Author Archives: Holland & Hart

June 6, 2011

Newspaper Loses Arbitration Argument, but Can Hold Employee to His Word

By Jude Biggs

Introduction

Unionized employees file grievances when they believe their employer has not followed the collective bargaining agreement (CBA”); usually such an employee argues the employer did not have “just cause” to discipline, demote, or fire him. If the grievance is not decided in favor of the employee, the employee can take the grievance to arbitration. In most cases, however, union employees need not grieve or arbitrate their statutory discrimination claims; they still have a right outside of the CBA to claim discrimination, just as a non-union employee does, so they can still litigate the claim in court. In 2009, the Supreme Court muddied the waters and said some CBAs may be worded clearly enough that a union employee may only arbitrate a discrimination or retaliation claim through the CBA process. Since then, courts have attempted to sort out just what “clearly enough” means. Courts have also struggled with what to do when an employee says he is disabled when he applies for social security benefits, but then claims he was qualified for a job and should be allowed to sue for discrimination. The following case is the latest word from the Tenth Circuit on both of these issues.

Background

John Mathews, a unionized employee of the Denver Newspaper Agency (the “Agency”), worked for the Agency from 1983 through 2005. At the time his claims arose, he was a Unit Supervisor (but still a union employee). In June 2005, a female employee complained that Mathews had made inappropriate comments; Mathews was placed on paid leave while the complaint was investigated. Once the investigation was completed, the union filed a grievance against Mathews on behalf of the complaining employee, and the Agency demoted him from his Unit Supervisor position on July 1, 2005. That same day, Mathews obtained a doctor’s note saying he could not return to work for medical reasons.

Mathews was originally from southern India. He filed a grievance against the Agency, claiming his demotion was due to his national origin and it violated the union contract’s anti-discrimination provision. He also claimed he was demoted in retaliation for complaints of race, color, and national origin discrimination that he had made in May and June of 2005. He later amended the grievance to remove any reference to a violation of anti-discrimination statutes, but he still claimed he was “discriminated” against when he was demoted. Under the CBA, Mathews could choose to arbitrate his grievance or litigate it in court; in this case, he chose to pursue arbitration. The arbitrator held a 4-day evidentiary hearing on the claims and ruled against Mathews. Mathews then filed a claim for disability benefits with the Social Security Administration (“SSA”), alleging complete and total disability beginning on June 11, 2005 (the date of the alleged comments that led to his demotion).

Mathews filed a lawsuit in district court, claiming he had been discriminated and retaliated against, in violation of Title VII of the Civil Rights Act and §1981 (another civil rights statute that prohibits race discrimination). The district judge ruled Mathews’s decision to arbitrate his claims prevented him from doing so again in court; in other words, he could not have two bites at the apple. In addition, the judge ruled that Mathews’s statement to the SSA that he was totally disabled and unable to work prevented him from claiming he could still do the job he held before. Hence, he was “judicially estopped” or prevented from maintaining a claim for discrimination, as he could not prove he was qualified for the job. Mathews then appealed to the Tenth Circuit.

The Tenth Circuit Says Mathews Gets Two Bites at the Apple

The Tenth Circuit looked first at when a union employee is limited to bringing a statutory discrimination claim under the arbitration procedure in a CBA, and when a union employee may file the discrimination claim under the CBA (if he wishes) and also in court. The Tenth Circuit explained that, based on a 2009 Supreme Court decision (Penn Plaza v. Pyett, 129 S. Ct. 1456 (2009)), a CBA may be worded in such a way as to be the exclusive remedy for claims based on anti-discrimination and anti-retaliation statutes. However, normally, a union employee has both contractual rights under the CBA and statutory rights not to be discriminated or retaliated against. The CBA preempts statutory rights only when the CBA expressly says that statutory claims are to be arbitrated under the CBA. In Mathews’s case, the CBA did say the company and union would not discriminate “in accordance with and as required by applicable state and federal laws.” That language, to the Tenth Circuit, meant only that the company and union agreed discriminatory conduct could violate both the CBA and anti-discrimination statutes; it did not mean submitting a claim of discrimination to arbitration waived the right to sue in court. In addition, Mathews had amended his initial grievance to delete any reference to statutory claims. As a result, the Tenth Circuit held the CBA arbitration process was not Mathews’s exclusive remedy and Mathews could also sue in court.

