Minimum Wage and Overtime Pay Extended to Certain Direct Home Care Workers


On September 17, 2013, the U.S. Department of Labor's Wage and Hour Division announced a final rule extending the Fair Labor Standards Act's minimum wage and overtime protections to cover certain direct care workers such as certified nursing assistants, home health aides, personal care aides, caregivers and other companions who provide essential home care assistance to elderly people and people with illnesses, injuries, or disabilities. The new rule will take effect January 1, 2015. 

Since 1974, the Fair Labor Standards Act ("FLSA") has covered workers who perform a "domestic service" – i.e., services of a household nature performed by a worker in or about a private home, whether permanent or temporary. This term includes services performed by companions, babysitters, cooks, waiters, maids, housekeepers, nannies, nurses, janitors, caretakers, handymen, gardeners, home health aides, personal care aides, and family chauffeurs, among others.  However, the FLSA also provides for a Companionship Services Exemption, exempting certain domestic service workers from minimum wage and overtime protection including, but not limited to, casual babysitters and domestic service workers employed to provide "companionship services" for an elderly person or a person with an illness, injury, or disability if they meet certain regulatory requirements described below.  

The amended regulations narrow the Companionship Services Exemption in two ways. First, they narrow the definition of "companionship services". Second, they provide that the exemption may only be claimed by the individual, family, or household using the services.

Under the revised regulations, the term "companionship services" means the provision of "fellowship" and "protection" for an elderly person or a person with an illness, injury, or disability who requires assistance in caring for himself or herself. "Companionship services" also include the provision of care, such as assisting a person with activities of daily living, provided that that such care requires no more than 20 percent of the employee's time worked for the person during the workweek. "Companionship services" do not include the performance of medically related services or household work not performed primarily for the elderly person or person with an illness, injury or disability who requires assistance, or household services.  Also, under the revised regulations, the Companionship Services Exemption is only available to the individual, family, or household solely or jointly employing the worker, and only if the companionship services duties test is met.  Third party employers of direct care workers, such as home care staffing agencies, are not permitted to claim this exemption, even when the employee performs companionship services and is jointly employed by the third party employer and the individual, family, or household using the services.  As such, third party employers must pay their workers the Federal minimum wage for all hours worked and overtime pay at time and one-half of the regular rate of pay for all hours worked over 40 in a workweek.



Urging an Employee to Retire is Not Necessarily Evidence of Age Discrimination


Mandatory retirement is generally unlawful under the Age Discrimination in Employment Act.  So when an employer urges an employee to retire, isn't this evidence of age discrimination that an employer should avoid?  

Not necessarily, as illustrated by a recent decision by the Eleventh Circuit Court of Appeals, Woolsey v. Town of Hillsboro Beach (11th Cir., September 6, 2013). 

James Woolsey is a police officer employed by the Town of Hillsboro Beach.  In 2008, the town's Chief of Police promoted Woolsey, who was 49 years-old at the time, to Captain, or second-in-command. But by 2010 Woolsey's relationship with the Chief soured because Woolsey had implemented certain practices the Chief did not agree with.  Woolsey claimed the Chief twice demanded that he retire and was silent when Woolsey asked why.  The Chief also provided Woolsey with materials for the Florida Retirement System's Deferred Retirement Option Program (DROP).  Woolsey claimed that the Chief told him that if he did not retire, he "was going to take [him] down in an embarrassing ball of flames."

That year, the Chief demoted Woolsey from Captain to Patrol Officer.  The Chief cited the following reasons for his decision: lack of loyalty, lack of supervisory skills, failure to perform at the level expected of Captain, failure to support the Police Department's accreditation process, and disagreements about how the Department should have been run.  

Woolsey sued the town, claiming that the Chief was motivated by age discrimination. The district court granted the town's motion for summary judgment, and Woolsey filed an appeal. 

