Category Archives: Wyoming

April 3, 2015

Presidential Veto Quashes Congressional Attempt to Overturn NLRB “Quickie” Election Rules

On March 31, 2015, President Obama vetoed a joint resolution passed by both houses of Congress that sought to overturn the National Labor Relations Board’s (NLRB’s) rules designed to speed up the union election process. Scheduled to go into effect on April 14, 2015, these so-called “quickie” or “ambush” election rules significantly shorten the period of time between a petition for a union election and a vote.

History of “Quickie” Election Rules

The “quickie” election rules have a tortured history. First proposed in June 2011, the rules faced immediate and severe criticism that led to a watered-down version of the rules being adopted in December 2011. These watered-down rules went briefly into effect in April 2012, but were quickly invalidated by a federal court just two weeks later. The court ruled that the Board had lacked a statutorily mandated quorum when it voted to adopt the rules.

Notably, the federal court also stated that nothing prevented a properly constituted quorum of the Board from voting to re-adopt the rules in the future. That is exactly what the Board did in February 2014. It re-proposed its original rules, and subsequently adopted the rules in December 2014. The new rules are slated to become effective on April 14th.

Legal Challenges Continue

Despite Congress’s ill-fated attempt to block the rules under the Congressional Review Act, the rules still face potential hurdles. For instance, the U.S. Chamber of Commerce filed a lawsuit in the District of Columbia in January 2015 seeking to vacate the rules and enjoin their enforcement. Business groups in Texas filed a similar lawsuit in January 2015. These lawsuits allege numerous reasons why the rules should be invalidated, including alleged violations of the National Labor Relations Act and Congressional intent, alleged violations of the First Amendment and due process protections, and arbitrary and capricious rulemaking under the Administrative Procedure Act. However, the lawsuits will take time to wind through the courts, and their chances of success are uncertain.

Anticipated Effects of Rules

Barring any unexpected injunction before April 14th, employers should anticipate big changes from the new rules. The rules will shorten the period of time between a petition for a union election and a vote to perhaps fifteen or fewer days (as opposed to the five or more weeks under current practice). The rules are expected to boost organizing activity as unions attempt to increase their membership – and dues-generated revenue – through “ambush” elections. The compressed timeline between a petition and vote will limit employers’ ability to fully explain the pros and cons of union representation before an election, and limit employees’ ability to cast an informed vote. To retain flexibility in dealing directly with their employees, employers should be ready at the first hint of union organizing to educate their employees about the desirability of union representation. Advance preparation, and a properly orchestrated counter-organizational campaign, will be key.

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March 30, 2015

Drafting Employee Handbook Policies That Pass NLRB Muster

By Brian Mumaugh

All employers, union and non-union alike, should think about making a thorough review of their employee handbook and policies in light of a recent report on employer workplace rules by the National Labor Relations Board’s (NLRB’s) General Counsel, Richard Griffin. In his report, Griffin describes a variety of employment policies that the Board has found unlawful and offers the Board’s reasoning as to why. He also points out acceptable policies and explains what wording or context made that policy lawful. The bottom line: a single word or phrase can, in this Board’s view, make the difference between an acceptable policy or one that violates the National Labor Relations Act (NLRA).

Overly Broad Handbook Policies Can Chill Employees’ Rights

The Board has long taken the position that even neutrally worded employment policies can violate the NLRA if they have a chilling effect on the right of employees to engage in protected concerted activities. These activities, referred to as Section 7 activities, include discussing wages, benefits, and other terms and conditions of employment with other employees and with outside parties, such as government agencies, union representatives and the news media.

In his March 18th Report, GC Griffin explains that the majority of policies found by the Board to violate the NLRA, were unlawful because employees could reasonably construe the language of the rule as prohibiting or infringing on Section 7 activities. Consequently, many well-intentioned, seemingly common-sense policies prove problematic for employers due to their possible interpretation as limiting an employee’s right to discuss their pay or working conditions with others.

