Are there legal risks with smoking bans?

I had the privilege of speaking last week at the COSE 2008 Small Business Conference. I received a question on the legality of workplace policies that prohibit employees from smoking at all – during the work day, off work, anywhere, any time. As The Cincinnati Enquirer reports, there is a definite trend of businesses refusing to employ smokers. Companies view these policies are part of wellness programs that are used to control health insurance costs. Often, the programs not only prohibit smoking, but offer programs to smokers to aid in their efforts to quit:

Taking the employee wellness program to another level, a local company is refusing to hire smokers unless they enter a program to help them quit.

USI, the insurance and financial services company located downtown, started the program this year. The program applies only to new employees, who are tested when they are hired.

"We decided not to hire smokers because they add additional expense to our health plan and our ongoing operation," said Dennis Curran, chief human resources officer for USI's Midwestern region….

Nationally, the Scotts Miracle-Gro lawn-care company and the Cleveland Clinic have started similar programs. Locally, the Hamilton County Public Health agency also doesn't hire smokers.

29 states and the District of Columbia have so-called “smoker protection” laws – laws that elevate smokers to a protected class, making it illegal to discriminate against an employee because he or she smokes. Ohio is not such a state. Thus, in Ohio, there is nothing per se illegal about making employment decisions based on one’s status as a smoker.

As far as I know, this type of smoking ban has never been tested in an Ohio court. I have three thoughts, though, of possible laws that could be implicated by a blanket smoking prohibition:

1. The ADA: The ADA and its Ohio counterpart protect “addiction” as a disability. For example, a company cannot terminate an employee because that employee has a record of drug or alcohol addiction, or is perceived as a drug addict. There is a potential claim out there that employees who are addicted to nicotine are protected by the ADA. However, to be legally disabled under the ADA, it is not enough to simply suffer from some affliction. That affliction must substantially limit a major life activity. While a smoker is often addicted to nicotine, I fail to see how that addiction could be a disability protected by the ADA.

2. ERISA: Section 510 of ERISA prohibits employment actions taken with the specific intent of interfering with an employee’s ERISA benefits. Section 510, however, generally does not apply when the loss of benefits is a consequence of, but not a motivating factor behind, a termination of employment. There are lots of reasons why an employer may not want smokers in the workplace – the odor and the frequent smoke breaks are two reasons in addition to the added health costs. Moreover, the employee is not being hired because of an intent to interfere with health benefits, but the loss of benefits is coincident to the loss of employment. In other words, I think this claim has some sex appeal to it, but ultimately will fail on its merits.

3. Privacy: Ohio has no law the specifically protects employees in their private, off-duty conduct. For the same reasons that drug testing is legal, smoking inquiries should also be legal. The remedy for an employee who does not want to answer questions about smoking habits, or have a smoking panel included in a workplace drug test, is to look for employment elsewhere.

I think there should be little risk in enacting a workplace smoke-out, but these legal theories are untested. For small and mid-sized businesses then, the question becomes if you want to be the business that get such a policy challenged. There is nothing wrong with taking aggressive HR positions and testing the bounds of permissible policies. Make no mistake, though, it is not a questions of if a terminated employee will challenge such a policy, but when, and you better be prepared to defend the policy in court. In other words, as a small or medium-sized employer, are you better off taking a risk and implementing even a relatively safe policy such as an employee smoking ban, or letting larger, richer businesses test the bounds of the law and follow their lead when a court upholds the policy as lawful?

WIRTW #53

In honor of my beloved Phillies first World Series appearance in 25 years, I’m starting this week’s roster with a couple of sports-related posts. The HR Capitalist writes on the culture of losing, and the Trade Secrets Blog asks if Brett Favre misappropriated trade secrets when he left the Packers.

Work Matters discusses workplace vulgarity.

Case in Point picks up on the concept of the bulletproof employee in the context of a request for FMLA leave.

The Connecticut Employment Law Blog suggests that we look at the Presidential candidates’ resumes to help decide who to vote for.

Staying on the topic of politics, Suits in the Workplace gives some insight on the legality of discussing politics at work.

Bob Sutton takes the position that performance evaluations are broken and need to discarded, or at least reinvented and replaced.

World of Work and HR Observations both comment on the implications of mis-classifying an employee as and independent contractor.

