In This Issue:

  • Telecommuting May Constitute A Reasonable Accommodation Under The ADA

  • eBay Settles Poaching Suits With DOJ, California AG

  • Employer’s Off-Duty Premises Rule Unlawful, Says NLRB

  • 4th Circuit Weighs In On Employer Liability For Third-Party Harassment

  • Arbitration Clause Survives Contract Termination – Despite Exclusion From Survival Clause

  • 10th Circuit Rules “Team Player” Rationale Could Be Pretextual

Telecommuting May Constitute A Reasonable Accommodation Under The ADA

Why it matters: Telecommuting may constitute a reasonable accommodation under the Americans with Disabilities Act, the 6th U.S. Circuit Court of Appeals determined, even where an employer contends the job requires regular attendance at the workplace. Due to advances in technology, “attendance” is no longer synonymous with an employee’s physical presence in the workplace, the panel majority wrote, even if the employee’s job required some face-to-face interactions. Much of the work performed by the plaintiff – who suffered from a serious case of irritable bowel syndrome – could be conducted over the phone or by videoconference, the court found, reversing summary judgment for the employer. In a scathing dissent, one panel member argued that the plaintiff’s personal opinion that she could get her work done by telecommuting should not be enough to sway the court, cautioning that the majority’s opinion would have a significant impact on employers. At a minimum, the decision demonstrates that courts are willing to find telecommuting to be a reasonable accommodation, putting employers on notice for a possible increase in employee requests.

Detailed Discussion
Jane Harris suffered from a severe case of irritable bowel syndrome (IBS) that caused her to soil herself simply when standing up. She asked her employer, Ford Motor Company, whether she could work from home up to four days a week.

Ford declined Harris’s request, stating that four days of working from home was not possible for her job as a resale steel buyer. The position necessitated face-to-face interactions, the company said, and its business judgment was that e-mail or teleconferencing was an insufficient substitute for in-person team problem solving. Ford suggested alternative accommodations that Harris refused.

After she was terminated for failing to meet certain objectives, Harris filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC). The agency then filed suit against Ford, alleging the company violated the ADA by failing to accommodate Harris’s disability.

The EEOC took the position that Harris was otherwise qualified for her position if Ford eliminated the requirement that she be physically present at Ford facilities or allowed a telecommuting accommodation.

The 6th Circuit agreed, finding that Harris’s physical presence was not an essential requirement of her job and that the telecommuting arrangement would not create an undue hardship for Ford.

“When we first developed the principle that attendance is an essential requirement of most jobs, technology was such that the workplace and an employer’s brick-and-mortar location were synonymous,” the panel wrote. “However, as technology has advanced in the intervening decades, and an ever-greater number of employers and employees utilize remote work arrangements, attendance at the workplace can no longer be assumed to mean attendance at the employer’s physical location. Instead, the law must respond to the advance of technology in the employment context, as it has in other areas of modern life, and recognize that the ‘workplace’ is anywhere that an employee can perform her job duties.”

In Harris’s case, the court disagreed with Ford that physical attendance was critical to the group dynamic of the team, and was “not persuaded that positions that require a great deal of teamwork are inherently unsuitable to telecommuting arrangements.” Harris did need to conduct occasional site visits with steel suppliers, the court acknowledged, but could do so even if she worked primarily from her home.

Alternatively, the panel also found the EEOC demonstrated Harris was qualified for her job with a telecommuting accommodation. The agency presented evidence that any past issues with attendance were related to IBS flare-ups and that other employees were allowed to work from home, albeit on a limited basis.

Although Harris initially requested up to four days working at home, the court said Ford should have done a better job engaging in an interactive process. The company offered two alternatives (moving Harris’s cubicle closer to the bathroom and offering her an alternate position more suited to telecommuting) that the court dismissed as inadequate.