Handbook Policies That Result in Violations

The report sets out eight categories of work rules that frequently violate the NLRA and then distinguishes between unacceptable and acceptable language for such rules. The categories and the unlawful aspects of each may be summarized as follows:

Confidentiality Policies: may not prohibit employees from discussing their wages, hours, workplace complaints or other personal information; prohibiting the disclosure of the company’s confidential information may be acceptable;
Employee Conduct Toward the Company and Supervisors: may not prohibit employees from engaging in negative, disrespectful or rude behavior or other conduct that may harm the company’s business or reputation; prohibiting employees from disparaging the company’s products, or requiring employees to be respectful to customers, vendors and competitors will typically be acceptable;
Conduct Toward Fellow Employees: may not prohibit “all” negative, derogatory, insulting or inappropriate comments between employees as that may interfere with the employees’ right to argue and debate with each other about management, unions and the terms and conditions of their employment; requiring employees to treat each other professionally and with respect as well as banning harassing and discriminatory conduct will typically be lawful;
Interactions with Third Parties: may not completely ban employees from talking to the media or government agencies; a policy noting that employees are not authorized to speak on behalf of the company without authorization may be considered lawful;
Restricting the Use of Company Logos, Copyrights and Trademarks: may not prohibit all use of company logos and intellectual property because the NLRB upholds employees’ right to use company names, logos and trademarks on picket signs, leaflets and other protest materials; policies that require employees to respect all copyright and intellectual property laws is acceptable;
Restricting Photos and Recordings: may not ban employees from taking pictures or making recordings on company property; a policy may limit the scope of such a prohibition depending on a competing protective right (such as a healthcare facility protecting patient privacy by limiting photos of patients);
Restrictions on Leaving Work: because employees have the right to go on strike, a policy that prohibits employees from “walking off the job” will be unlawful; policies stating that failure to report for a scheduled shift or leaving early without permission as grounds for discipline may be acceptable; and
Conflict-of-Interest Policies: policy may not ban any activity “that is not in the company’s best interest;” policies that give examples of what constitutes a conflict-of-interest, such as having a financial or ownership interest in a customer, supplier or competitor, or exploiting one’s position for personal gain will likely be lawful.

Few Bright Lines for Lawful Policies

The report goes on to offer analysis of additional policies dealing with topics such as handbook disclosure, social media and employee conduct related to a particular employer who agreed to revise their policies as part of a settlement agreement with the NLRB. You may have similar policies in your handbook, making it worthwhile to read what policy language the Board considers problematic and what may pass muster. The takeaway, however, is that the lawfulness of many policies may turn on a single word or phrase. At the present time, it is unclear whether GC Griffin’s report will withstand legal challenge. The best advice is that given the report and its contents, it is important to take time to review your handbook and compare your wording to the examples provided in the report. Although the report is not a legally binding interpretation of the NLRA, it can help you make an informed decision about the risks involved in including certain provisions in your employee handbook.

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March 26, 2015

Supreme Court: Pregnant Worker With Lifting Restrictions May Continue Lawsuit

By Jude Biggs

In a divided decision, on March 25, 2015, the U.S. Supreme Court released a long-awaited ruling involving a pregnant worker’s claim under the Pregnancy Discrimination Act (PDA). In its ruling, the Court held that the worker could proceed with her lawsuit, because disputes remain as to whether her employer treated more favorably at least some non-pregnant employees whose situation could not reasonably be distinguished from hers.

The majority of the Court forcefully rejected the 2014 guidance of the Equal Employment Opportunity Commission (EEOC) concerning the application of Title VII and the Americans with Disabilities Act (ADA) to the PDA, as it fell short on a number of fronts needed to “give it power to persuade.” Without ruling for either party, the Court adopted a new standard for courts to use when deciding PDA cases brought under a disparate treatment theory. Young v. UPS, 575 U.S. ___ (2015).

Despite the Court’s guidance, employers still will face many questions on what accommodations will be required in the future. The standards for “disparate treatment” and “disparate impact” cases may be more confusing in the future for employers who need to make decisions regarding whether and how to accommodate pregnant employees. As a result, employers are wise to respond carefully to accommodation requests by pregnant workers. Employers should review any policies that might have a disproportionate effect on pregnant workers, such as rules limiting job accommodations. In addition, employers should be careful to review restrictions on use of sick pay/sick time, leave eligibility outside of FMLA, lifting restrictions, and light duty assignments to determine: (1) if they disparately affect pregnant employees while accommodating others; and (2) what “strong” business rationale you can offer to defend the distinction.

For additional analysis of the Court's opinion and what it means for employers, please see our full article here.

