I. FMLA

Not What The Doctor Ordered. An employee was diagnosed with severe sleep apnea. The same day she received her FMLA paperwork from her employer, she provided it to her doctor. The doctor's staff assured the employee that once the doctor completed the paperwork, they would forward it to the employer. On a weekly basis, the employee checked with the doctor's office to verify whether the paperwork had been returned to her employer. She begged and pleaded with the doctor's staff to turn in the paperwork to her employer.

After waiting a substantial time to receive this paperwork, the employer terminated the employee for job abandonment since her absences were now un-excused. The day after she was terminated, the employer received the FMLA certification from her doctor. Despite this certification, the employer stood by its termination. The employee brought suit alleging that the employer denied her FMLA rights and retaliated against her for attempting to exercise those rights. The employer argued the employee was not on FMLA leave because the proper paperwork was turned in too late and thus the employee did not comply with the requirements of the FMLA regarding certification.

However, the district court rejected this argument. The district court took note that the FMLA has several provisions built into it which excuse "technical" non-compliance with the act if a diligent good faith effort was shown. The court held the employee showed a diligent good faith effort when she made weekly contact with the doctor's office regarding the completion of her FMLA certification paperwork. Accordingly, the employer's motion for summary judgment was denied.

II. TEXAS WORKERS' COMPENSATION

More Is Not Always Better – At Least Not For Texas Employees. Recently the Texas Supreme Court decided whether a worker may have more than one employer for purposes of the "exclusive remedy" provision of the Texas Workers' Compensation Act (TWCA). Why is this important? Well, it just may save an employer a lot of money and worry, since a company classified as an employer under the TWCA that obtains workers' compensation coverage limits its injured employees recovery to that provided by the insurance policy.

A temporary staffing agency hired employees to furnish to industrial clients. The agency provided supervisors at the client's facility who monitored arrival and departure times, and instructed its workers about lunch hours and breaks. The agency also withheld its workers' FICA, paid Social Security taxes, and provided workers' compensation insurance.

An employee was injured while working for the industrial client who controlled her specific tasks, assigned her to machinery work, and maintained the machinery.

The injured employee applied for workers' compensation with the staffing agency's carriers, but subsequently sued the agency and the industrial client, claiming negligence in failing to properly train her, warn her of damages, and provide her with a safe workplace. The trial court granted the agency's summary judgment motion because the TWCA's exclusive remedy provision barred the worker's claims since the agency was her employer or co-employer. The court of appeals affirmed in part and reversed in part.

The Texas Supreme Court found unpersuasive the employee's argument that the industrial client who controlled the details of her work was her sole employer. The court noted that the TWCA's decided bias in favor of employers electing to provide coverage for their employees supports the conclusion that the TWCA permits more than one employer for workers' compensation purposes. The court held in favor of the staffing agency applying the logic that the fact the industrial client controlled the employee's activities, and this was an employer within the meaning of the act, does not preclude the applicability of the TWCA's provision, including the exclusive remedy to both the staffing agency and the industrial client.

Although most employees frown on the thought of having more than one boss, the Texas Supreme Court has now made it clear that a worker can have more than one employer for purposes of the exclusive remedy provision of the TWCA.

III. ADA

Doctor, (Which) Doctor Give Me The News. As you may recall, we previously advised you of the decision of the U.S. Supreme Court in Chevron U.S.A., Inc. v. Echazabal. In that case, the Court reversed the Ninth Circuit Court of Appeals' holding that an employer could not justify its refusal to hire or terminate an employee who had high liver enzyme levels because the danger posed was only to the employee (and not to others) due to continued exposure to the chemicals at the plant. The Court rejected that narrow limitation of the "direct threat" defense and followed in the EEOC's regulations which defined "direct threat" to include risk to one's self.

On remand, the Ninth Circuit latched onto the wording of the EEOC regulations, and again reversed the district court's grant of summary judgment to Chevron. The Ninth Circuit concluded that issues of fact remained to be tried by a jury regarding whether or not Chevron had relied on the "most current medical knowledge and/or the best available evidence" and whether Chevron had properly considered the four relevant factors (duration of risk; nature and severity of the potential harm; likelihood potential harm will occur; and the imminence of the potential harm) in determining that Echazabal posed a direct threat of harm to himself.

