By: Ogletree Deakins

The Family and Medical Leave Act (FMLA) establishes protected leave for specific circumstances, including the birth or placement of a son or daughter, care of a newborn or newly placed son or daughter, and care for a son or daughter with a serious health condition. On June 22, 2010, the Wage and Hour Division of the Department of Labor issued Administrator’s Interpretation No. 2010-3 in response to requests for guidance regarding whether employees who do not have a biological or legal relationship with a child may take FMLA leave for birth, bonding, and to care for the child.

Under the FMLA, the definition of “son or daughter” includes not only a biological or adopted child, but also a “foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis.” According to the DOL, Congress intended the definition of “son or daughter” to “reflect the reality that many children in the United States today do not live in traditional ‘nuclear’ families with their biological father and mother.” One purpose of the FMLA is to ensure that an employee who has actual day-to-day child-care responsibilities is entitled to leave, even if that employee has no biological or legal relationship to the child.

The regulations associated with the FMLA define in loco parentis to include individuals with day-to-day responsibilities to care for and financially support a child. Whether an employee stands in loco parentis to a child is a fact issue dependent upon the specifics of the relationship and – according to the DOL – depends upon a variety of factors, including the age of the child, the amount of support provided, and the extent to which duties commonly associated with parenting are present. The DOL’s guidance goes one step further, and states that “the regulations do not require an employee who intends to assume the responsibilities of a parent to establish that he or she provides both day-to-day care and financial support in order to be found to stand in loco parentis to a child.” Therefore, an employee who provides day-to-day care for an unmarried partner’s child or a spouse’s child from a previous marriage, but does not financially support that child, may still be entitled to FMLA leave to care for the child should that child develop a serious health condition. Further, an employee who will share equally in child care responsibilities with a same sex partner would be entitled to FMLA leave for the birth or placement of that child, even without a biological or specific legal relationship with that child.

The DOL points out that “Neither the [FMLA] nor the regulations restrict the number of parents a child may have under the FMLA.” Therefore, the fact that a child has two biological parents does not prevent a finding that the same child is a “son or daughter” of an employee who provides day-to-day care or financial support to the child. For example, if the biological parents of a child divorce and remarry, it is possible (under the interpretation of the FMLA set forth in the DOL’s opinion letter) that there may be four individuals who may have equal rights to FMLA leave, should the child become seriously ill.

Employers should recognize that no specific legal relationship is required to establish in loco parentis status. However, there are limitations on this designation. For instance, an employee who cares for a child (even on a day-to-day basis) while the child’s parents are vacationing would not be considered to be acting in loco parentis to that child. However, if an employee intends to assume financial or day-to-day parental responsibility for a child on some continuing basis, and requests FMLA leave for that child’s care, the employer should look carefully at the facts before assuming that the employee is not entitled to such leave.

 

[With thanks to Hera Arsen, J.D., Ph.D., in our Client Services group – her more detailed explanation of this case can be found on the firm’s website at www.ogletreedeakins.com.]

The U.S. Supreme Court has held that a city police department’s search of an employee/police officer’s text messages was reasonable, and did not violate the individual’s Fourth Amendment (“search and seizure”) rights. City of Ontario v. Quon, No. 08-1332, U.S. Supreme Court (June 17, 2010). While employers have been anticipating the high court’s opinion on whether employees have a reasonable expectation of privacy related to electronic messages, the Supreme Court did not tackle that issue. Instead, the Court assumed that the officer did have a reasonable expectation of privacy in his personal text messages. However, the Court also found that the search was motivated by a legitimate work-related purpose, and was not excessive in scope. Based upon those factors, the Court held that the city’s review of the officer’s text messages was reasonable and did not violate the employee’s Constitutional Rights. City of Ontario v. Quon, No. 08-1332, U.S. Supreme Court (June 17, 2010).

Jeff Quon was a police sergeant with the Ontario Police Department (OPD). In 2001, the city of Ontario acquired 20 alphanumeric pagers capable of sending and receiving text messages and contracted with an outside vendor to provide wireless services. Under the agreement with the city, the vendor charged an overage fee if messages exceeded 25,000 characters in a single month.