The Eleventh Circuit affirmed the district court's decision.  The court noted that in support of the Chief's stated reasons for Woolsey's demotion, the town submitted multiple letters of counseling/reprimand and performance evaluations issued to Woolsey explaining his specific deficiencies and what needed to be done for him to improve, including a warning of possible demotion or termination if he did not.  While Woolsey argued that these were all subjective reasons, the court stated that a subjective reason is legally sufficient as long as the employer "articulates a clear and reasonably specific factual basis upon which it based its subjective opinion." In fact, Woolsey acknowledged that he had disagreements with the Chief about how the Department should be run. Also of significance was the fact that the Chief had promoted Woolsey just a couple of years earlier when Woolsey was 49 years old.  In short, the Eleventh Circuit held that Woolsey's claim of age discrimination was so weak that the district court was correct in granting summary judgment in the town's favor. 

Interestingly, the court's opinion attributed no significance to the Chief's repeated demands that Woolsey retire.  In the context of this case, that makes sense.  An employer may be aware that an employee is eligible for retirement benefits but be motivated to terminate or demote the employee for legitimate, non-discriminatory reasons.  In that scenario, urging an employee to accept retirement benefits as an alternative to a lawful discharge does not necessarily evidence a discriminatory intent.


Keeping the Jury at Bay: Workers' Compensation Retaliation Claim is Subject to Arbitration


A workers' compensation retaliation claim must be arbitrated under the parties' arbitration agreement, according to a recent decision by Florida's Second District Court of Appeal, Audio Visual Innovations, Inc. v. Spiessbach (Fla. 2d DCA, August 16, 2013)
Michael Spiessbach injured his back while working for Audio Visual Communications, Inc. (AVI).  He claimed that after filing a claim for workers' compensation benefits, AVI treated him differently and eventually terminated his employment because of his claim.  Spiessbach then filed suit under Florida's workers' compensation retaliation law, section 440.205, Florida Statutes.
AVI moved to compel arbitration, but the trial court denied the motion.  On appeal, the Second District Court of Appeal considered several issues.  First, did the arbitration agreement substantially diminish the statutory remedies under section 440.205?  The court held that it did not.  The employee was not required to pay the arbitrator's fees, and the arbitrator was authorized to grant any relief that a court could grant.
Second, was the workers' compensation retaliation claim a claim for "workers' compensation benefits" that was excluded under the parties' arbitration agreement?  The court held that it was not, noting that a petition for workers' compensation benefits is filed with the Office of the Judges Compensation Claims, whereas a claim for workers' compensation retaliation is filed in Circuit Court. 
Third, did the employer waive its right to arbitration by filing two motions for extension of time to answer the complaint, participating in mediation, and waiting five months before demanding arbitration?  The court held that the employer did not waive its right to arbitration because it did not file a responsive pleading or otherwise take a position on the merits that would be inconsistent with its right to arbitration.
The court therefore reversed the trial court's order and directed the trial court to grant AVI's motion to compel arbitration. 
For employers, the Spiessbach case is a good illustration of the pros and cons of arbitration.  The main benefit to the employer is that the case will be decided by an arbitrator rather than a jury.  For employers who fear hostile, "runaway" juries, that is a good thing.  On the other hand, arbitration agreements are often challenged by employees.  The cost of defending the arbitration agreement in court, coupled with the arbitrator's fees, may prove to be more expensive than litigation.  In addition, if the employer has a good case for summary judgment, court may be a better option, as arbitrators are hesitant to make an award for an employer without a hearing.  Accordingly, whether to have an arbitration agreement depends on many factors that should be carefully considered.    


