HIGHLIGHTS FOR THE MONTH OF JANUARY 2010

By: Elizabeth Torphy-Donzella

RECENT DEVELOPMENTS

Non-Disabled Job Applicants May Sue Under Americans With Disabilities Act For Improper Pre-Offer Medical Inquiries.

The U.S. Court of Appeals for the Eleventh Circuit has ruled that a job applicant who is subject to a pre-offer medical inquiry in violation of the Americans with Disabilities Act (“ADA”) may bring a legal claim against the employer, even if the applicant is not disabled.

Facts of the Case: In Harrison v. Benchmark Electronics Huntsville, Inc, the employer had a practice of obtaining labor through a temporary agency as a means for evaluating candidates for employment. Temporary workers who showed promise were invited to apply for permanent employment. The plaintiff, who had epilepsy that was controlled with medication, was invited to apply and submitted to a pre-employment drug test. When it came back positive, the plaintiff was directed to speak with the Medical Review Officer (MRO) who, in the presence of the hiring supervisor, asked the plaintiff what medication he took and how long he had been taking it. When the Plaintiff revealed that he had epilepsy that was controlled by medication the MRO asked him how long he had been disabled. The MRO cleared plaintiff for hire but the employer declined to extend an offer, asserting that the plaintiff’s attitude was bad. The plaintiff sued, claiming that the pre-offer medical inquiry violated his rights under the ADA and that he was denied employment based on a perception that he was disabled (at the charge stage, the EEOC had determined that plaintiff was not disabled and he did not argue otherwise in his lawsuit). The employer argued that a non-disabled person cannot assert a claim for a violation of the ADA’s pre-offer medical inquiry prohibitions and even if such a claim could be asserted, because the drug test results indicated use of barbiturates, the inquiry was permissible. The district court agreed and granted summary judgment.

The Court’s Ruling: The Court of Appeals reversed. The court first determined an issue of first impression in the Circuit and held that a private right of action for violation of the ADA’s pre-offer medical inquiry rules exists regardless of the plaintiff’s disability status (perceived or otherwise). Thus, a non-disabled applicant could assert a claim. Noting that a non-disabled plaintiff does need to show damage arising from the inquiry to proceed with the claim, the court found that the denial of employment and associated economic losses sufficed. The court also rejected the district court’s conclusion that the post-drug test questions were permissible under the ADA. While the Court of Appeals recognized that the ADA permits an employer to validate such a test by asking about the lawful use of drugs (such as asking what medications the applicant is taking that may have resulted in a positive test and whether he/she is taking lawful prescriptions), the district court failed to acknowledge the limited scope of the permissible inquiry. The appeals court found that a jury could conclude that the questions asked by the MRO, particularly with the supervisor present, exceeded what is permissible under the ADA.

Lessons Learned: While tests for the unlawful use of drugs do not constitute medical inquiries, this case demonstrates that follow up questions will run afoul of the ADA if they are not strictly limited to that which is necessary to address the reason for a positive test. In addition, such inquiries should be made by an MRO or other medical professional without the participation of company officials to ensure that the company cannot be deemed to have knowledge of an applicant’s medical information. Finally, it should be noted that under the amendments to the ADA enacted last year, this plaintiff would be considered disabled because the law now requires an individual’s disabled status to be assessed in its uncontrolled state. Controlled epilepsy clearly is now a disability under the ADA.

Restrictions Imposed By An Employer After The Onset Of Union Organizing Activity Violated National Labor Relations Act.

A decision and order of the National Labor Relations Board finding that an employer’s implementation of restrictive policies after the onset of a union organizing drive was upheld recently in Loparex LLC v. NLRB.

Facts of the Case: After the company implemented some unpopular policies, previously dormant efforts to organize employees to unionize resurfaced. Thereafter, when company bulletin boards were used for pro-union postings, the company implemented a policy requiring that company bulletin boards be used only for official postings. The company also prevented employees from distributing union literature in the parking lot. When challenged by the union, the company responded that the flyers that were placed on windshields presented an unacceptable risk of litter. Finally, the company informed its hourly shift leaders that they were supervisors within the meaning of the National Labor Relations Act (“NLRA”) and therefore prohibited from participating in organizing activities. In response, the union filed unfair labor practice charges claiming that the policies and actions were unlawful attempts to interfere with employees’ Section 7 right to organize. The NLRB found for the union and the employer appealed.