Before acquiring the pagers, the city adopted a “Computer Usage, Internet and E-mail Policy,” which was applicable to all employees. The policy set forth that the city “reserves the right to monitor and log all network activity including e-mail and Internet use, with or without notice.” The policy further stated that “users should have no expectation of privacy or confidentiality when using these resources” and that the use of inappropriate language in the e-mail system would not be tolerated. Although the policy did not specifically refer to text messaging, the city issued a written memo to employees that it would treat text messages the same way as it treated e-mails, and that text messages would be “eligible for auditing.” Quon signed a statement acknowledging that he had read and understood the city’s policy.

After Quon began to regularly exceed the 25,000-character limit, he was reminded that text messages were “considered e-mail and could be audited.” In October 2002, in an attempt to determine whether the 25,000 character limit was too low for work-related messages, the police department asked its vendor to provide the transcripts of Quon’s last two months of messages to determine if the overages were for work-related or personal messages. The transcripts revealed that many of the messages were personal in nature and that some were sexually explicit. That triggered an investigation of whether Quon was violating Ontario Police Department (OPD) rules by pursuing personal matters while on-duty. It was determined that in August, Quon sent or received 456 messages during work hours, and that less than 60 of those were work-related. The report concluded that Quon had violated OPD rules, for which he could be disciplined.

Quon filed suit in the U.S. District Court for the Central District of California claiming, in part, violation of his Fourth Amendment rights, and arguing that the privacy of personal text messages is protected by the ban on “unreasonable searches and seizures” found in the Fourth Amendment to the U.S. Constitution. The trial judge agreed that Quon had a reasonable expectation of privacy in the text messages, but held a jury trial to determine the intent of OPD’s search. The jury determined that the original purpose of investigation of the text messages was to determine the efficacy of the character limit, and not to determine whether Quon was wasting time while on-duty. Thus, the search was reasonable.

Quon appealed to the Ninth Circuit Court of Appeals, which agreed with the trial judge that the employees had a reasonable expectation of privacy. However, the Ninth Circuit rejected the trial judge’s finding on the reasonableness of the search overall, stating that, while the purpose of the search was to verify the efficacy of the 25,000 character limit, the purpose of the investigation could have been achieved by less-intrusive means (i.e., warning Quon, asking him to count the characters himself, or asking him to redact personal messages and grant permission to the department to review the redacted transcript).

The Supreme Court declined to address the issue of privacy of personal messages on company equipment, opting to dispose of the case on “narrower grounds.” Instead, the Court assumed that Quon had a reasonable expectation of privacy in the text messages, that the city’s review of the transcript constituted a search within the meaning of the Fourth Amendment, and that the principles applicable to a government employer’s search of an employee’s physical office apply to an electronic intrusion of privacy as well.

The Court then turned to the reasonableness of the search, finding that when conducted for a non-investigatory, work-related purpose or for the investigation of work-related misconduct, a government employer’s warrantless search is reasonable if: (1) it is “justified at its inception” and (2) if “the measures adopted are reasonably related to the objectives of the search and not excessively intrusive in light of” the circumstances giving rise to the search. Noting that OPD initiated the search to determine whether the vendor’s character limit was meeting the city’s needs, the Court concluded that the search was justified at its inception. The City and OPD had a legitimate interest in ensuring that officers were not paying for work-related expenses and alternatively, that the city was not paying for officers’ personal communications.

The Court next found that reviewing Quon’s messages was an “efficient and expedient way” to determine if his regular overages were work-related or personal. The Court noted that the review was not “excessively intrusive” since it covered only two months of messages and was limited to on-duty messaging. In addition, given that Quon was told that his messages were subject to auditing, the Court concluded that it would not have been reasonable for Quon to assume that his messages were “immune from scrutiny.” Thus, the Supreme Court held that the search was reasonable and the city did not violate Quon’s Fourth Amendment rights.

Although this case deals specifically with a public employer, private employers should use a similar approach when faced with an issue regarding the privacy of electronic correspondence on company computers and handheld devices, balancing privacy guarantees (based in state law or company policy) against the reasonableness of the employer’s search and its purpose.
 