The Continuing Saga of Unpaid Workers & Misclassification Issues


Worker misclassification continues to be an issue at the forefront of today's workplace.  Along with the use of unpaid interns, we are now seeing litigation brought on behalf of unpaid volunteers seeking compensation.  In the last week alone, three court filings highlight various issues related to unpaid workers:
  • On August 6, 2013, an unpaid summer intern working at Columbia Music Corp. filed a class action lawsuit in New York state court to recover unpaid minimum wages under New York state labor laws.  The named plaintiff (Britt'ni Fields) worked in Columbia's Promotions Department during the summer of 2008. According to the complaint, Fields' duties included general office task such as making photocopies and handling mass mailings.  The complaint alleges that Fields and other interns should have been compensated for this time because Columbia would otherwise have needed to hire new employees or pay additional wages to existing employees to perform this type of work. 
  • On August 7, 2013, an unpaid volunteer working at Major League Baseball's "FanFest" filed a hybrid class and collective action lawsuit in federal court for the Southern District of New York seeking to recover unpaid minimum wages under both the federal Fair Labor Standards Act and New York state labor laws. Plaintiff John Chen claims that he and other volunteers should have been compensated for the time they spent working as greeters, manning the information booth, and handling event hospitality.  The lawsuit alleges that volunteers were required to attend a mandatory orientation session, pass a background check, and wear a "uniform" consisting of sneakers and khaki pants or shorts.  Instead of wages, Chen and the other volunteers received Major League Baseball souvenirs. 
  • Also on August 7, 2013, two former unpaid interns filed a petition with the United States Supreme Court seeking to resolve a conflict among federal appeals courts as to the appropriate legal test for determining whether an unpaid intern is entitled to wages under the FLSA.  The petitioners, Risa Kaplan and Linda O'Neill, both completed externships as part of earning a degree in medical billing and coding at MedVance Institute.  Both Kaplan and O'Neill claimed that they were entitled to unpaid minimum wages for their work checking the status of medical claims and reviewing accounts during the course of their externships.    

These cases, coupled with the recent ruling against Fox Searchlight Pictures that unpaid interns working on the production of the film Black Swan were misclassified, may signal increased litigation related to unpaid interns and volunteers. Employers should review existing internship and volunteer programs to ensure that programs comply with the specific guidance issued in April 2010 by the U.S. Department of Labor.  Our July 2, 2013 Practice Update addresses the DOL's guidance in detail and provides practical suggestions for evaluating workplace internship and volunteer programs.



Healthcare Employers Beware: OSHA Campaign Is Targeting You


On July 16, 2013, the Occupational Safety and Health Administration (OSHA) announced that it is launching a campaign that aims to protect healthcare workers from musculoskeletal disorders (MSDs).  While this campaign expressly targets the District of Columbia and three nearby states, it is part of a broader campaign by OSHA, unions, and health worker advocates to put increased pressure on inspections in the healthcare industry.

As part of this effort, on July 17, the Washington-based pro-union, advocacy group Public Citizen released a report — "Health Care Workers Unprotected" — that criticized OSHA for not inspecting more healthcare industry establishments and lacking standards addressing healthcare industry hazards.  Officials from the Service Employees International Union and American Nurses Association appeared on a Public Citizen telephone news conference to endorse the report.

The Public Citizen report states that healthcare workers suffer more injuries and illnesses on the job each year than those in any other industry, but OSHA conducts relatively few inspections of healthcare facilities and is stymied in its ability to take action to address unsafe conditions by an absence of needed safety standards. 

The Public Citizen report also argued that the lack of regulations applicable to healthcare hinders inspectors, who are hesitant to cite employers under the general duty clause for a violation that does not correspond to a specific safety standard. The report noted that OSHA issued an ergonomic standard that could have protected healthcare workers in 2000, but Congress repealed it before it could take effect.  In the report, Public Citizen recommended that OSHA increase the number of inspections of the healthcare industry facilities and pursue standards to ensure that workers are protected from the risks posed by MSDs, workplace violence, and other threats. The report also recommends that Congress significantly increase funding of OSHA. 

In addition to MSD injuries, the report states that workplace violence is another serious hazard in the healthcare industry. Public Citizen recommended that OSHA develop a standard for workplace violence.  This standard, according to Public Citizen, should require employers to adopt zero-tolerance policies for violence and threats, provide protection for employees to deter co-worker retaliation, and develop workplace safety plans.  [In 2004, OSHA published guidance on preventing workplace violence in healthcare settings.]

The report identified injuries from surgical instruments and needles as a third major concern.  Although Public Citizen praised OSHA's bloodborne pathogen standard, it said the agency should update that rule to require injury logs that are reviewed by both managers and workers to assess potential hazards. The updated standard, according to Public Citizen, should also mandate employers purchase best available technology in needles and instruments, and that they consult with workers before making those purchasing decisions.  [OSHA has begun a review of the standard and has said it will end its review and issue findings in later this year.]