The Court’s Ruling: The U.S. Court of Appeals for the Seventh Circuit upheld the NLRB’s determinations. With respect to the implementation of the restriction on the use of bulletin boards, the court noted that employers are permitted to restrict union postings where such restrictions apply to other non-official communications and are not motivated by union activity. The employer denied that it was aware of the activity when it adopted the policy but the court concluded that the NLRB properly credited contrary evidence. The union activity in the three month period prior to change in policy was apparent (employees were wearing pro-union apparel and leaving union buttons near the time clock) and employees had, prior thereto, been free to use the bulletin board for non-official postings. The company’s prohibition on employee distribution of union literature in the parking lot also was found to be unlawful. While employers can limit distribution that disrupts employees’ work, they cannot limit off duty distribution of literature by employees in parking lots. The court rejected the company’s claim that its actions were simply aimed at litter prevention as a post-hoc rationalization. Finally, the employer’s assertion that shift leaders were statutory supervisors was rejected. The employer’s shift leaders were working foremen who assisted other crew members with questions and assigned them to work on machines but otherwise worked under the supervision of team managers. The authority to make shift work assignments did not constitute the sort of authority to “responsibly direct work” required to create supervisor status under the NLRA.

Lessons Learned: Employers that think they can deal with union organizing when and if a union ever comes on the scene may be in for an unpleasant surprise. As this case demonstrates, the law makes it difficult for companies to implement changes once a union begins to organize and the risk of unfair labor practices resulting from any changes is high. That is why we advised in the Top Tip in our December E-Update, the best way to defeat union organizing is to create a work environment in which employees do not feel that union representation is needed. In addition, employers must ensure that policies that will permit the legitimate control of organizing activity on company property and company time are in place and consistently enforced if they wish to be able to use these policies in the event of union organizing.

TAKE NOTE

Fair Labor Standards Act. A recent case from the U.S. Court of Appeals for the Third Circuit (which covers Pennsylvania, Delaware and New Jersey) confirms that although a job may require a high degree of skill and training, it is not within the Professional Exemption from overtime under the FLSA unless it also requires a prolonged course of specialized intellectual of study. In Pignataro v. Port Authority of New York and New Jersey, the court found in favor of two helicopter pilots who claimed that they were misclassified as exempt professionals and thereby denied overtime pay. Although working as a helicopter pilot required that the individual earn a commercial pilot certificate with a specialized rating, log 2000 hours of flying in helicopters, earn a special FAA certificate, and have knowledge of FAA rules and regulations, the job only required a high school diploma or GED. The specialized instruction and certifications required to be a pilot were insufficient to come within the ambit of the “learned” professional exemption, which the court held required a prolonged course of intellectual instruction (that is, instruction requiring abstract and profound thinking). This is consistent with the case cited in our November E-Update and confirms that employers must carefully scrutinize positions before deciding that they come within this (or any) FLSA exemption. “Important” or “difficult” work does not necessarily equate to “exempt” work.

Reasonable Accommodation for Disability. After a job transfer to a hospital unit housing the criminally mentally ill, the plaintiff exhibited signs of distress and asked to be transferred out of the unit. She was not transferred and quit. She claimed that the employer should have been on notice that she was suffering from a mental disability and granted her request to transfer out as a reasonable accommodation. The U.S. Court of Appeals for the District of Columbia rejected the plaintiff’s failure-to-accommodate claim in Stewart v. St. Elizabeth’s Hospital. The Court noted that when questioned about her emotional reaction to a patient’s behavior, the plaintiff told her supervisor that her distress was related to a personal matter. This, coupled with the plaintiff’s satisfactory completion of her work assignments, excellent attendance record, and minimal use of leave time (all for family matters) obviated any inference that plaintiff’ was laboring under a mental disability or that her request for a job transfer was to accommodate a mental disability. Thus, her claim under the Rehabilitation Act (the federal sector analogue to the ADA) was not viable.

