By: Ogletree Deakins

Courts typically have dismissed discrimination claims under Title VII if those claims were made by an independent contractor, rather than by an “employee” of the company. However, 42 U.S.C. §1981 (“Section 1981”), which prohibits racial discrimination in the formation of contracts, states that “all persons” shall have the same right “to make and enforce contracts as is enjoyed by white citizens.” In a case of first impression for the 3d U.S. Circuit Court of Appeals, that court has followed prior decisions of three sister-appellate courts in holding that an independent contractor may sue for race discrimination under Section 1981. Brown v. J. Kaz, Inc. d/b/a Craftmatic of Pittsburgh, 3d Circ., No. 08-2713, Sept. 11, 2009.

Craftmatic is a distributor of adjustable beds that sells its product through sales representatives. Those representatives schedule their own appointments to visit potential customers’ homes, provide their own equipment and means of transportation for those sales calls, and are paid on commission. Each sales person signs an “independent contractor” agreement with Craftmatic.

In 2006, Kimberly Brown, an African-American female, responded to an ad in which Craftmatic was seeking sales representatives, and then registered for a three-day training and an interview session in Pittsburgh with the company. Brown traveled by bus to Pittsburgh from her home in Cleveland for the session – she testified that the reason was that she preferred not to drive in unfamiliar places. She attended the training with two male applicants, neither of whom was African-American. Regarding his initial meeting with Brown, Craftmatic’s recruiting manager, Jay Morris, later stated that he knew that she was “going to be a headache” because she “asks a lot of questions.”

On the final day of training, Morris approached the applicants, and extended his hand to all three. He shook hands with the two men and exchanged pleasantries with them. For unexplained reasons, Brown refused to shake Morris’ hand. Morris responded with a remark, the content of which is disputed. Brown states that the remark was a racial slur, while Morris says that he was expressing his disappointment that Brown refused to shake hands, equating it to a racial rebuff. This exchange was followed by some heated words, during which Morris stated that if he had any voice in the decision, Brown would not work for Craftmatic. With input from Morris, the company ultimately decided not to use Brown as a sales representative.

Brown ultimately sued Craftmatic, claiming race discrimination under Title VII, the Pennsylvania Human Relations Act, and Section 1981. The district court dismissed the Title VII and PHRA claims on the basis that Brown was not an employee. That court also ruled that while Brown’s independent contractor status did not preclude her from bringing claims under Section 1981, Brown did not provide evidence sufficient to support her claims under that statute. The Third Circuit disagreed, taking issue with the lower court’s conclusion that Craftmatic would have been equally concerned with Brown’s behavior, even if no racial slurs were made. The appeals court said that instead, the real question was whether the same decision would have been made if Brown’s race was “taken out of the equation” altogether. The Third Circuit then reversed the summary judgment on the Section 1981 claim, allowing that claim to go forward.

The Third Circuit’s decision does not mean that Brown has proven her case of discrimination. What it means, however, is that there are disputed issues of fact, and that those issues should be decided by a jury. The primary take-away from this case is that an independent contractor can bring a racial discrimination claim under Section 1981 against a company that allegedly discriminates in the formation of its contracts, even without an actual employee/employer relationship. Companies that regularly rely on such contractors should be sure that hiring, training, and terminations are done consistently and in a non-discriminatory manner, in order to avoid the issues presented in this case.
 

The Age Discrimination in Employment Act (ADEA) makes it unlawful to discriminate against an individual over the age of 40, and specifically includes a prohibition against failing to hiring someone based on his or her age. The 2d U.S. Circuit Court of Appeals recently pointed out the expansive nature of that prohibition by holding that an employer may be held liable for discrimination by third parties – including an independent contractor who is authorized by the employer to make hiring decisions on its behalf. Halpert v. Manhattan Apartments, Inc., 2d Cir., No. 07-4074-cv, September 10, 2009.

In October 2001, Michael Halpert interviewed for a position to show rental apartments for Manhattan Apartments, Inc. (MAI). The interview was conducted by Robert Brooks, an independent contractor/broker who allegedly told Halpert that Halpert was “too old” to work in the prospective position, and asked why the placement center had not sent a younger applicant. Halpert was born on September 19, 1957.

