10 reasons why I love my job

The National Law Journal has published its 15th annual list of bizarre employment law cases. My favorite is actually number 10: "Maternity Wear, Pregnancy Suit":

Philadelphia-based maternity clothes retailer Mothers Work Inc. agreed to pay $375,000 to settle a suit alleging that it refused to hire qualified female applicants because they were pregnant. LaShonda Burns alleged the company would not hire applicants for sales positions who were "visibly pregnant" or who it learned were pregnant through interviews. Company president Rebecca Matthias denied any discrimination, but said the settlement was reached to avoid "huge" costs and "distractions" of protracted litigation. She added, "It's important to make sure our culture and policy are lived at every one of our stores."

What's next, the NAACP being sued for race discrimination?

What else I'm reading this week #25

It's a constant struggle to decide which is the hotter topic in employment law -- wage and hour lawsuits or retaliation claims. I've been focusing a lot of attention lately to the latter, so let's start this week's review with a pair of articles on the former. BLR's Daily HR Advisor asks the question, FLSA Class Action Overtime Suits—Are You Next? To help answer that question, Law.com gives everyone a lesson in Overtime 101. Workplace Horizons provides a timely update on an attempt to revitalize new regulations for SSA No-Match letters. For an explanation of what these new rules would mean, see New rules require termination of illegal immigrants

Mark Toth at the Manpower Employment Blawg asks if obesity discrimination is more prevalent than even race discrimination. I gave my thoughts on this issue last June: Supersized lawsuits - obesity-related claims expected to rise

The Workplace Prof Blog gives an academic perspective on a case in which Wal-Mart fired a manager for engaging in an improper affair with a coworker after it hired an investigator to follow the couple down to Central America to catch them in the act.

Monster.com's HR Guru gives some pointers on dealing with workplace violence.

Finally, my friend Donna Seale at Human Rights in the Workplace gives us a Canadian perspective on employers' responsibility for harassment by non-employees.

Failure to hire "because of litigation" may constitute retaliation

Another day, another retaliation case out of the 6th Circuit. In Cline v. BWXT Y-12, LLC, the company declined to hire Cline, a former employee, for an open position because the company was "in litigation with Mr. Cline and that he may not be the best person ... because of the litigation factor." That litigation involved a claim of age discrimination. The decision makers testified that while they knew of the litigation, they did not know that it involved allegations of age discrimination. The district court threw out the retaliation claim on summary judgment, finding that because the decision makers did not have "any knowledge of the substance of Cline's present suit," they could not have known that he had engaged in protected activity.

The appellate court disagreed, and found that because the decision makers "knew that Cline was involved in litigation with the company ... the evidence permits the inference that the decision makers were unwilling to hire someone in litigation with the company." That inference "creates a triable issue of fact over whether the decision makers knew of Cline's protected activity."

"Wait a second," you might say, "There can be all kinds of litigation Cline could have been involved in. Just because he sued the company doesn't mean that he was engaged in statutorily protected activity. And, even if he was, can't a company have a neutral policy against hiring anyone who has sued the company, regardless of the cause." The Court hears your protests:

Something more is required, the company says, because Cline’s evidence still does not show that the decision makers knew that the litigation involved an age-discrimination claim.... In one sense the company has a point. Cline’s evidence permits the inference that Mack and Zava would not hire someone—anyone—“in litigation” with the company, and that view might suggest unbiased neutrality. It thus might have made no difference to Mack and Zava whether the litigation involved age discrimination if they preferred not to hire anyone in litigation with the company without regard to the subject matter of the lawsuit—whether it was a tort action, a contract dispute or a civil rights complaint. But such an across-the-board explanation—that any litigation with the company precludes any individual from being hired (or for that matter being retained as a current employee)—would necessarily sweep up protected civil rights claims and non-protected claims. And if such an explanation suffices for one hiring decision, why couldn’t an employer adopt a company-wide policy against hiring or retaining anyone in litigation with the company? As long as the policy were consistently followed, the employer would rarely have reason to obtain knowledge about the substance of the litigation, and at any rate it could always fairly say that it was the ruthlessly neutral policy, not the protected activity, that caused the adverse action.

Thus, to prove his retaliation claim, Cline will have to prove two facts:

1. That the company knew about the content of his claim; and
2. That the company did not have a policy against hiring (or retaining) individuals with litigation against the company.

This case poses the age-old question, "What does 'because of' mean in an employment lawsuit?" The answer, as with most things, is, "It depends." Cline presents a rational and common sense understanding that not all employment decisions that look retaliatory are retaliatory. I would never counsel someone to provide "engaged in litigation" as a reason for termination, because of the negative inferences that one can draw. But, if the decision maker does not know of the reason for the litigation, and the company can prove that it has a policy (written or unwritten) against hiring (or for firing) anyone who is in litigation against it, then the company genuinely has not engaged in retaliation.

