In This Issue:
"At-will" Provision in Employee Contract Does Not Protect Employer From Misrepresentation Claims
The California State Appellate Court determined that an "at-will" provision in an employee's contract does not give the employer the ability to mislead the employee concerning terms of his employment. Employer Astor, who owns two California radio stations, induced an employee of Clear Channel Communications to leave his job and join Astor. The employment contract specified a generous compensation plan for the employee that Astor never put into effect, and then Astor fired the employee. The court found that Astor never intended to live up to his agreement, and, therefore, the employee has grounds for suing Astor for the tort of fraudulent inducement of contract. The court stated that the employee should be entitled to compensation for "loss of security and income associated with his former employment." Although an "at-will" employment relationship allows the employer freedom to terminate an employee at any time for any reason (unless the reason is discriminatory), the employer does not have "carte blanche to lie to an employee about any matter whatsoever or to trick him into accepting employment."
Contact for more information: David I. Dalby
Court Rejects Employee's Reverse Discrimination Claim
On July 12, 2004 the United States Court of Appeals for the Eighth Circuit affirmed the District Court's decision rejecting employee's contention that the company had committed reverse discrimination. Franklin Woods, an applicant for a manager position, filed the lawsuit alleging the employer engaged in gender discrimination when it chose a woman for the job (Sandra Baumgartner). The Appellate Court held that Woods did not show: 1) the additional requisite for reverse discrimination: that background circumstances support the suspicion that the company discriminates against the majority (i.e., men) and 2) that the company's reason for hiring Baumgartner over Woods was a pretext for discrimination. First, although Woods demonstrated that the company had promoted a number of women, he did not show that females were disproportionately hired in relation to men, nor did he show any type of illegal practice in promoting women. Second, the company relayed to the court that it hired Baumgartner over Woods mainly because of Baumgartner's superior leadership ability, and Woods did not show that the reason offered was a pretext for discriminatory conduct. Employers should note that as long as they have well documented and legitimate reasons for promoting anybody, whether the promotee be part of the minority or majority, it will be difficult for any Plaintiff to show pretext.
Contact for more information: Thomas P. Kane
Violation of Youth Provisions of Fair Labor Standards Act Ends in Tragedy
The U.S. Department of Labor determined that Fisherman's Fleet, Inc., a fish processing company, must pay the full amount of $132,575 in fines for violating the youth employment provisions of the Fair Labor Standards Act. The investigation, which began after a 16 year old boy died when a forklift he was driving overturned, revealed that the company had hired 26 minor children between the ages of 14 and 18 in a two year period. Part of the job that the minors were to perform included the operation of a forklift. Federal standards prohibit minors under the age of 18 from working in hazardous occupations, such as one that requires them to use a forklift. As a result of this tragedy, the Department has developed a "forklift STOP" that employers can affix to prohibited equipment to remind minor workers and their supervisors of the youth employment regulations. More information regarding the hours and work that youths may perform is located at www.youthrules.dol.gov.
Contact for more information: Clay M. Ullrick
California Court Upholds Hospital's Suspension of Erratic Doctor
On July 30, 2004, the Court of Appeals for the State of California reversed the judgment of the trial court and found that Sharp Memorial Hospital acted properly when it summarily suspended staff privileges of Dr. Penny Pancoast. The hospital completely suspended her staff privileges because she became suicidal, unaccountable and would have wandering, unconnected and angry conversations with employees. When the hospital completely suspended her staff privileges, it cited the Business and Professional Code of the State of California in stating that Dr. Pancoast the posed an imminent threat to patients. Dr. Pancoast argued that, because she was on medical records suspension before the hospital completely suspended her staff privileges, she could not consult with patients anyway, and therefore the hospital had no power to suspend her because she posed no threat to actual patients. The Court of Appeals ruled that an impaired physician poses just as much a threat to identified patients as unidentified patients, and that patient safety is of utmost concern. In effect, the court determined that the hospital has the right to summarily suspend a doctor's hospital privileges in a separate action, even though certain hospital privileges may incidentally already be suspended. Hospitals should keep in mind that, even with strong laws protecting employees and contractors, if the hospital has a reasonable question that patient safety may be in jeopardy, it should act immediately.
Contact for more information: Andrew B. Cripe
Federal Judge Ok’s Class Action Discrimination Lawsuit Against Wal-Mart;
On June 22, 2004, a Federal District Court in California determined that a lawsuit alleging that Wal-Mart Stores Inc., discriminated against women through pay, promotions, and training, may go forward as a class action. The lawsuit charges that Wal-Mart discriminated against female employees and followed a pattern of retaliating against those women who complained about the discrimination. As evidence of this alleged discrimination, plaintiffs have stated that 70 percent of Wal-Mart’s hourly employees are women, but less than 15 percent of them hold managerial positions. Further, the plaintiffs claim that women employees were generally encouraged to assume positions as cashier, where there was small chance of promotion. The lawsuit covers 1.6 million women who worked for Wal-Mart’s US stores at any time during the period from December 26, 1998, to the present. Lawyers for the plaintiffs have stated that this lawsuit against the largest U.S. private-sector employer is the largest civil rights class-action case in history.