The majority did try to limit its stance by clarifying that “we are not rejecting the long line of precedent recognizing predictable attendance as an essential function of most jobs. Nor are we claiming that, because technology has advanced, most modern jobs are amenable to remote work arrangements.” Many jobs continue to require physical presence, the court acknowledged, but “given the state of modern technology, it is no longer the case that jobs suitable for telecommuting are ‘extraordinary’ or ‘unusual.’”

A dissenting opinion characterized the majority’s decision as “regrettable,” writing that Ford offered “overwhelming evidence” to support its business judgment that Harris’s position required face-to-face interactions and regular work attendance. The dissent also expressed concern about the impact of the court’s holding.

“[T]he lesson for companies from this case is that, if you have a telecommuting policy, you have to let every employee use it to its full extent, even under unequal circumstances, even when it harms your business operations, because if you fail to do so, you could be in violation of the law,” the judge said. “Of course, companies will respond to this case by tightening their telecommuting policies in order to avoid legal liability, and countless employees who benefit from generous telecommuting policies will be adversely affected by the limited flexibility.”

To read the decision in EEOC v. Ford Motor Company, click here.

eBay Settles Poaching Suits With DOJ, California AG

Why it matters: On the heels of a $324 million settlement between engineers and tech companies in California federal court, eBay reached a deal with the Department of Justice (DOJ) and California’s Attorney General over similar charges. According to the authorities, eBay and Intuit had an agreement not to recruit each other’s employees and eBay agreed not to hire Intuit employees who approached the company. In addition to promising not to make any deals regarding employee recruitment for a five-year period, the settlement with California requires eBay to pay a total of $3.75 million. Employees or prospective employees affected by the alleged agreement will be eligible for restitution from a $2.375 million fund; the remainder constitutes civil penalties to the state. Given the amount of antipoaching litigation – and the high dollar amounts companies are paying out – employers would be well advised to steer clear of recruitment and hiring agreements and should be on the lookout for copycat suits from other plaintiffs.

Detailed Discussion
In 2010 the DOJ completed an investigation into several big-name technology companies based in California that were accused of agreements not to recruit each other’s employees.

Seven companies – Adobe Systems, Apple, Google, Intel, Intuit, Lucas Films, and Pixar – reached a deal with the DOJ in which they promised to halt antipoaching agreements. Some of the companies subsequently faced lawsuits from affected employees. Intuit, Lucas Films, and Pixar paid a total of $20 million to settle, while Adobe, Apple, Google, and Intel narrowly avoided trial by agreeing to a $324 million deal.

One of the targets, eBay was alleged to have reached an agreement with Intuit that lasted from 2006 until 2009 that prevented each company from recruiting employees from the other. eBay also promised not to hire Intuit employees who approached it. The “handshake” agreement between senior executives was fully documented in e-mails, according to the California AG’s office.

In one message, a senior vice president in eBay’s human resources department wrote to former CEO Meg Whitman that although eBay was keeping up its end of the deal, “it is hard to do this when Intuit recruits our folks.” The e-mail was triggered by a recruiting flyer sent from Intuit to an eBay employee. In response, Whitman forwarded the e-mail to the founder of Intuit, Scott Cook, and requested that he “remind your folks not to send this stuff to eBay people.” Cook replied with an apology, adding, “I’ll find out how this slip up occurred again.”

According to the DOJ and California AG’s office, the alleged agreement harmed employees by depriving them of job opportunities and lowered their salaries and benefits.

Pursuant to the deal with the DOJ, eBay will not pay any money but is subject to a five-year moratorium on anticompetitive agreements to restrain employee recruitment and hiring with other companies. In its agreement with the state of California, eBay will pay civil penalties and an additional $2.375 million in restitution, for a total of $3.75 million.

Restitution will be paid on a tiered schedule, with an estimated 40 employees of Intuit considered for but not offered a position at eBay receiving between $5,000 and $10,000 each. Another 950 Intuit employees who applied for and were not offered a job at eBay are eligible for between $1,000 and $5,000. A third group of roughly 13,000 current and former employees who were affected by the agreement but don’t fit into the first two categories will receive a maximum of $150 each.

