In This Issue:
An employee’s manager made a sexual proposition to the employee that the employee rebuffed. A short time later, the employee was denied a promotion. She then filed a charge with the Equal Employment Opportunity Commission (EEOC). The employee’s new manager significantly increased the employee’s workload after she filed the EEOC charge. The employee then asked for and was granted Family and Medical Leave Act (FMLA) leave to care for her ill two-year old. Upon returning from leave, the employee was suspended for job performance related to violating a Department of Transportation (DOT) regulation that she was required to adhere to as part of her job, though a DOT official later explained that her conduct did not violate any regulations. The employee sued her employer for violations of Title VII of the 1964 Civil Rights Act and the Illinois Human Rights Act (IHRA). In addition to her Title VII sex discrimination claim and IHRA claim, the employee also claimed “intentional infliction of emotional distress” (IIED) under Illinois tort law. The jury found for the employer on the sex discrimination claim, but found for the employee on the IIED claim, awarding the employee damages. On appeal, the employer argued that the IHRA pre-empted any recovery for emotional distress, asserting that if the employer was found not to have discriminated against the employee, there could not be intentional misconduct rising to the level of IIED. The Seventh Circuit disagreed and upheld the jury verdict, explaining that, in light of the extreme behavior of the employer presented to the jury, the Court had to conclude that the two claims alleged different wrongs, and that the employer committed a tort independent of its duties not to discriminate against the employee. In other words, if the employer’s conduct alleged to be a tort would be IIED even if it were not a civil rights violation, the IHRA does not preempt the tort theory of recovery. Employers should be aware that even when there is no discrimination against an employee, extreme behavior from its managers towards its employees may expose the employer to tort liability.
Naeem v. McKesson Drug Co., ___ F.3d ___, 2006 WL 932354 (7th Cir. 2006)Contact for more information: Tom H. LuetkemeyerCourt Upholds ‘Ministerial Exception’ to Bar Diocesan Music Director’s ADEA Claim
A music director and organist for the Catholic Diocese of Peoria had a dispute with the bishop’s assistant over what music should be played during Easter Mass. The 50-year-old music director was fired shortly thereafter. He filed a lawsuit against the diocese alleging a violation of the Age Discrimination in Employment Act (ADEA). The district court dismissed the former employee’s claim, holding that his claims are barred by the First Amendment’s “ministerial exception.” The Seventh Circuit upheld the dismissal, explaining that the power of the federal judiciary as contemplated by the Constitution was not intended to extend to the resolution of ecclesiastical controversies. As such, the First Amendment ministerial exception explains that the federal judiciary should not extend to cases involving the evaluation or interpretation of religious doctrine or to cases that encroach into church governance in an intrusive manner. The Seventh Circuit explained that if this case were permitted to go forward, the diocese would argue that the music director was terminated for a religious reason – his opinion concerning the appropriateness of music for Easter services. Such a position would propel the case into a quintessentially religious controversy, and the ministerial exception of the First Amendment prohibits jurisdictions over such matters.
Tomic v. Catholic Diocese of Peoria, 442 F.3d 1036 (7th Cir. 2006)Contact for more information: Justin M. PennEmployer Permitted to Use Evidence Acquired After Firing in FMLA Case
An employer fired an employee who sought an extended FMLA leave, but could not provide adequate medical documentation. The employee subsequently brought suit and the Court allowed the employer to use evidence acquired after the termination. The Sixth Circuit highlighted the distinction between a retaliation case, where the employee is discharged because of an FMLA leave, and an entitlement case, where the employee is discharged when the employee is not qualified for FMLA leave. In an entitlement case, the motivation of the employer in the firing is not at issue and the employer is able to use evidence acquired both before and after the firing. The Court also discussed “exacerbation” theories in FMLA suits that posit that the employee’s condition, usually a mental health condition, is exacerbated by the firing and the employee should be entitled to greater damages. The Court found that such theories within FMLA suits are without merit as the employee loses the right to reinstatement when unable to perform an essential function of the position without consideration of the employee’s condition.