But the Tenth Circuit Says Mathews Can’t Have It Both Ways

The Tenth Circuit then turned to Mathews’s claim that he could be totally disabled for purposes of getting social security disability benefits but not disabled for purposes of claiming he could still do his job. The Tenth Circuit pointed out that Mathews had to prove he could do the job before he could prove he was discriminated against. Mathews admitted he could not do the job anymore, but blamed the company for his disability. Since the company caused his disability, he argued, it should not escape liability. The Tenth Circuit did not buy his arguments.

In reaching that conclusion, the Tenth Circuit confirmed that, just because an employee claims to be disabled for purposes of gaining social security disability benefits, he is not necessarily estopped (or prevented) from saying he was qualified for a job in a subsequent lawsuit. However, such an employee must explain why he has taken inconsistent positions.

Looking at the medical evidence, the Tenth Circuit saw that Mathews had persuaded the social security judge that he was disabled due to a bulging disc of the cervical spine and an affective disorder as of June 11, 2005. In the discrimination case, he claimed “to the best of his recollection,” his disabling depression occurred after the Agency placed him on administrative leave on June 17, 2005. The two positions were entirely inconsistent, and he made no effort to explain the discrepancy. Mathews’s inconsistent statement to the SSA gave him the benefit of significant disability payments, and allowing him to recover for a lawsuit based on inconsistent statements would give him an unfair advantage. As a result, the Tenth Circuit concluded that the district judge had not abused his discretion by concluding Mathews could not establish a claim of discriminatory demotion.

Retaliatory Demotion Claim Still Survives

The court then reviewed whether Mathews could still sue for retaliatory demotion. Since that claim was not waived in the arbitration process, the court looked at the evidence supporting such a claim, and concluded a jury might rule in Mathews’s favor. The record showed Mathews was placed on leave on June 17, 2005, but he had made complaints to his supervisors on May 31 and sometime after June 17 but before his July 1 demotion. Given that timing, it was possible a jury might conclude the demotion was due to his complaints. As a result, the court remanded the case for further proceedings on the retaliatory demotion claim.

Lessons Learned

The Mathews case teaches union employers in Colorado (and other states within the Tenth Circuit’s reach) that, if they want employees’ statutory discrimination claims to be resolved only through the arbitration process under the CBA, the CBA must say clearly that the arbitrator has the exclusive authority to hear statutory claims. It also helps if the employee says in the grievance that he believes the conduct he is complaining about violates the CBA and anti-discrimination statutes. To avoid the Mathews result, union employers may consider negotiating provisions in their CBAs stating not only that the arbitrator has exclusive authority to hear statutory claims, but also that any general claim of “discrimination” will be deemed both a contract and statutory violation. That may often be impractical, given the dynamics of negotiations, but it may work with some unions.

For more information on this case or arbitration law in general, please contact Jude Biggs at jbiggs@hollandhart.com.

This article is posted with permission from Colorado Employment Law Letter, which is published by M. Lee Smith Publishers LLC. For more information, go to www.hrhero.com.

May 3, 2011

EEOC files suit against retailer alleging retaliation

The EEOC announced last Thursday that it was filing suit against a large retailer under Title VII. The EEOC complained that retailer retaliated against an employee when she heeded mandatory evacuation warnings. According to the EEOC, the retailer terminated the employee for "excessive absenteeism." The case will now proceed in federal court. Whether or not the EEOC can prevail in its suit remains to be seen.

The lesson for employers is that the EEOC is paying close attention to claims of retaliation by employees and is filing suit when it believes that employers have retaliated against employees for engaging in protected activity. Employers should tread carefully in this area, as the costs of defending a suit can be significant, as can the negative publicity that can result from an EEOC enforcement action. In recent days, the EEOC has announced settlements of retaliation claims totaling thousands of dollars. In addition, some of the settlements have involved mandatory training for all company personnel and other policy changes. Employers are well advised to train their management team on these issues to ensure that all key personnel understand the importance of disconnecting complaints about protected activity from employment decisions about that individual.