The Ninth Circuit discounted the two medical opinions Chevron had relied upon because one was a generalist and the other specialized in preventive medicine and neither had a particular expertise in liver ailments. The Ninth Circuit concluded that the better medical evidence reflected that elevated liver enzyme levels did not disclose damage to the liver or liver function, but only reflected an infection being present. The doctors hired by Echazabal's attorney had testified that the proper test of determining liver function reflected that Echazabal's liver was functioning properly. The Ninth Circuit pointed out that the experts used by the plaintiff were experts in liver ailments and that the jury could elect to credit their testimony over the doctors selected by Chevron and determine that Chevron had failed to utilize the most current medical knowledge available in determining that Echazabal posed a direct threat to himself.

So that you won't believe this kind of justice is reserved for the left coast, remember in an earlier issue we reported a similar ruling in which a magistrate judge here in Houston held that a bus company had violated the Americans with Disabilities Act (ADA) in relying upon the medical opinion of its doctor when the doctor refused to issue a DOT certification to an obese prospective bus driver. The magistrate judge held that both the doctor and the bus company had improperly perceived the driver applicant to be disabled and that a medical specialist should have been hired. It seems when dealing with the ADA a doctor's advice may not be the best prescription and employers who rely solely upon the opinion of the first doctor they encounter may have to take the medicine.

IV. BIG MONEY JUDGMENTS

Zest Fully Clean. One would think Dial Corp. and, in particular, its soap making facility, would be clean of any grimy discrimination. However, Dial and the EEOC recently settled a lawsuit when the company agreed to pay $10 million to settle the claims of nearly 100 women who alleged that they were sexually harassed while working at the soap making facility. The EEOC's suit alleged that the class of 100 women was routinely subjected to unwanted touching, verbal abuse, and sexual threats from male co-workers. The suit also alleged that Dial allowed this conduct to continue over a 13-year period, despite its knowledge of this illegal behavior.

The case settled on the eve of trial as both sides were weary of the jury's verdict cleaning out the coffers of the company. According to the EEOC's regional attorney, it was one of the ten largest settlements ever reached by the EEOC. As with most settlements with the EEOC, Dial continued to deny any failures in its personnel or HR policies. As any company who has had a lawsuit can attest, Dial's attorney said the case reached the point where Dial settled purely as a business decision.

The Smoke Clears. With the general nationwide backlash against smokers, several employers have gone through the process of establishing smoke-free work environments along with specific designated areas (usually in the exterior of the building) where smoking was allowed. It turns out this was great foresight by employers.

In New York a state court awarded $5.2 million to an employee who claimed they were harmed from workplace smoke. When the employee originally interviewed with the company she informed them that she had asthma and if she was to accept the position some accommodation would need to be made for her asthma. In particular, she was worried about the pervasiveness of the smoking culture at the company, a fashion-model agency.

Even though she received assurances from her supervisors that they would enact some restrictions on the employees' smoking, it continued for several weeks. All the while, the employee's respiratory health continued to deteriorate. Rather than change the smoking policy, the company assigned the new employee to a lower level position so that she could "learn the business." Unfortunately for the employee, the smoking continued at her new position.

If the smoke wasn't bad enough for the employee's asthma, the employee began to suffer harassment from the employees who smoked. The employee claimed the employees who smoked loaded her top desk drawer with packs of matches and attached a silver lighter to her phone with rubber band.

After several weeks, the employee went to the doctor with complaints that she was coughing up blood. The doctor quickly sent a letter stating the employee needed a workplace that was smoke-free. Shortly after the company's receipt of the letter, the employee was constructively discharged from her position. For those unaware, constructive discharge is when an employer makes an employee's work conditions so unbearable they have no choice but to quit their position.

On top of the doctor's letter and the relatively quick constructive discharge, the employer formally discharged the employee shortly after she wrote a letter wherein she stated she needed time to consult her attorney. In the formal discharge letter, the employer cited her health problems and her poor interpersonal skills (which, of course, had not been documented).

The plaintiff sued for violations of the state and city human rights laws (the NY equivalent to the TCHRA). The jury found that the employer had failed to accommodate the employee's asthma, subjected her to a hostile work environment and terminated her in retaliation for her complaints. As a result, they ordered a whopping $5.2 million verdict.