Wal-Mart relents on reimbursement of medical costs

Last week I reported on Wal-Mart's lawsuit against a brain damaged ex-employee for the reimbursement of her health care costs. As of this morning, Wal-Mart has relented and will not pursue the collection of its costs. CNN.com quotes the letter Wal-Mart sent to the family: "We wanted you to know that Wal-Mart will not seek any reimbursement for the money already spent on Ms. Shank's care, and we will work with you to ensure the remaining amounts in the trust can be used for her ongoing care." Wal-Mart will also be modifying its health care plan to allow "more discretion" in individual cases.

Companies make decisions for any number of reasons. There are legal reasons (which guided Wal-Mart's original decision), business reasons, public relations reasons, moral reasons, and sometimes no reason at all. Just because something is permitted by law, however, does not mean that there are not better justifications not to take that action. In making any decision, employment related or otherwise, companies would be wise not to just consider whether a course of action is legal, but also what effect that action will have on its business, its relationship with its employees, and its public persona. Only thoughtful consideration of all of these factors will allow for fully informed corporate decision making.

Ohio court finds no public policy for opposing corporate accounting irregularities

One would think that in our post-Enron corporate environment, employees, even in non-public companies, would be free to oppose corporate accounting irregularities without fear of termination. Yet, in Schwenke v. Wayne-Dalton Corp., the Lorain County (Ohio) Court of Appeals ruled that an employee claiming he was terminated for that very reason had no claim.

Ronald Schwenke was the controller for Wayne-Dalton Corp., a privately held manufacturer of garage doors headquartered in Mt. Hope, Ohio. During Schwenke's employment he complained about certain inappropriate accounting procedures engaged in by Wayne-Dalton's President and its CFO, in addition to what he perceived as the misappropriation of corporate assets. His complaints fells on deaf ears, and he was simply told to "make it work," perform his duties as controller, and not question how the business was operated. When he refused to "make it work" he was fired. Schwenke claimed that his termination was in retaliation for his complaints, and that it violated Ohio's public policy against firing employees in retaliation for reporting inappropriate accounting procedures or misappropriation of corporate assets.

Schwenke did not claim protection under Ohio's whistleblower statute because he failed to follow the statute's very specific reporting requirements that one must follow to qualify as a protected whistleblower. Instead, he claimed there is "a public policy in support of not firing an employee, such as appellee, in retaliation for reporting inappropriate accounting procedures or misappropriation of corporate assets." The court of appeals disagreed:

[W]e find that appellee has failed to identify any source of public policy as the basis for his claims. Appellee ... did not identify any constitution, statute or regulation that might provide a basis for his claims. Nor did appellee cite or present the trial court with any legal authority in support of his argument that his termination violated public policy.

In other words, Schwenke lost not because a public policy does not exist, but because he failed to articulate one. I wonder if the result would have been different if Schwenke simply articulated the Sarbanes-Oxley Act, which establishes accountability standards for publicly traded companies, as the public policy supporting his claim.

The concurring opinion, however, goes further, and suggests that there is no public policy sufficient for protection:

Appellee has failed to identify any source of public policy as the basis for his claims. I believe Appellee's best argument is the fiduciary duty which exists between a corporation and its directors and its shareholders warrants recognition as a public policy exception to the at-will employment doctrine. I know of no case law, nor has Appellee identified any, which has recognized the breach of that fiduciary duty rises to the level of a matter of public policy. The fact no such case law exists does not preclude this Court from recognizing, and thereby creating, new common law. While the facts of this case suggest doing so may be equitable, I join my colleagues in refusing to do so....

While I agree the corporate management practices found to exist by the jury in this case demonstrate a breach of the fiduciary duty to the corporation's shareholders ... I do not feel such rises to the level of a great societal wrong. This case brought to mind the Enron scandal. Unlike Enron, no corporate officer or board of directors' member of Wayne-Dalton has been alleged, much less shown, to have committed a criminal offense. Unlike Enron, Wayne-Dalton is not involved in the supply of public utilities. Unlike Enron, Wayne-Dalton's corporate management practices cannot be said to have any impact on the general public health and safety. Wayne-Dalton "wrongs" as found by the jury are not "societal" in nature.

The Enron analogy is fallacious. Enron was a publicly traded company. If Wayne-Dalton was a public company, Schwenke could have had a statutory whistleblower claim under Sarbanes-Oxley. The existence of that statutory remedy, however, would most likely nullify his public policy wrongful discharge claim, under the holding of Leininger v. Pioneer National Latex.

Nevertheless, the Schwenke case sends the wrong message to Ohio's privately held companies -- that they can terminate corporate watchdogs without fear of retaliation liability. Employees have to be free to oppose corporate accounting irregularities, even in non-public companies. Sarbanes-Oxley should provide a sufficient public policy to support these claims against non-public companies. I hope it does in the next case of this ilk.

Carnival of HR 30 is available

Please take a minute to surf over to Fortify Your Oasis and read this week's compilation of the blogosphere's best HR and employment relations posts.