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March 23, 2015

FMLA and FLSA Lawsuits Are Increasing

By Mark Wiletsky

The U.S. federal courts saw a whopping 26.3 percent increase in the number of Family and Medical Leave Act (FMLA) lawsuits filed last year over the prior fiscal year, according to statistics recently released by the Administrative Office of the U.S. Courts. Wage and hour lawsuits alleging a violation of the Fair Labor Standards Act (FLSA) were up a significant 8.8 percent. These filings are the highest they’ve been in the past 20 years of annual statistics reported by the courts.

The increasing numbers of lawsuits brought under those two employment laws may reflect how difficult it is to understand and administer wage and hour and leave laws. The increase also may be due to the heightened awareness by workers of their rights and benefits under these laws. Regardless of the cause of the increase, the numbers suggest that it is worthwhile for employers to focus their compliance efforts in these two areas.

Self-Audit Your Pay and Leave Practices

Before you find yourself defending a lawsuit, take the time to review your payroll and FMLA policies and practices, including these often tricky issues:

Classifying workers as exempt versus non-exempt from minimum wage and overtime pay requirements
Calculating each non-exempt employee’s regular rate of pay and overtime rate
Rounding time at the beginning and end of shifts
Automatic deductions for meal periods
Treating workers as independent contractors rather than employees
Tracking time worked remotely or “off-the-clock”
Providing FMLA notices within required time period
Calculating FMLA leave for workers with irregular schedules
Administering intermittent FMLA leave
Not penalizing employees who have taken FMLA leave

If your self-audit reveals any irregularities, take steps to revise your policies and practices to bring them into compliance with the applicable laws. Don’t forget state and local laws that may impose additional requirements related to pay and leave administration. If in doubt, don’t hesitate to consult with your legal counsel so that you don’t become one of next year’s statistics.

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March 12, 2015

EEOC Strategic Enforcement Priorities: More Insight from Denver’s Director (Part Two)

By Jude Biggs

As we wrote last week, John Lowrie, the new director of the EEOC’s Denver Field Office, recently offered insight into the agency’s national Strategic Enforcement Plan (SEP) and how his office will approach those enforcement goals. Here is the second article in the series exploring the third and fourth priorities in the EEOC’s SEP.

Priority #3 – Developing Issues

Field Director Lowrie explained the EEOC and its individual field offices are working to advance a number of developing issues. These include:

Reasonable ADA accommodations – one example is telecommuting, where an employee’s physical presence at the company is not an essential job function. The EEOC has successfully pursued this in a case against the Ford Motor Company but the case is being reexamined by the full Sixth Circuit Court of Appeals so may not stand.
Pregnancy discrimination – Mr. Lowrie discussed the lengthy Pregnancy Discrimination Act (PDA) enforcement guidance issued last July. The guidance document contains many hypothetical situations that the agency deems would violate the PDA as well as a section on employer best practices.
Title VII accommodations – Mr. Lowrie pointed to the Abercrombie & Fitch religious accommodation case which is currently before the U.S. Supreme Court as an example of how the agency looks to ensure employers make reasonable accommodations for characteristics protected by Title VII. At issue in the Abercrombie case is whether a Muslim job applicant who wore a headscarf to her job interview and was denied employment was required to request a reasonable accommodation on religious grounds in light of the company’s “look policy” which would not have permitted wearing the headscarf at work.

Priority #4 – Equal Pay Act

The fourth priority in the EEOC’s SEP is enforcement of the Equal Pay Act (EPA). Mr. Lowrie noted that Jenny Yang, who was appointed as the EEOC’s new chairperson last September, had made a recent visit to the Denver field office during which she specifically mentioned EPA issues to the Denver investigators and staff. Because equal pay issues are high on the Chair’s agenda, charges involving allegations of unequal pay based on gender will receive additional attention by EEOC investigators and attorneys.

Mr. Lowrie also noted that Wyoming is the worst state in the nation for pay disparity issues. Because the Denver field office has jurisdiction over Wyoming (as well as Colorado), the Denver field office may look to change Wyoming’s poor ranking through vigilant enforcement of equal pay charges that come into its office.

