Employers go 2 out of 4 at the Supreme Court today

The Supreme Court this morning released a quartet of opinions that impact employers. Continuing this Court's somewhat surprising trend, the employer came out on the winning end of only half of these cases.

In MetLife v. Glenn, the Court ruled that the fact that a claim administrator of an ERISA plan also funds the plan benefits is a "conflict of interest" that must be weighed in a judicial review of the administrator's benefit determination. I have always been troubled by benefit plans that both pay benefits and make the decision whether to pay. To the extent that such plans will no longer have the protection of the arbitrary and capricious standard upon judicial review of their decisions, I applaud the Court's decision.

In Kentucky Retirement Systems v. EEOC, the Court ruled that a benefit plan's use of age as a potential factor in the distribution of retirement benefits to disabled workers does not establish a prima facie case of age discrimination. For the background on this case, see Supreme Court considers use of age as factor in disability retirement benefits. I think the Court got it partially right. It seems to me that retirement eligibility is a proxy for age, but the employer in this case did not use the factor arbitrarily or discriminatorily.

In Meacham v. Knolls Atomic Power Laboratory, the Court ruled that when an employee alleges disparate impact under the ADEA, the employer bears the burden of persuasion on the "reasonable factors other than age" defense. Again, I think the Court got this right. If the employer is raising the defense, the employer should have the burden of proving it.

Finally, in Chamber of Commerce v. Brown, the Court ruled that federal labor law prohibits state from regulating or limiting an employer's right to speak out about labor union organizing by their employees.

[Hat-tip: SCOTUSblog]

Giving "high in the sky" a whole new meaning

There are certain thinks you just don't want to think about while your sitting at the gate waiting to board a flight. One of them is the pilot in the bathroom of the 737 you are about to board doing a few lines of coke. This morning, in Gabbard v. FAA, the 6th Circuit made the friendly skies a little bit safer by affirming an arbitrator's decision that had approved the FAA's revocation of a pilot's license after he had failed a drug test.

The take-away from this case has nothing to do with airlines, drug tests, or arbitrations. Instead, this case serves as another reminder that employees can sue for any reason at any time. Gabbard could not possibly have thought he was going to have his license reinstated, especially after an arbitrator had ruled against him. Yet, he had no shame in parading his shameful conduct before the second highest court in the land. Even the most rock solid termination can end in a lawsuit. That risk, however, should not hamstring employers from taking necessary actions to rid their workplaces of bad employees, especially when good cause exists.

Clearing up some wage and hour misconceptions

The Fair Labor Standards Act has two basic requirements for non-exempt employees 18 years old and over: the payment of a minimum wage (which is currently $7 an hour in Ohio), and the payment of one and one-half times the regular rate of pay for any hours worked in excess of 40 in any work week. What's missing from this list are typical payroll practices such as vacation, holiday, severance, or sick pay; meal or rest periods; premium pay for weekend, holiday, or off-shift work; pay raises or benefits; the payment of final wages to terminated employees; and pay stubs or W-2s.
Some of these payroll practices have no provision whatsoever in any federal or state law. For example, no law requires the payment of vacation, holiday, severance, or sick pay, premium pay (except for the over-40 requirements of the FLSA), pay raises, or benefits (although ERISA regulates the latter if benefits are provided). Of course, many of these are typical in virtually all businesses. Good luck hiring or retaining any decent employees if you don't offer paid holidays and annual raises, for example.
Ohio law regulates the handling of employees final paychecks. In Ohio, paychecks must be provided no less often than semi-monthly, which means that a severed employee must be paid no later than either the 15th or the last day of the month, depending on whether the employee's last day of employment falls within the 1st half of 2nd half of the month.
The Internal Revenue Code governs the handling of W-2s. Suffice it to say that if you are paying an employee any wages during the year, you must provide that employee with a W-2, and make all the applicable withholdings on that employee's behalf.
Meal and rest periods are not required by any law. Neither federal law or Ohio law requires employers to provided employees with any breaks during the work day. Federal law, however, does provide for whether meal and rest breaks are counted as "hours worked." This distinction is important. If time is counted as "hours worked," it goes into the calculation of time worked during the work week for consideration of whether the employee has crossed the 40-hour threshold for overtime pay.
Rest periods, which are considered breaks of 20 minutes or less, are counted as hours worked whether or not the break is paid. Rest breaks are customarily paid, and if they must be counted as work hours, they might as well be paid for.
A bona fide meal period, however, is not considered hours worked. To be a bona fide meal period the employee must be totally relieved of his or her work duties. According to the Department of Labor: "The employee is not relieved if he is required to perform any duties, whether active or inactive, while eating."
Next week, we'll delve into the mistakes employers make in the handing of rest and meal periods, which has led to a lot of wage and hour class action litigation and some huge judgments against unwary employers.