These union-backed efforts follow the release of a little publicized OSHA letter of interpretation, dated April 5, 2013, wherein the agency announced for the first time that during an inspection of non-union worksites, employees can be represented by anyone selected by the employees, including outside union agents.  OSHA's new policy will undoubtedly encourage unions to get involved in OSHA inspections in non-organized facilities as a means of gaining access to the facility.  In short, these OSHA developments provide an open door to many union organizers targeting the healthcare industry — an industry sought after by labor organizations in recent years. 

Now more than ever, healthcare employers should engage in vigorous compliance with federal and state safety standards. 


NLRB Has Full Complement Of Board Members


The Senate confirmed all five of the President's nominees to serve as National Labor Relations Board (the "Board") members on July 30, 2013.  This gives the Board a full complement of Senate-confirmed members for the first time in a decade. 

The Board now includes Democrats Board Chairman Mark Gaston Pearce, whose term was set to expire in August, Kent Hirozawa, who has served as Pearce's chief counsel, and Nancy Schiffer, a retired associate general counsel at the AFL-CIO. The two Republican members are Philip Miscimarra, a partner at Morgan Lewis & Bockius LLP, and Harry I. Johnson III, a partner at Arent Fox LLP.  

The nominations of Hirozawa and Schiffer on July 16, 2013 were part of a Senate deal to avert a filibuster showdown.   Hirozawa and Schiffer replaced the previous renominations of Richard F. Griffin, Jr. and Sharon Block, on February 13, 2013.  One may recall that it was their appointment as Board Members on January 4, 2012, during what the President considered to be a recess, that led to the D.C. Circuit's Noel Canning decision that the Senate was not actually in recess and the appointments were unconstitutional.   That decision is currently on appeal to the U.S. Supreme Court. 

Republicans engaged in efforts to block the Griffin and Block nominations, as well as several other nominations, and Democrats countered by threatening a rule change to end filibusters of executive nominations. As a compromise, Democrats agreed not to force the rule change, and Republications agreed  not to  filibuster the two new nominees or Pearce's renomination.

The new nominations remove any doubt about Board authority going forward and are not expected to cause a shift in the Board's approach to labor law issues, because the Board still contains a Democrat majority.  Further, even if Noel Canning is upheld on appeal to the U.S. Supreme Court, the new Board will be able to reissue all the decisions called into question.



Don't Forget To File Your EEO-1 Reports


All private employers who are subject to Title VII and have at least 100 employees must file the Employer Information Report ("EEO-1 Report"). The Equal Employment Opportunity Commission ("EEOC") requires that the EEO-1 Report must be filed by September 30, 2013.  In addition, private employers who have fewer than 100 employees, but are owned or affiliated with one or more other companies, or who have centralized control or management with other companies, such that the group of companies is a single enterprise may also have to file the EEO-1 Report.  Where such an enterprise employs at least 100 employees, the company must file an EEO-1 Report.  Most federal contractors and first-tier subcontractors are also required to file an EEO-1 Report.

The EEO-1 Report requires the disclosure of various types of company information, including federal contractor status, and employment data by job category, race/ethnicity, and gender.  The EEOC prefers that employers file the EEO-1 Report online using the EEOC's website.  For more information, click here to access the EEOC's website about EEO-1 Reports.


Employer's Back Door Settlement of FLSA Claim Backfires


An employer's settlement of a Fair Labor Standards Act claim directly with a former employee rather than with the former employee's attorney was invalid and should not have been approved by the federal district court, according to a recent decision by the Eleventh Circuit Court of Appeals, Nall v. Mal-Motels, Inc. (11th Cir., July 29, 2013). 

Candace Nall worked for Mal-Motels, which is owned by Mohammad Malik.  Nall quit her job because she was not being paid overtime.  She then hired an attorney and filed suit against Mal-Motels and Malik. Malik, who apparently did not want to pay an attorney any more than he wanted to pay Nall overtime, filed an answer.  Malik then met with Nall to discuss a settlement of her lawsuit.  Malik told Nall she was "ruining his business" and proposed a settlement of two thousand dollars in exchange for a dismissal of the lawsuit.  Nall, who was homeless and needed the money, accepted the settlement and filed a voluntary dismissal of the case.  The court rejected the dismissal because it had not been filed by her lawyer.  Malik then hired a lawyer, who moved to enforce the parties' settlement.  At the hearing on the motion to enforce the settlement, Nall's attorney objected to the settlement. Nevertheless, the court approved the settlement as "a fair and reasonable resolution of a bona fide dispute under the FLSA" and dismissed her complaint. 