Non-competition, confidentiality, and non-solicitation agreements all are examples of restrictive covenants that are used to preclude an employee from taking certain proprietary information or customers and using it (or them) in a way that may adversely affect the individual’s previous employer. When a company determines that a former employee may be prepared to violate such an agreement, it often will ask the court for injunctive relief that can include ordering the individual to refrain from taking certain actions over the period of time during which the validity of the restrictive covenant is determined. The 3d U.S. Circuit Court of Appeals recently vacated a district court’s preliminary injunction, finding that the lower court insufficiently evaluated and supported its decision to enforce a noncompetition agreement. PharMethod Inc. v. Caserta, 3d Cir., No. 10-1388, unpublished opinion, 6/2/10.

In that case, Michael Caserta had entered into restrictive covenants with his employer, Rentacom. He then became employed with that company’s successor, PharMethod. He was terminated by PharMethod in 2009 and became involved in activity viewed by PharMethod as competitive with its services. PharMethod filed a lawsuit, asking the federal court for a preliminary injunction to stop Caserta from competing against it until a full analysis of Caserta’s employment activities could be completed. The court granted the injunction, and Caserta appealed to the Third Circuit.

The Third Circuit reversed and remanded, stating that while the applicable federal rule requires a district court to make specific findings of fact and conclusions of law to assist in “meaningful appellate review,” the lower court here simply stated ultimate facts and conclusions without foundation. The appellate court vacated the preliminary injunction and remanded the lawsuit back to the district court with specific instructions on how to properly evaluate the request for injunctive relief.

First, it said, the lower court should evaluate the relationship between Caserta’s original employer, Rentacom, and its successor, PharMethod, to assure that PharMethod can enforce a restrictive covenant in an agreement made between Caserta and Rentacom. Next, the specific restrictions within that agreement must be reviewed to determine whether they are enforceable. In Pennsylvania, post-employment restrictive covenants are enforceable if: (1) they are incident to an employment relationship between the parties; (2) the restrictions are reasonably necessary for the protection of the employer; and (3) the restrictions are reasonably limited in duration and geographic extent. The Court also pointed out that restrictive covenants are “not favored in Pennsylvania and have been historically viewed as a trade restraint that prevents a former employer from earning a living.”

While a restrictive covenant may legitimately protect certain business-related interests, the Third Circuit specifically held that eliminating competition or gaining an economic advantage is not a legitimate business interest. Further, while the courts have discretion to “blue pencil” an agreement by limiting restrictive covenants to terms that are reasonably necessary for the protection of the employer’s business interest, the Third Circuit also pointed out that over-broad restrictions suggest an “intent to oppress the employee and/or foster a monopoly, either of which is an illegitimate purpose,” and could lead a court to invalidate an entire agreement. The Court also pointed out that because some Pennsylvania courts have shown a reluctance to enforce restrictive covenants against an employee who leaves employment involuntarily, the lower court here should have determined whether enforcement of a restrictive covenant against Caserta is appropriate under the specific circumstances of his termination.

The in-depth inquiry directed by the Third Circuit provides a checklist of elements that employers should incorporate into the drafting of restrictive covenants. A covenant-not-to-compete should be limited to the protection of the legitimate business interest of the employer, and should not be overly-broad in either a temporal or geographic respect; a confidentiality agreement should protect proprietary information, including trade secrets, and should not be extended in an attempt to protect information that is otherwise publically available; and non-solicitation covenants should preclude a former employee’s solicitation only of actual or probable customers, and not speculative ones. Because an appropriate court review should include all of these factors, employers should recognize that restrictive covenants that extend beyond those boundaries may be subject to revision or non-enforcement by the courts.
 

It is generally understood that employees can bring claims for hostile environment, wrongful termination, or even “constructive discharge” – where an employee claims that an employer made working conditions so intolerable that a reasonable employee would feel compelled to resign. What is less clearly understood is the extent of the economic damages for which a hospital or health care system may be liable in an employment-related lawsuit. Because a successful litigant in an employment case often is entitled to compensatory damages, lost wages and, in some instances, front pay, a lawsuit by a physician-employee can create the potential for large monetary damage awards. In a clear example of this fact, a Texas jury recently awarded more than $3.6 Million to an Egyptian-born physician who claimed that he was forced to resign after race-based comments from another employed physician. Nassar v. Univ. of Texas Southwestern Medical Center at Dallas, N.D. Tex., No. 08-1337, jury verdict, 5/26/10.

