Surpeme Court defers to EEOC on the definition of a "Charge" of age discrimination

The U.S. Supreme Court has issued its second employment decision in as many days, as today it has issued its opinion in Federal Express v. Holowecki. [The opinion is available for download from the Court here.]

Recall that Holowecki raised the procedural issue of what constitutes a "charge" of discrimination submitted to the Equal Employment Opportunity Commission under the Age Discrimination in Employment Act. The plaintiff submitted an Intake Questionnaire, with an accompanying affidavit, to the EEOC, which alleged that Fed Ex had committed age discrimination. She did not, however, file a Charge of Discrimination until 6 months later. In the interim, the EEOC neither assigned a charge number, nor informed Fed Ex that it had received the Intake Questionnaire. The issue was whether the Intake Questionnaire constituted a "Charge" sufficient to start the proceedings with the EEOC.

A 7-2 majority of the Court deferred to the EEOC's regulations and policy statements, and held that the Intake Questionnaire was a "Charge" because it could be reasonably construed as a request for the EEOC to take remedial action to protect the employee's rights or otherwise settle a dispute between the employer and the employee.

My problem with this ruling is that Fed Ex never had any meaningful way to respond to the Intake Questionnaire. That form was never sent to it, and it had no notice that a proceeding had even been initiated until after the actual charge was filed 6 months hence. Thus, an employee can proceed to federal court on an age discrimination class action lawsuit, without the employer, who had no notice that a charge had even been filed with the EEOC, having the benefit of trying to settle the claim pre-lawsuit. During the EEOC's conciliation process, the stakes are decidedly much lower than they are once an actual lawsuit is filed. For one thing, claimants usually are not represented by counsel at the EEOC. The same is rarely true in federal court. This decision prejudices employers who will be denied any opportunity to resolve a case via the EEOC's informal conciliation process. The majority attempts to cure this problem by suggesting that the trial court stay the case to allow for mediation. That stay, however, ignores the crucial differences between a mediation before as compared to after a federal court case has been filed.

In concluding his dissent, Justice Thomas hits a home run in summarizing the key problems with the majority opinion:

The implications of the Court's decision will reach far beyond respondent's case. Today's decision does nothing—absolutely nothing—to solve the problem that under the EEOC's current processes no one can tell, ex ante, whether a particular filing is or is not a charge. Given the Court's utterly vague criteria, whatever the agency later decides to regard as a charge is a charge—and the statutorily required notice to the employer and conciliation process will be evaded in the future as it has been in this case. The Court's failure to apply a clear and sensible rule renders its decision of little use in future cases to complainants, employers, or the agency.

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This decision will have limited impact in Ohio, because employees have a private right of action under Ohio law without first going to the EEOC. However, because age discrimination claims under Ohio Revised Code 4112.99 are subject to a short 180-day statute of limitations, the Holowecki decision could impact those employees who miss that relatively short statute and have to go the EEOC for relief to enable a federal court filing under the ADEA.

Being upfront about a non-compete agreement can save a lot of headaches

Monday's Chicago Tribune had an interesting piece about the proliferation of non-compete agreements in today's business environment. Quoting from the article:

In an economy where information and relationships rule, businesses are quicker to try to limit the damage when people leave. And it's no longer just executives and high-tech workers whom companies worry about.... Employees encounter non-compete, non-disclosure and non-solicitation issues coming and going. The forms often sit in the stack of papers that new hires are asked to sign their first day on the job. And restrictive covenants invariably get tacked on severance offers in layoffs and firings.

The article quotes Diana Smith, managing director of The Novo Group, a Chicago recruiting firm, who advises that companies and job applicants should be up front and open about non-compete agreements:

"Companies that want to recruit from their competition will find ways to make it work. People should be really open in their discussions and not be afraid that it's going to stop the show. Chances are you're going to find a way to work around it."

Ms. Smith's point is important for employers to take to heart. Despite the existence of an agreement, companies may or may not have a real interest in enforcing a non-compete agreement against a former employee. Factors that the former employer might consider are the level of the employee, the circumstances surrounding the employee's departure, the employee's customer and industry contacts, and what trade secrets and other confidential information the employee was privy to.

Nevertheless, when an employee who has signed a non-compete goes behind the old employer's back to work for a competitor, the old employer is forced into action to send a message to all of the other employees who have signed non-compete agreements that the company takes them seriously and will enforce them if pushed to do so. Past enforcement is also a factor that courts look at in examining whether to grant an injunction enforcing a non-compete agreement.