Steps to Avoid Additional Scrutiny

Because the EEOC is giving priority status to these types of charges, you need to take time to review your compliance efforts related to these issues. First, take a look at your reasonable accommodation process. Have you trained your managers and supervisors to recognize when an accommodation is being requested? Do you engage in an interactive process with the applicants and employees who make accommodation requests? Be certain to document your interactive process and all accommodations decisions you make. Second, review your policies as they relate to pregnant employees. Make sure that you do not treat pregnancy less favorably than other medical conditions and consider possible ADA accommodations if circumstances so warrant. Third, audit your pay grades and compensation structure to make sure that you are paying workers doing the same work equally, regardless of gender.

Next Installment Will Focus on Final Two EEOC Priorities

In the next and final article in this series, we will offer insight into the last two of the EEOC’s strategic priorities. Both are areas in which the EEOC has vigorously sued employers whose policies and practices it deems are discriminatory, so stay tuned.

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March 9, 2015

DOL May Issue Interpretations of FLSA Exemptions Without Notice-and-Comment Process

By Mark Wiletsky

Today the Supreme Court sided with the U.S. Department of Labor (DOL), holding that a federal agency’s interpretive rules are exempt from notice-and-comment rulemaking procedures. Perez v. Mortgage Bankers Ass’n, 575 U.S. ___ (2015). The Court’s decision means that the DOL (and other federal agencies) may issue initial and amended interpretive rules without advance notice and without considering input from interested parties.

DOL “Flip-Flopped” on Interpretive FLSA Rule

In this case, the Mortgage Bankers Association (MBA) challenged the DOL’s most recent interpretation on whether loan officers fell within the Fair Labor Standards Act (FLSA) administrative exemption following a series of “flip-flops” in the DOL’s interpretation. In 1999 and 2001, the DOL issued opinion letters stating that mortgage-loan officers do not qualify for the administrative exemption to overtime pay requirements. After new regulations regarding the exemption were issued in 2004, the MBA requested a new interpretation under the revised regulations. In 2006, the DOL issued an opinion letter in which it changed its position, deciding that mortgage-loan officers do qualify for the administrative exemption. In 2010, however, the DOL changed its interpretation again when it withdrew the 2006 opinion letter and issued an Administrator’s Interpretation without notice or comment stating that loan officers once again do not fall within the administrative exemption.

The MBA sued the DOL, claiming that the DOL needed to use the notice-and-comment process established by the Administrative Procedure Act (APA) when it planned to issue a new interpretation of a regulation that differs significantly from its prior interpretation.

Distinction Between Legislative Rules and Interpretive Rules

In a unanimous decision, the U.S. Supreme Court ruled that the text of the APA specifically excludes interpretive rules from the notice-and-comment process, so the DOL was free to change its interpretation on loan officers qualifying for the administrative exemption without providing advance notice or seeking public comment first. The Court pointed to the difference between “legislative rules” that have the force and effect of law, which must go through the notice-and-comment period, and “interpretive rules” that do not have the force and effect of law and, therefore, are not subject to the notice-and-comment obligation.

Finding that the clear text of the APA exempted interpretive rules from the notice-and-comment process, the Court overruled prior precedent in a line of cases that has come to be known as the Paralyzed Veterans doctrine. Under that doctrine, if an agency had given its regulation a definitive interpretation, the agency needed to use the APA’s notice-and-comment process before issuing a significantly revised interpretation. The Court’s ruling today specifies that no notice or comment process is needed for interpretive rules, whether it is an initial interpretation or a subsequently revised one.

Implications of Court’s Decision

Today’s ruling means that the DOL’s interpretation excluding mortgage-loan officers from the administrative exemption stands. More broadly, it means that federal agencies, such as the DOL, are permitted to issue and amend interpretations of their regulations that will take effect immediately without any advance notice to the regulated parties. Accordingly, employers should stay on top of new developments so as not to miss any new regulatory interpretations that may impact their employment practices.

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February 23, 2015

Exempt Employee Salary Deductions for a Reduced Schedule

By Brad Cave

Classifying an employee as exempt under the Fair Labor Standards Act (FLSA) comes with a trade-off. Most employers know that exempt employees are not entitled to overtime. But, in exchange for that benefit, the FLSA limits employers’ ability to reduce the exempt employee’s salary, even when they are not coming to work. However, exempt employees are not immune from needing time off of work to recover from a medical condition, to settle an aging parent into an assisting living arrangement or to handle a long-term behavioral issue with a child. If an employee seeks some time off each week to take care of such matters, you may agree to allow the employee to work a reduced work schedule for a period of time. But when payday rolls around, must you pay the employee his or her full weekly salary or can you deduct pay to reflect the reduced work schedule? Missing this answer can have significant ramifications for the employee’s exempt status.

