In This Issue:
U.S. Supreme Court: Home Health Care Workers Exempt From FLSA
A home health care worker filed suit, arguing that she was entitled to payment of the federal minimum wage and overtime pay under the Fair Labor Standards Act (FLSA). The FLSA includes a specific exemption from its minimum wage and overtime requirements for "any employee who is employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves." A U.S. Department of Labor (DOL) regulation addressing this exemption states that it covers workers who are employed by a third party, not the family or household using their services. However, that regulation conflicts with another DOL regulation, which defines "domestic service employment" as work performed in the home of the person employing the worker. As a result, the home health care worker argued that the general definition of "domestic service employment" controlled. The U.S. Supreme Court unanimously disagreed. In its holding, the Court firmly acknowledged that the DOL has authority to fill in gaps within the FLSA with regulations such as the one at issue, and that the agency’s interpretation of its own regulations was entitled to deference. As a result, the exemption from the FLSA wage and hour requirements applies to employees providing companionship services, even if the employee is "employed by an employer or agency other than the family or household using their services." While this clarification is important, the exception is limited, and employers must continue to both carefully evaluate whether employees are covered by wage and overtime rules, and evaluate corresponding provisions of state law.
Long Island Care at Home, Ltd. v. Coke, No. 06-593 (June 11, 2007).Contact for more information: Paul J. ChernerU.S. Supreme Court: State Statute Can Limit Union’s Use of Funds for Political Purposes
Washington State public sector unions were allowed to implement agency shop agreements, which require non-union employees to pay dues as compensation for union representation in collective bargaining. Another Washington law prohibits the union from using non-member dues to support union-backed candidates, unless the non-member affirmatively approved that his or her particular dues payment could be used for such political activity. The union argued that this requirement to receive approval from non-union members before their dues could be used for political purposes improperly infringed on the union’s First Amendment rights. The union analogized the case to campaign finance lawsuits in which courts held that the government could not limit the manner in which the regulated entity used its funds. The U.S. Supreme Court, however, distinguished the case from campaign finance actions, because it involved compulsory payments from employees for a governmental benefit, i.e. the governmental job. The Court held that because the workers were required to pay the dues as a condition of public employment pursuant to the agency shop agreement, the state could limit the way in which the non-union members’ dues were spent. The Supreme Court noted that the state of Washington could have adopted a law allowing non-member union dues to directly support political candidates unless the non-union member objected, but it did not do so.
Davenport et al. v. Washington Education Association, No. 05-1589 (June 14, 2007).Contact for more information: James R. PiragesSupreme Court Agrees to Decide Whether “Me Too” Evidence of Discrimination Can Be Used
A 51-year-old woman sued her former employer asserting that she was included in a round of layoffs because of her age in violation of the Age Discrimination in Employment Act (ADEA). At trial, the former employee sought to include testimony from five other employees of the employer that they heard age-based remarks from the employer and that they saw spreadsheets listing employees’ ages. The employer argued that the testimony of the other employees was irrelevant because those employees worked for different supervisors and in different departments than former employee. The U.S. Court of Appeals for the Tenth Circuit, agreeing with two other federal courts of appeals, held that the other employees’ testimony should have been allowed at trial. Six other federal courts of appeals have reached the opposite conclusion. The U.S. Supreme Court will now resolve the issue of whether an employer’s liability on individual discrimination actions can turn on the introduction of “me too” evidence of treatment. Employers should pay close attention to this issue as it could dramatically affect their ability to defend discrimination suits.
Sprint/United Management Co. v. Mendelsohn, Case No. 06-1221 (June 11, 2007).Contact for more information: Tom H. LuetkemeyerSexist Comments Just As Actionable As Sexual Comments
A female employee of a plastic manufacturer received numerous derogatory, sex-based comments from her supervisor over a period of nearly 10 months. She was told that women do not belong in the pressroom and that women think they know everything. Once, while bending over, the employee’s supervisor told her to remain in that position and that it was perfect. During the employee’s pregnancy, her supervisor asked if she got a breast enlargement over the weekend. The employee began reporting the incidents to human resources, but the reports went unanswered. Her supervisor’s comments continued with added threats of termination due to her complaints. In a performance review, the supervisor gave her the worst review of her career, which resulted in no annual raise. The employee also began receiving paychecks that were short hours. After her repeated reports to human resources went unanswered, the employee resigned and filed suit. The U.S. Court of Appeals for the Seventh Circuit held that the subject sexist, anti-female remarks, while not sexual, were sufficient to support a claim for hostile work environment. Employers must be aware that sexist remarks are just as capable of leading to liability as comments that are overly sexual in nature, and should train their employees accordingly.
