United States: Labour And Employment Newsletter ~ Summer 2000

Meanwhile, the Department of Labor ("DOL") has sought approval from the Office of Management and Budget ("OMB") to mail out two surveys on July 5th, neither of which is compulsory, that are designed to gather information on the policies and benefits employers have developed pursuant to the Family Medical Leave Act ("FMLA"). The DOL's two surveys will be sent to 2,400 business establishments and 1,500 employees. Employers will be selected randomly from a Dun & Bradstreet business list. According to the DOL, employees contacted will also be selected randomly from a commercially available list. Only those employees who indicate in an initial phone interview that they either took FMLA leave, needed FMLA leave, or needed leave in addition to that granted under the FMLA will actually receive the survey.

Recipients of the OFCCP's mandatory Equal Opportunity Survey will have 30 days to complete the 3part form, which requests general information about the employer's affirmative action programs, data on hires, promotions and terminations, as well as information relating to the compensation and tenure of fulltime employees. While the first 3,000 employers to receive the survey were "flagged" by the OFCCP's Equal Employment Data System List, the other 4,000 companies receiving the survey are, according to the OFCCP, establishments that were evaluated by the OFCCP some time on or after October 1, 1997. The OFCCP states that survey results from the second group will not be used to schedule a new compliance evaluation. The initial mailing of this survey to 7,000 employers is only a test pilot for an additional 53,000 surveys the OFCCP hopes to send out this fall. Before it approves the additional survey, however, the OMB has required the OFCCP to evaluate the data from the first mailing.

The DOL's voluntary FMLA survey will question employers about their policies with regard to leave for family and medical reasons, as well as their employees' use of this leave. The employee survey will ask employees whether they have needed but not taken leave under the FMLA, how many leaves they took and for what reasons, and the time frame during which leaves were taken. Even though the survey is voluntary, employers and employees selected to take the survey will receive a letter from the Secretary of Labor encouraging their participation.

MBP labor group members are available to discuss any questions employers might have about completing any of the surveys. In particular, MBP can counsel employers who are scheduled by the OFCCP for a full compliance review.

On May 4, 2000, the OFCCP published proposed revisions that would significantly streamline the regulations that govern how federal contractors write their affirmative action plans. The current regulations, which are informally known as "602" and apply to every employer with more than 50 employees and more than $50,000 in annual federal contracts, establish extensive requirements for federal contractors' written affirmative action plans. However, the proposed changes, published for 60 days to allow for public comment, would consolidate those requirements.

Specifically, the revised regulations replace the currently required detailed "workforce analysis," with an organizational profile. Further, the much-criticized "eight-factor availability analysis," which seeks to identify whether women and minorities are being employed at the rate that would be expected, will be replaced by a two-factor analysis. The new analysis requires contractors to compare their workforce demographics to their local populations using only external and internal availability.

The proposed revised regulations contain the first major changes to the substance of the regulations since 1970. The proposed regulations state that the "OFCCP would like to place greater focus on contractors' actual non-discrimination and affirmative action activities and less focus on item-by-item review of whether contractor affirmative action plans meet detailed technical standards." According to Assistant Secretary of Labor Bernard Anderson, "the simple intent of the regulations is to reduce paperwork and to improve the compliance evaluation process."

In Sheets v. Integrated Information Utility Sys., Inc., a federal district court in Oregon required the employer to defend a lawsuit filed there by a telecommuting employee even though the employer was based in Colorado and did not conduct business in Oregon.

The employer recruited the plaintiff in Oregon and entered into an employment contract with him that allowed him to "telecommute." Eighteen months later the employer discharged the employee.

The employee filed a breach of contract action in federal court in Oregon. The employer moved to dismiss for lack of personal jurisdiction, arguing that its headquarters were in Colorado, that it did not have offices in Oregon, and that it was not soliciting business in Oregon.

The district court denied the motion to dismiss, finding that the telecommuting arrangement provided an adequate basis for asserting personal jurisdiction over the employer. While acknowledging that other courts have reached a different result on similar facts, the district court concluded that its decision was consistent with the Supreme Court's holding in Burger King Corp. v. Rudzewicz that "parties who reach out beyond one state and create continuing relationships and obligations with citizens of another state are subject to regulation and sanctions in the other state for the consequences of their activities."

According to a recent directive issued by the Occupational Safety and Health Administration (OSHA), employers will not be held liable for the safety of employees' home offices. This directive departs from an OSHA opinion letter from late 1999 which suggested OSHA would hold an employer liable for the safety and health of telecommuters and other at home workers. But employers are not completely off the hook.