FLSA Salary Basis

Under the Fair Labor Standards Act, exempt employees’ pay must meet the salary basis test, which means that the employee must receive a predetermined amount of salary for each workweek, without reductions because of variations in the quality or quantity of work during the week. Thus, deductions from salary for reduced working hours is generally not permitted under the salary basis test. Deducting pay for the missed time could result in the loss of the employee’s exempt status. However, two exceptions may apply to your employee.

FMLA Leave Can Result in Pay Deduction

If the employee’s reduced schedule constitutes unpaid leave under the Family and Medical Leave Act (FMLA), the FLSA regulations permit employers to “pay a proportionate part of the full salary for time actually worked” without risk to the exempt status. This means that if your employee is missing work for an FMLA-qualifying reason, you may deduct pay from their weekly salary to reflect the unpaid FMLA leave time.

PTO, Sick Leave or Other Paid Leaves

If the employee has accrued PTO, sick leave or another type of company-provided paid leave, you can require that the employee use such paid leave to cover the partial day absences, as long as the employee continues to receive the full amount of their weekly salary. And, once the employee uses up all of their accrued paid leave, you can make salary deductions for full-day, but not partial-day, absences.

Saved Wages Vs. Loss of Exempt Status

Deductions from an exempt employee’s salary should be made only after careful consideration of the potential consequences. After all, the salary you save now for missed time may seem trivial if you lose the exempt status of this and all similarly-situated employees and owe them overtime for the past two years.

October 28, 2014

Defeating Micro-Units: Employer Strategies to Challenge Smaller Bargaining Units

By Brian Mumaugh

Unions are organizing smaller segments of an entire workforce in order to get their foot in the door and keep organizing efforts alive. The National Labor Relations Board (NLRB or Board) has approved so-called micro-units, setting employers up for difficult battles over appropriate bargaining units in the future. Employers should think about the possibility of seeing a micro-unit proposed in their workforce—and how to avoid them.

Unions Can More Easily Win Representation For Smaller Groups

As unions press to increase their membership in the United States, unions are looking for new ways to organize workers and remain relevant. Organizing large workforces requires unions to expend significant resources – money, personnel and time – to collect signatures from at least 30% of the proposed bargaining unit to trigger an election (some unions want to see upwards of 70% signing authorization cards before petitioning for an election). Then additional resources are needed to get out the vote to ensure a majority of votes cast are in favor of the union. Large organizing campaigns also give the company time to mount an anti-union campaign.

Organizing micro-units, however, can be done relatively quickly, cheaply and often without much response from the company. Think about it – organizing a unit of 30 workers in a single department may need only one or two union organizers to persuade the 15 to 20 employees needed to win the organizing campaign. Before you know it, you’ve got a segment of your workforce represented by a third party with whom you must collectively bargain. This can lead to multiple micro-units at your company represented by different unions and the headaches multiply.

Parameters For Micro-Units Are Evolving

The NLRB has discretion in representation cases to determine the appropriate bargaining unit, whether an employer unit, craft unit, plant unit or subdivision thereof, pursuant to section 9(b) of the NLRA. Although decided on a case-by-case basis, the main, long-standing factor for determining an appropriate unit was the “community of interest” of the employees involved. In 2011, however, the Board significantly changed that analysis in a case called Specialty Healthcare, allowing the unit petitioned-for by the union to govern except in those situations where the employer can establish by “overwhelming evidence” that the requested unit is inappropriate. This new approach places a high burden on employers who wish to challenge the make-up of the unit proposed by the union.