Covenants Not To Compete. The U.S. Court of Appeals for the Third Circuit recently ruled that an agreement that restricted an employee from competing with his former employer for two years on a nationwide basis was enforceable under Pennsylvania law. Although the plaintiff claimed that a change in ownership foreclosed the employer from enforcing the restriction because the agreement had not been assigned in the sale, the court rejected this contention as well. In Zambelli Fireworks Mfg. Co, Inc. v. Wood, the plaintiff was employed for seven years by one of the oldest and largest fireworks companies in the United States. Plaintiff came to the job with a theater degree and only limited pyrotechnics skills (chiefly involving home fireworks). He had no knowledge of aerial fireworks displays. As a result of his employment, the plaintiff was given access to all of the company’s formulas and price lists as well as its customers. Treated like a member of the family that then owned the business, he also received personal training on the layout and choreography of fireworks and firsthand experience in aerial firework displays. He also was sent to the Pyrotechnic Guild Institute and became one of only 68 certified trainers in the U.S. A non-compete agreement he entered into prohibited him, for a two year period after departing employment, from engaging in the sale or production of pyrotechnic displays, from soliciting clients or employees, and from disclosing confidential company information. Shortly after the family transferred ownership of the company to new investors by a stock sale, the plaintiff quit and opened a competing business. The former employer sued and obtained an injunction. In ruling that the non-compete was enforceable and the injunction was proper the Third Circuit Court of Appeals rejected all of the plaintiff’s arguments against enforcement. First, the court ruled that the company did not need to assign his non-compete agreement to the new owner for it to be enforceable because, under Pennsylvania law, a stock sale (unlike an assets sale), does not alter the corporate entity. Second, the court found that the agreement was based on legitimate protectable interests. As a result of his employment, the plaintiff was given considerable client contact and attendant familiarity with the company’s confidential business information. The post-employment limits thus protected the company’s customer goodwill. In addition, the specialized training and guidance in pyrotechnics funded by the company that permitted plaintiff to be one of only 68 certified trainers in the U.S. also justified the post-employment restrictions under Pennsylvania law.

New Jersey Law Against Discrimination. In an expansive ruling, the Superior Court of New Jersey Appellate Division has held that an individual business owner who claimed that another company refused to do business with her firm when she rebuffed the sexual advances of that company’s branch manager can sue for sex discrimination under the State Law Against Discrimination (LAD). In J.T’s Tire Service, Inc. v. United Rentals North America, Inc., a female business owner sold tires to a rental company for many years. After she rejected the sexual advances of the rental company’s branch manager, however, she claimed the he told her she had “made a very poor decision” and began directing the company to delay payments to her firm. Shortly thereafter, the rental company stopped doing business with her entirely. She brought suit, claming that the actions were unlawful sex discrimination under the LAD and retaliation for her rejection of the unlawful conduct. The trial court concluded that the business decisions were not discrimination or retaliation within the meaning of the statute. The appellate court reversed, holding that the LAD prohibits a discriminatory refusal to do business and that refusing to do business because of a rejection of sexual advances violated the LAD. The court rejected the company’s argument that sexual harassment is only recognized as sex discrimination in the employment context. The LAD, the court noted, always has been liberally construed: “The quid pro quo sexual harassment alleged in the complaint if legally permitted, would stand as a barrier to a woman’s ability to do business on an equal footing with men.”

TOP TIP

Companies that impose automatic time deductions for meal breaks risk exposure to class-wide liability under the FLSA if they end up “shorting” nonexempt employees for hours worked as a result of interrupted or skipped lunch breaks. A recent spate of lawsuits against healthcare employers for alleged failure to pay wages due as a result of such policies demonstrates this.

Companies use auto-deductions for meal breaks for a variety of reasons. Sometimes it is because automated timekeeping systems require a default meal period to be input. In other instances, the time expended getting to and from a remote time clock may be so great as to militate in favor of a default deduction. In still other cases, punching in and out for lunch may be viewed by employees as motivated by employer micromanagement, making auto-deduction a “kinder and gentler” method of accounting for time. The FLSA risk, however, arises when the employer fails to adopt practices that account for actual variation (i.e. the shorted lunch hour interrupted by work). If auto-deduction is the only practical method available for accounting for unpaid lunch breaks, the following should help companies avoid FLSA liability:

• Inform employees that they are required to report any variation in the length of their lunch break to their supervisor so that their time record can be adjusted.
• Require supervisors to review and sign off on time records to ensure that they reflect actual hours worked.
• Make sure that the employee handbook includes a policy that advises employees that they should report any improper deductions or errors in their pay to their supervisor or to human resources promptly so that appropriate corrections can be made.

Finally, if auto-deduction is in place simply to avoid the “micromanaged employee” syndrome, consider explaining that punching in and out is required not for punitive reasons, but instead to ensure that employees are fully and fairly compensated.

For greater clarification of any of these issues, you may contact any Shawe Rosenthal attorney.