If You Don't Document The File, It's Going To Hurt You At Trial. The Houston Chronicle recently reported that a jury in Matagorda County awarded a former employee $612,000 after finding the company retaliated against him for filing a workers' compensation claim. The employee, who worked for the plant for the past 32 years, began having trouble with his hearing. Thinking that his hearing problem was caused by the excessive noise at the plant, the employee was tested. The medical tests indicated the hearing loss was indeed caused by the excessive noise at the plant. The company denied this claim and then fired the employee after the employee unloaded the wrong chemical into a tank.

The company contended that the employee was on a "phase three termination warning." According to the employer, if the employee made another error, like loading the wrong chemical, it would result in termination. According to the attorney involved in the case, the company could not produce any notes, which should have been in the employee's personnel file, documenting these earlier warnings. Proper documentation of an employee's discipline leading up to termination is an important lesson for all employers.

V. TITLE VII UPDATE

Legally Blonde. As many of you know Title VII prevents an employer from discriminating against an employee on the basis of sex, race, national origin, ethnicity, color, religion and gender, among others. Blonde hair is not one of the categories protected under Title VII. Duh. That did not stop an employee from bringing suit though.

In her lawsuit, the employee alleged that her supervisor had embarrassed her in front of other workers and humiliated her. She alleged her supervisor continually made derogatory remarks about her hair color, ethnicity and religion. Specifically, the super-visor told several of those notorious blonde jokes.

As a result of this horribly inappropriate conduct (that we all have probably done), the employee filed a charge with the EEOC. Later she sued her employer in federal court where she alleged that she was discriminated against, retaliated against and suffered a hostile work environment when she was not given a performance bonus and denied a pay increase.

Fortunately for the employer, the district court granted summary judgment. The court found that even though the comments made by the supervisor were disparaging, unprofessional and in poor taste, they did not add up to an actionable claim under Title VII for sexual harassment. The comments might have been immature teasing or taunting, but they were not sufficiently severe enough or prolonged enough to alter the employee's work environment.

With regard to her allegations that she was discriminated against because she was blonde, the court noted, "Being blonde is not a protected group under Title VII." (I guess blonde is not a color.) Of course, the employer was required to expend substantial attorneys' fees acquiring summary judgment in the lawsuit just so the employee could learn this lesson. Then again, she was blonde. The moral of the story is don't hire any dumb blondes.

When Not Reporting Harassment Is Irrelevant. As mentioned in the last newsletter, two 1998 Supreme Court cases referred to as Ellerth and Faragher established the standards under which an employer may be held vicariously liable for the sexual harassment of an employee, which led to a tangible employment action by a "supervisor" under Title VII. An often overlooked portion of these cases occurs when the alleged harasser is such a high ranking official that the company is vicariously liable for his actions regardless of whether the company took any tangible employment action.

The Fifth Circuit explored this issue in a recent case. Several employees of a television station were subjected to a constant barrage of sexual harassment by the president/general manager of the station. Multiple employees complained that he asked them out on dates, and even went so far as to forcibly kiss an employee without her consent. The human resource manager requested that all new employees be warned about the president's flirtatious behavior. Despite this knowledge, he continued to attempt to kiss, hug and grope employees and instructed them not to tell anyone about his actions.

One new employee must not have received the memo regarding the president. The new employee entered into a sexual relationship with this alleged harasser. The president believed the relationship was consensual. However, the employee testified that she acquiesced to his advances only after she was unable to prevent him from forcing himself on her physically. The new employee was frightened of losing her job. She was once again instructed by the president not to tell anyone. As a result, she never reported the actions of the alleged harasser. After considering leaving her position for a higher paying job, she immediately received raises for which the president took credit.

Since the employee never filed a complaint regarding the harassment and did not suffer a tangible employment action such as a demotion or termination, the employer attempted to argue that it should not be liable for the actions of the president. As soon as some of this conduct was reported, the Board of Directors immediately terminated the alleged harasser.

The court held that, despite the fact some of the employees did not report the alleged harassment, since the president was such a high ranking official he served as a proxy for the corporation. As a result, the company would be vicariously liable for the alleged harasser's conduct despite the fact the employer never took a tangible employment action against any of the employees.