Legalethics.com reports on a default judgment entered against a company for e-discovery violations and the destruction of evidence.

BLR’s HR Daily Advisor tells that employees cannot take the 5th in workplace investigations.

Until next week, “Why can’t us?” Go Phils!

Is administrative exhaustion a statutory or jurisdictional requirement?

It is axiomatic that a plaintiff must file a charge with the EEOC before filing a complaint alleging discrimination in federal court, and that the EEOC charge must contain a written statement sufficiently precise to identify the parties, to describe generally the action or practices complained of, and identify the specific type of discrimination alleged. Allen v. Highlands Hosp. (6th Cir. 10/21/08), which I discussed yesterday, may alter this conventional wisdom in a significant way. It held that exhaustion is a statutory element of a plaintiff’s discrimination claim, but not a jurisdictional requirement to filing suit.

In Allen, the plaintiffs’ EEOC charges alleged age discrimination, but not the specific disparate impact theory pursued in the case. The Hospital argued that the disparate-impact claim should be dismissed because the plaintiffs failed to exhaust their EEOC administrative remedies, and that identifying the specific claim of discrimination before the EEOC with sufficient precision is a jurisdictional prerequisite to maintaining that claim in federal court.

The 6th Circuit overturned its prior precedent and disregarded the employer’s argument. Six years ago, in Weigel v. Baptist Hosp. of E. Tenn. (6th Cir. 7/15/02), the 6th Circuit held that “federal courts do not have subject matter jurisdiction to hear [ADEA] claims unless the claimant explicitly files the claim in an EEOC charge or the claim can be reasonably expected to grow out of the EEOC charge.” In Allen, however, the court reversed court and held “that although administrative exhaustion is still a statutory prerequisite to maintaining claims brought under the ADEA, the prerequisite does not state a limitation on federal courts’ subject matter jurisdiction over such claims.”

The distinction between a jurisdictional and statutory requirement is significant. A jurisdictional requirement would serve as an absolute bar to any plaintiff pursuing a claim without exhaustion. By making this requirement statutory, the 6th Circuit makes available arguments such as equitable tolling, which would enable a plaintiff to stay in federal court even if the charge was filed late.

Practically, this ruling should have a minimal effect on discrimination claims in Ohio. Ohio’s state employment discrimination statute has no exhaustion requirement at all. Under Ohio Rev. Code 4112.99, an aggrieved employee can proceed directly to court without first filing any charge whatsoever with any administrative agency. Thus, in Ohio discrimination claims, exhaustion rarely becomes an issue. Where this decision may have some effect is in age discrimination claims. Age claims under Ohio law are subject to a short 180-day statute of limitations, as compared to all other forms of employment discrimination, which have a six-year filing period. An employee, however, has 300 days to file an age discrimination charge with the EEOC. For an employee who misses the shorter 180-day filing period under 4112.99, an EEOC charge and later federal lawsuit under the ADEA is always an option. Thus, this decision could impact those employees who miss the relatively short state statute and have to go the EEOC for relief to enable a federal court filing under the ADEA.

Cost cutting does not necessarily equate to age discrimination

Layoffs have become all the rage. Just yesterday, one of Cleveland’s larger employers, National City Bank, announced that it will be cutting 4,000 employees nationwide. Often, when companies look to cut costs, they will shed more senior employees in favor of hiring less costly employees, who are often, but not necessarily, younger. This strategy is exactly what Highlands Hospital Corp. employed that resulted in an age discrimination claim by two terminated employees. In Allen v. Highlands Hosp. (6th Cir. 10/21/08), the 6th Circuit reaffirmed that a plaintiff cannot support an age discrimination disparate impact claim by simply relying upon a general policy or practice, but must isolate and identify a specific employment practice that disproportionately impacts employees who are at least 40 years old.

Jo Ann Allen (age 63) and Debra Slone (age 53) were both employees of Highlands Hospital. The hospital’s CEO, Harold Warman, decided to terminate both of them for violating its patient privacy policy. Specifically, Allen and Slone removed the x-rays of Allen’s granddaughter without the patient’s written permission and signed a backdated documents to try to cover their tracks.

Allen and Slone sued the hospital for age discrimination. Among other claims, they alleged that Warman’s cost-cutting measures had a disparate impact on their age. Warman had been systematically terminating employees based on seniority to facilitate the hiring of new, less costly employees.