Boumehdi v. Plastic Holdings, LLC, No. 06-4061 (7th Cir. June 4, 2007).Contact for more information: Andrew B. CripeInability to Stand for More Than 30 to 40 Minutes Not a Disability
A foundry worker was unable to stand for more than 30 to 40 minutes after suffering a spinal fracture when he fell from a tree while hunting. The employer fired the employee because he allegedly started a rumor that the employer terminated another employee after returning from a work related injury. The employee filed suit under the American’s with Disabilities Act (ADA), arguing that he was actually fired due to his claimed disability. However, the U.S. Court of Appeals for the Seventh Circuit held that the employee’s condition did not constitute a “disability” under the ADA because 30 to 40 minutes was longer than the “very brief” period required a substantially limitation on his ability to stand. By way of comparison, the Court noted that the worker’s alleged disability was no different from what average persons of “excess weight” might experience, and that such individuals are not “disabled” under the ADA. Employers should be receptive to claims of disability, but be aware that not all impairments qualify as a disability.
Williams v. Excel Foundry & Machine, Inc., No. 06-1863 (7th Cir. June 1, 2007).Contact for more information: Aimee DelaneyUnwed Man Has No Claim for Pregnancy Bias
A manager and a part-time employee working at a farm owned by a group of Catholic nuns began dating. The relationship led to rising tension between the manager and the farm’s director. Other employees complained to the director that the couple’s indiscreet behavior affected workplace morale, and that the manager would touch and make sexual advances toward other female employees. Neighbors also complained about the “hippies” that the manager hired to work on the farm. The director was concerned that the archdiocese, in light of these complaints, might close the farm. After the part-time employee became pregnant and the couple got engaged, the director fired the manager. The manager sued the farm for purported violations of the Pregnancy Discrimination Act (PDA), alleging that he was discriminated against because he fathered a child out-of-wedlock with the part-time employee. The U.S. Court of Appeals for the Seventh Circuit held that the employer was not liable to the manager for violations of the PDA because the PDA covers bias because of sex, not sexual activity or reproductive capacity. Because the manager did not allege that he was fired on the basis of sex, his claim failed. Employers must be aware that making employment decisions based on an employee’s sexual activity must be made with the greatest of care.
Griffin v. Sisters of St. Francis, Inc., No. 06-3312, (7th Cir. June 6, 2007).Contact for more information: Justin M. PennFailure to Share Supervisor’s Religious Views Sufficient Basis for Discrimination Claim
An employee sued her employer, alleging that her non-adherence to, and non-membership in, the same religious group as her supervisor prevented her advancement. The employee contended that while other employees who shared the supervisor’s religious beliefs were given preferential treatment, she was denied a promotion. The U.S. Court of Appeals for the Ninth Circuit held that the employee had a valid religious discrimination claim even though she could not show that she was treated differently because of her religion. The Ninth Circuit explained that in cases where discrimination allegedly results from non-adherence to a set of religious beliefs, it is the employer’s religious beliefs, and the fact that the employee does not share them, that serve as the basis for the claim. This case demonstrates the growing flexibility that courts are applying to the manner in which discrimination cases can be proved. Employers must be aware that nontraditional discrimination claims are gaining traction.
Noyes v. Kelly Services, No. 04-17050 (9th Cir., May 29, 2007).Contact for more information: Richard H. HeroldLiability Arises for Conduct Occurring at Foreign Subsidiary
A U.S. drug company owned subsidiaries in Puerto Rico and Mexico. A sales representative for the Puerto Rican subsidiary was temporarily transferred to the Mexican subsidiary. While on assignment in Mexico, the sales representative remained an employee of the Puerto Rican subsidiary, which paid her in U.S. currency and maintained her U.S. employee benefits. In a decision made by managers of both companies, the Mexican subsidiary fired the sales rep for misusing company resources. After her termination, the sales representative filed suit against the parent company and both subsidiaries, alleging, among other claims, continuous harassment and discrimination from coworkers and supervisors while at the Mexican subsidiary. The U.S. Court of Appeals for the First Circuit held that there was enough evidence to support the argument that the three entities were one single employer for purposes of liability under Title VII of the Civil Rights Act of 1964. The Court found a reciprocal relationship between the subsidiaries because they performed substantially the same function, frequently interchanged employees, and used the parent company’s centralized human resources and personnel policies. Further, each company had substantial control over the sales representative’s employment and termination. Employers should be aware that liability can arise for conduct occurring at foreign subsidiaries if the two companies are found to be a single-employer for Title VII purposes.
Torres-Negrón v. Merck & Company, Inc., No. 06-1260 (1st Cir. May 23, 2007). Contact for more information: V. Brette BensingerGeneral Contractor Not Liable for Subcontractor’s OSHA Violation
A general contractor for the construction of a college dormitory subcontracted the project’s exterior brick masonry work. During the project, a U.S. Occupational Safety and Health Administration (OSHA) Compliance Safety and Health Officer observed and photographed the subcontractor’s employees working from scaffolds that did not protect against falls. Based on these observations, OSHA issued the general contractor a citation under the multi-employer worksite doctrine. Under that doctrine, a “controlling employer” is liable for a subcontractor’s acts even if the general contractor neither created the hazardous condition nor exposed any of its own employees to it. The general contractor argued that the doctrine is invalid because it conflicts with a federal regulation, which states that “[e]ach employer shall protect the employment and places of employment of each of his employees engaged in construction work.” The U.S. Occupational Safety and Health Review Commission (OSHRC) agreed that the general contractor was not liable for the subcontractor’s violation. In doing so, the OSHRC noted that the U.S. Secretary of Labor has inconsistently interpreted the doctrine over the years. Moreover, the policy has been changed four times since its inception. Given the doctrine’s checkered history, the OSHRC held that the doctrine had to yield to the plain language of the regulation. Moving forward, it is unclear whether this holding will apply outside the construction industry. Employers should continue to insist that subcontractors comply with all applicable safety standards.
