Employment Practices Newsletter - October 2011

October 4, 2011

Seventh Circuit Determines That Pregnancy Complications Can Be ADA Disability

In 2008, an employee experienced pregnancy complications and her doctor placed her on light-duty restrictions. Because the restrictions prevented the employee from performing certain essential functions of her position and she did not qualify for medical leave, the employer terminated her. She subsequently recovered and had a successful pregnancy. The employee sued the employer, alleging that it had violated the Americans with Disabilities Act (ADA) by discriminating against her based upon her physical limitations. The ADA, which was substantially amended in 2009, protects individuals who have a physical or mental impairment that substantially limits one or more of their major life activities. The district court, deciding the case under the ADA as it existed before the 2009 amendments, found that the employee’s pregnancy complications were not a qualifying “disability” under the ADA. The U.S. Court of Appeals for the Seventh Circuit agreed and reasoned that although the employee’s pregnancy complications constituted “physiological disorders of the reproductive system” which were qualifying impairments, the employee’s condition had lasted only a few months and so had not “substantially limited” any of her major life activities. It is important to note that this case likely would have ended differently if it were decided under the ADA after the 2009 amendments, which changed the Act to make clear that even short-term impairments can “substantially limit” major life activities. Employers should focus on accommodating temporary disabilities such as pregnancy complications rather than on determining whether an employee is disabled. 

Serednyj v. Beverly Healthcare, LLC, Case No. 10-2201 (7th Cir. 2011 Aug. 26, 2011)

For more information, please contact James R. Pirages or your regular Hinshaw attorney.

Court Recognized Claim Alleging Age Harassment Under ADEA 

A 65-year-old car salesman alleged that his manager made persistent abusive remarks about his age and Christian religious beliefs, which forced him to resign. The salesman sued, alleging age and religion discrimination under the Age Discrimination and Employment Act (ADEA) and Title VII of the 1964 Civil Rights Act, as amended. On a matter of first impression the U.S. Court of Appeals for the Fifth Circuit held that hostile work environment claims are recognizable under the ADEA. The Fifth Circuit joined the U.S. Court of Appeals for the Sixth Circuit in recognizing hostile work environment claims under the ADEA by finding that there is a “general similarity of purpose” between Title VII and the ADEA and that the “broad application” of the hostile environment doctrine applies to all types of discrimination under Title VII and with “equal force” to the ADEA. Therefore, under the ADEA, an individual raises a hostile work environment claim by establishing that: (1) he or she is over 40; (2) he or she was subject to harassment, through words or actions, based on age; (3) the harasser created an objectively intimidating, hostile or offensive work environment; and (4) there exists some basis for liability on the employer’s part. Employers must be mindful that courts have explicitly recognized age-based harassment as a cause of action under the ADEA. 

Dediol v. Best Chevrolet Inc., Case No. 10-30767 (5th Cir. 2011 Sept. 12, 2011)

For more information, please contact your regular Hinshaw attorney.

NLRB Reverses Its Precedent Regarding Voluntary Recognition

An agreement between a multifacility employer and a union required the employer to recognize the union if it provided authorization cards signed by a majority of the employees of the employer. Pursuant to the agreement, the employer voluntarily recognized the union at one of its facilities. In accordance with National Labor Relations Board (NLRB) precedent established in Dana Corp., the employer posted a notice informing employees of their right to file a decertification petition, which was subsequently filed. In the meantime, the employer and union negotiated an initial collective bargaining agreement. In deciding that the parties should be allowed a reasonable period of time to negotiate an initial collective bargaining agreement, the NLRB dismissed the decertification petition. In addition to reversing Dana, the NLRB decided that the parties should be allowed between six months to one year to negotiate an initial collective bargaining agreement. This case demonstrates the NLRB’s authority to reverse its own precedent when the board’s political majority changes. Employers must understand this and be careful when relying on NLRB precedent that was established during a different political climate.

Lamons Gasket Co., 357 NLRB No. 72 (Aug. 26, 2011)

For more information, please contact Thomas Y. Mandler or your regular Hinshaw attorney.

Reasonable Period of Time for a Successor Employer to Negotiate 

An employer purchased the assets of a company that had a collective bargaining agreement with a union. The employer performed the same services as the predecessor company for the same customer and with the same employees. Therefore, it was a successor under labor law and required to negotiate with its predecessor’s union. During the negotiations between the employer and the union, a different union filed a petition with the National Labor Relations Board (NLRB) for an election to represent the same employees. The NLRB determined that the employer and predecessor’s union should be allowed a reasonable period of time to negotiate an initial collective bargaining agreement. That period of time was determined to be between six months and one year (identical to the period of time the NLRB established on the same day for a voluntary recognition situation). Therefore, the rival union’s petition was dismissed. Employers should note that the NLRB has established six months to one year as the reasonable period of time to negotiate an initial collective bargaining agreement.