Contrary to the disparate impact claim, the statistics showed that Warman’s program did not necessarily disproportionately affect older employees at the hospital:

Date	Total # of Employees	Employees Age 40 and Older	Employees Younger than Age 40
July 1998	672	273	399
Dec. 2002	488	253	235
Dec. 2004	530	267	263

 

In July 1998, 40% of the hospital’s total employees, including Allen and Slone, were age 40 or older. By December 2002, that ratio increased to 52%, which also included Allen and Slone. Two years later, that number had slightly decreased to just over 50%.

A disparate impact claim involves employment practices that are neutral on their face but in application fall more harshly on one group over another. Plaintiffs that allege disparate impact discrimination under the ADEA must isolate and identify a specific employment practice that is allegedly responsible for the statistical disparities. it is not sufficient for a plaintiff to simply point to a generalized policy that leads to a perceived impact.

Allen and Slone argued on that the effect of the policy demanding the termination of the highest paid employees had a illegal impact based on age. The Court found, however, that the plaintiffs failed to isolate and identify “a specific employment practice that disproportionately impacts employees who are at least 40 years old”:

As we have already explained, the plaintiffs have at best alleged that HHC desired to reduce costs associated with its highly paid workforce, including those costs associated with employees with greater seniority. But the plaintiffs have not established that this corporate desire evolved into an identifiable practice that disproportionately harms workers who are at least 40 years old. Because Allen and Slone have simply “point[ed] to a generalized policy,” as opposed to specific practice, they have therefore failed to raise a genuine question of material fact with respect to their disparate impact claim.

Coupled with the compelling statistical evidence, the appellate court affirmed the district court’s dismissal of the age discrimination claim.

Disparate impact claims are much more seldom litigated than disparate treatment claims. Because it is likely that mass layoffs will increase as the health of the economy decreases, it is also likely that these types of claims will pick up in frequency. Because of the possibility of a disparate impact claim with a mass layoff, companies should consider conducting pre and post-layoff statistical analyses to ensure that otherwise neutral selection criteria do not unfair impact one group over another. A little planning can go a long way to preventing the type of lawsuit that plagued Highlands Hospital in this case.

[Thanks to Steve Sutton for sending this decision to me]

A labor & employment civics lesson

Today brings us two interesting posts detailing employment law issues to consider on election day. Michael Moore at the Pennsylvania Labor & Employment Blog and Dan Schwartz at the Connecticut Employment Law Blog both nicely summarize some of the key employment law issues that the next president might face.

If you are interested in a decidedly pro-business take on some of these issues, you should also take a look at website of the U.S. Chamber of Commerce, which has detailed information on a variety of workplace issues, including:

• Equal Employment Opportunity
• Absence Abuse and Medical Leave
• Paid Family and Medical Leave
• The Employee Free Choice Act

As we consider some of the more controversial of these initiatives (such as the Employee Free Choice Act), it’s important to remember that a President is but one piece in a complex governmental puzzle. Currently, if you count the two Independent Senators that caucus with the Democrats, the Dems hold a slim 51-49 lead in the Senate. Assuming that Senators Lieberman and Sanders continue to caucus on the left, nine current seats would have to change from red to blue for the Dems to reach the magic number of 60. Recent polling data suggest that the Democrats will certainly get closer to 60 than they are now, but it should prove very difficult to get over that hump.

Why is 60 such an important number? Because that is number needed to make the Democratic majority filibuster-proof. A filibuster is where a senator, or a series of senators, speak for as long as they want and on any topic they choose on the Senate floor. By way of example, Strom Thurmond once spoke for more than 24 straight hours to try to block passage of the Civil Rights Act of 1957. Practically, a filibuster permits one or more senators to derail a vote indefinitely, unless a supermajority (that magic number, 60) invokes cloture, which brings the filibuster to an end.

Because a filibuster poses such a huge risk, its threat is usually enough to derail controversial legislation without the support of at least 60 senators. Thus, if the Democrats don’t reach 60 (or even 58, depending on the inclinations of the two Independents), a Republican minority should be able to block controversial issues such as the Employee Free Choice Act.

On election night, while we watch the states change to red or blue on the electoral college map, it is equally important to follow some of the close Senate races. Without understanding both, one cannot truly decipher what the employment law landscape will look like after January 20, 2009.