6th Circuit recognizes claim for associational retaliation

The 6th Circuit continues to broaden the scope of retaliation claims, and in the process make it more and more difficult for employers in Ohio, Michigan, Kentucky, and Tennessee to manage against these claims. In Hawkins v. Anheuser-Busch, the 6th Circuit recognized a claim against an employer for retaliatory acts committed not by a manager or supervisor, but by a co-worker. Yesterday, the Court continued its expansion of retaliation liability and recognized liability for "associational retaliation."
Section 704(a) of Title VII of the Civil Rights Act of 1964 prevents retaliation by employers for two types of activity, opposition and participation:

It shall be an unlawful employment practice for an employer to discriminate against any of his employees ... because he has opposed any practice made an unlawful employment practice by this subchapter, or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this subchapter.

On its face, it seems clear that the anti-retaliation provision is limited to an employee who himself or herself opposes an unlawful employment practice, made a charge, or participated in a investigation, proceeding or hearing regarding a charge. Yet, in Thompson v. North American Stainless, decided this week by the 6th Circuit, the Court has held that the same anti-retaliation provision also protects a related or associated third party from retaliation.
Eric Thompson was engaged to Miriam Regalado, another North American Stainless employee. Three weeks after Regalado filed a sex discrimination charge with the EEOC, North American Stainless terminated Thompson for alleged performance reasons. The 6th Circuit reversed the trial court's dismissal of the retaliation claim, holding:

Title VII prohibit[s] employers from taking retaliatory action against employees not directly involved in protected activity, but who are so closely related to or associated with those who are directly involved, that it is clear that the protected activity motivated the employer's action. (emphasis added).

The Court found that even though the plain language of the statute would prohibit such a claim, not allowing the claim would frustrate the statute's purpose -- prohibiting conduct that would dissuade reasonable workers from engaging in protected activity. The Court also defended itself from possible criticism that it was taking too broad a reading of the statute and opening the door to a flood of claims:

Other courts have expressed concerns as to whether this decision will result in a flood of suits from relatives and associates of those who file EEOC charges.... The requirement of a prima facie case in general, and a causal link specifically protect employers from defending against meritless suits. Of greater concern to the court would be the result of a contrary ruling. That is, permitting employers to retaliate with impunity for opposition to unlawful practices, filing EEOC charges or otherwise participating in such efforts, as long as that retaliation is only directed at family members and friends, and not the individual conducting the protected activity.

In becoming the first circuit court to recognize a claim for associational retaliation, the court rewrote Title VII's anti-retaliation for public policy reasons. As the dissent further explained:

It was Congress’s prerogative to create – or refrain from creating – a federal cause of action for civil rights retaliation. Congress likewise was entitled to mold the scope of such legislation, making the boundaries of coverage either expansive or limited in nature. In enacting § 704(a), Congress chose the latter. The text of § 704(a) is plain and unambiguous in its protection of a limited class of persons who are afforded the right to sue for retaliation. To be included in this class, the plaintiff must show that his employer discriminated against him "because he has opposed any practice made an unlawful employment practice by this subchapter, or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this subchapter." 42 U.S.C. § 2000e-3(a) (emphasis added).
By application of the plain language of the statute, plaintiff Eric L. Thompson is clearly not included in the class of persons for whom Congress created a retaliation cause of action because Thompson, himself, did not oppose an unlawful employment practice, or make a charge, testify, assist, or participate in an investigation....
In essence, plaintiff and the EEOC request that we become the first circuit court to hold that Title VII creates a cause of action for third-party retaliation on behalf of friends and family members who have not engaged in protected activity. The majority has accepted this dubious invitation. In doing so, the majority rewrites the law.

Separate and apart from whether one agrees or disagrees with the Court's judicial activism, its holding creates genuine logistical problems for employers. If Title VII protects those "who are so closely related to or associated" with employees who engage in protected activity, it simply begs the question, how close is close enough? In Thompson, the relationship was a fiancee. It is safe to assume liability will also extend to action taken against spouses. What about boyfriends and girlfriends? How long do you have to date to be protected from retaliation?
The same protection also will probably extend to parents and children. What about siblings? Grandparents? Cousins? 3rd cousins twice removed? In-laws? Friends? Carpoolers? The people you share your lunch table with? The person you sat next to in 3rd grade? How close is close enough for an employer to intend for its actions to punish the exercise of protected activity? Do employers now have to ask for family trees and class pictures as part of the orientation process?
These questions, none of which the Thompson court answers, could hamstring employers from making any employment decisions for fear of doing something against someone who has some relationship to someone else who complained about something last October. The implications of this case have the potential to reach that level of silliness. The best course of action is still to make legitimate personnel decisions for bona fide business reasons and let the chips fall where they may. Fear of being sued will freeze your workforce, and bad employees will continue to get a free pass and remain employed. No company wants to get sued, but sometimes you have to take that risk to rid yourself of a bad worker. The Thompson case just makes it that much more likely that if you take action against an employee, you may have to defend that decision in court.