UGL-Unicco Services Co., 357 NLRB No. 76 (Aug. 26, 2011)

For more information, please contact Tom H. Luetkemeyer or your regular Hinshaw attorney.

Successor Employer Must Recognize Union That “Perfected” an Inappropriate Unit

A successor employer refused to recognize the incumbent union because it claimed that the predecessor bargaining unit, which included technical workers, guards and professionals, violated Section 9 of the National Labor Relations Act. The union disclaimed interest in the guards and professionals and again requested recognition. The employer refused. The National Labor Relations Board (NLRB) found that by disclaiming interest in 15 of 163 unit employees, the union had not substantially altered the existing unit, and thus the employer was required to recognize and bargain with the incumbent union. In addition, the NLRB rejected the employer’s claim that the new unit, absent guards and professionals, was inappropriate. The NLRB ordered the employer to recognize and bargain with the union, to rescind any changes made to terms and conditions of employment since its refusal to bargain, and to make unit employees whole for any losses incurred because of the employer’s unilateral changes. Successor employers should exercise caution before refusing to recognize an incumbent union.

Specialty Hosp. of Washington-Hadley LLC, 357 NLRB No. 77 (Aug. 26, 2011)

For more information, please contact Jennifer M. Ballard or your regular Hinshaw attorney.

NLRB Limits “Core Purposes” Bargaining Exemption

A hospital implemented a flu-prevention policy that required nurses to get flu shots. Under the policy, a nurse who refused to become immunized had to agree to either wear a protective face mask or take antiviral medication while on duty. The nurses’ union objected to the policy because the hospital failed to provide a reasonable amount of time to bargain about the “new working conditions” it planned to “unilaterally impose.” When the union filed an unfair labor practice complaint, the hospital argued that it was not obligated to bargain over the decision to implement the flu-prevention policy because the policy “went directly to the hospital’s core purpose as an acute care hospital.” The National Labor Relations Board (NLRB) rejected the “core purposes” argument, holding that it did not apply in the health care context. If applied broadly, the “core purposes” exception would “swallow the rule that decisions affecting employment conditions are subject to mandatory bargaining . . .” i.e., decisions concerning “how, when, and by whom patients are cared for.” Accordingly, the NLRB found that the hospital’s decision to implement its flu-prevention policy was subject to mandatory bargaining. Employers must be mindful that the duty to bargain will arise when an employer implements a policy affecting the terms and conditions of employment, even if the policy also affects the “core purposes” of the employer’s enterprise. 

Virginia Mason Hosp., 357 NLRB No. 53 (Aug. 23, 2011)
For more information, please contact your regular Hinshaw attorney.

NLRB Rules That Unions Cannot Fund Lawsuits During the “Critical Period” 

A union launched an organizing campaign to represent route drivers and dispatchers, and introduced them to its outside counsel. The employees and the attorneys then entered an attorney-client agreement specifying that the union would pay all attorneys’ fees. The union later filed a National Labor Relations Board (NLRB) petition to represent the employees. Days later, the attorneys filed federal and state wage and hour claims against the employer. The union won the election, and the employer challenged the election results because of the timing of the union-funded lawsuit. The NLRB set aside the election and ordered a new one, ruling that such lawsuits are barred during the critical election period. The NLRB reasoned that a union-funded lawsuit filed during the critical period was akin to an employer granting wage increases in anticipation of a presentation election; both acts could be viewed as a gratuitous benefit and induce support in a manner unrelated to the merits of representation. The NLRB believes that a rule barring such lawsuits during the critical election period better protects employee free choice in a representation election. Employers must be mindful that unions are still permitted to educate employees concerning their labor rights and refer employees to counsel during the critical period, so long as they do not fund the litigation. 

Stericyle, Inc., 32-RC-5603 (NLRB Aug. 23, 2011)
For more information, please contact your Hinshaw attorney.

Federal Government’s Increased Focus on Independent Contractor Issues

On September 19, 2011, the U.S. Department of Labor announced that it had signed agreements with the Internal Revenue Service (IRS) and several states to share information about workers who are improperly classified as independent contractors. Both minimum wage and overtime enforcement will be the object of greater enforcement, as well as the subjects of federal taxes, unemployment compensation and workers' compensation. Connecticut, Hawaii, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington are involved, with Illinois and New York indicating that they will join soon.