The directive distinguishes between home offices (defined as office work activities in a home-based work-site such as filing, keyboarding, computer research, reading, and writing) and other home-based work-sites, such as home manufacturing operations. In the case of home offices, OSHA will merely let employers know of complaints about home office conditions but will not follow up with the employer or employee.

In the case of other home-based work sites, however, OSHA will take a more active role in monitoring and requiring employers to comply with health and safety standards. The directive suggests that OSHA will inspect home-based work sites if it receives a complaint or referral regarding a safety or health violation that "threatens physical harm or poses imminent danger." For example, past OSHA inspections of homework places have uncovered use of unguarded crimping machines and the handling of adhesives without protective gloves.

The directive makes it clear that OSHA will continue to hold employers responsible in home work sites for "hazards caused by materials, equipment, or work processes which the employer provides or requires to be used in an employee's home." Finally, employers who are currently required to inform OSHA of work-related injuries and illnesses will continue to be responsible for keeping such records even where the incident occurs in a home office or other home-based work site.

Yvette Cruz began working at Coach Stores, Inc. in 1990. In June of 1994, her supervisor told her that she would become the Co-ordinator of Systems Operations when the position was created in early 1995. The position was never created. In November of 1995, a male co-worker of Cruz made a sexually suggestive remark to her. The two argued and Cruz slapped the co-worker who placed her in a headlock. The altercation ended when Cruz's supervisor intervened. Coach investigated the incident and ultimately terminated both Cruz and the co-worker.

Cruz filed suit alleging that Coach failed to promote her, discharged her because of race, retaliated against her for exercising her Title VII-protected rights, and tolerated an environment of discriminatory harassment including racial and gender slurs. The district court dismissed the failure to promote and retaliation claims and granted Coach summary judgment on all other counts. Cruz appealed to the Second Circuit.

The Court of Appeals for the Second Circuit affirmed the dismissal of the promotion claim, finding Cruz's complaint failed to allege the existence of a job for which she had applied or was qualified, and affirmed the grant of summary judgment in favor of Coach on the discharge/race claim. Similarly, the Second Circuit affirmed the dismissal of Cruz's retaliation claim because Cruz failed to allege she engaged in activity protected under Title VII, thereby rejecting Cruz's argument that slapping the co-worker for his comments constituted "protected activity" under the statute.

The court did conclude, however, that Cruz had produced sufficient evidence of harassment to survive summary judgment where the evidence showed Coach's human resources manager frequently used racial slurs to refer to Hispanics and AfricanAmericans and commented that women should be "barefoot and pregnant."

The Court of Appeals for the Sixth Circuit recently held that an employee who suffers severe and pervasive harassment by a supervisor in retaliation for a complaint about prior harassment can pursue a claim under Title VII of the Civil Rights Act of 1964. Morris v. Oldham County Fiscal Court.

In this case the employee, Morris, complained that after she reported an incident in which her supervisor offered to revise and improve Morris' performance evaluation in exchange for sexual favors, the supervisor began to give Morris the "cold shoulder" and was overly critical of her work performance. After an additional complaint by Morris, the supervisor was moved to a different work location and instructed not to communicate directly with Morris or to be around her without a third person present. Nevertheless, Morris was subjected to more than fifteen workplace visits and thirty telephone calls from this supervisor. The supervisor also followed Morris home and threw roofing nails onto her home driveway. Morris suffered anxiety attacks due to this behavior and was compelled to take sick leave.

The Sixth Circuit concluded that Morris did not suffer any adverse employment action as a result of the supervisor's behavior. However, the Court found that Morris had suffered a hostile working environment due to the supervisor's "retaliatory harassment" of her after she made her complaint of sexual harassment. Accordingly, Morris could establish a prima facie case of retaliation under Title VII based on this "retaliatory harassment."

Significantly, the Sixth Circuit also held that "retaliatory harassment," like sexual harassment, does not, in and of itself, constitute an adverse employment action. Absent a tangible employment action, an employer is entitled to the same affirmative defense for retaliatory harassment that it is entitled to in cases involving sexual harassment. An employer may avoid liability for retaliatory harassment if it can show (a) that it exercised reasonable care to prevent and promptly correct any harassing behavior, and (b) that the employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer.

In Bellaver v. Quanex, the Seventh Circuit Court of Appeals rejected an employer's one-person reduction-in-force defense and reinstated the plaintiff's sex discrimination claim. The plaintiff, a female executive, claimed that her discharge was discriminatory on the basis of sex in that she was discharged because of her aggressive personal style. The employer moved for summary judgment arguing that the plaintiff had been discharged as part of a one-person reduction-in-force. The plaintiff had not been replaced and other employees had taken over her responsibilities. The trial court granted summary judgment in favor of the employer, holding that the plaintiff had been discharged as part of a reduction-in-force and that she had failed to identify any similarly situated male employee who was treated more favorably.