A preliminary approval hearing for the settlement is scheduled for Aug. 29 in California federal court.

To read the proposed final judgment in U.S. v. eBay, click here.

To read the proposed settlement deal in California v. eBay, click here.

Employer’s Off-Duty Premises Rule Unlawful, Says NLRB

Why it matters: The latest target of the National Labor Relations Board’s (NLRB) displeasure with regard to employer policies: a provision prohibiting off-duty employees from remaining on the premises after their shift ended. Affirming an administrative law judge’s ruling, the Board held that because the policy at issue contained an indefinite exception – where a supervisor could grant approval on a case-by-case basis – the provision violated the National Labor Relations Act (NLRA) by giving the employer too much discretion. The decision is only the latest iteration of the Board’s crackdown on various employer policies, from social media to confidentiality and even hats.

Detailed Discussion
Oakland, California-based Piedmont Nursing Home maintained a rule that stated: “Employees may not clock in for duty before their shift begins, nor are they to remain on the grounds after the end of their shift, unless previously authorized by their supervisor. Employees must have prior supervisor authorization before working/incurring overtime.”

In September 2011 the Nursing Home’s administrative manager sent a memorandum reaffirming the rule: “No employees are allowed inside the building when not scheduled to work unless they have prior approval of their supervisor/manager, Human Resources, or the Executive Director.”

Prior approval had been granted by the employer under three circumstances: for off-duty employees to pick up their paychecks at the security desk, attend meetings with human resources personnel, or arrive early for the night shift.

The events triggering the NLRB case began when a union representative at Piedmont Gardens requested that off-duty employees be granted permission to attend a meeting with a human resources director. The request was denied. The off-duty employees arrived at the building anyway but were not allowed in the facility.

An administrative law judge found the policy violated Section 8(a) of the NLRA. A three-member panel of the NLRB affirmed.

Employers may validly restrict off-duty access as long as the rule applies only to the interior of the facility and other working areas, is clearly disseminated to all employees, and applies to all off-duty employees seeking access for any purpose, the Board explained, not just those engaging in union-related activity.

Piedmont Gardens ran afoul of the last requirement by including “an exception, indefinite in scope, under which off-duty access is permitted with supervisory authorization,” the panel wrote. “The vice in such a rule is that it gives the [employer] ‘broad – indeed, unlimited – discretion “to decide when and why employees may access the facility.”’”

Although the nursing home argued it had limited exceptions to just three circumstances, the Board said the record failed to establish “that those were the only circumstances under which supervisors and managers had granted access in the past or had discretion to grant access.”

The Board found the rule unlawful on its face as well as illegal when applied against the off-duty employees who were not allowed to enter the facility.

One panel member agreed with the outcome in the decision but noted his disagreement with the Board’s ruling on the facial legality of the policy. He would have found “that a rule may lawfully prohibit off-duty employees from accessing the interior of a workplace even if the rule contains an exception permitting access if employees obtain the prior approval of a supervisor or manager or if access is warranted by other unspecific circumstances,” according to the decision. “Such an exception reasonably contemplates legitimate business reasons, which cannot be enumerated in advance, that predictably would warrant allowing off-duty employees on the premises.”

Although he believed the rule to be facially lawful, Piedmont Gardens violated Section 8(a) by applying its off-duty access rule to restrict the exercise of Section 7 rights, however, the panel member said.

The Board ordered the employer to rescind the rule and cease and desist from maintaining and enforcing the off-duty policy.

To read the NLRB’s decision, click here.

4th Circuit Weighs In On Employer Liability For Third-Party Harassment

Why it matters: In a case reminding employers about potential liability for third-party harassment, the 4th U.S. Circuit Court of Appeals reversed summary judgment for an employer in a suit alleging a female customer service representative was subjected to a racially and sexually hostile work environment by an independent sales rep. The three-judge panel adopted a negligence standard for third-party liability similar to other federal appellate courts – citing cases from the 7th, 9th, 10th, and 11th Circuits – establishing that employers can be liable if they “knew or should have known” about harassment and fail to take prompt remedial action.