On September 21, 2011, the IRS announced a low-cost settlement program for employers to reclassify independent contractors as employees to comply with tax laws. The Voluntary Classification Settlement Program allows employers to reclassify independent contractors prospectively, treat them as employees, and pay 10 percent of the taxes (including FICA) that should have been paid. No penalties or interest will be required as would be the case if the employer were audited by the IRS. To be eligible, an employer must have consistently treated the workers as independent contractors, and filed 1099 forms for the workers. 

Employers should carefully review how they have classified their workers, and if appropriate, consider how these important federal government initiatives may affect them.

Department of Labor Announcement: 
IRS Announcement:,,id=246203,00.html

For more information, please contact James D. Harbert or your regular Hinshaw attorney.

An ADA Determination Must Be Based on an Individual Inquiry

An employee who was injured while working was given a different job when his doctor released him to work with no restrictions. A Worker's compensation determined that the employee was entitled to compensation benefits based on his inability to return to his pre-injury job at his pre-injury pay. Upon receiving that order, the employer placed the employee on medical leave because it had no jobs suited to his medical restrictions. The employee sued his employer for disability discrimination on the theory of a perceived disability under the Americans with Disabilities Act (ADA). The U.S. Court of Appeals for the Sixth Circuit reversed a verdict for the employer and remanded the case on two grounds. First, the court stated that while the employee did have a disability under workers’ compensation law, he did not have an ADA disability as his disability did not “substantially limit him in a major life activity.” As such, the employer had an obligation to make an individualized determination as to the employee’s actual ability to perform the essential functions of his job as required under the ADA. Second, the court rejected the employer’s defense of having an “honest belief” for making an adverse employment decision. Under the “honest belief” theory, if the employer provides a nondiscriminatory reason for taking the adverse employment action and honestly believed and reasonably relied on the known facts when it made the decision, the decision cannot be found to have been made on a discriminatory basis. The court held that the employer had not made a reasonable informed decision based largely on not having considered the employee’s post-injury job in which there was no need to place him on medical leave. Employers must carefully use the “honest belief” defense and must ensure that an employee’s disability claims are thoroughly reviewed under both workers’ compensation law and the ADA.

Jones v. Nissan N. Am., Case No. 09-5786 (6th Cir. Aug 18, 2011)

For more information, please contact your regular Hinshaw attorney.

Company Lawfully Terminated Employee for Illegally Download Movies

A company became alarmed when a significant amount of internet traffic on its network began causing network connection problems. The company tracked the source of the source of the problem to an employee who was using the company network to download a movie to his personal laptop computer. The company’s investigation revealed that the employee had downloaded approximately 15 movies bypassing copyright laws and viewing movies for free. The company terminated the employee for engaging in illegal behavior on company property because of the employee’s violation of copyright laws. In the termination letter, the company also stated that the employee’s conduct exposed the company to potential liability. Upon termination, the employee’s union filed a grievance, arguing that the employee did not know that downloading movies was illegal and that the company’s claims of “illegality” implicated external law beyond the scope of the union agreement. The arbitrator decided in favor of the company and determined that that the employee did know, and, in any case, should have understood that, downloading movies was illegal. The arbitrator defended the company’s consideration of “illegal” conduct in the termination and explained that the dispute is not about the “application of complex issues of external law,” but instead “is the application of common sense with respect to ownership rights to creative works which is well established and recognized.” Although employers should exercise caution in dealing with issues related to employee privacy, if an employee’s personal use of the employer’s network is interfering with employer business or exposing the employer to liability, employers can and should take action. 

In Re: Hayes International and United Steelworkers, Local 2958, 129 LA 559 (Aug. 10, 2011) 

For more information, please contact V. Brette Bensinger or your regular Hinshaw attorney.