Naiel Nassar, a U.S. citizen since 1990, was born in Egypt and attended medical school there. He then did a medical residency and a fellowship in infectious diseases at the University of California, Davis. In 2001, Nassar was hired by the University of Texas Southwestern Medical Center (UTSW) as an Assistant Professor of infectious disease medicine. Part of Nassar’s duties required that he provide patient care at the Amelia Court clinic, an outpatient HIV/AIDS clinic affiliated with UTSW.

In 2004, UTSW hired Dr. Beth Levine as the chief of its infectious disease program. In that role, Levine directed that Nassar begin billing for the services he provided to the HIV clinic. Nassar objected to the directive, arguing that his salary for clinical services was fully funded by a federal grant, and stating that billing the patients therefore would be “double dipping.” Nassar claimed that Levine also began to “harass” him, making derogatory statement about his race and his Muslim religion, including one comment that “middle easterners were lazy.” His allegations were supported by a clinical supervisor, whose affidavit described a “disconnect between Dr. Levine’s statements and the reality of Dr. Nassar’s work.” Based on his concerns about Levine, Nassar ultimately applied for employment at Parkland Health & Hospital System in 2006. Parkland made preparations to hire Nassar, even drafting a job offer letter, but never formally hired Nassar. Nassar contended that UTSW retaliated against him by blocking the offer from Parkland. Nassar ultimately filed a lawsuit in federal court alleging discrimination and retaliation. Levine strongly disputed Nassar’s allegations, as did UTSW.

At trial, the jury was presented with only two questions: (1) Whether Nassar was constructively discharged because of his race, national origin, or religious preference; and (2) Whether UTSW retaliated against Nassar by blocking or objecting to his employment by Parkland after Nassar complained about his treatment at UTSW. After one hour of deliberations, the jury answered “Yes” to both questions. Two days after the May 24, 2010 verdict, the same jury awarded $3.2 Million in compensatory damages and $438,000 in lost back pay to Nassar. The court now will determine whether Nassar’s claim for lost front pay – which could range from $200,000 to $4 Million – should be paid as part of the award. In addition, Nassar has made a claim for attorney fees, which also will be heard by the court. UTSW has already stated that it will be appealing the verdict and the resulting judgment.

Hospital and healthcare entities that are contemplating direct hiring of physicians should take the time to read the jury instructions and verdict sheet on which the decision in the jury’s decision was based. (Find a copy on my blog at www.employmentlawmatters.net.) Most notable is the court’s instruction in which it defines “constructive discharge” as a resignation from working conditions “so intolerable that a reasonable employee would feel compelled to resign.” The court goes on to point out that to prove constructive discharge, Nassar “need not show that his race, national origin, or religions preference was the sole or even the primary motivation for [UTSW’s] conduct.” He simply had to prove that his protected characteristics “played a motivating part in [UTSW’s] conduct, even though other factors may also have motivated [UTSW].

Employers, including health care entities, should ensure that supervisors and managers are trained to recognize and remedy discriminatory conduct, to assure that such conduct does not become viewed as a “motivating part” of any adverse employment action taken by the employer.
 

Unless an individual can prove that she is meeting the expectations of her employer, that individual cannot set forth the prima facie case necessary to support a claim of workplace discrimination. The 7th U.S. Circuit Court of Appeals has found that an employee who was fired for insubordination was not meeting an employer’s legitimate business expectations after she engaged in arguments with her co-workers, the general manager, and the owner of the business. The Court further found that the insubordination was a non-discriminatory reason that overcame the employee’s claim that her termination for insubordination was a “pretext” for discrimination. Everroad v. Scott Truck Sys., Inc., 7th Cir., No. 08-3311, May 10, 2010.

Diana Everroad filed a federal lawsuit against her former employer, Scott Truck Systems, Inc., and against the company’s general manager, who also was the wife of the company’s owner. Everroad claimed that she had been discriminated against because of her age and gender, and that she was retaliated against for reporting that discrimination. The lower court granted summary judgment in favor of the defendants, and that decision was upheld on appeal.