March 21, 2011

YOU JUST MIGHT FIND . . . YOU GET WHAT YOU NEED – A PRACTICAL GUIDE TO FINDING AND MANAGING DISABILITY ACCOMMODATIONS

By John M. Husband and Bradford J. Williams

After two decades of fairly predictable defense verdicts premised upon threshold coverage issues under the Americans with Disabilities Act (“ADA”), the Americans with Disabilities Amendments Act of 2008 (“ADAAA”) has upended the playing field. With the ADAAA, proposed regulations, and emergent case law now defining “disability” into virtual irrelevance, the battleground for disability discrimination claims has shifted to the issues of: (1) “qualified individual” with a disability; (2) “reasonable accommodation” and “undue hardship;” and (3) the motivation behind challenged employment actions.

A recent paper prepared for the American Bar Association’s 4th Annual Section of Labor & Employment Law Conference by Holland & Hart attorneys John M. Husband and Bradford J. Williams outlines the nature and scope of the ADA’s coverage and protections; surveys changes made by the ADAAA, proposed regulations, and emergent case law; and describes innovative methods employers are using to facilitate the interactive process. The paper also highlights specific coverage and accommodation issues arising in the context of mental impairments.

To read the paper, please visit: http://www.hollandhart.com/articles/YouJustMightFindYouGetWhatYouNeed.pdf.

For more information about the authors, please visit: John Husband or Bradford J. Williams

March 16, 2011

Hiring Mistakes

Over the years, I have heard a familiar theme from clients who face lawsuits filed by former employees. Many have expressed to me that the biggest mistake made was hiring the employee in the first place. While this may be a true expression of a client's feelings, usually there are a lot of mistakes that were made during the tenure of the employee. Nevertheless, I have looked at the hiring process in a number of cases. I believe with greater focus, a business can increase the likelihood of success in hiring by being aware of certain mistakes. Recently, my colleague Joe Neguse and I did a webinar for HospitalityLawyer.com. An article summarizing that presentation, authored by Patrick Mayock from HotelNewsNow.com, can be found by following this link: http://www.hotelnewsnow.com/Articles.aspx/5150/9-hotel-hiring-mistakes-and-how-to-avoid-them

For more information, feel free to reach out to me Steven M. Gutierrez or Joseph D. Neguse

March 16, 2011

Holland & Hart Attorneys Gutierrez and Neguse Featured on HotelNewsNow.com

Holland & Hart attorneys Steven Gutierrez and Joseph Neguse recently presented at a webinar sponsored by Hospitalitylawyer.com regarding mistakes made in the hiring process by the hotel industry.

A summary of their presentation is featured in an article written by Patrick Maycock on the website HotelNewsNow.com. A link to the article is available by clicking on 9 hotel hiring mistakes (and how to avoid them). Although the presentation focused on the hotel industry, we believe that the hiring mistakes featured in Mr. Maycock's article are applicable to employers in any industry.

More information about Holland & Hart's labor and employment group is available here.

March 4, 2011

Avoiding Policy or Reimbursement Liability for Unemployment Benefits

by A. Dean Bennett

To determine whether a former employee is eligible for unemployment benefits, the State of Idaho applies the “standard of behavior test.” Under this test, an employer can contest a former employee’s claim to unemployment benefits if it can show: “(1) the employee’s conduct fell below the standard of behavior expected by the employer; and (2) the employer’s expectations were objectively reasonable under the circumstances.”

But practically, how does the State apply the test, and how can employers make sure that under-performing employees do not continue to cost the employer money—even after being terminated? The Idaho Supreme Court recently addressed the standard, and gave employers some helpful guidance. See Adams v. Aspen Water, Inc., No. 36501, 2011 WL 322362 (Idaho Feb. 3, 2011).

The Court hurried past the first prong of the test, labeling it “subjective.” Whether an employee’s conduct falls below the standard of behavior expected by an employer is determined only by what the employer expected of the employee. Were the “standard of behavior test” limited to the first prong, no employer would ever lose a case contesting a claim for unemployment benefits.

The second prong of the test, however, is objective. Whether the employer’s expectations were objectively reasonable under the circumstances will likely turn on whether the employer communicated its expectations to the employee. The Court noted that it will sometimes recognize uncommunicated expectations as reasonable if they “flow naturally from the employment relationship.” But the safer route, and the route that will avoid protracted litigation and the associated costs, is for the employer to expressly communicate its expectations to the employee.