Color-blind employment practices

The Word on Employment Law has an interesting post this morning about the effect of color on the Presidential election. Note that I said color, and not race. Under Title VII (and Ohio's parallel employment discrimination statute) it is illegal to make an employment decision because of "color." How, exactly, is color different than race?

The EEOC gives us some guidance in its Compliance Manual on Race and Color Discrimination. "Color" means:

pigmentation, complexion, or skin shade or tone. Thus, color discrimination occurs when a person is discriminated against based on the lightness, darkness, or other color characteristic of the person. Even though race and color clearly overlap, they are not synonymous. Thus, color discrimination can occur between persons of different races or ethnicities, or between persons of the same race or ethnicity.

The EEOC also provides some hypothetical examples of color discrimination:

• An African American employer violates Title VII if she refuses to hire other African Americans whose skin is either darker or lighter than her own. For example, it would be an act of unlawful color discrimination for an employer to refuse to hire a dark-skinned person to work at a cosmetics counter because the vendor prefers a "light skinned representative."
• A dark-complexioned African American manager violates Title VII if he frequently makes offensive jokes and comments about the skin color of a light-complexioned subordinate. This example is based on the EEOC's settlement of a claim against Applebee's.

Moreover, the EEOC's E-RACE Initiative is targeting these types of claims for special enforcement efforts:

Color discrimination in employment seems to be on the rise. In Fiscal Year 1992, EEOC received 374 charges alleging color-based discrimination. By Fiscal Year 2006, charge-filings alleging color discrimination increased to 1,241. A recent study conducted by a Vanderbilt University professor "found that those with lighter skin earn on average 8 to 15 percent more than immigrants with the darkest skin tone -- even when taking into account education and language proficiency. This trend continued even when comparing people of the same race or ethnicity." Similarly, a 2006 University of Georgia survey revealed that a light-skinned Black male with only a Bachelor's degree and basic work experience would be preferred over a dark-skinned Black male with an MBA and past managerial positions. However, in the case of Black female applicants seeking a job, "the more qualified or experienced darker-skinned woman got it, but if the qualifications were identical, the lighter-skinned woman was preferred."

While these claims are still rare, it is significant that EEOC charges of color discrimination have risen more than 330% since 1992. Moreover, the EEOC's E-RACE initiative calls for stepped up enforcement in this area.

It may not be a defense to a discrimination claim that two African American employees were treated differently if one is light complexioned and the other is dark complexioned. For employers, it's important to keep in mind that color discrimination is illegal, and is different than race discrimination.

It's a Discriminatory World After All - Sikh sues Disney for banning his turban

I am a Sikh man and the turban that I wear is a religiously-mandated article of clothing. My supervisor tells me that my turban makes my coworkers "uncomfortable," and has asked me to remove it. What should I do?

If a turban is religiously-mandated, you should ask your employer for a religious accommodation to wear it at work. Your employer has a legal obligation to grant your request if it does not impose a burden, or an "undue hardship," under Title VII. Claiming that your coworkers might be "upset" or "uncomfortable" when they see your turban is not an undue hardship.

The above is the EEOC's position on the accommodation of religious articles of clothing. I bring this up because Disney has been sued by a practitioner of the Sikh religion, who claims he was denied a job because of his turban. According to a press release by the Sikh American Legal Defense and Education Fund:

Mr. Channa applied for a job as a musician with Disney in the Fall of 2006 but was told that he would not be hired because he lacked "the Disney look" - a negative reference to his religiously-mandated dastaar (Sikh turban).

This lawsuit will most likely be decided on one question - does it pose an undue hardship on Disney for one of its performers to wear a turban? This question is not as easy to answer as it might appear. Disney World might be the most controlled environment on the planet. Employees are not called employees, but cast members. Every worker is considered integral to the suspension of disbelief that Disney is trying to create. Thus, if Mr. Channa is going to be performing, shouldn't he be required to wear the uniform, even if it means not wearing his turban?