In recent months, the Board has decided a couple of micro-unit cases that offer some guidance on what it takes to challenge a micro-unit. In a case involving a Macy’s Department store in Massachusetts, the Board deemed appropriate a micro-unit made up of only cosmetics and fragrances employees at the store. Macy’s Inc., 361 NLRB No. 4 (July 22, 2014). The store argued that the unit was too narrow and that the appropriate unit in a retail store context is a “wall-to-wall unit” or, alternatively, all selling employees at the store. The Board did not agree. It concluded that the cosmetics and fragrances employees were a readily identifiable group that shared a community of interest not shared by other store employees. Factors weighing in favor of the micro-unit included the fact that the cosmetics and fragrances employees were in the same department and were supervised by the same managers. In addition, there was little regular contact between the cosmetics and fragrances employees and other store employees. The NLRB found that Macy’s had not met the high burden of showing that other employees should be included in the unit because they did not share an “overwhelming community of interest.”

Coming to the opposite conclusion, however, the Board rejected a micro-unit of sales associates who sold shoes at the Manhattan Bergdorf Goodman store. The union had petitioned for the unit to be made up of 35 women’s shoes sales associates in the Salon shoes department (high end designer shoes) and 11 women’s Contemporary shoes sales associates in the Contemporary Sportswear department (modestly priced shoes). The Board concluded the proposed unit was inappropriate because the two shoe departments were located on separate floors, did not share the same supervisors and managers, did not have any cross-over or interchange between employees and did not have much contact with employees in other departments storewide. The Neiman Marcus Group, Inc. d/b/a Bergdorf Goodman, 361 NLRB No. 11 (July 28, 2014).

Strategies for Attacking Micro-Units

The Macy’s and Bergdorf Goodman cases offer some guidance to help employers avoid union organizing of micro-units. Strategies to consider now, before a union organizing campaign begins, include:

Combining departments or job classifications that share skills or tasks
Cross-training and cross-utilizing workers across departments, classifications or locations
Allowing for promotional and transfer opportunities across department and organizational lines
Revising supervisory and managerial structures so that more employees report to the same managers
Maintaining pay and bonus structures common to all employees or for all in a larger unit.

Micro-units can be a game-changer when it comes to union organizing so employers have to change their own tactics to combat such bargaining units. Taking time now to change organizational and reporting structures can go a long way in overcoming a proposed micro-unit in the future.

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September 23, 2014

Cheyenne Jury Awards $1,481,000+ On FMLA Retaliation Claim

By Brad Cave

The series of large verdicts for Wyoming employees seems to be marching forward. The most recent example occurred recently when a Cheyenne jury awarded over $740,000 to a trona miner after deciding that he was fired because he took FMLA leave. With liquidated damages available in an FMLA case, the Wyoming court entered judgment in an amount in excess of $1.48 million in favor of the employee. This case stands as yet another example about the importance of supervisor training and careful, well-documented and consistent decision making.

Long Term Employee With A Pain in the Neck. We first told you about this case in March of this year, when the Tenth Circuit Court of Appeals sent the case back to Wyoming for trial after reversing the trial court’s dismissal of the case. (Safety Violation or Too Much Intermittent FMLA Leave?). Here is a short recap of the facts.

Steven Smothers had been employed by Solvay Chemical for 18 years when his employment was terminated. Smothers had experienced back problems since 1994 resulting in three surgeries on his neck and other medical procedures, and an extended course of medical treatment by specialists. Over the years, Smothers took intermittent FMLA leave for his medical appointments and when he was unable to work due to the pain. The amount of FMLA leave he took did not go unnoticed. He was pressured by the production superintendent to change shifts to lessen the additional overtime cost caused by his absences, but such a change would have cost him about $7,000 per year in shift differential pay. Solvay also gave Smothers a negative rating on his performance evaluation because of his absences, and he was told that he was rejected for a promotion because of the leave.

Smothers’ Safety Rule Violation. In August 2008, Smothers and his coworkers were performing an acid wash, which Solvay did every six months to clean residual trona out of the equipment. When Smothers noticed that a damaged spool piece had caused a leak, he began to fix it without obtaining a line break permit which was required by Solvay safety rules. Smothers and a co-worker, Mahaffey, argued about whether the permit was necessary, and after Smothers removed the spool piece without first getting the permit, Mahaffey immediately reported Smothers’ actions to a supervisor.

Solvay terminated Smothers’ employment on August 28, 2008, based on a joint decision of six Solvay managers. Five of the six decision makers testified that the argument between Smothers and Mahaffey weighed heavily in the group’s decision to fire Smothers. Although the trial court originally dismissed the case, the Tenth Circuit believed that Smothers had presented enough evidence to create doubt about the real reasons for Smothers’ termination. So, the case was sent back to the trial court for trial.