Reversing summary judgment, the Seventh Circuit held that the district court had incorrectly analyzed the plaintiff's Title VII sex discrimination claim as a discharge stemming from a reduction-in-force. The Seventh Circuit explained: "A reduction-in-force takes place when an employer decides to eliminate certain positions from its workforce. RIFs typically involve the layoff of many employees at once, and employers will not be allowed cynically to avoid liability by terming the decision to fire an employee with a unique job description as a RIF when the decision in fact was nothing more than a decision to fire that particular employee."

The Seventh Circuit took special note of the fact that the employer had admitted that it had previously notified another former employee that she had been discharged due to a reduction-in-force solely to give that employee a "facesaving" basis for her discharge.

According to the EEOC, under the ADA, an employer is required to provide reassignment as a reasonable accommodation when an employee can no longer perform the essential functions of his or her current position, with or without reasonable accommodation. The EEOC advises that an employer with a voluntary affirmative action plan must reassign a qualified, disabled employee to a vacant position even if a similarly or better qualified minority candidate was entitled to the position under the employer's affirmative action program.

This requirement, however, is not absolute. The ADA would not require an employer to offer a vacant position to a disabled employee over a minority candidate if the disabled employee was not "qualified" for the position. According to the EEOC, an employer may ensure that an employee with a disability is qualified for a vacant position by ascertaining that the individual (1) meets the requisite skill, experience, education and other job-related requirements; and (2) can perform the essential functions of the position, with or without reasonable accommodation.

While the EEOC letter is not an "official opinion" of the EEOC, such interpretative letters are frequently relied on as guides to the position the EEOC will adopt in administrative and judicial proceedings.

The Court of Appeals for the Second Circuit recently held that a plaintiff alleging that his employer failed to reasonably accommodate his disability by transferring him to a suitable position bears the burden of proving that such a vacancy existed.

Patrick Jackan began working at the Department of Labor ("DOL") as a Labor Services Representative ("LSR") in September 1981. Jackan was transferred at his request to the more physically strenuous position of Safety and Health Inspector in November of 1993. In early 1995, Jackan had spinal surgery that severely limited his ability to lift and crawl and caused him debilitating symptoms such as dizziness, headaches, numbness, and trembling. Cleared by his doctors for a "desk job," Jackan requested that he be transferred, specifically mentioning his old LSR position as a possibility. The DOL denied his request based on the civil service rules. In 1996, Jackan was discharged due to his continued absence from employment.

Jackan filed suit against the DOL, alleging that by failing to provide him a reasonable accommodation for his medical condition, it violated the Americans with Disabilities Act as well as Section 504 of the Rehabilitation Act. The trial court found that the DOL did not fail to reasonably accommodate Jackan because no vacancy existed and the civil service rules prohibited the transfer.

The Second Circuit affirmed. It agreed that plaintiff failed to meet his burden of proving that a vacancy existed at the time he requested a transfer, since there was insufficient evidence in the record on this issue. In reaching its decision, the court distinguished between a plaintiff's burden at trial of proving the existence of a vacancy from the employer's legal duty to assist an employee in identifying appropriate vacant positions at the time an accommodation is requested.

A recent Supreme Court decision establishes that states cannot be sued by public employees under the Age Discrimination in Employment Act (ADEA). In Kimel v. Florida Bd. of Regents, the Supreme Court held that Congress exceeded its authority under the U.S. Constitution when it removed States' immunity from age discrimination lawsuits by public workers.

Justice O'Connor, writing for the Court, explained that the plain language of the ADEA provisions at issue "clearly demonstrates Congress's intent to subject the States to suit for money damages at the hands of individual employees." However, the Court found that Congress did not effectuate its intention pursuant to a valid exercise of constitutional authority and, therefore, the ADEA does not successfully abrogate the States' sovereign immunity.

Justice O'Connor noted that although states are immune from suit by public employees under the ADEA, these workers are still protected by state age discrimination laws in almost every state.

The Supreme Court had also agreed to hear argument in two cases, Florida Department of Corrections v. Dickson and Alsbrook v. Maumelle, Ark., asking whether Congress acted within its power under the Fourteenth Amendment when it abrogated States' Eleventh Amendment immunity under the Americans with Disabilities Act (ADA). The Court dismissed both cases before argument because the parties settled their disputes.