On appeal, the Eleventh Circuit reversed.  The court began by reaffirming the rule stated in Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982) that back wage claims arising under the FLSA can be settled or compromised only by the Department of Labor or by a court-supervised settlement that results in a "stipulated judgment" after the court has scrutinized the settlement for fairness.  The settlement did not meet the Lynn's Food Stores requirement of a stipulated judgment because "it takes two (or more) to stipulate," the court wrote, "and a judgment to which one side objects is not a stipulated one."  Although Nall had agreed to the settlement, the fact that Nall's attorney objected to the settlement was significant: 

When a plaintiff's attorney asks the district court to reject a settlement agreement that was reached without the attorney's knowledge or participation, whatever else the judgment approving the agreement may be, it is not a "stipulated judgment" within the meaning of Lynn's Food.

Employers should take a couple of lessons from the Nall decision.  First, hire a lawyer if your company is sued under the FLSA.  A non-lawyer cannot represent a corporation and is probably unqualified to understand the rules regarding the settlement of FLSA cases.  Second, if the plaintiff is represented by an attorney, do not attempt a "back door" settlement directly with the plaintiff.  Cutting out the plaintiff's attorney may seem like a clever idea, but the plaintiff's attorney will not simply go away.  In the long run, you will pay more by doing what Malik did than by defending the case the right way.  But you don't have to take my word for it. The Eleventh Circuit's opinion in Nall begins with this observation:

This appeal grew out of an effort by two people to settle an FLSA lawsuit involving an overtime claim.  They attempted to settle the litigation without the advice and assistance of attorneys, which only led to the involvement of attorneys and more litigation.  The case presents issues about how a lawsuit involving an FLSA claim can be settled, and it demonstrates how a few dollars saved can lead to a lot more dollars spent.



Supervisor Misconduct Alone is Insufficient to Impute Employer Liability Under the OSH Act


On July 24, 2013, in Comtran Group, Inc. v. U.S. Department of Labor, the U.S. Court of Appeals for the Eleventh Circuit overturned a final decision of the Occupational Safety and Health Review Commission ("Review Commission") and issued an important decision affecting employer liability under the Occupational Safety and Health Act ("OSH Act") in a case involving supervisor misconduct.  

A supervisor for the employer, Comtran Group, was digging in a six-feet deep trench with an unprotected five-feet high "spoil pile" at the edge of the excavation — a violation of an OSHA standard.  The case on appeal before the Eleventh Circuit involved the Department of Labor's contention that it is appropriate to impute a supervisor's knowledge of his own violative conduct to his employer under the OSH Act, thereby relieving the Secretary of Labor of her burden to prove the "knowledge" element of her prima facie case.  In reversing the Review Commission's decision, the Eleventh Circuit answered the question of first impression for this circuit in the negative.

In disagreeing with the Review Commission, the Court found that the Secretary failed to show that the employer knew or should have known that the OSH Act was being violated.  To establish employer liability for OSH Act violations, the DOL must show all of the following:

  • The regulation cited applied; 
  • It was violated;
  • That an employee was exposed to the hazard that was created; and
  • The employer "knowingly disregarded" the OSH Act’s requirements.

In Comtran, the DOL established the first three prongs of the four-prong test, but the Eleventh Circuit found that the DOL failed to prove the knowledge element. Even more importantly, the Eleventh Circuit decided that the DOL cannot meet its burden under the fourth prong by supervisory misconduct alone.  

