I. WAGE AND HOUR

Meaty Settlement. A $3.1 million verdict was reached in a class action lawsuit filed against Tyson Fresh Meats, Inc. for violations of the Fair Labor Standards Act (FLSA). The plaintiffs, employees of the company's plant in Washington, alleged they were not compensated for time spent putting on and taking off mandatory safety gear for their jobs. As a result, the employees sought back pay for the time not compensated.

Ignorance Of The Law Is No Excuse ... Unless You're A Plaintiff. While not all courts agree, an Illinois District Court, purportedly relying on a Seventh Circuit case, held that a plaintiff who claims to not be aware of any overtime requirement was excused from the statute of limitations because his employer had failed to post the required notice of employee overtime rights.

A class action lawsuit against a landscaping employer and its owner was filed. An ex-employee of the company, who had been terminated three years and 30 days before, sought to join the class action suit. He was met by a defense that the statute of limitations (three years for willful violations) had run on any claim he might have had by the mere passage of time. The court held that the burden was on the former employee "to conclusively demonstrate an exception to the statute of limitations." The court noted that federal regulations require covered employers to "post and keep posted a notice explaining the (wage and hour laws) ... in conspicuous places in every establishment where such employees are employed so as to permit them to observe readily a copy." The prescribed notice emphasizes the right to time and a half pay for overtime and advises that employees should contact the nearest Wage and Hour Division office for additional information.

The court reasoned: "Mandating that employers post a notice informing employees of their rights only makes sense; if employees generally know their rights or have a duty to learn those rights on their own, notice would be superfluous. An employer who fails to post the required notice is at least partly to blame for the employee's ignorance. The penalty ... is that the statute of limitations period does not begin to run until an employee becomes aware of his rights. To this extent, the rule shifts the cost of delay due to legal ignorance from the employee to the employer. Do you have the required notices posted?

II. TITLE VII

Shades Of Color. The Civil Rights Act of 1964 has always prohibited discrimination by an employer against an employee based upon his "race, color, religion, sex, or national origin." Of the statutory mandates, "color" violations have historically been the least alleged and least litigated. Over the last few years, there seems to be a slight increase in claims (and findings) of discrimination based upon an employee's skin color. Two recent cases show that unlawful discrimination occurs within the same racial and/or ethnic group. A nationwide restaurant chain recently settled a claim where a light-skinned African American manager regularly made "offensive and embarrassing comments about the dark skin color of" one of his darker skinned waiters. There was an agreed economic penalty of $40,000 for the humiliation to the waiter and a requirement that the restaurant specifically add to its policies a prohibition against skin color discrimination and that it include this subject in the training sessions for its managers. Around the time this was occurring, a New York federal judge permitted the continuation of a lawsuit that was claiming skin color discrimination where a darker skinned manager had teased a lighter skinned employee that she was a "white wannabe." One of the lessons learned from these cases is that employers need to flesh out in their training programs that skin tone harassment and/or discrimination is a clear violation of company policy and is potentially a violation of law which could subject the company to costly litigation.

III. COBRA

Qualify For What? An employee worked for an employer that served as both the sponsor and administrator of its group health plan. When the plant closed where the employee worked, the employee entered into a severance agreement with her employer which included limited health benefits as long as she worked continuously through a certain date.

Prior to the plant's closing, the employee became hospitalized due to a long-term illness. The HR department wrote a letter to her stating that the employer had decided to retroactively separate her from her employment as of the date she left for her illness. Furthermore, the employer provided the employee with the required COBRA forms. As a result, if the employee desired to retain her insurance she would need to complete the forms if she wished to keep her health insurance.

The employee never elected COBRA coverage. Therefore, her health coverage was terminated. The employee alleged that she did not know of the termination of coverage until after the time limit expired. When she was informed that her coverage was terminated, her husband contacted the employer requesting a copy of the letter previously provided.

Sadly, the employee later died and her husband sued the employer and the group insurer on her behalf. The husband alleged that the letter did not meet the requirements of a COBRA notice. After reviewing the letter, the Third Circuit determined that it did not adequately define the term qualifying event. According to the court, "It is highly unlikely that a layperson would understand the meaning of the term ‘qualifying event' without any explanation of that term."

As a result, the employer was found liable for the employee's health costs for failing to provide her with the required COBRA notification.