Detailed Discussion
Lori Freeman, an African-American female, worked as a customer service representative for Dal-Tile Corporation in North Carolina. Dal-Tile had an ownership interest in a local kitchen and bath remodeling center, VoStone, Inc.

An independent sales representative for VoStone named Timothy Koester typically interacted with Freeman more than once a day. The first incident cited by Freeman occurred just two weeks after she started her job in 2006 when she overheard Koester refer to a photograph by asking, “[H]ey, who are these two black b****es?”

Over the next three years, Koester repeatedly used the term “b****es” and often made comments about his sexual prowess, sharing photos on his phone of naked women. He also engaged in crude behavior such as farting into Freeman’s phone. On one occasion, he asked Freeman to cover for him because he had partied too hard the night before and said, “I’m just too f***ed up, don’t take offense, but I’m as f***ed up as a n****r’s checkbook.” When President Barack Obama was elected in 2008, he told her, “[Y]ou guys won.”

Freeman complained of the incidents to her supervisor and told Koester his comments were demeaning and made her uncomfortable. She eventually reported the comments to human resources in 2009 and Koester was initially banned from the facility. The company later lifted the ban but prohibited Koester from communicating with Freeman.

After resigning, Freeman filed a charge with the Equal Employment Opportunity Commission (EEOC) and then filed suit in federal court, claiming that Dal-Tile subjected her to discrimination based on both sex and race. A federal district court held that Freeman could not establish that liability should be imputed to Dal-Tile and granted the employer summary judgment.

A two-to-one panel of the 4th Circuit reversed on her claims of a hostile work environment. First, the court adopted a negligence standard for employer liability with regard to third-party harassment under Title VII.

“Similar to the reasoning we set forth for employer liability for co-worker harassment, ‘an employer cannot avoid Title VII liability for [third-party] harassment by adopting a “see no evil, hear no evil” strategy,’” the panel wrote. “Therefore, an employer is liable under Title VII for third parties creating a hostile work environment if the employer knew or should have known of the harassment and failed ‘to take prompt remedial action reasonably calculated to end the harassment.’”

Finding the record in Freeman’s case “replete with evidence of frequent abusive behavior by Koester during Freeman’s tenure,” the court said she had established a basis for imposing liability on Dal-Tile under the new standard.

Freeman presented evidence that her supervisor knew about all three of the most major incidents (the “black b****es” comments and the checkbook reference) and had personal knowledge of the lewd and inappropriate statements Koester made on a frequent basis.

“This evidence, if proven true, shows that Dal-Tile, through its agent [the supervisor], had actual knowledge of the harassment and that Freeman found it offensive, as shown by Freeman’s frequent complaints and her negative reaction to his behavior,” the panel wrote. “However, even if [the supervisor] did not have actual knowledge that Freeman was offended by Koester’s behavior, at the very least, she should have known it,” the court added, given the use of such incendiary terms in the presence of a black, female employee.

The panel majority also criticized the employer for not responding to the alleged harassment for three years. “[P]articularly shocking to us is the fact Dal-Tile took absolutely no action when Koester passed gas on Freeman’s phone and made [her] cry in [the presence of her supervisor], nor when Freeman promptly complained to [her supervisor] that Koester had used the word ‘n****r’ on the phone with her.”

The court reversed summary judgment in Dal-Tile’s favor on the sexual and racial hostile work environment claims under Title VII. However, the panel upheld summary judgment on other claims such as constructive discharge, finding that Freeman voluntarily resigned from her position. The decision was not unanimous, with one judge filing a dissenting opinion in which he expressed “grave concerns” that “the majority extends the scope of Title VII beyond what the Supreme Court has so far recognized.”

To read the decision in Freeman v. Dal-Tile Corp., click here.