On the other hand, what happens if the new employer picks up the phone and calls the old employer to ask for permission to hire the applicant despite the non-compete? The old employer may say yes if it does not want to run up attorneys' fees by attempting to enforce a non-compete against a marginal employee. Further, by allowing the new employer to hire the employee, the old employer will signal that it expects the same courtesy in the future - that is, at least a phone call before an employee is hired. And, if the old employer says no, the new employer has not lost anything, because hiring the employee will most likely result in litigation anyway.

Asking about the existence of a non-compete or other restrictive agreement should be boilerplate in virtually all hiring processes. Picking up the telephone and asking for an employee to be released from a non-compete for a particular job costs nothing, and could save significant heartache down the road by staving off litigation that the old employer may feel compelled to bring to save face.

The nation's focus turns to Cleveland (and lots of snow)

Today's snowstorm here in Cleveland notwithstanding, there will be a Democratic debate tonight. In honor of the debate, I suggest that anyone who has an interest on the candidates' position on labor and employment issues check out Presidential Politics – Predictions for the Workplace, by John Phillips. Even though the article was written almost two months ago, it's over-inclusive in its coverage of candidates. Because Senators Obama and Clinton have not changed their positions, the piece is as timely as to them as it was when is was written. Employment law issues have not gotten a lot of play in the campaign, and John's piece is the best primer on the subject I've come across.

There really is not all that much of a fundamental difference in the two candidates' positions on labor and employment law issues. If McCain (the presumptive Republican nominee) wins the general election, we can largely expect a maintenance of the status quo. If, however, either Senator Obama or Senator Clinton becomes our next POTUS, then it safe to assume that we will see some combination of the initiatives presented in the Civil Rights Act of 2008, the Fair Pay Restoration Act, the ADA Restoration Act, the Employment Non-Discrimination Act, and the Employee Free Choice Act. Just one more factor to consider as everyone goes to the polls on March 4 and in November.

Supreme Court issues ruling in "me, too" evidence case

As predicted, the Supreme Court has reversed the 10th Circuit's decision in Sprint/United Management v. Mendelsohn, which had held that "me, too" evidence in discrimination cases is per se admissible, and that a trial court must admit any testimony of other workers who claimed to suffer the same sort of bias against them, even if a different decisionmaker was involved. In a unanimous decision, Justice Thomas wrote that it was error for the appellate court to announce per se rule of admissibility and disregard the trial's court discretionary weighing of the evidence. Thus, the Federal Rules of Evidence do not require admission of testimony by nonparties alleging discrimination at the hands of persons who played no role in the adverse employment decision challenged by the plaintiff. Instead, the trial court should balance the evidence under Evidence Rule 403 to decide on its ultimate admissibility: "The question whether evidence of discrimination by other supervisors is relevant in an individual ADEA case is fact based and depends on many factors, including how closely related the evidence is to the plaintiff's circumstances and theory of the case."

This decision makes a lot of sense. It skirts the ultimate issue of whether "me, too" evidence is admissible or inadmissible because that decision should be fought in the trial court, which is in the best position to examine the evidence and weigh its relevance and admissibility. One can't judge whether evidence of discrimination by other supervisors is admissible without considering it in light of the context and theory of the case, all of which should be done by the trial judge. This decision may not give any guidance to trial judges on how and when to admit such evidence that some (including me) were hoping for, but that guidance would have impeded on their role as the ultimate gatekeepers of relevancy.

A copy of the Court's decision can be downloaded here.

[Hat tip: SCOTUS Blog]

Failure to document performance problems dooms employer's defense

In Birch v. Cuyahoga Cty. Probate Court, a court magistrate sued the court and its presiding judge, claiming that her status as the lowest paid court magistrate constituted wage-based sex discrimination. Specifically, Birch claimed that all of the female probate court magistrates were paid lower salaries than all of the male magistrates, that the highest paid female magistrate earned less than her lowest paid male counterpart, and that she was the lowest paid of all. In defense of the wage practice, the probate court claimed that it paid Birch less because of poor job performance. The Court, however, rebuked that claim because of the employer's failure to document any of the concerns in Birch's personnel file:

Appellees' assertions supported by documentary evidence might have established these facts beyond dispute. Due to a history of regrettably minimalist supervisory employment practices, however, the record is barren of evidence apart from the assertions of Judge Donnelly and Magistrate Polito to this effect. [The record demonstrates that there are no job descriptions for magistrates, no written description of the work performed by the various departments, and no protocol for determining magistrate salaries. Employees are not evaluated, and the court does not produce written documentation of performance concerns.] These assertions do not establish that appellees would have taken the same action in the absence of discriminatory motive. They do, however, create a genuine issue of material fact that precludes summary judgment.

The bottom line: if you plan on defending a discrimination case based on poor job performance, it's best to have the deficiencies documented somewhere, preferably in the employee's personnel file.

