Employment Law -- Aug 13, 2013

by Manatt, Phelps & Phillips, LLP

In This Issue:

EEOC Targets Cancer Discrimination

Filing two new lawsuits, the Equal Employment Opportunity Commission is cracking down on employers allegedly discriminating against workers with cancer.

In Oklahoma the agency filed suit against Midwest Regional Medical Center on behalf of nurse aide Janice Withers. According to the complaint, Withers was terminated after taking sick days due to the side effects of her radiation treatments. Diagnosed in December 2011 with basal cell carcinoma, Withers underwent radiation treatment in January and February of the following year. Her supervisor offered a leave of absence, but Withers chose to remain working.

Instead, Withers called in sick on three days because of nausea and fatigue, residual side effects of her radiation treatments, the agency said. On the fourth day, her supervisor called to tell her she was being put on leave for an additional week to "get rested up from the radiation," sending a letter to confirm the agreement. But Withers was then discharged in the interim for being a "no-show."

Her termination violated the Americans with Disabilities Act, the agency alleged, because Withers could have performed her essential job functions with or without reasonable accommodation - had Midwest Regional permitted.

In a second suit filed just two days later, the EEOC claims that Kyklos Bearing International, an Ohio-based bearings manufacturer, illegally fired forklift operator Donique Price because she, too, suffered from cancer.

KBI told Price she lost her job because medical restrictions limited her ability to lift and the company did not have any light-duty work available. But the EEOC argued the employer's stated reason was a "ruse for disability discrimination." Price had submitted written documentation from her doctor clearing her to work without any medical restrictions after she returned to work following surgery and treatment for her cancer, according to the complaint.

Both suits seek injunctive relief halting future discrimination practices by the employers. The Withers suit also requested back pay, compensatory and punitive damages, and reinstatement or front pay. Price asked for compensatory and punitive damages and lost wages and benefits.

To read the complaint in EEOC v. Midwest Regional Medical Center, click here.

To read the complaint in EEOC v. Kyklos Bearing International, click here.

Why it matters: In a press release announcing the Price complaint against KBI, the EEOC noted that the suit reflects the agency's stated goals: "One of the six national priorities identified by the EEOC's Strategic Enforcement Plan is for the agency to address emerging and developing issues in equal employment law, including issues involving the ADA and pregnancy-related limitations, among other possible issues." Employers should be cognizant that the agency is keeping a close eye on ADA issues and that employees with cancer are considered a category of emerging and developing plaintiffs for the EEOC.

ADA Suit Filed In Wake Of AMA Defining Obesity As Disease

Just weeks after the American Medical Association declared obesity to be a disease, one plaintiff has already filed suit in federal court claiming he was terminated because of his weight in violation of the Americans with Disabilities Act.

In June the AMA upgraded obesity from a condition to a disease. Defined as having a body mass index of 30 or higher, obesity is a "multimetabolic and hormonal disease state" that results in health conditions like cardiovascular disease and type 2 diabetes, the group said.

"The suggestion that obesity is not a disease but rather a consequence of a chosen lifestyle exemplified by overeating and/or inactivity is equivalent to suggesting that lung cancer is not a disease because it was brought about by individual choice to smoke cigarettes," according to the resolution passed by the AMA.

The designation provides employees with an argument that they are protected under the auspices of the ADA, with a lighter burden to establish discrimination. With the support of the AMA's definition behind a plaintiff's case, employers may struggle to argue that obesity is not a covered impairment.

And one plaintiff is ready to find out whether that argument will work. Joseph Whittaker sued America's Car-Mart, Inc., alleging that he was fired after seven years of employment because he is "severely obese." Despite his weight, Whittaker said he could perform the "essential elements" of his job. His employer, however, regarded him as being substantially limited in the major life activity of walking and fired him from his job as the general manager of a dealership, he claimed.

Although Whittaker's complaint doesn't cite to the AMA's updated definition, it states that he was "at all times relevant a qualified individual with a disability within the meaning of the ADA."

Whittaker's suit, filed in the Eastern District of Missouri, seeks compensatory and punitive damages, including payment for emotional and mental anguish.

To read the complaint in Whittaker v. America's Car-Mart, Inc., click here.

Why it matters: Although only one state (Michigan) and six cities currently prohibit discrimination based upon physical appearance or obesity, employers may want to brace themselves for an increase in obesity-related litigation. The AMA's new definition will likely spur more than just Whittaker's suit, given that an estimated one-third of American adults are classified as obese, according to the organization. How the courts will handle the issue remains to be seen.

Kmart Cashiers Near Settlement Deal Over Seating But Face Judicial Doubts

Potentially ending a long, complicated case, Kmart and a class of cashiers from two California stores have reached an agreement to end a lawsuit alleging violations of state labor law.