On the flip side, Disney permitted Mr. Channa to interview and rehearse with his turban. If the specific uniform was a requirement for the job, why lead him along only to pull the rug out from under him at the last minute. Plus, I'd image that a company as large as Disney has had cast members in the past who have not been able to match the uniform exactly. For example, would Disney refuse to hire a disabled musician if he had to perform in a wheelchair?

It seems to me that Disney dropped the ball on this one. Can there really be an undue hardship on Disney by allowing Mr. Channa to wear his turban? The EEOC defines undue hardship as an accommodation that "requires more than ordinary administrative costs, diminishes efficiency in other jobs, infringes on other employees' job rights or benefits, impairs workplace safety, or causes co-workers to carry the accommodated employee's share of potentially hazardous or burdensome work." Religious head wear does not impact any of these factors. This is a lawsuit that Disney should settle and settle quickly, if for no other reason that to avoid the bad press that its small world apparently does not include Sikhs.

Is this the beginning of the end for the Ohio Healthy Families Act?

The Cleveland Plain Dealer is reporting that Governor Strickland has publicly come out against the Healthy Families Act:

Strickland, a Democrat, began speaking out publicly against the so-called Healthy Families Act last week, urging business and labor to get together and work out a compromise that would keep it off the ballot.

His motivations are both practical and political.... From a practical standpoint, Strickland clearly is concerned about the measure's economic costs. Like the coalition of business interests that is opposing the issue, he has noted how expensive it would be for companies to provide such a benefit.... Despite the concerns of employers, voters love the idea. Therein lies Strickland's political headache.

Voters of both parties support the proposal, but it is especially popular among Strickland's fellow Democrats. It has been predicted to drive Democratic turnout in this fall's presidential race in much the same way a proposed gay marriage ban did with Republican turnout in 2004. As with that issue, the sick-day proposal has national scope: it has been proposed in a dozen states and two cities, and is supported by presumptive Democratic nominee Barack Obama.

Because 70% of Ohioans support this measure, it will be very difficult to keep if off November's ballot, despite Governor Strickland's efforts. In the meantime, if you want more information on the likely harm the Health Families Act will cause to Ohio's already fragile business climate, visit the Ohio Chamber of Commerce's website about the OHFA, Ohio Business Votes.

The intersection of techology and labor law: new website for posting of compensation information raises concerns

George's Employment Blog reminds us that an employer cannot ban its employees from discussing wage and benefits without violating the National Labor Relations Act. According the NLRB's recent decision in Windstream Corp.:

[A]n employer rule which regards employee compensation and benefit information as confidential and prohibits employees from discussing such information with one another violates Section 8(a)(1) of the Act.... In examining whether a particular rule so violates Section 8(a)(1), the Board's analysis requires that the rule be such that "Employees would reasonably construe the language to prohibit Section 7 activity."

Windstream's challenged policy stated:

Employee compensation, benefits, and personnel records and information are confidential.

Only employees who need to know such information in the course of employment should access such employee information.

You should not disclose this information to any other Windstream employee unless that employee has a need to know such information in the course of employment.

Except as required to comply with law, you should never disclose this information to any party other than the employee or individual whose access has been authorized by the employee.

This does not prohibit you from disclosing or discussing personal, confidential information with others, so long as you did not come into possession of such information through access which you have as part of your formal Company duties.

(Winstream added the last sentence after the filing of the unfair labor practice charge). The NLRB found that the language violated Section 8(a)(1) because it was "so broadly stated that employees could and will construe them to prohibit discussions of wages and working conditions with others."

I was again reminded of this line of cases when I read an article in Business Week magazine this week touting the launch of Glassdoor.com. According to Glassdoor.com's press release, it will make available user-submitted, anonymous compensation information organized by company:

Compensation information by company and position. Unlike most salary services that only report aggregated data by generic position type and industry, Glassdoor provides details of salary, bonuses, and other compensation for actual positions and titles at specific companies. For example, users can see exactly what a software engineer at Google makes, along with bonuses and types of equity grants, in comparison to a software development engineer at Microsoft.

If employees have a statutory right to discuss compensation and benefit information, but lack the same right to use an employer's e-mail system for Section 7 purposes, can a company prohibit its employees from accessing Glassdoor.com without violating the National Labor Relations Act? The answer seems to be yes, as long as the prohibition only extends to company time and company equipment. A more broadly draft ban that applies to what employees do on their personal time very well might run afoul of the Windstream line of cases.