IV. FMLA

If You Snooze You Lose … Well, Maybe Not Your Job. An appeals court in the Seventh Circuit recently reinstated an employee who slept and read on his job for approximately two weeks and did not attend a meeting. The court found that the employee was entitled to reinstatement under the FMLA because, as a model employee for four years, his unusual behavior was itself notice of a serious health condition. The court also held that even if the change in behavior was not enough to alert the employer of the employee's need for medical leave, notice was unnecessary in this case because the employee, suffering from major depression, was unable to inform his employer and request leave.

Early in November 1998, the employer became aware that the employee, an engineer who worked the night shift, frequented the carpenter's shop and would sleep. To investigate further, the employer installed a camera in the carpenter's shop, which showed the employee spending hours of his shift sleeping or reading. On the day the employer planned to discuss this behavior with the employee, the employee left work early telling a co-worker that he was not feeling well and would be out for the remainder of the week. The next day the employer attempted to reach the employee at home and was told by the employee's sisters that he was "very sick." The employer finally had a conversation with the employee, in which he agreed to attend a meeting the following day. However, the employee did not attend the meeting and was terminated for misconduct.

Shortly thereafter, the employee's psychiatrist uncovered that the employee was "hiding" in the carpenter's shack and that he was unable to regulate his sleep cycle due to his depression. Also, the employee was hallucinating, attempting suicide, and suffering panic attacks. After two months of medical treatment, the employee returned to work; however, the employer would not reinstate him. The employee then filed a suit under the ADA and FMLA. The appeals court held that the employee did not have a claim under the ADA, but he did have a viable claim under the FMLA. The court disagreed with the district court's ruling that even though the employer discovered after his termination the employee was suffering major depression, the employer was justified in discharging the employee for sleeping on the job for ten days. Instead, the appeals court concluded that since the employee's final two weeks of employment should have been treated as medical leave rather than misconduct and the employee was able to resume working before the 12 weeks of FMLA leave expired, the employee should be reinstated.

Arbitrating The FMLA? The Seventh Circuit recently issued an opinion that all employers with collective bargaining agreements ought to be aware. In the case, the employer and the union entered into a collective bargaining agreement (CBA). In 1995, the parties jointly executed a Memorandum of Understanding that set forth and incorporated into the CBA an absenteeism policy that was very detailed. The policy assessed points based on absenteeism or tardiness issues and when an employee accumulates a certain amount of points, they are terminated.

The basic concept behind the policy is that employees are expected to be on time to work every scheduled workday. The reasons for absences should be limited to those of a necessary and compelling nature. Absences of a necessary and compelling nature were defined as "those involving an emergent situation that required urgent action on the part of the employee and that was beyond the control of the employee and a reasonable alternative to work did not exist."

In October of 1999, the employer notified one if its employees that she had three or more non-compelling absences. As a result, the employer told the employee that for a six-month period absences will only be approved if they qualify under the FMLA, fall within the sick leave provisions of the CBA or are clearly an emergency.

The employee missed three days over the next three months. The employee missed one day to care for her husband whose hand was injured in a fight, one day to stay home with her sick son, and one day to stay home with her other son. When the employee missed another day, the company terminated her after a disciplinary hearing. Of course, the union fought the termination.

After considering the arguments, the arbitrator ruled that each of the absences was a qualified absence under the FMLA. Accordingly, those absences should not be held against the employee and her termination was unsupported by just cause. The arbitrator ordered her reinstated with half back pay. However, the district court found that the arbitrator acted outside his contractual authority when he interpreted the FMLA.

On appeal, the appellate court held that an arbitrator's authority extended to interpreting the FMLA, as well as the CBA between the parties. The court held that the CBA gave the arbitrator the authority to take the FMLA into account and consider whether the absences were FMLA absences. The court also looked to the fact both parties, during the original arbitration, were willing to allow the arbitrator to decide the FMLA issue. As a result, it is possible that arbitrators may soon begin interpreting the FMLA, one of the more difficult labor and employment laws to interpret.

V. ADA

Think About It.

The United States Court of Appeals for the Tenth Circuit recently held that an employee with bipolar disorder, attention deficit disorder (ADD), and hypothyroidism was not disabled under the Americans with Disabilities Act (ADA) because she failed to show that these impairments substantially affected major life activities. The court rejected the former employee's contention that her impairments substantially affected the major life activities of concentrating, interacting with others, and communicating. The court noted that bipolar disorder, ADD, and hypothyroidism could constitute disabilities under the ADA and that communicating with others is a major life activity. However, the former employee did not demonstrate that she had difficulty communicating with others. There was only one instance where she left a phone message for her supervisor in which her speech was slurred and difficult to understand. But, aside from this isolated incident, the court held there was no evidence showing the former employee had trouble speaking to others or that others had difficulty understanding her.