The Court noted that there's a distinction between a supervisor's knowledge of a subordinate's misconduct, which can be imputable to an employer, and the supervisor's knowledge of his own misconduct. An employer can only act through its agents, of course, and the supervisor is the employer’s "eyes and ears," such that his knowledge is the employer’s knowledge. However, when the misconduct is the supervisor's own, the employer in such instance has no "eyes and ears," the Court stated. "It is, figuratively speaking, blind and deaf. To impute knowledge in this situation would be fundamentally unfair." The result would be arbitrary and capricious, the Court said, and not in accordance with the law;  thus, it reversed the Review Commission’s decision.


Yes, You Can Fire an Employee Because She is Hot, Iowa Supreme Court Affirms


Last year we reported on the Iowa Supreme Court's decision in Nelson v. James H. Knight, DDS (Iowa, December 21, 2012), in which the court held that a dental practice did not discriminate against a female assistant by terminating her because her good looks and personal relationship with the dentist triggered jealousy on the part of the dentist's wife.  The court rejected the claim of Melissa Nelson that her boss, Dr. Knight, terminated her because of her gender and would not have terminated her if she had been male.

Recently, after some negative media coverage and a petition for rehearing filed by Nelson, the Iowa Supreme Court reconsidered its decision and issued a revised opinion. But the result was the same. The court affirmed the district court's decision to dismiss Nelson's claim. 

On first blush the court's decision may seem unjust.  But, in fact, it is well-supported by precedent and consistent with the purpose of Title VII – to prevent discrimination on the basis of certain protected statuses, not on the basis of personal relationships. The court noted that there is a substantial body of case law holding that sexual favoritism, where one employee is treated more favorably than members of the opposite sex because of a consensual relationship with the boss, does not violate Title VII.  Following the same logic, treating an employee unfavorably because of such a relationship does not violate the law, either.  

The court acknowledged the unfairness of the situation to Nelson, who did not initiate any sexually suggestive conduct with Dr. Knight or do anything wrong.  But the court noted that "Title VII and the Iowa Civil Rights Act are not general fairness laws, and an employer does not violate them by treating an employee unfairly so long as the employer does not engage in discrimination based upon the employee's protected status."  The court concluded that Nelson was fired not because of her gender – there were several other women in the office who were not let go – but because of her good looks and personal relationship with Dr. Knight.  Nelson's termination was undoubtedly unfair, but it was not illegal.


Employer Affordable Care Act Mandate Delayed


The Treasury Department has just announced that the employer penalty provisions of Health Care Reform, which were set to go into effect on January 1, 2014, will now be delayed until 2015. The delay applies only to the employer penalty provisions and certain related information reporting requirements. At least for now, the implementation of the Health Insurance Marketplaces (Exchanges) and the requirement that individuals obtain coverage (the Individual Mandate) are still scheduled to go into effect in 2014, along with other scheduled requirements. It also appears that, as of now, employers will still be required to provide Marketplace Notices to employees as of October 1.
The delay will be welcome news for employers that have been struggling with the complexities of the penalty provisions and the lack of guidance on key issues. We are expecting further guidance on how the rest of Health Care Reform will work before the end of summer. For more information about the announcement, please see Health Law RX Blog.


Employees Asserting Retaliation Must Meet Higher Causation Standard, Supreme Court Rules


The explosion of retaliation claims may skid to a halt or at least slow down after the Supreme Court's decision this week holding that plaintiffs making Title VII retaliation claims must establish that their protected activity was a "but-for" cause of the alleged adverse action by the employer.

In University of Texas Southwestern Medical Center v. Nassar, the Supreme Court held that the text, structure, and history of Title VII demonstrated that merely showing that an employee's conduct in engaging in protected activity was "a motivating factor" in the employer's action was not enough.

That holding should eliminate what's become a standard practice from the employee playbook: when the employee senses discipline or termination on the horizon, the employee files a claim of discrimination based on a protected category/status such as age, sex, or race. Then, when the discipline or termination comes to pass, the employee asserts it was in retaliation for complaining of discrimination.

Employers should be thrilled that the Supreme Court saw that play clearly and removed it from the employee arsenal.  As the Court noted, the number of retaliation claims has nearly doubled in the last 15 years and has outstripped every kind of status-based discrimination except race.  The Court paid heed to the burden those claims place on employer and court resources, noting that the "proper interpretation" of the causation standard is "of central importance to the fair and responsible allocation of in the judicial litigation systems."

