attention. Articles in both the USA Today and the Wall Street Journal recount stories of Muslim employees whose employers refused to permit time at work to accommodate daily prayer.

The following table, courtesy of the EEOC and the USA Today, illustrates the rise of religious discrimination claims brought by Muslims, in the last 10 years, and especially after Sept. 11:

Year	Muslim	Jewish	Catholic	Protestant
1998	285	276	118	159
1999	282	287	101	171
2000	284	282	134	178
2001	330	294	143	210
2002	720	317	118	204
2003	598	260	145	241
2004	504	275	135	228
2005	507	281	122	206
2006	594	282	118	233
2007	607	287	177	258

 

Two facts stick out from this table: religious bias claims are way up across the board, and claims brought by Muslim employees lead the pack by an eye-popping margin. Before you knee-jerk prohibit Muslim (or other) employees from praying at work, consider these numbers, what real effect five minutes of prayer will have on your organization, and whether you want to be defending the bona fides of that effect at the EEOC or in court.

President Obama

A lot of ink has been spilled already, with tons more to come, about just how truly historic last night was. Given our country’s history, one cannot overstate the importance of the first African-American President. When you drill down a little deeper, however, President Obama will serve as a symbol of something potentially deeper. Will President Obama mean the end of affirmative action? Consider what happened. An African-American man, raised by a single mother, succeeded to the most important position in the world. Is it still credible for minorities to say that historic racism and biases makes it impossible for them to compete for jobs, and that the playing field needs to be leveled by quotas and preferences? Last night may prove to be the final leveling of the playing field and the functional end of affirmative action.

Only time will tell if we truly find ourselves in a post-racial era. What we know as we wake up this morning and start to absorb what happened yesterday is that if have not reached that mark, we have taken a giant step in its direction.

Do you know? The Pregnancy Discrimination Act at 30

Do you know? The Pregnancy Discrimination Act turned 30 years old last week. The PDA outlawed employment discrimination on the basis of “pregnancy, childbirth, or related medical conditions” as unlawful sex discrimination. It does not require that employers give pregnant women preferential treatment (that, after all, would discriminate against men), but it does mandate that pregnant women be treated as would any employee with a similarly disabling temporary condition. Yet, despite being ingrained into our way of thinking that pregnancy discrimination is wrong, the number of claims filed with the EEOC continue to rise. In 2007, pregnancy discrimination filings with the EEOC hit an all-time high of 5,587 (source: Time Magazine).

According to a study published by the National Partnership for Women & Families, the number of claims might actually be higher, as women may under-report pregnancy discrimination out of fear of causing long-term career damage. Who knows if this conjecture is true. What is true, however, is that employees, regardless of gender, have the right to have a career and a family and not be punished for the choice. The sooner businesses recognize this undercurrent of potential bias the sooner they can put measures in place to prevent pregnancy discrimination from becoming a potential problem area.

Court sanctions employee for perjury

I can’t tell you how many times I’ve had a client ask me, “I thought perjury is illegal. How can she lie during her deposition like that?” Well, perjury is illegal, but unless your name is Barry Bonds, it’s a crime that is usually not worth the scarce governmental resources it takes to prosecute it. Negrete v. Nat’l Railroad Pass (7th Cir. 10/27/08), decided last week by the 7th Circuit, illustrates that dishonest conduct in litigation has real implications.

In Negrete, the 7th Circuit affirmed the trial court’s dismissal of an employee’s workplace injury claim because he had missed repeated discovery deadlines, hidden and tampered with evidence, and lied in his deposition. Negrete was a former track repair worker for Amtrak. After the hurt his back at work, he claimed that the injury had left him permanently disabled and unable to work. The two key issues in the case were how badly Negrete was injured, and whether he was still able to work.

Negrete’s missteps included:

• Producing only 12 pages out of a 236-page medical report, which omitted a key medical opinion that he was able to work.
• Turning over documents that appeared to have been tampered with.
• Lying about his current sources of income.
• Lying about the extent of physical labor he performed on owned rental property.

Based on this misconduct, the Court concluded as follows:

True, Negrete often produced documents directly contradicting his deposition testimony, but that does not prove, as his lawyer claims, that his false testimony was inadvertent; it shows only that Negrete is a poor liar. Given Negrete’s repeated misconduct, it would have been hard to reach any conclusion other than that he was acting in bad faith.

Negrete also argues that the sanction of dismissal was too harsh because he is uneducated and lied only about collateral issues. But Negrete’s misconduct related to the most important issues of the case—how badly he was injured and whether he was able to work. And although Negrete may not be well educated, it does not take a graduate degree to understand that it is unacceptable to hide evidence and lie in a deposition.

This case should serve as a warning to all litigants, plaintiffs and defendants, that judges’ tolerance for shenanigans and dishonesty in discovery is getting lower and lower. Hiding evidence and lying will never help a case. Credibility is everything with judges and juries. One of our jobs as lawyers is to spin bad facts in the best light for our clients. We cannot do that, however, unless all of the facts are out on the table.