The court then noted that there was a split of authority on whether interacting with others is a major life activity for the purposes of the ADA. Therefore, the court simply decided that even assuming interacting with others is a major life activity, the former employee did not demonstrate that her interaction with others was substantially affected by her impairments. There was no question that the former employee had problems interacting with several of her co-workers, but the court found no evidence tending to show she had problems interacting with people in general on a regular basis. She played softball and volleyball on organized teams, was in a group at work that collected Beanie Babies, babysat, attended football games, was active in her local college alumni association, and had a boyfriend on and off for a number of years.

Although the appeals court left open the possibility that interacting with others could constitute a major life activity for the purposes of the ADA, it definitively concluded that concentrating is not a major life activity in and of itself.

Job Related Still OK. There have been a lot of recent cases explaining what questions an employer can ask a job applicant about his or her medical condition. The Fifth Circuit clarified the situation slightly.

An applicant with extensive experience as a pipefitter applied for a pipefitter position. The applicant had a history of injuries to his left knee. The applicant, however, had never been unable to physically perform any job due to his injury, nor h ad a physician ever placed him on work restriction due to this injury.

The applicant was given a conditional offer of employment, which was dependent upon his completing and passing a physical capacity evaluation and a drug screening test performed by a third-party testing service. During the physical exam, the employee was asked to complete a series of physical tests, including a test that measured the applicant's ability to lift 100 pounds unassisted. Unfortunately, the applicant could only lift 92 pounds. As a result, the applicant was not hired by the employer.

The Fifth Circuit held that the rejected applicant could not show that the employer's lifting capacity test violated the ADA provisions regarding pre-employment medical inquiries. The Fifth Circuit held that the employee failed to rebut the employer's evidence that the 100-pound lifting requirement was job related.

Rehire Policy May Need To Be Rehabilitated. Many employers note on termination notices whether or not an employee is eligible for rehire. Many of those employers also have policies which provide that employees who are discharged for cause, or who resign to avoid discharge due to drug or alcohol abuse, will not be eligible for rehire. Problem?? Could be, stay tuned.

The U.S. Supreme Court heard arguments on October 8, 2003, on a case in which the Ninth Circuit held that a policy which denied rehire for an employee who had resigned in lieu of being discharged, when the employee tested positive for cocaine, violated the ADA. The former employee had been working for the company for 25 years and had problems with alcohol prior to failing the drug test. The ADA does not protect individuals who are current users of drugs or alcohol. However, the ADA specifically recognizes that recovering addicts are "persons with a disability." When the former employee reapplied for a position with his ex-employer, his application was rejected under its policy of not rehiring any individual who had resigned in lieu of being discharged. The Ninth Circuit held that the employer's "neutral on its face" policy of not rehiring former employees who had resigned in lieu of being discharged had the effect of discriminating against recovering addicts who had resigned in lieu of being discharged due to failing a drug test. The Ninth Circuit also concluded the employer could not get off the hook by showing that the individual who disqualified the former employee from consideration for rehire was not aware of the reason for the former employee having resigned in lieu of being discharged. The court reasoned that even though the individual could not have intentionally discriminated against the former employee, the "neutral on its face" policy did discriminate when applied to former employees whose employment was terminated due to failing a drug test and who thereafter became recovering addicts.

While we do not recommend changing your rehire policy at the moment, keep tuned to find out what the Supreme Court says.

VI. THE SAFETY ACT

Employers who install or implement new products or procedures intended to prevent and/or fight terrorism may be entitled to some additional protections under the SAFETY ("Support Anti-Terrorism by Fostering Effective Technologies") Act of 2002. While designed for the sellers of anti-terrorism technology, it is also applicable to employers that develop and implement new security procedures.

The SAFETY Act has the following beneficial components for anti-terrorism technologies deployed or used in response to a terrorist act:

• Provides exclusive jurisdiction in federal court for suits against developers and sellers of "qualified anti-terrorism technologies;"

• Limits the liability of sellers of qualified anti-terrorism technologies to an amount of liability insurance coverage specified for each individual technology, provided that developers or sellers will not be required to obtain any more liability insurance coverage than is reasonably available "at prices and terms that will not reasonably distort the sales price" of the technology.