USERRA #1: Liquidated Damages Are Permitted for Willful Violations

A sprinkler service/sales representative was also a member of the Massachusetts National Guard, and was deployed to Iraq in May 2007. The company hired another individual while the employee was overseas. When the employee returned in May 2008, the company offered to rehire him as a sprinkler helper, which paid a slightly higher hourly compensation, but no commissions and fewer perks. The employee accepted the position but repeatedly told the company that he wanted to return to his prior position. The employee was terminated in October 2008, for absenteeism. The employee sued, alleging violations of the Uniformed Services Employment and Reemployment Rights Act (USERRA). The Act protects veterans by guaranteeing reemployment with their former employer, to the position they would have held had their employment not been interrupted or a position of similar pay and seniority, upon their return from military service. The U.S. Court of Appeals for the First Circuit Court of Appeals affirmed a trial court ruling that the company acted with deliberate indifference regarding its obligations under USERRA. The court determined that the company was aware of both its obligation to reinstate the employee and the employee’s repeated expression of dissatisfaction that he was not reinstated to his prior position. That was “sufficient to permit a reasonable jury to conclude that the company knew of its obligations and acted with reckless disregard in refusing to reinstate [the employee] to his pre-service position.” Employers must be mindful of their obligation to reinstate employees returning from military service to their former position. 

Fryer v. A.S.A.P. Fire & Safety Corp., Inc. Case Nos. 10-2047; 11-1021 (1st Cir. Sept. 9, 2011)

For more information, please contact Sean N. Pon or your regular Hinshaw attorney.

USERRA #2: Reinstatement and Pay for Commission-Based Employees

After the events of September 11, 2001, a financial advisor was called to active duty by the U.S. Air Force Reserves. In October 2003, he completed his military service and requested reinstatement to his former position pursuant to the Uniformed Services Employment and Reemployment Rights Act (USERRA). The Act protects veterans by guaranteeing reemployment by their former employer, to the position they would have held had their employment not been interrupted or a position of similar pay and seniority, upon their return from military service. The employee was not reemployed for nearly four months and was ultimately offered a position that set his compensation at the commission rate he received prior to his military service, without regard to the large book of business he had prior to his service. The employee sued, alleging violations of USERRA. The U.S. Court of Appeals for the Second Circuit concluded that under USERRA, when an employee receives commission-based pay, the relevant analysis is the total amount paid, not just the rate of commission, when determining reinstatement to a similar paying position. Employers must be careful in assessing service members’ actual pay upon their return to work. 

Serricchio v. Wachovia Securities, LLC, Case No. 10-1590-cv (2d Cir. Sept. 13, 2011) 

For more information, please contact Sean N. Pon or your regular Hinshaw attorney.

Public Medical Employees Must Pay “Fair Share” Dues, Despite Off-Site Work

In 2003, a majority of the 20,000 in-home medical assistants working for state-run programs in Illinois voted to elect a union as their exclusive representative for bargaining with the state. Approximately 4,500 of the assistants exercised their right under Illinois law to “opt-out” of public union representation, but still found themselves subject to a “fair share” provision in the collective bargaining agreement that required them to pay their proportionate share of union costs. The constitutionality of such “fair share” provisions for public employees was recognized by the U.S. Supreme Court in, Abood v. Detroit Board of Education, 431 U.S. 209 (1977). In this case, however, the 4,500 nonmember assistants argued that they should not be subject to a “fair share” rule under Abood because they were not “public employees”—instead, they claimed, they were employed by the individual Medicaid patients that they treated. They sued the state of Illinois for violating their First Amendment right to freedom of association. The U.S. Court of Appeals for the Seventh Circuit rejected their claim, and reasoned that the in-home assistants were “public employees” for the purpose of Abood, even if they were also employees of their patients. The court concluded that because the state had control “over virtually every aspect of [the in-home] assistants’ job,” its interest in “labor peace” was present, regardless of whether the assistants had joint employers. This decision represents the first time that a federal appellate court has extended the Abood rule to employees who are employed by two or more employers. Public employers and quasi-public employers should anticipate that employees may be subject to a “fair share” agreement even if they primarily work in private settings.

Harris v. Quinn, Case No. 10-3835 (7th Cir. Sept. 1, 2011)

For more information, please contact your regular Hinshaw attorney.

Aimee Delaney Selected As One of 40 Illinois Attorneys Under 40 to Watch for 2011

Aimee E. Delaney, a Chicago-based partner in the Labor and Employment Group of Hinshaw & Culbertson LLP, has been selected by her peers and named by the Chicago Daily Law Bulletin and Chicago Lawyer magazines one of “40 Illinois Attorneys Under 40 to Watch.” This honor recognizes young attorneys who show a passion for their profession, have had a series of successful results, and demonstrate commitment to the legal profession. Ms. Delaney represents employers in both class and individual claims of discrimination, harassment, wage and hour violations, breach of contract disputes, as well as grievance arbitrations. She also counsels employers on reduction-in-force plans, termination, severance agreements, disciplinary action and employment contracts.

Congratulations Aimee!

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.