On April 26, 2000, Vermont Governor Howard Dean signed a bill allowing for civil unions between gay couples. The law, which becomes effective July 1, 2000, gives gay couples virtually the same benefits that married couples receive.

This legislation follows a highly publicized and controversial opinion by the Vermont Supreme Court that held that same-sex couples are entitled, under the state constitution, to obtain the same benefits and protections afforded by Vermont law to married opposite-sex couples.

According to the Court, the state legislature could provide these benefits by making marriage available to same-sex couples or by implementing a parallel licensing or registration scheme. In response to this decision, the House Judiciary Committee of the Vermont Legislature approved the bill that was signed by Governor Dean, creating for same-sex couples the most extensive domestic partnership system in the United States.

Of course, the establishment of civil unions in Vermont for same-sex couples is relevant only to benefits under state law. The Vermont law may, however, be a precursor to a growing trend of treating same-sex couples like opposite-sex couples for benefit purposes.

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In Mackenzie v. Miller Brewing Co., the Wisconsin Court of Appeals recently reversed a widelypublicized $24.7 million jury verdict in favor of an employee who was terminated for making remarks to a female co-worker about an offcolor episode of the television show "Seinfeld." Miller Brewing terminated plaintiff Jerold Mackenzie, a 19year veteran of the company, in 1993 for "poor management judgment" after his co-worker, Patricia Best, said she was offended when Mackenzie repeatedly commented on and discussed the "Seinfeld" episode's thinly veiled references to female sexual anatomy.

Mackenzie then sued Miller Brewing, Best and Robert Smith, his former supervisor, regarding a series of events leading up to his termination. First, Mackenzie alleged that Miller Brewing and Smith made an "intentional misrepresentation leading him to continue his employment at Miller Brewing" by stating in 1987 that a company reorganization did not affect his job status and by failing to inform him that his job position had been downgraded in 1989. Second, Mackenzie alleged that Smith tortiously interfered with his prospective contract in 1992 by expressing his belief as to why Mackenzie should not be promoted. Third, Mackenzie alleged that Best tortiously interfered with his contract by "fraudulently misrepresenting" that she felt harassed by Mackenzie's references to the "Seinfeld" episode. In 1997, a Milwaukee County jury awarded Mackenzie a total of $26.6 million, including $25 million on the intentional misrepresentation claim and $100,000 against Smith for tortious interference. The jury entered a $1.5 million punitive damage award against Best. The trial court subsequently reduced the verdict to $24.7 million.

The Wisconsin Court of Appeals overturned the verdict in its entirety. The Court first concluded that Mackenzie's intentional misrepresentation claim against the employer was not independently actionable in tort. The Court also found that even if such a claim were actionable, Mackenzie failed to prove any of the elements of the claim. The Court further found that Mackenzie's tortious interference claim against his supervisor, Smith, failed because Smith's comments opposing a possible promotion of Mackenzie were privileged and Mackenzie failed to prove any interference by Smith. Finally, the Court affirmed the trial court's posttrial ruling that the jury's $1.5 million punitive damage award against Best could not stand because the jury awarded Mackenzie no compensatory damages on that claim.

A New York federal court recently upheld the decision of a securities arbitration panel awarding a former compliance director over $140,000 — including $100,000 in punitive damages — after his former employer, a brokerage firm, published false information about him in his Uniform Termination Statement ("Form U5"). Acciardo v. Millennium Securities Corp.

Raymond Acciardo, an attorney, was hired by Millennium in April 1996 as the company's Director of Compliance. According to Acciardo, he was fraudulently induced to accept this position, as he was told by Millennium executives that the company had no regulatory problems or customer complaints. Testimony at the arbitration demonstrated that Millennium had severe regulatory problems at the time that Acciardo was hired. Acciardo claimed he was discharged because he refused to participate in or ignore the company's regulatory fraud. As a member of the National Association of Securities Dealers, Millennium was required to complete a Form U5 for Acciardo, setting forth the reason for his discharge. Millennium wrote that Acciardo was fired for failure to perform his duties, for removing company documents from the office and for being the subject of a customer complaint.

Acciardo brought an arbitration action against Millennium, claiming that he was wrongfully discharged and defamed based upon what Millennium wrote in the Form U5. The arbitration panel found for Acciardo, basing its decision, in part, on the testimony of other former Acciardo employees, who stated that their Form U5s were filled with false statements. The panel awarded Acciardo approximately $35,000 for breach of contract, $5,000 in compensatory damages and $100,000 in punitive damages for defamation. In upholding the award, the court held that Millennium's statements on the Form U5 were entitled to a qualified, rather than an absolute immunity, and that the false and malicious statements were not protected by this privilege.