Edgar v. JAC Products, Inc., ___ F.3d ___, 2006 WL 870500 (6th Cir. 2006)Contact for more information: Thomas Y. MandlerEmployee Fired for Insubordination Not Entitled to Reinstatement
An employer fired an employee seeking FMLA leave but was found not liable under the FMLA because the firing was not related to the leave request, but rather insubordination. The employee, after learning that his leave request was denied, began to use profane language directed at his supervisor, physically threatened the supervisor and challenged the supervisor to a fight. The Court found that some level of opposition by an employee when denied a leave is acceptable, but only when the opposition is reasonable in light of the employer’s interest in maintaining a “harmonious and efficient” workplace. The use of profanity, however common in the workplace, was found to be disruptive, especially when directed in a threatening manner toward the employee’s supervisor. Ultimately, the fighting words and insubordination, the reasons for dismissal, were found unprotected activities under FMLA.
Denny v. Union Pacific Railroad Co., Case No. 04-35490 Slip Copy (9th Cir. 2006)Employee’s Failure to Give Notice Does Not Bar Depressed Worker’s FMLA Claim
An employee with depression and other ailments brought a claim alleging that his employer refused to advise him of the benefits available to him in violation of the FMLA. The employer sought summary judgment on the employee’s claims, asserting that the employee never gave the employer notice of his mental condition, and thus the employer’s duty to advise him of his FMLA rights were never triggered. The Court held that it could be inferred that the employer had sufficient notice from oral and written communications from the employee about his depression. The Court explained that the employee’s declining performance could also have provided sufficient notice absent direct notice given by the employee. Looking to the employee’s deterioration of performance, coupled with evidence that the employee spoke of his mental condition, the Court determined that sufficient facts existed for a jury to find that the employer had sufficient notice of the employee’s mental condition, thus triggering duties under FMLA. Employers need to be certain that employees who make known that they have a medical condition are advised of their rights under FMLA.
Lozano v. Kay Mfg. Co., Case No. 04 C 2784 (N.D.Ill. March 28, 2006)Contact for more information: Paul J. ChernerDepartment of Labor Administrative Review Board Weighs in on Sarbanes-Oxley
The chief financial officer of a bank complained about the bank’s financial mismanagement – and the bank fired him. The employee then sued the employer alleging that he was fired for whistleblowing, in violation of the Sarbanes-Oxley Act. An Administrative Law Judge (ALJ) from the Department of Labor (DOL) found that the employer had violated the Sarbanes-Oxley Act. In the “preliminary” order, the Judge “recommended” that the employer reinstate the employee. The employer appealed the ruling, and argued that it did not have to immediately reinstate the employee based on the “preliminary” and “recommended” references in the order. DOL’s Administrative Review Board found that, although the ALJ’s determination was termed “preliminary order of reinstatement”, the reinstatement order was effective immediately. In other words, pursuant to the ALJ’s order, the employee was entitled to return to his old job immediately. The employer argued that the employee should not be able to return until after the appeal was decided. The Board allowed the employer 10 days to move for a stay of his order. The Board noted that if the employer wins the “motion for a stay,” then the employee would not be entitled to reinstatement until after the outcome of the appeal was published. Even though the ALJ’s order was termed “preliminary,” the employer has a high threshold to satisfy in order to suspend the reinstatement until after the merit of the appeal is determined.
Welch v. Cardinal, DOL Arb. 06-062 (March 31, 2006)Contact for more information: James R. PiragesDOL Clarifies Application of the FLSA Minimum Wage and Overtime Pay Exemption
New Job Requirements Regarding Hours WorkedIn FLSA2006-6, the DOL addressed whether implementation of two new job requirements imposed on employees, otherwise exempt under Section 13(a)(1), would result in loss of the exemption. These two requirements were: (1) that exempt employees work either 45 or 50 hours a week; and (2) that the employer could require, at its option that exempt employees make up work time lost due to personal absences of less than a day. The DOL stated that neither of these two requirements would result in a loss of exemption so long as the employer did not dock the employees’ salary for violating either requirement.