As with most liability-limiting advice—get it in writing. The best way to communicate employer expectations is through a written job description and/or an employment policy manual setting forth expectations for employee conduct. If an employee fails to meet the written expectations, the employer will be in a position to quickly and effectively contest an unemployment claim.

February 2, 2011

February 3: Beyond the Basics in Employment Law

On February 3, Anthony Hall, Dean Bennett, and I will be co-presenting at an employment law seminar in Boise. The seminar is called "Beyond the Basics in Employment Law" and is intended to update human resources professionals, business owners, and employment attorneys on the recent developments in this area of the law.

We will be presenting on wage and hour issues, including classification issues, pitfalls in the use of independent contractors, compensability issues for employees working on or off the clock, and other timely topics of significance to this area of the law.

In a separate session, we'll discuss new regulations applicable to the FMLA and the forthcoming regulations under the ADA Amendments Act of 2008. As we mentioned in a previous post, those regulations will likely be implemented soon.

The seminar will be held at the Doubletree Hotel, 2900 Chinden, Boise, Idaho beginning at 8:30 a.m. We hope you join us. Same-day registration is available.

January 26, 2011

Precedent Regarding the Scope of Workplace Internet Posting Policies Delayed

by A. Dean Bennett

Employers may have to wait for another case for precedent regarding workplace internet posting policies. In October 2010, the NLRB filed a complaint against the American Medical Response of Connecticut, Inc., after the company fired an employee who made disparaging comments on Facebook about her workplace and boss.

The Complaint alleged violation of Section 7 of the National Labor Relations Act that protects workers’ rights to “self-organization, to form, join or assist labor organizations, to bargain collectively through representation of their own choosing and to engage in other concerted activities for the purpose of collective bargaining of other mutual aid protection.”

At issue in that case was an employer’s policy, which stated “Employees are prohibited from making disparaging, discriminatory or defamatory comments when discussing the Company or the employee’s superiors, coworkers and/or competitors.”

Many commentators expected the new, more employee friendly NLRB, to conclude that such a broad policy was unlawful because it prohibits protected speech. But today, the parties to that case called off a hearing and appear to be engaged in settlement talks.

It might be time to revisit your workplace internet posting policies. Is your policy so broad that it prohibits discussion about wages and working conditions? If so, your policy may be unlawful. Although a court has not expressly decided the issue, plaintiffs’ counsel are on notice that the argument and legal theory has some traction.

January 22, 2011

Understanding the Idaho Trade Secrets Act and its Relevance to Former Employees

by Nicole C. Snyder

It is often concerning when an employee is discharged or quits her job and goes to work for a competitor. In the absence of a non-competition agreement, the former employer may claim that the employee has stolen trade secrets and used them in her new job.

Idaho has adopted the Uniform Trade Secrets Act, codified under Idaho Code § 48-801, et seq. The Act prohibits the misappropriation of “trade secrets,” defined as:

[I]nformation, including a formula, pattern, compilation, program, computer program, device, method, technique, or process, that:

(a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

(b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy… .

If an employer claims a former employee has violated the Trade Secrets Act, is the claim likely to succeed?

Maybe. It is important for employers to recognize that there are significant limitations on the protections against former employers under the Trade Secrets Act. In a very recent case, Wesco Autobody Supply, Inc. v Ernest, the Idaho Supreme Court recited this language from a prior decision:

[T]he legislature did not intend the [Idaho Trade Secrets Act] to be read so broadly as to preclude the hiring of an employee from a competitor; the legislature also did not intend that merely hiring a competitor's employee constitutes acquiring a trade secret.” Instead, “[a]n employee will naturally take with her to a new company the skills, training, and knowledge she has acquired from her time with her previous employer. This basic transfer of information cannot be stopped, unless an employee is not allowed to pursue her livelihood by changing employers.

In the Wesco case, the Court found it was possible that one employee violated the Trade Secrets Act when the employee took and used the former employee’s customer lists, lists showing customer buying preferences, history of customer purchases, and custom paint formulas. The Court, however, was unwilling to say that other employees had violated the Trade Secrets Act based merely on the fact that their customer relationships caused the customers to follow the former employees to a new employer.

In sum, if a company’s leadership is worried about the risk of employees working for a competitor and using the knowledge and relationships they built for a competitor’s advantage, then reliance on the Idaho Trade Secrets Act may be inadequate. In such cases, it is important to utilize carefully-crafted noncompetition agreements.