Scott Truck is a family-owned and operated commercial trucking company. Everroad was hired as a dispatcher in 2004 – at the age of 51 – by defendant Hantzis, the general manager and wife of the owner, David Scott. Within the first months of her employment, Everroad experienced conflicts with her co-wrokers, and was complained about by two of the Company’s largest customers. Scott and Hantzis ultimately moved Everroad from the dispatcher position to a newly created “data administrator” job with the same pay and hours, but with a more flexible schedule. In her new position, Everroad worked in close proximity with a younger female employee who, according to Everroad overused the phone for personal calls. She complained to Scott and Hantzis, who called a meeting with Everroad and the co-worker to attempt to resolve the issue. The Court colourfully described the meeting by saying that “Voices were raised, accusations were exchanged, tears were shed, and eyes were rolled.” Apparently, it didn’t go well. Upset by Everroad’s antics, and concluding that Everroad had been insubordinate, Scott and Hantzis decided to terminate her employment. When they informed her of that fact, Everroad told Scott that he and his wife were “nuts, crazy, insane” and “sick” and called Hantzis a derogatory female term, beginning with the f-word as a descriptive adjective. Later that evening, Everroad called Scott, asking for severance pay. Scott declined.

The Company’s motion for summary judgment against Everroad’s ensuing lawsuit was granted, and the case was dismissed. On appeal, the Seventh Circuit found that Everroad’s insubordination undermined the discrimination claims in two ways: first, insubordination precluded Everroad from proving that she “met her employer’s legitimate job expectations,” which is an element of the required prima facie case; second, insubordination is a non-discriminatory reason for termination, which meant that Everroad was unable to show that the Company’s actions were simply a pretext for discrimination. Further, although Everroad claimed that she was treated differently than “similarly situated” male/younger employees, she was unable to show that anyone else had been similarly insubordinate and treated more favourably.

Insubordination is a non-discriminatory reason for termination in most circumstances. The relevant inquiry at the summary judgment level is not whether a reasonable jury would conclude that an employee’s conduct was insubordinate, but whether the employer genuinely believed it to be so at the time of the complained-of adverse action. A jury may disagree with a company’s decision to terminate an employee for insubordination or may think that the decision was in error, but so long as the employer “genuinely believed the truth of their stated reason for the decision,” the reason is not pretextual, and the employee will be unable to prove discrimination. The most effective way to support an employer’s genuine belief is complete, contemporaneous, and objective documentation of the employee actions and statements on which the decision is based.
 

In a case in which over $3 Million in compensatory damages already had been awarded to a group of 12 female former employees claiming gender discrimination, the same jury awarded $250 Million in punitive damages to a class of 5600 female employees and former employees of Novartis Pharmaceutical Corporation for the same claims. Velez v. Novartis Pharma. Corp., S.D.N.Y., No. 04-civ.9194, punitive damages verdict 5/19/10. The case, filed as a class action in 2005 in the Southern District of New York, was a “sex plus” case, meaning that the gender discrimination was brought in tandem with related claims, such as pregnancy discrimination or family leave interference. The plaintiffs in the case against Novartis made claims based upon unequal pay, lack of promotion, and adverse treatment after pregnancy leave.

The number of “sex plus” cases has risen steadily over the past ten years, but the verdict and damages against Novartis has eclipsed previous verdicts. The claims against that company included a demand for monetary damages, along with a restructuring of Novartis’ pay and promotion practices. Novartis, which has been on a national “best companies for working mothers” list for over 10 years, defended against the claims by citing its policies and procedures, and by arguing that while 70 percent of its sales representatives are men, that dis-proportionality was not the result of discrimination.

After a six-week trial, a unanimous jury awarded $3.3 Million as compensatory damages to the 12 named plaintiffs in the case, finding that the women had been treated differently than their male counterparts. Compensatory damages are damages for actual losses, but can include amounts for “pain and suffering,” as well. Because that award opens the door for others in the 5600-member class to claim compensatory damages of their own, the total damages in this case could conceivably approach – and possibly exceed – $1 Billion.

While there is a question regarding whether the jury’s verdict in the case will be upheld on appeal, the jury’s message should be received and understood by employers: claims of widespread discrimination – whether real or perceived – should be investigated, remedied, and kept from reoccurrence. This case comes at a time when the Obama Administration has taken an aggressive stance on an issue that it perceives to require that attention. Federal courts are responding to this attention, and have become more likely to grant class certification in cases that historically have been brought as single-plaintiff claims, or by small groups of employees. The 9th U.S. Circuit Court of Appeals recently ruled that a “gender plus” discrimination claim that could eventually involve as many as one million current and former female employees of Wal-Mart can go forward as a class action in federal court in California.
 

