HIGHLIGHTS FOR THE MONTH OF NOVEMBER 2009

By: Darryl G. McCallum

RECENT DEVELOPMENTS

Court Rules Employee on Indefinite Leave of Absence Could Be Entitled to Reasonable Accommodation.

The Maryland Court of Special Appeals ruled in a disability discrimination claim under the Montgomery County Human Rights Act that an employee who provided a doctor's note to his employer stating that he needed leave from work "indefinitely" was not, as a matter of law, no longer qualified for the job. Accordingly, the Court held that the employee's termination claim should be remanded for a jury trial.

Facts of the Case: In Hawkins v. Rockville Printing and Graphics, the plaintiff provided his employer with a doctor's note stating that he had been seen for "multiple medical and psychological problems" and that he was "advised to remain off work for an indefinite period." Two days after receiving the plaintiff's note, the employer announced that it was selling its assets to a new company and that all of the employees would be terminated. Employees were invited to apply for employment with the new company. The plaintiff alleged that he was not actually given the opportunity to apply with the new company and that his former manager confirmed that the new company would not give him a job. The employee sued, claiming disability discrimination under the Montgomery County Human Rights Act. The trial court granted summary judgment to the employer, concluding that an employee who could not provide a definite return-to-work date was not a "qualified individual with a disability" as a matter of law. The employee appealed.

The Court's Ruling: The Court of Special Appeals found that there was a dispute of material fact as to whether the employee was a "qualified individual with a disability" even though the doctor's note stated that the employee should be off work for an "indefinite" period of time and the employee had not been released by his doctor to return to work. Taking the facts in the light most favorable to the plaintiff, his "indefinite" absence did not necessarily mean that he would not be able to attend work in a reasonably regular manner or that his absence should be for an extended period of time. Thus, because the employee was denied the opportunity to apply for employment with the new company, the new company was not entitled to summary judgment.

Lessons Learned: Employers that fail to seek clarifying information before taking adverse action against an employee on leave for a disability may find, in litigation, that the employee and his doctor will testify that the employee actually could have returned to work in a reasonable period of time (and thus, that he was entitled to additional leave as a reasonable accommodation). Dialogue with employees on leave for disabilities (and documenting the dialogue) is critical in order to avoid discrimination claims or, if necessary, defend them.

The U.S. Court of Appeals for the Second Circuit has ruled that an employee whose work was highly specialized but who nonetheless did not possess an advanced academic degree did not qualify as an exempt employee based on the professional exemption to the FLSA and that the employer willfully violated the FLSA by classifying him as exempt.

Facts of the Case: In Young v. Cooper Cameron Corporation, the plaintiff worked for three years as a “Product Design Specialist II” (“PDS”) for the employer, Cooper Cameron Corp. At the time of hire, the plaintiff possessed twenty years’ experience in the engineering field, and the position involved complicated technical expertise and responsibility. Significantly, however, as was the case with all of the other PDS II’s at Cooper Cameron, the plaintiff did not possess any formal education beyond a high school diploma. The employer had determined “through multiple internal and external analyses” that the PDS II position was an exempt position; it paid an annual salary of $62,000, and applicants were required to have 12 years of relevant experience before being hired. When the plaintiff was laid off in a reduction-in-force, he sued, alleging that Cooper Cameron had improperly and willfully classified him as an exempt professional. The district court found both that the employee was improperly classified and that the improper classification was willful. The employer appealed.

The Court’s Ruling: The Court of Appeals upheld the trial court’s rulings, focusing on the language of the Department of Labor’s regulations defining the professional exemption. The Court noted that the “typical symbol” of professional training is an advanced academic degree, and in professions coming under the professional exemption, “an advanced academic degree is a standard (if not universal) prerequisite.” 29 C.F.R. § 541.301(e)(1). The Court held that “[i]f a job does not require knowledge customarily acquired by an advanced educational degree – as for example when many employees in the position have no more than a high school diploma – then, regardless of the duties performed, the employee is not an exempt professional under the FLSA.” The Court also held that the employer’s violation of the FLSA was willful, because the employer originally had considered the plaintiff for a non-exempt position called a Mechanical Designer, in which the plaintiff would have performed the same duties as a PDS II. The evidence showed that the only reason the employer offered the plaintiff the PDS II position was to avoid paying him overtime.

Lessons Learned: This case also serves as an important reminder that courts will look beyond job titles and job descriptions and will focus on the work the employee actually does in determining whether the employee is exempt and whether the employer willfully violated the FLSA in classifying the employee as exempt. Thus, employers should be cautious when classifying any employee as an exempt professional where the employee lacks a post high school degree.