In response to a lawsuit filed by Halpert, MAI filed a motion for summary judgment which was granted by the district court. That lower court found that MAI as not an “employer” under the definition of the ADEA, and dismissed the case against MAI. That decision was reversed by the Second Circuit, which remanded the case for trial. The Second Circuit based the reversal on the fact that the ADEA’s prohibitions against discrimination apply to the hiring process, whether a company uses its own employees to interview applicants, or asks an independent contractor to fill that role. If a company gives someone authority to interview applicants and make hiring decisions on behalf of the company, the company may be held liable if that contractor discriminates against an applicant because of the applicant’s age.

MAI’s potential liability under the ADEA turns on whether Brooks was hiring Halpert to work for him as a fellow independent broker, or was making the hiring decision for MAI as its agent. The Court pointed out that MAI sponsored a training program for individuals hired to show the apartments, that the successful applicants would earn commissions from MAI, that the interview took place at MAI’s offices, and that the placement person who sent Halpert to the interview testified that she believed that he was being interviewed for a position with MAI. The Court held that there were disputed issues of material fact that precluded dismissal of the action.

The controversy in this case was not whether MAI was liable for discrimination against an independent contractor (an action typically not protected against under the ADEA), but whether MAI can be held liable for age discrimination by an independent contractor when that person works as an agent for MAI. The Court found that the answer to this question is an unequivocal Yes.

This case could have a significant impact on companies who plan to contract out human resource functions to a third party contractor. Employers who believe that using an independent contractor to conduct interviews will absolve them from compliance with federal anti-discrimination laws should become familiar with this case, and must recognize that the ADEA’s reach extends to a company that uses intermediaries to conduct activities related to employees or applicants. Such a company’s potential liability does not depend on whether the individual acting for the company is an actual employee or an independent contractor – either individual can be an agent for the company for purposes of the ADEA, regardless of his or her employment status for other purposes.
 

Congress has repeatedly rejected legislation that would extend Title VII protection to claims of sexual orientation discrimination. However, under Title VII, an employee may raise a claim of gender discrimination if that individual can demonstrate that an harasser was acting to punish the employee’s noncompliance with gender stereotypes. The 3d U.S. Circuit Court of Appeals has allowed the claim of a self-described “effeminate man” to move forward to a jury trial, on the basis that the plaintiff presented evidence that his co-workers harassed him because of his non-compliance with male-associated stereotypes. Prowel v. Wise Business Forms, Inc., 3d Cir., No. 07-3997, August 28, 2009.

Brian Prowel was one of 145 employees of Wise Business Forms in Butler, Pennsylvania, and had worked for the company since 1991. Prowel, an openly gay male, felt that his mannerisms caused him not to “fit in” with the other men at Wise. He described his male co-workers as “blue collar,” “very rough around the edges,” and “everything I wasn’t.” In stark contract, Wise had a high-pitched voice, walked and carried himself in an effeminate manner, and filed his fingernails “instead of ripping them off with a utility knife.”

Some of his co-workers reacted negatively to Prowel’s demeanor and appearance, calling him “Princess” and “Rosebud” and making fun of the way he talked, walked, and sat. Prowel complained to his supervisors, but the harassment continued. In April 2004, Prowel became so unhappy with his work environment that he considered suing the company and said so to certain co-workers. Prowel subsequently was asked to meet with his supervisors and was asked about approaching those individuals regarding his proposed lawsuit. In December 2004, Prowel was terminated “for lack of work.”

Prowel then sued Wise in federal court. His claims included gender discrimination and retaliation claims under Title VII. The lower court found that Prowel’s claims were based upon sexual orientation – not a viable claim under Title VII – and dismissed the suit. On appeal, the Third Circuit reversed, finding that Title VII does not bar a homosexual man from bring a gender stereotyping claim under the Act, since such a claim is “because of” the plaintiff’s sex, a type of discrimination barred by law.

The Third Circuit pointed out the U.S. Supreme Court’s opinion in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989), in which a female was denied a promotion because she failed to conform to gender stereotypes. Hopkins used profanity, was not “charming,” and did not walk, talk, or dress in a feminine manner. The Supreme Court found that when an employer acts on a belief that a woman cannot be aggressive, it has discriminated “because of sex” and has violated Title VII.

Similarly, the evidence set forth by Prowel indicates that he was harassed and treated differently because he did not conform to his co-workers’ vision of how a “man” should look, speak, or act. Therefore, Prowel marshaled enough evidence to argue that his harassment was based on gender stereotypes, even if part of the harassment was based on his sexual orientation.

The line between sexual orientation discrimination and discrimination “because of sex” can be difficult to draw. Under Title VII, an unlawful employment practice is established when the plaintiff demonstrates that sex was one of the motivating factors for discrimination, even if other factors – including harassment based on sexual preference – also motivated the same actions.