Employers often are hesitant to discipline or fire an employee who is in a protected class, knowing that the potential for lawsuit can be higher in those circumstances. This issue was addressed directly by the 6th U.S. Circuit Court of Appeals in an unpublished opinion in which an employee failed to prove that the company’s reason for not re-hiring him after a layoff – that he was a “troublesome employee” – was a pretext for age discrimination. Viergutz v. Lucent Technologies, Inc., 6th Circ., No. 08-3626, unpubl., 4/23/10.

Lucent Technologies hired Brian Viergutz in 1997 as an installer. Viergutz was 43 years old at that time. In December 2002, Viergutz was laid off as part of a reduction in force. During his employment, Viergutz admittedly had numerous personal conflicts with his peers.

In 2005, and in response to a job posting by Lucent, Viergutz applied for re-employment as an installer at Lucent. Upon receipt of Viergutz’ application, Melissa Reznick, Lucent’s hiring manager, recognized Viergutz’ name because she had briefly supervised him during his initial period of employment. Based upon her own knowledge, and because she had heard comments from other managers about him, Reznick decided not to interview Viergutz. She specifically informed the HR department that Viergutz had a “bad reputation” and “would not be a good candidate” for the job. In addition, Viergutz’ level of experience was much higher than required in the new position. Lucent ultimately hired an individual who was under the age of 40, and had background as a general laborer.

Viergutz ultimately filed complaints in both state and federal courts, alleging age discrimination and various state court causes of action, including one labeled “Harassment/Defamation of Character” based upon what he alleged to be “rumors and lies” related to his reputation as a technician. The actions were consolidated in federal court, and the district court granted Lucent’s motion for summary judgment. Viergutz filed a timely appeal to the Sixth Circuit, which upheld the lower court’s decision.

In its opinion, the appellate court outlined the three-step burden-shifting process, and held that Viergutz had set forth a prima facie case of age discrimination, thereby filling the first step. Therefore, the burden shifted to Lucent to state a legitimate non-discriminatory reason for not hiring Viergutz. To fulfill that burden, the company submitted evidence and testimony, including an affidavit averring that Veirgutz’ supervisors indicated that he “did not work well with others” and “needed constant supervision.” At that point, the burden shifted back to Viergutz to prove that the reason provided by Lucent was a pretext for discrimination. The Court held that Viergutz failed to show that Lucent’s decision had a basis in fact. Viergutz was unable to show that his superior skills made him more qualified for the open position, because the job posting stated specifically that the person hired would “free up higher skilled installers for higher skilled jobs.” Further, Viergutz was unable to factually dispute his poor reputation, or that he had been sent by the company for evaluation and counseling after an incident with a co-worker in 2002. Viergutz’ own testimony chronicled multiple disputes with co-workers, although he disputed the characterization of the disagreements.

In considering whether to re-hire a former employee, employers should recognize that courts do not require that the decisional process of the company is optimal or perfect. Instead, the key is whether the employer made a “reasonably informed and considered decision” regarding the action taken. In this case, the company was able to support its position with written documentation of prior incidents, and an affidavit of a former supervisor of the applicant. Further, the written job posting, which detailed the level of experience being sought for the position, was instrumental in supporting the Court’s decision that Lucent had provided sufficient rationale for its decision.

[One additional and interesting point in this case is that Viergutz was unrepresented by counsel. In its opinion, however, the Court specifically points out that it “devoted significant effort to ensure that dismissing Mr. Viergutz’s claims is the right result under the law. . . .” and that the result “would have been the same even had Mr. Viergutz had the services of a lawyer, the only difference being that Mr. Viergutz has saved himself substantial expense in attorney’s fees.”]
 

The EEOC announced on May 5, 2010 that Ohio-based Everdry Marketing and Management, Inc., has paid over $500,000 in damages in interest to satisfy a judgment against that company stemming from a 2006 jury trial. The original claims were filed by 13 women, mostly teenagers at the time of the incidents, who worked at the company’s Rochester, N.Y., location as telemarketers. EEOC v. Everdry Mktg. & Mgmt., Inc., W.D.N.Y., No. 01-cv-6329, judgment satisfied, 5/5/10.