VI. FLSA

When Is An Ex-Employee Still An Employee. An employee brought an action under the Fair Labor Standards Act (FLSA) alleging that her employer failed to pay her overtime. The employee worked as a security guard and shortly after her lawsuit was filed, her employer lost the contract to provide security services at the location where she worked. As a result, the employee put in her two-week notice and sought employment with the new employer who was taking over the contract.

Her old employer called up the employee's prospective employer and informed it that she had filed suit for back wages.

As a result of these phone calls, the employee brought suit for retaliation. The employee claims that these phone calls negatively affected her new employer's opinion of her. Furthermore, her new supervisor did not appear to believe her side of the story and she was ultimately terminated. In addition, the employee claims to have not worked in the security industry for several months after she lost her new job. She also claimed that she suffered severe emotional distress and depression, was required to take tranquilizers to help her cope, and could not sleep.

The employer quickly moved for summary judgment on several grounds including the fact that the employee should lose her claim of retaliation as she did not suffer an "adverse employment action." The employer argued that merely calling up her new employer and informing it of the facts was not retaliatory nor did it have an adverse impact on the employee. The employee argued that the calls themselves were adverse employment actions and the burden then shifted to the employer to provide a legitimate non-discriminatory reason for its actions.

The court held that this case was analogous to the "tainted employment" reference cases. Therefore, the fact that the calls to her new employer caused the employee anxiety, potentially affected her employer's view of her, and caused her new employer not to believe her side of the story was sufficient to state a prima facie case of retaliation under the FLSA. According to the court, former employees, just like present employees, need protection from discrimination by an employer that is resentful of a complaint filed against it. Included in that protection is a prohibition against your old employer from contacting your new employer and informing it of the lawsuit you filed against your old employer.

Here's A Tip: Be Careful How The Gratuities Are Handled. Lawsuits alleging violation of the Fair Labor Standards Act are becoming more prevalent right here in Houston. A whole cottage industry of law firms soliciting potential class members to sue their employers for not paying overtime to certain classifications or for having corrupted tip pools are in vogue. An employer in New York with a history replete of violating the law finally filed bankruptcy. The now bankrupt employer had injunctions issued against it preventing it from continuing with the way it implemented its tip pool. Its assets were bought by two of its managers. Obviously not having learned any lessons from the lawsuits that were filed against the old company, the employer created a tip pool where the waiters were required to share their tips with each other, with the busboys and with the "black jackets," the managers of the restaurant.

Several employees brought suit. The new employer attempted to argue that its "black jackets" should receive tips regardless of whether they were members of management as they performed traditional service functions, such as seating customers, delivering food and clearing tables. The court disagreed with the employer and granted summary judgment with regard to the tip pool. Unfortunately, the new employer was now filing for bankruptcy protection.

VII. BEFORE THE NLRB

Guess What? Asking A Relevant Question In A Lawsuit Can Be An Unfair Labor Practice. An employee working for Guess? Inc. was injured on the job and filed a workers' compensation claim. An attorney for the workers' compensation carrier representing Guess? took the deposition of the employee about the injury and its effect on her mobility. She had been videotaped by an investigator showing her lack of any impairment after the incident. She was asked at the deposition if she had seen the video and she replied that she had seen it at the union hall with the union attorney. Further questions were asked about her frequency of going to the union hall and what activities she engaged in at the union hall. Other questions were asked about what other employees of the employer were at the union hall who might have seen her activities at the hall. The trial judge found that the attorney had no illegal objective in his questions and the questions were relevant to the ultimate fact issues. The NLRB agreed but reversed the trial judge who had found no violation because even though both the questioning was "lacking an illegal objective and was relevant, the analysis must then consider whether the Respondent's need for the information outweighs the employees' rights under Section 7 of the Act ..." The Board in a 2-1 decision, which is now on appeal, weighed the employee's confidentiality interests under Section 7 of the Act against the employer's need to defend itself in the lawsuit and held that Section 7 rights prevailed in this case and the employer violated the Act by the attorney's questions.

Union Organizational Activity Since Our Last Newsletter. Eight petitions for certification have been filed by unions. Three petitions for decertification have been filed by management. No decertification elections have been held since our last report. Three 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.