Secretary of Labor v. Summit Contractors, No. 03-1622 (OSHRC April 27, 2007).Contact for more information: Kristine E. KwongNLRB Told to Bargain With Its Employees
The National Labor Relations Board (NLRB) negotiated a pilot program for telecommuting with the NLRB Professional Association (Union). When the NLRB subsequently attempted to make that pilot program permanent, the Union filed a grievance against the NLRB. An arbitrator agreed with the Union that the NLRB was required to negotiate the proposed change from a pilot program to a permanent program. The arbitrator held that the agreed upon pilot program could not be utilized by the NLRB as authority to unilaterally change it to a permanent program.Contact for more information: Lori L. HoadleyFederal Minimum Wage to Increase Three Times
The current federal minimum wage of $5.15 per hour will be increased by 70¢ three times over the next two years. It will be increased to $5.85 on July 24, 2007; to $6.55 on July 24, 2008; and to $7.25 on July 24, 2009. Employers are cautioned to check their state’s minimum wage amount, which may be greater than the federal minimum wage.Contact for more information: Thomas Y. MandlerEEOC Issues New Guidance on Family Responsibility Discrimination
On May 23, 2007, the U.S. Equal Employment Opportunity Commission (EEOC) issued a new guidance addressing “Unlawful Disparate Treatment of Workers with Caregiving Responsibilities” (Guidance). The Guidance is not intended to create a new protected classification against which discrimination is prohibited. Nevertheless, discrimination based on an employee’s caregiving responsibilities, popularly tagged as “family responsibility discrimination” or “FRD,” is garnering a lot of attention and is a growing trend in employment law. Irrespective of the tag applied, FRD is, for the most part, simply a catchall phrase for traditional forms of discrimination when the conduct has a connection to an employee’s family responsibilities. In the end, the Guidance reaffirms that employers should act on facts rather than stereotypes. It remains acceptable to take action against an employee whose family responsibilities have an actual, objective impact on his or her performance. On the other hand, actions based on stereotypes and assumptions cannot justify adverse employment actions. Employers should train management and supervisors to understand that treating employees differently because of caregiving responsibilities can often lead to viable claims of discrimination.
EEOC Enforcement Guidance: Unlawful Disparate Treatment of Workers with Caregiving Responsibilities, No. 915.002, May 23, 2007Contact for more information: Scott M. GilbertHinshaw Attorney Thomas Y. Mandler Named One of Top 100 U.S. Labor Attorneys
For the second year in a row, Thomas Y. Mandler has been named one of the Top 100 Labor Attorneys in the United States by the Labor Relations Institute. This honor is based upon a statistical analysis of successful cases before the National Labor Relations Board during the past 10 years. Tom is also in the top one percent of labor attorneys in the United States, making him one of the most active and successful attorneys representing employers in NLRB elections. Congratulations, Tom!Contact for more information: Thomas Y. MandlerHinshaw Attorney Tom H. Luetkemeyer Wins Important Restrictive Covenant Trial
A hospital owned and operated a clinic and staffed it with a physician’s assistant (PA) and a doctor. The PA’s employment contract included a restrictive covenant, which precluded him from working as a PA within 25 miles of the clinic for a two-year period upon the termination of his employment. After 11 years with the clinic, the hospital terminated the PA’s employment due to performance concerns. The PA filed suit asking the court to find the restrictive covenant invalid. At trial, the PA argued that the covenant was void as a matter of public policy because it restricted the ability of a medical professional to practice in a medically underserved area. Tom Luetkemeyer represented the hospital, and was not only able to establish the basic requirements necessary to support the validity of the restrictive covenant, he was also able to successfully rebut the PA’s public policy argument. In its written opinion, the court held that restrictive covenants actually serve the public policy of attracting medical professionals to underserved areas, and the covenant was consequently upheld. Great work, Tom!Contact for more information: Tom H. LuetkemeyerSave the Date! 2007 Effectively Dealing with Current Labor & Employment Issues Seminar
Join employers, human resource professionals and in-house legal counsel for an informative seminar designed to examine and analyze current issues affecting employers and to outline practical strategies for building your company’s immunity to claims, including:
September 25, 2007
The University Club of Chicago76 East Monroe StreetChicago, Illinois
November 7, 2007
Drury Lane Oakbrook Terrace100 Drury LaneOakbrook Terrace, Illinois
9:00 a.m. – 12:15 p.m.
Registration begins at 8:30 a.m.
Luncheon immediately following the seminar
We are currently in the process of obtaining approval to provide continuing education credit for HR professionals and lawyers.
Hinshaw & Culbertson LLPKatherine McCormack312-704-3329
Hinshaw & Culbertson LLP
A more detailed brochure will be mailed in a few weeks.
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.