What’s the Real Reason for Smothers’ termination? Like all retaliation cases, the jury in this trial was asked to decide whether Smothers was fired for a safety rule violation, as the employer contended, or because his employer retaliated against him for using intermittent FMLA leave or discriminated against him because of his disability. We don’t have a transcript of the trial, so we cannot tell you what evidence the jury heard or what facts persuaded the jury. We do know that the Tenth Circuit reasoned that the jury could disbelieve Solvay’s reasons because:

Supervisors criticized Smothers informally and in his performance evaluation for taking FMLA-protected leave, and rejected him for a promotion because of his time off;
Solvay did not give Smothers an opportunity to describe or explain his side of the argument with Mahaffey, even though the argument was a central reason for the decision to terminate Smothers’ employment;
Other Solvay employees who committed safety rule violations were not terminated.

And the Jury Returns.The jury found in favor of Smothers on his FMLA claim, and awarded Smothers the amount of $740,535 for his lost wages and benefits from the date of his termination, August 27, 2008, through the date of trial. But the potential damages don’t stop with the lost wages. Under the FMLA, the successful employee may be entitled to an additional amount equivalent to the jury’s award for liquidated damages – in other words, a penalty against the employer for the violation. As a result, the court has entered judgment against Solvay in the total amount of $1,481,070, twice the amount of the jury’s verdict, plus interest since the date of termination. The trial court declined to award Smothers any future lost wages. However, Smothers is entitled to an additional judgment for his reasonable attorneys’ fees and costs, which could add hundreds of thousands of dollars to the total.

Bottom Line. Regardless of the final number after adding prejudgment interest and attorneys’ fees, this is one of the largest judgments ever entered against a Wyoming employer. We cannot speculate about what evidence led the jury to its verdict, but we can share some lessons, with the benefit of twenty-twenty hindsight, that will help any employer avoid this kind of result:

Managers and supervisors must be trained and committed to the fact that taking FMLA leave is protected by federal law, and must not be the reason for formal criticism, denied opportunities, or informal complaining. FMLA-protected leave cannot be held against an employee for any reason whatsoever. Any comment or suggestion to the contrary can be used as evidence of pretext.
Investigations must be thorough and even-handed. While we don’t know all the evidence in this case, the jury may have heard that Solvay spent much more time asking Mahaffey about the argument with Smothers, while never asking Smothers for his side of the argument. Everybody should get the same opportunity to tell their side of the story. An inadequate investigation can be used as evidence of pretext.
Employees must be treated consistently. Smothers had evidence that other Solvay employees intentionally violated safety rules without being terminated. Employers need to mete out comparable discipline for comparable violations, or have a compelling reason why an employee gets tougher punishment.
Employers must respect long years of service. Of course, keeping a job for eighteen years does nothing to technically change the legal relationship or create any new rights or protection for the employee. But, after that length of time with a good performance record, it becomes difficult for a jury to believe that termination is an appropriate response for one incident.

Wyoming juries have delivered substantial employee verdicts over the last few years. Employers should pay attention.

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August 7, 2014

Favoritism to Paramour is Not Gender Discrimination

By Brad Cave

Friendship, cronyism, nepotism, affairs – many types of personal relationships may result in one employee being treated better than another employee. But is that favoritism discriminatory? Does the non-favored employee have a discrimination claim against the employer? No, Title VII does not prohibit favoritism based on a special relationship, says the Tenth Circuit Court of Appeals.

“I Like You Best”

If an employer pays the CFO’s sister a higher wage than other employees doing similar work, offers the most lucrative deals to an employee who is the boss’s best friend or gives playoff tickets as a bonus to the manager’s boyfriend who works at the company, that special treatment is permissible because it is based on the special relationship or bond between the parties, not on a protected characteristic. It is only when the differential treatment is based on an impermissible classification, such as gender, race or age, that it crosses the line into unlawful discrimination. In a recent decision, the Tenth Circuit Court of Appeals affirmed that distinction, ruling that a supervisor’s favoritism toward a female subordinate based on their purported intimate relationship did not amount to reverse gender discrimination against her male counterpart. Clark v. Cache Valley Elec. Co., No. 13-4119 (10th Cir. July 25, 2014).