Arbitration Clause Survives Contract Termination – Despite Exclusion From Survival Clause

Why it matters: In a victory for employers, the 6th U.S. Circuit Court of Appeals held that an arbitration clause survived the termination of an underlying agreement even though the clause was not specifically included in the agreement’s survival clause. Several other paragraphs were listed in the survival clause, the employee told the court, implying that the arbitration clause was specifically excluded. But the unanimous three-judge panel disagreed, noting that other sections of the agreement that were not mentioned in the survival clause had a life after the contract. Therefore, the court said, the plaintiff failed to prove that the arbitration clause was meant to expire. While the employer eked out a win before the 6th Circuit, employers may want to play it safe and explicitly include an arbitration provision in the survival clause, avoiding the issue altogether.

Detailed Discussion
Cynthia Huffman was hired by The Hilltop Companies to review mortgage loan files to ensure that lawful procedures were followed during foreclosures and other proceedings. Huffman’s employment relationship was governed by a Professional Services Contract Agreement, which stated that she was an independent contractor.

When her employment ended, Huffman sued Hilltop alleging violations of the Fair Labor Standards Act and Ohio state law, contending that she was wrongly classified as an independent contractor and was entitled to overtime.

Hilltop sought to compel arbitration in the case pursuant to the contract. The agreement contained 24 clauses, including an arbitration clause and a survival clause. The survival clause delineated 12 paragraphs that would survive termination of the agreement – such as client confidentiality and compensation – but did not list the arbitration clause.

A federal district court agreed with Huffman that the exclusion of the arbitration clause from the survival clause meant it had no post-expiration effect.

But on appeal, the 6th Circuit reversed in the employer’s favor.

Noting that it was the first federal appellate court to consider the issue, the panel emphasized the “strong federal policy in favor of arbitration” and rejected two arguments from Huffman.

First, the court said the agreement did not have to be construed in favor of Huffman because Hilltop drafted it. Even if the court found ambiguity in the contract, “the strong presumption in favor of arbitration applies instead,” the panel wrote. “Therefore, all doubts are resolved in favor of arbitration, and the plaintiffs must present ‘the most forceful evidence of a purpose to exclude the claim from arbitration [in order to] prevail.’”

The omission of the arbitration clause from the survival clause was not a clear implication that the paragraph was not meant to have post-expiration effect, the court then determined. Other clauses that were not included in the survival clause remained in effect after the contract’s expiration, the panel said, such as the non-compete provision and the severability clause.

“We believe that considering the contract as a whole – the survival clause and its relationship to the other clauses in the agreement – is the correct way to determine whether the parties unambiguously intended for the arbitration clause to expire with the contract,” the court said. “We observe that the parties did not clearly intend for the survival clause to serve as an exhaustive list of the provisions that would survive expiration of the agreement. Indeed, the non-compete clause remains in effect for twelve months after expiration, yet it is not listed in the survival clause.”

Further, “neither the agreement’s severability clause nor its integration clause is listed in the survival clause,” the court added. “However, it is illogical to conclude that upon expiration of the contract, the parties no longer intended the agreement to be severable. It is similarly illogical to conclude that the parties intended the ban on extrinsic evidence to be in effect only prior to the agreement’s expiration. The difficulty in the plaintiff’s position is that it is just as plausible that the parties also intended the arbitration clause to survive.”

The panel noted that a different outcome could be possible if the evidence established a “clear implication” – say, 23 of the 24 clauses were all listed in the survival clause, leaving arbitration as the sole exclusion – but such facts were not present.

“The omission of the arbitration clause from the survival clause in this case did not clearly imply that the parties did not intend for the arbitration clause to have post-termination effect,” the court concluded.

To read the opinion in Huffman v. Hilltop LLC, click here.

10th Circuit Rules “Team Player” Rationale Could Be Pretextual

Why it matters: Could the failure to be a “team player” be a pretextual reason to terminate a female employee? An unpublished decision from the 10th U.S. Circuit Court of Appeals answered the question in the affirmative, reversing summary judgment for an employer. A female sales manager said male employees were allowed to question and “butt heads” with superiors, but when she did it she was fired. Although a federal district court accepted the employer’s unwavering position that the plaintiff was not a team player, a divided federal appellate panel reversed the case. A dissenting member of the panel said summary judgment should have been upheld because the female employee’s approach of questioning superiors was different than her male coworkers, with no evidence that the men “came even close to [the plaintiff’s] critical, obnoxious, insulting, and accusatory behavior.”