• Prohibits joint and several liability for non-economic damages, so developers and sellers can only be liable for that percentage of non-economic damages proportionate to their responsibility for the harm;

• Bars punitive damages and prejudgment interest;

• Reduces plaintiffs' recovery by amounts plaintiffs received from "collateral sources," such as insurance benefits and other government benefits; and

• Provides a rebuttable presumption that the developer or seller is entitled to the "government contractor defense," provided that its "Qualified Anti-Terrorism Technology" is certified by Department of Homeland Security "DHS" as an "Approved Product for Homeland Security."

The July 11, 2003, proposed regulations outline the suggested application for a technology to become qualified. A separate and more detailed application is required for certification as an "Approved Product for Homeland Security." Both applications remain in the comment process and neither is final. In the interim, the DHS has established a website that invites the submission of technologies for its consideration and provides Q&As related to the SAFETY Act. This site can be accessed at http://www.safetyact.gov./

We recently affiliated, in an "of counsel" role, with Bryant S. Banes. Bryant was previously a trial and appellate attorney with the U.S. Department of Justice, Commercial Litigation/National Courts Branch in Washington, D.C. While there, Bryant's practice focused upon contract dispute and labor issues relating to government contracts. Bryant is working with us and our clients who have special government contract issues, such as how to obtain contracts, defending against claims of the government, and how to resolve issues and present claims arising during performance of those contracts. If you have any questions about the SAFETY Act, specifically, about whether or how your company can become qualified for the Act's protection, or about any government contract issues, call us and we'll get your problem handled.

VII. LABOR ARBITRATION

Group Hug Anyone?

A female employee complained of being sexually harassed by a male co-worker after he wrapped his arms around her. The male employee admitted that he was trying to give the female employee an unsolicited hug. The employer terminated him for his behavior. However, the arbitrator decided that the termination was too severe of a punishment for the employee because he could have reasonably believed that hugging other employees without invitation was acceptable behavior in the workplace. One may wonder how could that be?

The employer allowed employees in a production area to set up a "hug station," where employees would gather and engage in communal hugs. In one part of the production area, there was an imitation clock entitled, in bold letters, "Hug Station Clock," which at the top stated "[t]he Hug Station Will Open Again At." Between the sign, which said "Hug Station" and the hug clock, a figure of a partially dressed woman was posted. The arbitrator found that the production area employees had an established practice of group hugging and that even the Human Resources Manager on one or more occasions participated in the group hugs. Also, despite the existence of a policy prohibiting sexual harassment, no formal program of employee training regarding the implementation of that policy was ever carried out prior to the employee's discharge. According to the arbitrator, the fact that the employer condoned the "hugging station" and did very little to impress upon employees the seriousness of sexual harassment, the "employer permitted an atmosphere to develop that could lead to impermissible activities, like sexual harassment." Therefore, the arbitrator believed that it was unfair for the employer to terminate a 26-year employee with an impeccable record for conduct that it was willing to tolerate. The arbitrator reduced the discharge to a 30-day suspension and prohibited the employee from going near the co-worker without the explicit direction of his supervisor.

VIII. NLRB

Union Organizational Activity Since Our Last Newsletter. Five petitions for certification have been filed by unions. Two petitions for decertification have been filed by management. One decertification election was held and the Union fought off decertification. Seven certification elections have been held, of which management won two.

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The Quarterly Update is a newsletter providing recent items of interest to our clients in the various areas of employment law. While the Update is to alert you to potential new problem areas or changes in the law, it is not to be considered legal advice or a legal opinion. Such can only be given after careful consideration of the facts unique to any situation. The contents of this newsletter are copyrighted and may not be used without express written consent of Neel & Hooper, P.C.

** Neel & Hooper, P.C. is a member of WORKLAW Network.  WORKLAW Network is comprised of independent law firms that devote their entire practice to representing management in all facets of labor and employment law.  Formerly known as LABNET, the network was founded in 1989 to provide employers with access to high quality law firms throughout the U.S. specializing in labor and employment law matters.

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Member firms are linked by e-mail and share a computerized database containing research memoranda, briefs, election campaign materials and other pooled resources, allowing for more efficient representation of clients.  All WORKLAW Network firms represent employers in employment litigation and labor relations.  Several firms also represent employees in employee benefits and workers’ compensation.