Reverse Gender Discrimination Under Title VII

Project manager Kenyon Brady Clark sued his employer, Cache Valley Electric Company, alleging violations of Title VII. Clark’s discrimination claim alleged that his supervisor, Myron Perschon, favored a female project manager, Melissa Silver, over him because Perschon and Silver were in a romantic relationship. Clark asserted that Perschon gave Silver better work assignments, paid her more for performing less work and performed most of Silver’s job duties himself. Although it turned out that there had been no affair, Clark still asserted that “whether they were having sex or not, there was favoritism.” When asked about the reason for the favoritism at his deposition, Clark admitted that if the favoritism was not due to a romantic relationship, he did not know the reason for it.

The Court analyzed Clark’s claim as a reverse gender discrimination case under which Clark needed to show circumstances that would support an inference that his employer discriminates against the majority (i.e., males) or that “but for [his] status the challenged decision would not have occurred.” Significantly, Clark did not assert that the favoritism was due to Silver being a female or that Cache Valley treated women more favorably than men. Instead, Clark focused on the preferential treatment that his supervisor offered to one specific female employee. That deficit was fatal to his reverse gender discrimination claim. The Court cited numerous cases where the motives for preferential treatment were other special relationships, such as friendship, nepotism or personal fondness or intimacy, in which it had ruled that such favoritism was not within the purview of Title VII’s anti-discrimination provisions. Because Clark’s discrimination claim was based only on the favoritism shown to a special friend and not on a protected characteristic, his claim was not covered by Title VII. The Court affirmed summary judgment in favor of Cache Valley.

Retaliation Claim Fails Too

Clark also raised a retaliation claim in his lawsuit against Cache Valley. Clark asserted that his supervisor, Perschon, retaliated against him by trying to get a competitor to hire him, refusing to communicate with him and otherwise distancing himself from Clark. Clark also alleged that he was fired in retaliation for complaining about Perschon’s favoritism and retaliation. He had complained to management about the alleged affair between Perschon and Silver, stating that it was difficult to continually respond to vendors and suppliers who had questions about the purported relationship. He reported that they were acting like a married couple. He later complained about the preferential treatment that Silver received from Perschon, including receiving better job assignments and higher bonuses. In a letter to the company’s CEO and to human resources, Clark wrote that over the past three years, he had personally and professionally suffered serious and real adverse effects to his employment due to the alleged affair. He wrote that the affair created a hostile work environment and that it was the company’s responsibility to ensure that the workplace was free of harassment and retaliation. Shortly after meeting with HR and the company’s legal counsel to discuss his letter, Clark was terminated.

The Court rejected Clark’s retaliation claim. To make out a Title VII retaliation claim, Clark needed to show that (1) he engaged in protected opposition to discrimination, (2) a reasonable employee would have found the challenged action materially adverse, and (3) a causal connection existed between the protected activity and the materially adverse action. The Court concluded that Clark failed to show that he engaged in protected opposition to discrimination. He needed to show that he had a reasonable good-faith belief when he complained to the company that he was engaging in protected opposition to discrimination and that his good-faith belief was reasonable both subjectively and objectively. He failed to do so. Although he made statements about a “hostile work environment” and “discrimination” in his complaints to the company, the Court found such statements to be conclusory and not related to gender discrimination. The statements were about Perschon’s favoritism to Silver based on the alleged inappropriate relationship, which was not gender discrimination. Therefore, Clark’s retaliation claim failed.

Just ‘Cuz It’s Legal Doesn’t Make It Smart

Clark’s reverse discrimination claim was a little more cut and dried than most because he essentially admitted that the preferential treatment shown by his supervisor to a female colleague was not due to her status as a female. Consider whether the outcome would have been different had Clark provided evidence that the supervisor historically treated women better than men. Or think about other situations where special relationships result in favoritism, such as when the boss takes all his male cronies to play golf with clients while the female employees toil away at work. Even though the courts have been clear about distinguishing favoritism based on special relationships from discrimination based on a protected class, employers are wise to steer clear from favoring some employees over others, especially when it comes to pay, bonuses and benefits where the non-favored employees can prove financial harm. Keeping the terms and conditions of employment on an even footing will help keep your workplace productive, the morale of employees high and your company out of court.

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