The case originally was filed by the EEOC in 2001 as part of its “Youth@Work” initiative, targeted at training young people about illegal workplace discrimination and harassment. The complaint included claims that male managers and co-workers at the Rochester franchise of Everdry verbally and physically harassed the young women between 1998-2002, making numerous sexual remarks and jokes, and on one occasion, promising a raise in return for sexual acts. Following a multi-week trial in federal court in New York in October of 2006, a jury originally awarded $585,000 in damages to the 13 plaintiffs; that amount ultimately was reduced to $471,096. The jury concluded that the Rochester affiliate at which the incidents occurred was part of an “integrated enterprise,” and that Everydry therefore violated Title VII of the Civil Rights Act by allowing the harassment.

Afterwards, Everdry appealed the verdict on the basis that as a franchise, the Rochester affiliate was not part of the Everdry company. The 2d U.S. Circuit Court of Appeals rejected that argument and affirmed the jury verdict, specifically affirming the award of punitive damages assessed by the jury against the company. Everydry corporate headquarters has paid the judgment – although none of the complained-of incidents occurred at its corporate facilities in Ohio – plus $86,581 in post-judgment interest. The Rochester affiliate is no longer in operation.

This case points out two things: first, that sexual harassment training is extremely important, especially if a company has related or affiliated entities in other geographic locations, and for which it ultimately may be held responsible; and second, that the EEOC is persistent in enforcing federal laws banning workplace discrimination.
 

The 4th U.S. Circuit Court of Appeals has reversed a lower court’s summary judgment in favor of an employer who required a female employee to take a physical ability test after an on-the-job injury, even though it did not require such a test for similarly situated male employees. Merritt v. Old Dominion Freight Line Inc., 4th Circ., No. 09-1498, April 9, 2010.

Deborah Merritt worked for Old Dominion Freight Lines as a Line Haul driver. While Line Haul drivers spend nights and weekends away from home, driving across state lines, Old Dominion also had Pickup and Delivery drivers who worked locally and rarely had to work nights or weekends. In 2002, after six years as a Line Haul driver, Merritt began to apply for a Pickup and Delivery job, in order to spend more time with her family. She claimed that she applied for several open Pickup and Delivery positions, but that less-experienced male drivers were hired. Merritt alleged that she was told by a terminal manager that the company didn’t want women in the Pickup and Delivery jobs – which required more lifting – because management was afraid that a woman “would get hurt.” Of the company’s 3100 Pickup and Delivery drivers, only six were female.

In March 2004, Merritt was hired as a Pickup and Delivery driver, but not until two male Pickup and Delivery drivers were asked how they would feel about working with a woman. (They responded that they would have no trouble doing so.) Merritt was then put on a 90-day probation period which, she alleged, was not the typical procedure for new Pickup and Delivery drivers. By all reports, Merritt performed her new job successfully, and received no complaints from customers or co-workers. During this initial time frame, however, the terminal operations manager allegedly told a male driver that “this is not a woman’s place.”

In September 2004, Merritt suffered an ankle sprain at work and also was diagnosed with plantar fasciitis. Her doctor prescribed light duty work until a December 27 appointment. At that appointment, the doctor concluded that Merritt’s injury was “not a disabling condition,” and that she could return to work without restrictions. Just prior to that appointment, however, the company’s vice president of safety and personnel decided that Merritt would have to pass a Physical Ability Test (PAT) before she was allowed to return to work. The test was administered on December 28, immediately after Merritt’s full release to return to work, and the company determined that Merritt failed the test. While the test showed no restrictions related to Merritt’s ankle injury, it indicated that the 5 foot, 1 inch Merritt was unable to place a particular box on an overhead shelf, and had difficulty walking backward pulling a cable (Merritt testified that the test occurred in a hallway full of people, and that she bumped into several of them). On the basis of that test, Merritt was fired for “inability to perform job.” She sued under Title VII, claiming gender discrimination.

Although the lower court granted summary judgment to Old Dominion, that decision was reversed by the Fourth Circuit. The appellate court determined that a reasonable jury could find that the evidence presented by Merritt undermined Old Dominion’s assertion that it had a “regular policy” of requiring drivers to pass a PAT before returning from injury-related absences. In fact, the company used the test inconsistently, and injured male drivers often returned to work without taking such a test. Further, the company did not use the PAT – which originally was developed for new applicants – to test Merritt’s return from her ankle injury, but applied the test for strength and coordination. Therefore, the Court found that, given the earlier statements by other managers that the Pickup and Delivery job was not suitable for women, in light of the dearth of females in that position, and considering that the PAT was used only on an intermittent basis and then typically for new hires, a reasonable jury could find that gender discrimination may have been the real reason for Merritt’s termination.