Appellate Court Upholds Arbitrator’s Award of Bonuses to Striking Employees.

The U.S. Court of Appeals for the Fourth Circuit upheld an arbitrator’s decision requiring bonuses to be paid to employees who were on strike at the end of the year despite the fact that company policy required employees to be actively working at year end to be eligible.

Facts of the Case: In PPG Indus., Inc. v. Int’l Chemical Workers Union, a collective bargaining agreement contained a bonus plan under which an employee was eligible for a year-end bonus if the employee was “actively employed” at the end of the year. As per the CBA, the term “actively employed” meant “actively at work; on vacation; or on FMLA or Military leave of absence.” The CBA further stated that the term “actively employed” “does not include overtime hours, leaves of absence, other than FMLA and/or Military, or layoffs.” Certain bargaining unit employees went on strike for approximately six months, from September 2005 until February 2006. After resolution of the strike and agreement on a new CBA, the company refused to pay the year-end bonus to striking employees and the Union filed a grievance on their behalf. The arbitrator awarded the striking employees their year-end bonuses, holding that the employees did not forfeit their right to year-end bonuses by going on strike. The arbitrator considered evidence of a series of meetings between the union and the employer regarding the bonus plan in 1995, where a Company official had stated in response to a question about the meaning of the term “actively employed” that employees were either “employed” or “terminated,” thereby suggesting that any employee who was not terminated was actively employed. The district court refused to enforce the arbitrator’s award, finding that the arbitrator had improperly changed the term “actively employed” in the CBA to add employees who are “on strike” to its list of inclusions.

The Court’s Ruling: The Court of Appeals reversed the district court. While the Court of Appeals recognized that arbitrators cannot ignore the plain language of the contract and impose their own notions of industrial justice, the court noted, “as long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, that a court is convinced he committed serious error does not suffice to overturn his decision.” Here, the arbitrator found the term “actively employed” to be ambiguous and thus properly relied on extrinsic evidence, including evidence as to the 1995 meetings between the employer and the union regarding the bonus plan, in interpreting the term.

Lessons Learned: Courts are reluctant to overturn an arbitrator’s decision regarding a labor grievance even when the court might have reached a different conclusion. In this case, the fact that the CBA did not expressly address the issue of whether striking employees are to be considered “actively employed” left the arbitrator with the task of determining the issue based on extrinsic evidence. However, had the parties expressly addressed this issue in the CBA, then the arbitrator would not have had the discretion to change the parties’ agreement.

TAKE NOTE

Paid Sick Leave Bill Introduced in Congress. In light of the H1N1 flu pandemic, Congress is considering emergency legislation that would require employers to provide seven paid sick days to employees who need time off to care for themselves or a family member who has a contagious disease such as H1N1. The emergency legislation, entitled the Pandemic Protection for Workers, Families and Businesses Act, would allow employees paid sick leave to (1) care for their own flu symptoms, including obtaining a medical diagnosis and obtaining preventative treatment, (2) care for a sick child, or (3) care for a child whose school or day care facility has been closed due to the spread of a contagious illness. Part time employees would receive a pro rata share of the seven days of paid sick leave based on the number of hours worked. If an employer already has a paid sick leave policy in place that provides at least seven days of leave that can be used for the purposes covered by the bill, the employer need not provide any additional paid sick time. The bill contains a sunset provision, such that it would expire two years from the date of enactment, unless Congress decides to make it permanent.

FLSA. The U.S. Court of Appeals for the Ninth Circuit recently held that a hospital’s policy of paying a lower base rate to employees working 12-hour shifts instead of 8-hour shifts did not violate the FLSA. In Parth v. Pomona Valley Hospital Medical Center, the hospital/employer, which had previously scheduled its nurses to work almost exclusively 8-hour shifts, implemented a new policy at the request of the nurses, by which it allowed the nurses to work optional 12-hour shifts. Those working the 12-hour shifts received a lower base salary and time-and-a-half pay for all hours worked in excess of eight per day. As a result, nurses who volunteered for the 12-hour shifts made approximately the same amount of money and worked the same number of hours per week as they had when they worked the eight-hour shift schedule. Many nurses preferred the 12-hour shifts because it gave them more days away from the hospital. After this arrangement was made, the nurses voted to unionize, and the CBA kept in place the optional 12-hour shift policy with a lower base rate. Subsequently, one of the nurses filed a putative class action claiming that the hospital’s use of different base hourly rates violated the FLSA by denying unionized employees overtime pay. The district court found that the employer’s policy was permissible under the FLSA and the employees appealed. In affirming the district court, the Court of Appeals held that the use of a lower base pay rate for longer shifts is permissible. Under the FLSA, the Court noted, employers and employees are generally free to establish the regular rate of pay at any point and in any manner they see fit, “as long as the minimum hourly rates established by [the FLSA] are respected.”