Do you know? Ohio’s wage payment statute

Do you know? Ohio has a specific law that details how companies are to pay their employees. O.R.C. 4113.15 provides, in relevant part:

(A) Every individual, firm, partnership, association, or corporation doing business in this state shall, on or before the first day of each month, pay all its employees the wages earned by them during the first half of the preceding month ending with the fifteenth day thereof, and shall, on or before the fifteenth day of each month, pay such employees the wages earned by them during the last half of the preceding calendar month….

(B) Where wages remain unpaid for thirty days beyond the regularly scheduled payday or, in the case where no regularly scheduled payday is applicable, for sixty days beyond the filing by the employee of a claim or for sixty days beyond the date of the agreement, award, or other act making wages payable and no contest court order or dispute of any wage claim including the assertion of a counterclaim exists accounting for nonpayment, the employer, in addition, as liquidated damages, is liable to the employee in an amount equal to six per cent of the amount of the claim still unpaid and not in contest or disputed or two hundred dollars, whichever is greater….

(D) As used in this section:

(1) “Wage” means the net amount of money payable to an employee, including any guaranteed pay or reimbursement for expenses, less any federal, state, or local taxes withheld; any deductions made pursuant to a written agreement for the purpose of providing the employee with any fringe benefits; and any employee authorized deduction.

In plain English, businesses have to pay their employees at least two time a month, at least as frequently on the 1st and 15th of each month. Of course, employers can choose to pay more frequently, but any less often would violate the statute.

If wages go unpaid for 30 days past a regularly scheduled payday, or 60 days if no payday applies (such as a vacation or bonus payout), the employer could be held liable for liquidated damages of the greater of 6% of the unpaid wages or $200, provided that there is not a legitimate dispute over the payment of the wages. For example, if an employee claims that they are owed unused vacation days on termination, or claims that a bonus is owed, and an employer disputes that claim in good faith (based on a policy, for example), the liquidated damages provision would not apply.

This law does specifically speak to the handling of unpaid wages on termination. One reasonable reading of the statute would make them due on the first regularly scheduled payday following the last day of employment. Another reasonable reading would make them due within 60 days after the last date of employment. The more prudent interpretation of the statute would suggest that employers make a habit of including final paychecks with the next regular payroll. However, under 4113.15(B), the employer will not incur any potential liability until 30 days after that next payroll.

Comment about employee’s job security leads to reversal of summary judgment in FMLA retaliation case

A maintenance technician with a history of back problems suffers from unpredictable episodes of back pain that temporarily rendered him unable to perform his job duties. As a result, his employer granted him intermittent FMLA leave. The problem worsened to the point that he needed FMLA leave of more significant duration. Prior to taking the leave, the employee claims that his employer’s HR Director told him “if I took that FMLA for that period of time, there would not be a job waiting for me, when I returned.” Shortly after the FMLA leave began, the company experienced a layoff, which required the company to let go one maintenance technician. The employee on FMLA leave was the least senior maintenance tech and was selected for the layoff.

He sues for FMLA retaliation, but the district court grants the employer’s motion for summary judgment and dismisses the claim. In Daugherty v. Sajar Plastics (6th Cir. 10/16/08), the 6th Circuit reversed the grant of summary judgment on the FMLA retaliation claim, finding that the HR Director’s comment was direct evidence of the company’s retaliatory intent:

Clearly, this unambiguous comment, which we must take as true at the summary judgment stage, constitutes direct evidence that Daugherty’s termination was motivated by unlawful, discriminatory animus. Alexander was Daugherty’s immediate supervisor and a decision maker at Sajar. A fact finder would not be required to draw any inferences to determine that Alexander retaliated against Daugherty when Alexander explicitly threatened such retaliation and the threat – that Daugherty would not have a job waiting for him when he returned from leave – was realized….

For its part, the company had valid reasons to lay-off and not recall Daugherty: he was the least senior employee in a bloated department, and he refused to provide medical certification when Sajar Plastics tried to recall him a few months later. One comment, however, from a person in a position of authority over Daugherty’s job, casts enough doubt on the company’s motive to cloud the legitimacy of its justifications and create an issue for trial. Let this case serve a cautionary story – be very careful in the words you select whenever dealing with anyone remotely engaging in protected activity.