The suit was originally filed on behalf of all cashiers in the state of California over the retailer's failure to provide seated workstations in violation of California Wage Order 7-2001(14), which reads: "All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats." The case was narrowed to a class from a single store in Tulare, Calif., and Kmart prevailed in a bench trial.

However, the court then granted certification to a second one-store class of Redlands cashiers in June. Trial was scheduled to begin in September.

Now the parties have reached a settlement deal that would pay no more than $280,000 to both classes of plaintiffs, a total of 233 individuals. The dollar amount includes compensation for class members, incentive awards to class representatives, counsel fees and other administrative costs, and payments to the California Labor and Workforce Development Agency. After $5,000 each for the class representatives and $185,000 in expenses for class counsel (who agreed not to seek fees in the case), the remaining class members would receive about $75 each.

Judicial approval of the deal is still required - and appears doubtful.

After the parties notified U.S. District Court Judge William Alsup of the Northern District Court of California of their tentative agreement, he ordered further briefing and expressed his doubts about the terms of the deal.

"The parties' proposed settlement appears to be little more than reimbursement of class counsel's expenses in exchange for a class-wide release," he wrote in an order. "Under the proposal, the class members would receive only token sums (except for the class representatives, who would hit bonanzas)," he wrote. "It is unlikely that the Court will give preliminary approval to this settlement."

Why it matters: The case's long and winding road continues. If Judge Alsup declines to approve the settlement, the parties could continue to negotiate or face off in a second trial in September. The deal would also leave open the possibility of other cashier seating litigation against Kmart, as the court specifically asked the attorneys whether the deal and its attendant release would impact other plaintiffs; the parties answered in the negative. California has been a hotbed of "suitable seating" litigation, with similar suits filed against companies like Bank of America, CVS Pharmacy, Rite Aid, Target Corp., and Wal-Mart. The courts have struggled with the cases, reaching varied results. Judge Alsup certified a one-store-only class of cashiers while another court certified a class of 22,000 Wal-Mart employees and a third refused to certify 1,000 tellers in a suit against Bank of America. 

Federal Appellate Courts Weigh In On FLSA Impact On Illegal Aliens, Private Deals

In a pair of cases addressing the Fair Labor Standards Act, two federal appellate courts addressed whether illegal aliens can recover wages under the statute and whether judicial approval is required for settlement deals where an employee no longer works for the defendant employer.

Emphasizing the intent of the statute, the 8th U.S. Circuit Court of Appeals held that immigration status is irrelevant in an FLSA suit because employers should not be allowed to "exploit" an employee's immigration status or profit from hiring unauthorized aliens to avoid complying with fair wage laws.

Elmer Lucas and five other workers at the Jerusalem Café in Missouri were paid a weekly rate that averaged out to hourly wages ranging from $3.90 to $10.39. All six were not authorized to work in the United States. A federal court denied the employer's motion to dismiss for lack of standing based upon their immigration status, and the plaintiff won $283,728.08 in damages and an additional $156,000 in legal fees and expenses at trial.

The café owners appealed, but the 8th Circuit affirmed, noting the "sweeping definitions" of "employer" and "employee" in the FLSA, which "unambiguously encompass unauthorized aliens." Congress excluded specific categories of workers in the statute (like family members engaged in agricultural work and certain governmental employees) and could have also excluded illegal aliens, the court noted, but chose not to.

The employers' argument that the Immigration Reform and Control Act implicitly amended the FLSA to exclude unauthorized aliens was misplaced, the court said. The two pieces of legislation work in harmony to "promote dignified employment conditions for those working in this country, regardless of immigration status, while firmly discouraging the employment of individuals who lack work authorization." Holding employers liable for violating the IRCA by employing unauthorized workers - and additionally requiring them to pay the same workers legal wages - advances the purpose of federal immigration policy.

Exempting illegal workers from FLSA coverage would also incentivize employers to profit by hiring them and paying an illegal wage, the panel said. "[A]liens, whether authorized to work or not, may recover unpaid and underpaid wages under the FLSA," the court concluded, affirming the verdict. 

In the 11th Circuit case, the panel reversed a district court's entry of a settlement agreement between Candace Nall and her former employer, Mal-Motels, Inc.

Nall's FLSA suit sought unpaid overtime for the time she worked as a front desk clerk and night auditor at Mal-Motels, for a total of $3,780. The owner of the company called Nall and asked to meet with her, without her attorney, to talk about the case. At the meeting the owner presented Nall with two documents to sign. He also gave her a check for $1,000 and another one or two thousand dollars in cash (the amount was disputed by the parties) to settle her suit.

Although she felt pressured, Nall signed the documents because she "was homeless at the time and needed the money." The owner then filed the documents - a voluntary dismissal and letter to Nall's attorney stating the case was settled - with the court. After a hearing, a magistrate judge recommended that the district court approve the settlement over Nall's objections.