Employers should be aware of this decision, and should understand that while sexual orientation is not yet included as a protected category under federal law (although it is protected under some state statutes), gender stereotyping is a very closely related cause of action. Therefore, employee complaints of harassment should not be overlooked or downplayed on the basis that they appear to involve an issue of sexual orientation. (Of course, employee complaints should never be “overlooked or downplayed” under any circumstance.) Instead, if any of the complained-of activity includes actions that are meant to punish or belittle non-compliance with gender stereotypes, the actions may constitute a violation of Title VII’s “because of sex” provision.
 

The Family and Medical Leave Act (FMLA) was designed, in large part, to protect the medical needs of employees with serious health conditions. The Department of Labor regulations, which provide guidance to both courts and companies, were revised on January 1, 2009, but continue to require that an employee provide notice of the need for leave associated with a serious medical condition. In a recent case, decided under the “old” version of the DOL regulation, the 8th U.S. Circuit Court of Appeals upheld summary judgment in favor of an employer who had demoted an employee after the employee missed work for a claimed “nervous breakdown.” Talmadge Scobey v. Nucor Steel-Arkansas, 8th Cir., No. 08-1192, Aug. 25, 2009. In that case, an individual sued his employer for interference with and retaliation for exercise of his FMLA rights, claiming that he was demoted because of his attempt to obtain leave under that Act.

Talmadge Scobey began working at Nucor Steel in 1998. Until 2005, Scobey worked as a “ladle man” in Nucor’s Hickman, Arkansas facility. The position, which paid over $80,000, was dangerous and demanding, and included handling thousands of pounds of molten steel.

In February, 2005, Scobey accumulated two unexcused absences. Under the company’s attendance policy, an employee could be terminated after four unexcused absences. On Saturday, April 9, 2005, Scobey called his supervisor, ostensibly to ask for time off work for the funeral of his ex-father-in-law, but was unable to reach that supervisor. Scobey did not appear for work on April 10. On April 11, he called and told his supervisor that he had “suffered a nervous breakdown,” and was “through with” the company, and then hung up with no further explanation. During that call, Scobey’s speech was slurred and his supervisor “had the impression” that Scobey was intoxicated. Scobey did not show up for work on April 12 or 13. On April 14, he called Blakemore, a supervisor and a friend of Scobey’s, and told him that he couldn’t remember the past four days and “wanted some help.” On April 15, Scobey visited a doctor, who diagnosed him with hypertension. On April 20, Scobey was assessed by Nucor’s EAP provider, at the company’s suggestion, and entered an outpatient alcohol treatment program, which he left before completing.

On May 20, Scobey met with Nucor’s plant manager who, rather than terminate Scobey’s employment, suspended Scobey for three days and demoted him to an entry-level position. After two weeks in that position, Scobey stopped coming to work, and subsequently sued the company for violation of the FMLA. The district court dismissed both claims on summary judgment, and the dismissal was upheld by the Eighth Circuit on appeal.

In order to request leave under the FMLA, an employee does not have to reference the Act. However, under both the old and the recently amended regulations, the employee must do more than merely call in sick to trigger an employer’s duty to act under the FMLA. An employee has an affirmative duty to indicate both the need for and the reason for the leave, and should let the employer know how long the anticipated leave might be. Scobey’s case turned on the issue of whether he provided to Nucor a sufficient and timely notice of a serious health condition for his absences from April 10-13. According to the Eighth Circuit, he did not, and was therefore estopped from claiming violation of the FMLA. The Court made this decision based primarily on the fact that Scobey’s notice to Nucor did not include sufficient information to adequately apprise the company that Scobey’s condition might be protected by the FMLA.

In his April 11 call, he informed his supervisor that he “was through” with the company – notice of quitting, not notice of the need for medical leave. He was intoxicated enough to forget the next four days, and although absences for the treatment of alcoholism are protected under the FMLA, absences caused by the use of alcohol are not. Scobey argued that his inebriated state was a manifestation of underlying depression, which should have been recognized by the company. The Court found, however, that based upon Scobey’s apparent intoxication, his prior absences, and his shifting explanations of the reason for his absence, his phone calls were not adequate to apprise Nucor that the FMLA might apply.