Detailed Discussion
When Synerlink Corporation hired Stacey Potter in 2004, she was the company’s first female territory manager. The parties agreed that Potter quickly became one of Synerlink’s top salespeople and won several sales awards.

However, the parties disagreed about Potter’s role as a team player. Synerlink executives felt she could be too aggressive. When a new territory manager was hired, each of the others was expected to chip in some of their territory for the new guy. Potter pushed back. In a series of e-mails over several months, she argued that the company was “penaliz[ing]” her when it should not have hired a new manager in the first place.

She suggested other employees should give up more of their own territories, complained about salespeople, and wrote, “If I’m forced to waive a white flag to prove I’m a team player and help my fellow [territory manager], I will consider doing it.”

Potter was given the option to resign, but she refused, and Synerlink terminated her for not being a team player. A federal district court judge granted the employer summary judgment on Potter’s Title VII and state law sexual discrimination claims. The case went to trial on other claims, and a jury awarded her almost $50,000 in unpaid commissions. Both parties appealed.

Analyzing Potter’s Title VII discrimination claim, the 10th Circuit held that a jury should consider whether Synerlink fired her for failing to conform to stereotypical expectations for women by butting heads with management.

The “team player” rationale for her termination could be pretextual, the court said, because Synerlink treated Potter differently from male territory managers who expressed dissatisfaction with management. The panel considered testimony from two male counterparts who said they “butt[ed] heads,” “talk[ed] things out,” and “ask[ed] a lot of questions” when territory changes were announced.

Potter’s supervisor “actually invited [her] to share her concerns, but unlike the male [territory managers], he fired her when she did so,” the panel wrote. “Evidence of Synerlink’s disparate treatment of Ms. Potter relative to the male [territory managers] in responding to their expressed concerns about territory changes is sufficient to withstand summary judgment. A reasonable jury could conclude Ms. Potter’s expressions of concern were similar to [her male counterparts’] and that Synerlink’s rationale for firing her was pretextual.”

Unlike the dissent, the majority refused to compare the tone of the male territory managers to Potter’s e-mails, as that “involves weighing evidence, which is the jury’s role.” The court did note that Potter admitted she was unaware of anyone else having “the same type of conversation” she had with her superiors and that her supervisor testified: “Nobody ever came on as strong in writing as what Stacey did. . . . Nobody in the history of our company had ever come on that strong attacking so many people in our company.”

State law discrimination claims were similarly reversed, and the panel remanded the case for a new trial.

A dissenting opinion argued that the majority should have focused on a direct comparison between Potter’s behavior and that of her male counterparts in order to determine whether Synerlink’s rationale was truly pretextual. “[O]ur focus should be narrow, deciding whether there is a genuine factual dispute as to the only material fact of significance: whether her insubordinate and insulting conduct was of ‘comparable seriousness’ to that of her male counterparts, which was tolerated,” the dissent said.

Because the dissent found that “Potter’s expression of her opinions in her e-mails is a far cry from professional conversations regarding negotiations and shared concerns described as the approach taken by [the male territory managers],” the judge would have affirmed summary judgment. “The anti-discrimination statutes should provide protection, not preference,” he wrote. “Protected class members ought not to be insulated from the consequences of their intemperate behavior under the guise of fair and equal treatment.”

To read the decision in Potter v. Synerlink Corp., click here.

 

Topics:  ADA, Appeals, Apple, Arbitration, eBay, EEOC, Employer Liability Issues, Google, Hiring & Firing, Intel, Intuit, Pixar, Reasonable Accommodation, Telecommuting

Published In: Alternative Dispute Resolution (ADR) Updates, Civil Procedure Updates, Civil Rights Updates, General Business Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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