7th Circuit Affirms Board's Finding that Company Acted Because of Anti-Union Animus When it Fired Employee
Employers must be careful not to apply workplace rules in a way that might "chill" or adversely impact union supporters, especially during union organization. On June 15, 2004, the 7th Circuit Court of Appeals ruled that SCA Tissue Company committed unfair labor practices when it fired an employee. Although the company alleged that it fired the employee because he left work three hours early on two consecutive occasions without first contacting a supervisor, the employee showed that other employees had committed worse attendance infractions without immediate termination. Further, the terminated employee strongly supported the union, and the court determined that the company fired him because of this union allegiance. The plant manager warned him that he could not discuss the union on the shop floor because of the rule against non-work related conversations on the floor, when, in actuality, the company ban on non-work-related conversations did not even exist. Additionally, a company supervisor ordered the terminated employee to remove his union button because the button violated the "no jewelry" policy. The no jewelry policy had not been enforced prior to the wearing of the pin. Further, a supervisor not only demanded that the terminated employee cover his union T-shirt but commented about this union supporter's "attitude." The Court found that those instances directly reflected the supervisor's opinion of the now terminated employee's pro-union stance. It should also be noted that the employee's dismissal occurred after the company's first union certification election. Although the union did not win majority support, the outspoken employee was a primary union supporter and was aware that another certification election could be held one year after the former election.
Contact for more information: Tom H. Luetkemeyer
No Easy Task to Convince Court to Review Arbitrator's Award
Certain American Airlines employees appealed to the 7th Circuit in an effort to overturn an arbitral award in favor of American Airlines. At issue was an age discrimination allegation against American Airlines' for its refusal to allow pilots over 60 years of age downgrade to the position of flight officer. According to the Federal Aviation Administration's policy, which was not challenged in the appeal, pilots over 60 years old may not fly a plane. Since the disqualified pilots could not fly planes due to the FAA policy, they attempted to downgrade to flight officers. However, the arbitrator ruled that though the collective bargaining agreement did not explicitly state that "disqualified pilots may not downgrade to flight officers," an extension of the company "up or out" policy (encouraging employee advancement) implied that the downgrade violates the collective bargaining agreement. The pilots argued that the arbitrators could not have engaged in interpretation of the collective bargaining agreement because the agreement "does not state that captains are forbidden to downbid to flight officers." However, the Court of Appeals found that the arbitrator's analysis can be fairly described as interpretation of the collective bargaining agreement, and, because of this, the decision may not be reviewed or overturned by the Court of Appeals. This opinion underscores the difficulty in convincing the court to overturn or review decisions of arbitrators, especially in the transportation industry.
Contact for more information: Paul J. Cherner
Decisionmakers: Be Wary of Using Superlatives When Describing
The Court of Appeals for the 11th Circuit reversed a portion of the summary judgment order in favor of B/E Aerospace, Inc. and sent it back to the District Court for further proceedings. The portion of the summary judgment order that was reversed pertains to an allegation of sex discrimination in not promoting a female employee. The Court of Appeals found that the female employee presented substantial evidence that she was not only qualified for the position, but that a reasonable jury could determine that the decisionmaker had discriminated against her when he decided to promote a man instead of the female candidate. Based on statements that the decisionmaker made to the female employee's direct supervisor, a co-employee, and to the female employee herself, the court determined that a fact finder could decide that the company discriminated in failing to promote the female employee. Specifically, the decisionmaker told the female employee that she "was the obvious candidate for the Vice President position and even though women aren't typically in that type of position we'll see what happen when we throw your name out there to corporate." Further, a co-employee testified that the decisionmaker told him that the female employee was the "obvious choice" for the promotion, and the "most qualified based on her accomplishments in the engineering department." Third, and lastly, the female employee's supervisor testified that the decisionmaker told him that the female employee was an excellent candidate for the position. Because these statements could create an inference of discrimination, the Court of Appeals decided to reverse summary judgment on that issue. The inference to take notice of is: since a company would normally promote the "most qualified" candidate, and the decisionmaker stated that the female employee was the "most qualified", the jury could infer that she was therefore not promoted because of her sex. Decisionmakers should be careful not to use superlatives in discussing employee qualifications for promotions.
Contact for more information: Thomas Y. Mandler
Reminder: New Overtime Regulations Effective August 23, 2004
The new Department of Labor overtime regulations, covered in depth in the prior issue of the Employment Practices Alert, will go into effect on August 23, 2004. Again, employers should review these regulations and their own overtime pay practices to ensure compliance.
Contact for more information: Aimee Delaney
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. |