Revisiting some lessons from childrens' lit

Dan Schwartz of the Connecticut Employment Law Blog has written on a topic close my heart and on which I've written before, Click Clack Moo, Cows That Type, my daughter's favorite book. Dan uses the book to teach some basic lesson about labor relations. When I wrote about this book back in May, I drew some general employment relations lessons, which I'm republishing below:

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"Farmer Brown has a problem. His cows like to type. " So starts Click Clack Moo, Cows That Type, my soon to be one year old daughter's favorite book. In Click Clack Moo, Farmer Brown's cows and hens decide that they need electric blankets to keep warm at night in the barn. They deliver their demand to Farmer Brown on notes typed by the cows on a typewriter. When Farmer Brown refuses their demands, they go on strike, withholding milk and eggs. Ultimately, in a deal brokered by the duck, Farmer Brown agrees to accept the cows' typewriter in exchange for electric blankets. The labor dispute ended, and the cows and hens went back to producing milk and eggs. The deal backfired on Farmer Brown, though, as Duck absconds with the typewriter and leverages it into a diving board for the pond.

Click Clack Moo teaches us some valuable lessons:

1. Fair Treatment: The best means to avoid collective action by your employees is to treat your employees fairly. The barn was cold, and the cows and hens perceived that they were being forced to work in intolerable conditions. When Farmer Brown refused even to consider any concessions, they went on strike. If you want your employees to work hard, not unionize, and not file lawsuits, treat them fairly. Maintain reasonable, even-handed work rules and policies. Apply them equally. Don't discriminate. There is no guarantee that you'll stay out of court, but if you end up there, you'll have a much easier time convincing a judge and a jury of the rightness of your decision if you are perceived as being fair, reasonable, and even-handed.
2. Litigation is an Answer, But Not Always the Best Answer: Even in employment cases, where there are so many emotions in play on both sides of the table, it is only the most frivolous of cases that cannot not be resolved at some dollar figure. It is the job of the employer, working with its attorney, to strike the right balance between the cost of litigation and the cost of settlement. Convictions often get in the way, and often times litigation and trial is the only means to an outcome. But, you should always keep an open mind towards a resolution.
3. Don't Go It Alone: When resolving any case, make sure all your loose ends are tied up in a tidy agreement. Farmer Brown missed this last point. A well drafted agreement that included Duck would have avoided the added expense of the diving board. If Farmer Brown had retained competent counsel, he could have potentially avoided the problem with Duck (who probably went to law school).

Article highlights the importance of medical confidentiality by employers

An article in Thursday's New York Times asks the question, "I'm Ill, but Who Really Needs to Know?"

One of the first decisions you make in the emotional hours after a scary diagnosis is whether to tell others. Most of us share the news with our loved ones, but what of the circles beyond, particularly those at work? Your boss?

If an employee chooses to disclose a medical condition to an employer, it should go without saying that it is illegal to take any adverse action against that employee because of the illness. Separate and apart from the obvious, employers have clearly defined responsibilities with the handling of employee medical information. The EEOC sets out an employer's specific responsibilities under the ADA when an employee discloses medical information:

Basic rule: With limited exceptions, you must keep confidential any medical information you learn about an applicant or employee. Information can be confidential even if it contains no medical diagnosis or treatment course and even if it is not generated by a health care professional.

Do not place medical information in regular personnel files. Rather, keep medical information in a separate medical file that is accessible only to designated officials. Medical information stored electronically must be similarly protected (e.g., by storing it on a separate database).

The ADA recognizes that employers may sometimes have to disclose medical information about applicants or employees. Therefore, the law contains certain exceptions to the general rule requiring confidentiality. Information that is otherwise confidential under the ADA may be disclosed:

• to supervisors and managers where they need medical information in order to provide a reasonable accommodation or to meet an employee's work restrictions;
• to first aid and safety personnel if an employee would need emergency treatment or require some other assistance (such as help during an emergency evacuation) because of a medical condition;
• to individuals investigating compliance with the ADA and with similar state and local laws; and
• pursuant to workers' compensation laws (e.g., to a state workers' compensation office in order to evaluate a claim) or for insurance purposes.

HIPAA also imposes certain privacy and confidentiality obligations on employers' handling of employee medical information.

It is best to advise employees in an employee handbook or policy statement about the handling of their medical information. In the handbooks I've written recently I've been incorporating a policy statement on "serious illnesses." That policy lets employees know that their medical information is confidential, limited to managers and supervisors on a need to know basis, kept in a separate file, and that anyone who makes unauthorized disclosure of employee medical information will be subject to discipline up to an including termination. This policy should be dovetailed with other policies on reasonable accommodations for disabilities.