The Supreme Court also refused to give credence to the EEOC guidance manual's interpretation of Title VII that an employee could show retaliation merely by establishing that engaging in protected activity was "a" motivating factor. The Court said the agency's guidance on this issue was not entitled to deference under applicable law because it failed to address the statutory scheme, lacked a persuasive discussion and involved circular reasoning.  This could open the door to further challenges to claims that the EEOC's guidance on an issue is entitled to deference from the courts.


Supreme Court Affirms Narrow Definition of Supervisor Under Title VII


The Supreme Court has ruled in Vance v. Ball State University that the authority to take tangible employment actions is the defining characteristic of a supervisor, and that without such authority an employee is not a supervisor for purposes of analyzing an employer's liability under Title VII of the Civil Rights Act of 1964. 

The significance of the Vance case turns on the fact that under Title VII, the analysis of an employer's liability for unlawful harassment depends on the status of the harasser. If the harassing employee is a co-worker, the employer is liable only if it was negligent in controlling working conditions. But a different analysis applies if the harasser is a supervisor. If the supervisor's harassment results in a tangible employment action, the employer is strictly liable. If no tangible employment action is taken, the employer may escape liability by establishing, as an affirmative defense, that: (1) the employer exercised reasonable care to prevent and correct any harassing behavior; and (2) that the plaintiff unreasonably failed to take advantage of the preventive or corrective opportunities that the employer provided.

Maetta Vance is an African-American woman who worked for Ball State University (BSU). She alleged that a fellow BSU employee, a white woman named Saundra Davis, subjected her to a racially hostile work environment in violation of Title VII. Although Vance alleged that Davis was her supervisor, it was undisputed that Davis did not have the power to hire, fire, demote, promote, transfer, or discipline Vance. The trial court ruled that a negligence standard governed the case because Davis was not a supervisor as the Seventh Circuit had defined that term in previous decisions. Applying the negligence standard, the trial court ruled that BSU could not be found liable because the evidence showed that BSU was not negligent – it had responded reasonably to the allegations of racial harassment. The Seventh Circuit Court of Appeals affirmed the trial court's dismissal of the case. 

The Supreme Court affirmed the Seventh Circuit's bright-line test for defining a supervisor:

We hold that an employer may be vicariously liable for an employee's unlawful harassment only when the employer has empowered that employee to take tangible employment actions against the victim, i.e., to effect a "significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.

In so holding, the Court rejected as "nebulous" the "open-ended approach advocated by the EEOC's Enforcement Guidance, which ties supervisor status to the ability to exercise significant direction over another's daily work." The Court also addressed the dissenting justices' concern that the majority opinion will leave employees unprotected against harassment by co-workers who, though they are not supervisors, still have the authority to assign unpleasant tasks or alter the work environment in objectionable ways. In these cases, the majority noted, a victim of harassment can still prevail by showing that the employer was negligent in preventing the harassment. Negligence can be shown by evidence that an employer did not monitor the workplace, failed to respond to complaints, failed to provide a system for registering complaints, or effectively discouraged complaints from being filed. The negligence standard, the court noted, "is thought to provide adequate protection for tort plaintiffs in many other situations."

Here are a few quick takeaways for employers in understanding the Vance decision:

  • For employers in the First, Seventh and Eighth Circuits, Vance reaffirms the existing, narrow definition of supervisor that applied in those circuits before the Supreme Court decided Vance.
  • For employers in the Second and Fourth Circuits, and in other circuits that had not addressed the issue squarely, the Vance decision's narrow definition of supervisor is good news and makes a finding of employer liability for harassment less likely. 
  • All employers should nevertheless remain vigilant against unlawful harassment, as even co-worker harassment can result in employer liability if the employer is found negligent. Indeed, the Court in Vance expressed skepticism that there are many cases in which the actions of a co-worker who is able to direct the victim's daily work activities in a meaningful way, and who creates an unlawful hostile environment, would not result in a finding of negligence by the employer. 
  • Vance may not be the final word on who is a supervisor under Title VII. In her dissenting opinion, Justice Ginsburg stated that "[t]he ball is once again in Congress' court to correct the error into which this Court has fallen, and to restore the robust protections against workplace harassment the Court weakens today." The last time Justice Ginsburg said that, the Lily Ledbetter Fair Pay Act was born.