The Court’s opinion and comments create a road map for companies who are serious about instituting a safety-based testing program. According to the Court, a neutral policy which served the company’s legitimate business and safety interests could have withstood legal challenge. However, Old Dominion’s selective use of the PAT, along with the company’s changing rationales for its use, possible sexist remarks, and a statistical lack of females in the subject position all could indicate to a jury that the company was reserving the more desirable “Pickup and Delivery” positions for male drivers.
 

In an unusual case of first impression, the 3d U.S. Circuit Court of Appeals has held that under certain circumstances, the ADA may obligate an employer to accommodate an employee’s disability-related difficulties in getting to work. In that case, the Court reversed summary judgment in favor of an employer and held that changing a part-time employee’s schedule to day shift – because her monocular vision made it dangerous for her to drive at night – could be a reasonable accommodation under the ADA. Colwell v. Rite Aid Corporation, 3d Circ., No. 08-4675, April 8, 2010.

In April 2005, Jeanette Colwell began employment as a part-time retail clerk at a Rite Aid store in Old Forge, Pennsylvania, generally working weekdays from 5:00 to 9:00 p.m. A few months after she began working there, Colwell was diagnosed with “retinal vein occlusion and glaucoma,” which eventually left her blind in one eye. In September 2005, Colwell informed her supervisor that the partial blindness made the drive to work at night dangerous and difficult for her, and asked to be switched to day (9:00 a.m. to 2:00 p.m.) shift so that she could drive to work safely. Public transportation was not an option, because the buses stopped running at 6:00 p.m. in that area. Colwell was told her shift would not be changed because it “wouldn’t be fair” to the other employees. At that point, Colwell began to rely on relatives to drive her to work, even though she said it was a “hardship” for her family to do it.

On October 12, 2005, after a number of unsuccessful attempts to have her shift changed to permanent day shift, Colwell wrote a letter of resignation to Rite Aid that stated that she felt that she had “not been given fair treatment.” Rite Aid never responded to Colwell’s note. A few months after leaving her position with Rite Aid, Colwell filed a lawsuit that included a claim that the company had failed to accommodate her disability by refusing to move her to the day shift.

The district court granted summary judgment to Rite Aid on Colwell’s failure-to-accommodate claim, on the basis that Colwell “did not need an accommodation to perform her job once she arrived at work.” The lower court found that the accommodation requested by Colwell “had nothing to do with the work environment or the manner and circumstances under which she performed her work,” and that the ADA only covers barriers “that exist inside the workplace.”

The Third Circuit reversed that decision, disagreeing with Rite Aid’s position that Colwell’s difficulties amounted to a “commuting problem unrelated to the workplace.” Instead, the Court found that the reach of the ADA is not limited in that way, and that changing Colwell’s work schedule to day shift was, in fact, the type of accommodation contemplated by the ADA. The Court pointed to language within the ADA in which the term “reasonable accommodation” is defined to specifically include “modified work schedules,” and that what Colwell was requesting was, in essence, a schedule change. The Court held that “under certain circumstances the ADA can obligate an employer to accommodate an employee’s disability-related difficulties in getting to work, if reasonable.” Because Colwell’s requested accommodation was a change in workplace condition that was entirely within the company’s control, and would have allowed Colwell to get to work to perform her job, the Court found that the shift change could be viewed as a reasonable accommodation.

Although in this case, the Court held that the ADA contemplates that an employer may need to modify an employee’s work schedule to accommodate that individual’s disability-related difficulties in getting to work, the employer is not precluded from asserting a defense that the re-scheduling may create an “undue hardship” or financial burden if, in fact, it does. This case underscores the need for a full evaluation of an individual’s particular medical impairment to determine what aspects of employment are affected, the benefit of participating in the interactive process required under the ADA, and the need to review the employee’s request for accommodation in the broadest context possible to determine whether or not the request will assist the employee in the performance of his or her job. Because this decision seems to expand employers’ obligations with respect to “reasonable accommodation,” it is worth following to see whether other courts of appeal rule consistently with the case.