DOL Opinion Letter FLSA 2006-6 (March 10, 2006)
Personal Employee Reimbursement Polict for Damaged EquipmentIn FLSA2006-7, the DOL addressed whether a policy requiring employees to reimburse the employer for damage caused to the employer’s equipment (i.e. cell phones or computers) would jeopardize those employees’ exempt status under Section 13(A)(1). Under the proposed policy, the employer would require employees to pay for the damaged equipment by either: (1) having its value deducted from their paycheck; or (2) reimbursing the employer from their own pocket. The DOL stated that such deductions or reimbursements would violate the salary basis requirements of Section 13(a)(1) and result in a loss of exemption for those employees. The DOL reasoned that because none of the exceptions contained in 29 C.F.R. § 541.602(b) to the salary basis requirements of Section 13(a)(1) provided for such deduction or reimbursement that it was prohibited. The DOL restated the principle that employees must receive a predetermined amount of compensation in order to qualify for exemption under Section 13(a)(1). Similarly, the DOL’s stated that nonexempt employees could not be subject to this policy if it reduced the employees’ compensation below any statutorily-required minimum wage or overtime premium due those employees.
DOL Opinion Letter FLSA 2006-7 (March 10, 2006)Contact for more information: Stephen D. VernonEmployers Receive Relief in Analyzing Claims of Racial Harassment
The EEOC recently released a new compliance manual updating guidance regarding race and color discrimination prohibited by Title VII. Additionally, the EEOC created a question-and-answer sheet, providing answers to many commonly asked questions and areas of confusion regarding race and color discrimination, such as: (1) the types of questions that are prohibited in interviews, and (2) what steps employers should take once an employee has alleged a claim of racial harassment. The new materials also focus on evaluating allegations of discrimination and providing equal access to jobs through recruitment. According to the EEOC, around 26,740 racial discrimination charges were filed in 2005. More is available at www.eeoc.gov under Race/Color Discrimination, and the new compliance manual is available at the EEOC’s Publication Distribution Center at (800) 669-3362.
Race/Color Discrimination, U.S. Equal Employment Opportunity Commission (April 19, 2006)Contact for more information: V. Brette BensingerCalifornia Validates Class Action Waivers in Arbitration Agreements
An employee filed a class action lawsuit against his former employer for violations of the Labor and Business and Professions Code. The plaintiff alleged that the employer illegally misclassified him and other salaried customer service managers as exempt managerial employees. At the commencement of the plaintiff’s employment, the plaintiff received a package of information including the employer’s “Dispute Resolution Rules and Procedures” that included an arbitration provision for resolving all employment-related disputes. The arbitration agreement also included a class action waiver. Most notably, the package of information also included a form that gave the employee 30 days to opt out of the arbitration agreement. The plaintiff did not opt out. When the plaintiff tried to void the arbitration agreement, the Court of Appeals held that the provision was enforceable because the agreement had a 30-day opt-out period that the plaintiff elected not to exercise. Therefore, in California, a class action waiver in a pre-employment arbitration agreement is valid and enforceable.
Gentry v. Superior Superior Court, 37 Cal.Rptr. 3d 790 (Cal.App. 2d Dist. 2006)Contact for more information: Kristine E. KwongCalifornia Court Addresses Statutory Confusion in a Race Discrimination Claim
In an employment discrimination action involving allegations of racial violence and intimidation, the Second Appellate Court in California recently held that the Unruh Act, Civil Code section 51, does not preclude the employee from alleging a separate cause of action under Civil Code sections 51.7 and 52.1, respectively the Ralph Act and Bane Civil Rights Act. The Unruh Act provides that all persons in California are entitled to “full and equal” accommodations “in all business establishments of every kind” without regards to “sex, race, color, religion, ancestry, national origin, disability, or medical conditions,” whereas the Ralph Act and Bane Act specifically pertained to prohibiting violence against a person because of race, religion, color, ancestry, or national origin. In reversing the trial court’s order granting the motion to strike, the Court observed that the legislative history of these statutes do not support the employer’s contention that a cause of action predicated on either the Ralph Act or Bane Act is already encompassed in the Unruh Act. The Court further noted that the Ralph Act and Bane Act permits an employee to institute a private civil action, even though previously the employee was required to file a complaint with the Fair Employment Practices Commission and would have no private right of action.
Stamps v. Superior Court, 136 Cal.App.4th 1441 (Cal.App. 2d Dist. 2006)
This newsletter has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.