Email Policy Cannot Be Used to Squelch Protected, Concerted Activity


Employers must ensure that their email policies advise employees of the appropriate use of email.  Likewise, employers must enforce appropriate use policies in a consistent matter.  However, employers do not have unfettered discretion to discipline employees for "inappropriate" email content.  In a recent ruling, the NLRB found that an employer had committed an unfair labor practice when disciplining employees over emails that constituted concerted activity protected by section 7 of the National Labor Relations Act.   

The underlying facts date back to April 2007, when NASA advised all of its facilities, including its Jet Propulsion Laboratory ("JPL") operated by Caltech, that employees would have to undergo background checks or they would be terminated.  In 2007, 28 employees filed suit against NASA and other entities seeking to enjoin the background check procedure.  In January 2011, the court ruled JPL could proceed with the background checks.  JPL notified employees of the court's ruling and advised them they would need to complete the background checks to obtain the badges required to enter the Pasadena facility.  

Following JPL's email concerning the lawsuit, several employees emailed co-workers about the court's ruling.  JPL concluded that several of these employees' emails violated its email policies and issued written warnings.  The written warnings prompted a barrage of subsequent emails from employees objecting to the discipline.  JPL eventually had to send an email requesting that the employees cease hitting "reply all" -- because 4600 individuals were receiving emails about disciplining certain employees over email content.  In one email, JPL practically begged: "Out of respect for people's time, the … management team would like to ask you not to reply to this email address until we can fix the situation."  Unfortunately, this only prompted more employee responses.  One employee shot back (hitting "reply all") -  "I for one have found the responses enlightening."   

The employees who received the written warnings filed an unfair labor practice charge with the NLRB.  Caltech was found to have committed unfair labor practices for issuing warnings to employees over emails expressing objections to the mandatory background check process or the court's ruling.  Caltech appealed the outcome but it was affirmed by an Administrative Law Judge, who noted that the employer had offered no evidence of disciplining employees following other mass emails, involving the sale of Girl Scout cookies, lunch specials at a local restaurant, United Way campaigns, etc.  "[A]n employer may not allow use of its computers for non-work related activities and discriminate against use of the computers for similar Section 7 activities[,]" the ALJ noted.



Silence is Golden for Employee Suspended Without Pay


Employers:  Read and understand your employment agreements with your employees, and don't assume you have contractual rights that are not spelled out in the agreements.  Those are among the lessons to take from a recent decision by Florida's Second District Court of Appeal, Nancy Havens, D.D.S. v. Coast Florida, P.A., Case No. 2D12-1047 (June 12, 2013).

Nancy Havens is a dentist who had a five year employment agreement with Coast Florida, P.A. ("Coast"). Three years into the agreement, Coast suspended her without pay pending an internal investigation.  Havens demanded that her compensation be reinstated during her suspension.  When Coast refused, Havens resigned her employment and sued Coast.  The trial court dismissed the complaint, but the Second DCA reversed and remanded the case to the trial court, ruling that Havens stated a claim for breach of the agreement.  The result is that Coast may have to pay Havens out for the remaining two years of the agreement.

The reason?  The agreement was silent on the issue of suspension.  Ruling that the substantive right to suspend could not be read into the contract, the Second DCA noted that if there was an ambiguity on the right to suspend, the ambiguity must be construed against Coast, the drafter of the agreement.  

So what did Dr. Havens do to prompt an internal investigation?  The Second DCA's opinion does not say, and it does not matter.  Even if Dr. Havens engaged in egregious wrongdoing, her employment agreement did not give Coast the right to suspend her without pay.  It is that simple.  The employment agreement contained a "cause" termination provision.  If Coast had cause to terminate Havens, it should have invoked that provision rather than suspending her without pay.  Coast's decision to suspend Havens without pay despite the agreement's silence on this issue may cost the dental practice dearly.  Employers should take heed.


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