Sales Commissions. The U.S. Court of Appeals for the Sixth Circuit recently held that the prior course of dealing between an employer and its sales representatives in terms of paying commissions prevented the employer from relying on a provision of its commissions policy which would have reduced the amount of commissions earned by the plaintiffs. In Anton v. SBC Global Services, Inc., the plaintiffs, two sales employees who secured a multi-million dollar contract for their employer, sued the employer after the commission they were paid was much smaller than they expected. The company’s normal practice was to pay sales employees a percentage of the life-cycle revenue for each contract they procured. However, a provision in the company’s commission policy stated that for contracts with life-cycle revenue greater than $2 million, the company has discretion to reduce the amount of commissions paid, and the company did so with each plaintiff. The employees sued and prevailed at trial; each was awarded more than $3 million. The Court of Appeals affirmed, ruling that despite the language in the commission policy, the course of dealing between the parties showed that the company did not have the discretion to reduce the amount of commissions paid. The company had always paid out the full commission amount to each of the plaintiffs previously and the one time an adjustment was made, it was to correct a mathematical error. Moreover, the company could not show that the employees had ever been made aware of the provision in the commission policy concerning the company’s right to reduce commissions for large sales, as there was no evidence that either plaintiff had received or accessed a copy of the commission policy. The result in this case shows the importance of having a clearly drafted commission policy that is consistently applied and that contains a written acknowledgment form that the employee must execute (either in paper form or electronically).

Americans with Disabilities Act. An employee’s sworn testimony, in the context of applying for disability benefits, that he is unable to perform his job may undermine his claim under the Americans with Disabilities Act (ADA), according to the 7th U.S. Circuit Court of Appeals. In Butler v. Village of Round Lake Police Dept, the plaintiff, a police sergeant, was diagnosed with chronic obstructive pulmonary disease (COPD), an incurable lung disease. After being placed on a leave of absence pending a release to full duty, he applied for a disability pension. During the hearing on his application, the employee testified that his health condition made it impossible for him to perform normal police duties. Three doctors submitted certificates of disability in support of his application, noting severe restrictions on his physical activity, including strenuous activity, running, walking and lifting. The pension board found that the employee was disabled and awarded him benefits. The employee then filed suit against the police force, alleging violations of the ADA. The trial court ruled that the ADA claim failed because, based on his sworn testimony before the pension board, the plaintiff was not capable of performing essential police functions, either with or without accommodations. On appeal, the U.S. Court of Appeals for the Seventh Circuit confirmed that a plaintiff should not succeed on two different claims based on opposite theories. Because the plaintiff testified in his disability benefits hearing that he was unable to perform basic police duties, he could not later contend that he is or was capable of performing those same duties for purposes of his ADA claim.

TOP TIP

Using Social Networking Websites in the Hiring Process.

The use of social networking sites as a means of obtaining information about employment applicants has become more and more common. A recent study found that 45 percent of employers surveyed use such sites to screen job applicants and 35 percent declined a job offer to a candidate based on information about the candidate they uncovered on a social networking site. [Link to news article.] Using social networking sites to obtain information about potential employees, however, creates certain pitfalls for employers.

Social networking sites may reveal personal information about applicants and employees, such as their sexual orientation, relationship status, age, and religion, all of which cannot legally be considered in evaluating a person for a job. Possessing such information could lead to a discrimination lawsuit if an unsuccessful applicant claimed that the employer considered information about a protected characteristic gained from a social networking site in making the hiring decision. So too, if hiring managers and human resource officials are using information from social networking sites on a hit or miss basis, pursuant to no standard policy or procedure, this could also lead to discrimination lawsuits by those denied employment who claim that they were unfairly singled out based on a protected characteristic.

In order to minimize these risks, employers should do the following:

1) Have a uniform written policy for using social networking websites in the hiring process. Train all those involved in the hiring process to treat all applicants consistently with respect to searching the sites and using the information obtained.

2) Be sure to document the search that was performed and the reasons for the hiring decision.

3) Remember that not all information found on the Internet is accurate. An employer should take steps to verify the accuracy of the information (e.g., is this the same “John Smith”) prior to making any employment decision.

4) Finally, be sure to check local laws, as some states, such as California and New York, have laws that prohibit the employer’s using information about a person’s legal off-duty conduct in making employment decisions.

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