Under prior case law, the 11th Circuit said there are only two ways in which FLSA claims can be settled or compromised by the employee in suits against a current employer: under the supervision of the Secretary of Labor or where a district court "enter[s] a stipulated judgment after scrutinizing the settlement for fairness." The court extended that rule to apply in cases between employees and a former employer as well.

Public policy justifications support the need to protect "certain groups of the population from substandard wages and excessive hours," the court said, and allowing employers to secure releases from workers in need of wages would "nullify the deterrent effect" of the FLSA.

"Given the 'often great inequalities in bargaining power between employers and employees,' mandatory protections 'not subject to negotiation or bargaining between employers and employees' are needed to ensure that an employer - who has a strong bargaining position - does not take advantage of an employee," the court wrote. "Ensuring that each FLSA plaintiff receives the damages including liquidated damages, to which she is statutorily entitled, is no less important when the plaintiff is a former employee."

Turning to Nall's case, the court found that "whatever else the judgment approving the agreement may be, it is not a 'stipulated judgment,'" as it "takes two (or more) to stipulate, and a judgment to which one side objects is not a stipulated one." The panel vacated judicial approval of the settlement and remanded the case.

To read the 8th Circuit's decision in Lucas v. Jerusalem Cafe, click here.

To read the 11th Circuit's decision in Nall v. Mal-Motel, Inc., click here.

Why it matters: Both decisions are significant victories for FLSA plaintiffs. The 8th Circuit's opinion allowing illegal immigrants to recover damages under the FLSA is in line with other courts that have considered the issue, including the 11th U.S. Circuit Court of Appeals and federal courts in California, Michigan, New Jersey, New York, and Oklahoma, as well as the position taken by the Secretary of Labor. And the 11th Circuit's holding extends the protections already granted to current employees engaged in FLSA litigation to former employees as well, rejecting private deals to resolve claims under the statute.

NLRB Refuses To Tip Its Hat To Company's Policy On Caps

Continuing its crackdown on a broad range of employment agreements from social media policies to confidentiality and nondisparagement provisions, the National Labor Relations Board has waded into the world of fashion.

A rule that employees could not wear baseball caps except those with the company's logo (and only facing forward) violated the National Labor Relations Act, administrative law judge William Nelson Cates determined.

In the employee guidelines for Nevada-based World Color Corp., a subsidiary of Quad Graphics Inc., the company included the following rule: "…Baseball caps are prohibited except for Quad/Graphics baseball caps worn with the bill facing forward…" The rule appeared in the section on corporate safety, separate from the dress code.

But "the Board, with court approval, has long held that in the absence of special circumstances employees have a Section 7 right under the Act to wear insignia referring to unions or other matters pertaining to working conditions for the purpose of mutual aid or protection," Cates wrote. "An employer may prohibit the wearing of union insignia by its employees if, and only if, the employer can demonstrate substantial evidence of special circumstances that would outweigh the employees' rights protected by Section 7 of the Act."

"Special circumstances" may include violence, interference with training or production, interference with safety, or unreasonable interferences with the image the employer desires for its employees to project to its customers or suppliers, the ALJ noted. No special circumstances existed in the case of Quad.

The hats had no built-in safety features, the company had not experienced any problems with gang insignias or color symbolism, and the record was void of any interactions between employees at the printing press and customers, Cates wrote.

"I find the Company's hat policy forbids or prohibits employees from displaying union logos, or for that matter other protected messages, on their hats, if they choose to wear hats, thereby restricting employees from engaging in activity protected by the Act," the ALJ concluded.

Cates ordered Quad to rescind the hat policy portion of its employee guidelines and post notice to that effect for employees.

In addition, Cates found a comment made by a supervisor to an employee who was about to be reassigned that "management knew about [your] posts on Facebook" similarly violated the Act. The supervisor and the employee were friends on the social networking site, where the employee had posted comments about Quad and his union.

Although the reassignment was based on production, the employee "could reasonably believe his reassignment was in retaliation for his protected activity and that other negative consequences could follow," the ALJ wrote. The supervisor's comment "interfered with, restrained, and coerced [the employee] in the exercise of rights guaranteed him in Section 7 of the Act and in violation of Section 8(a)(1) of the Act."

Quad must cease and desist from telling employees they are being reassigned from one press machine to another because of the employees' protected concerted social media activities that included comments supportive of the union, Cates ordered.

To read the ALJ's decision in World Color Corp., click here.

Why it matters: The ALJ's decision reiterates the NLRB's broad focus on all aspects of employment documents, from a policy on hats to social media policies to nondisparagement and confidentiality clauses. Employers should consider reviewing their various policies and guidelines with an eye towards achieving compliance with the Board's rigorous efforts on behalf of employee rights.

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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