Having failed to provide sufficient notice to trigger the FMLA, Scobey was unable to support his FMLA claim. However, employers should not read this case as blanket permission to ignore incomplete or non-specific information regarding an employee’s health condition. Had the facts been slightly different, and had Scobey suffered from depression in the past of which Nucor had been aware, or had Scobey previously provided doctors’ notes regarding the status of an ongoing depressive episode, a question of fact may have existed regarding whether Scobey’s calls constituted adequate notice of the need for FMLA leave. Employers must recognize that these cases are very fact specific, and should review such situations carefully before making a decision to refuse a request for FMLA leave.
 

An employee who takes leave under the Family and Medical Leave Act (FMLA) is entitled – in most instances – to be reinstated to his or her former position, with equivalent pay and benefits, upon expiration of that leave. However, an employee is not entitled to a position or other benefit of employment to which he would not otherwise be entitled simply because he is on FMLA leave. It is on that basis that the 7th U.S. Circuit Court of Appeals upheld the termination of a company’s Vice President of Information Technology, even though the termination occurred while that individual was on an FMLA leave. Daugherty v. Wabash Center, Inc., 7th Cir., No. 08-3104, August 14, 2009.

During his work history with Wabash, a not-for-profit agency serving individuals with developmental disabilities, Michael Daugherty worked his way from maintenance assistant to VP of the agency’s IT group. In 2006, Daugherty became involved in “e-mail wars” with a number of Wabash employees. During the same time period, he was accused of poor management techniques by the employees of an affiliated company for whom he acted as Chief Information Officer. At a meeting on June 19, Daugherty received a written reprimand for both issues. Daugherty agreed with the substance of the discipline and volunteered to draft a corrective action plan for himself. Daugherty was then told that permission for his upcoming month-long vacation was being revoked because of pressing company business. At that, Daugherty left the meeting and went to visit his doctor. He returned to Wabash to request FMLA leave, providing a note from his doctor that he was to be “off work for 2 weeks due to medical illness.” Although his FMLA paperwork only stated that he had been “placed under a tremendous amount of stress” at work, Daugherty was granted two weeks of leave under the FMLA.

During Daugherty’s absence, Wabash discovered that Daugherty had used the company’s credit card without authorization to order items that were delivered to his home. In addition, on June 30, Wabash’s VP of Finance discovered that certain e-mail correspondence with Daugherty was missing from his computer. Based upon suspicions that Daugherty was remotely accessing (and possibly sabotaging) the company’s computer system, outside experts were brought in to investigate. Upon initial investigation, it was determined that Daugherty had failed to back-up servers, and that the company’s IT infrastructure (Daugherty’s responsibility) was deficient.

Upon his return on July 3, Daugherty informed the company that he was taking additional medical leave. At that point, management asked him to sign a new corrective action plan and to return his keys and passwords. Daugherty refused, saying that such action would be “working,” and he was not to be working during leave. He also refused subsequent requests for the keys and information.

On July 31, a forensic expert found that Daugherty had deleted over 5,000 files from his computer on June 19, the day of the original disciplinary meeting. On August 9, Wabash terminated Daugherty’s employment, citing the missing files, violation of purchasing protocols, poor IT practices, failure to turn over keys, and poor management style. Daugherty filed suit in September 2006, claiming that his termination was in violation of the FMLA. The district court granted summary judgment in favor of the company. That decision was affirmed on appeal by the Seventh Circuit.

Daugherty argued that Wabash was required to reinstate him after his FMLA leave and that he could not be fired before that reinstatement. However, FMLA only entitles an employee to the same position to which he would have been entitled had he not gone on leave. Because the information discovered by Wabash during Daugherty’s leave would have justified his termination had the leave not been taken, there was no reason to wait until Daugherty’s return in order to fire him. Because Daugherty acknowledged the fact that he had violated company policies, there was no disputed fact that his actions factually supported the termination.

Once again, a company’s complete investigation – here, involving an outside consultant – and full and contemporaneous documentation of the results form the basis of a successful legal defense. Employers should recognize that in this atmosphere of layoffs, restructurings, and increased litigation, those two factors have continued to be the critical elements of an effective defense to an employee’s claims of discrimination and illegal treatment.
www.employmentlawmatters.net/uploads/file/FMLA – Daugherty.pdf

When an individual claims to have been racially harassed by co-workers, he or she must show that the employer was negligent either in discovering or remedying the harassment. An employer can avoid liability for co-worker harassment if it takes prompt and appropriate remedial action that is likely to prevent the harassment from recurring. Recently, the 7th U.S. Circuit Court of Appeals analyzed specific actions taken by a company after a noose was found hanging in a workplace, and found those actions to have been sufficient to uphold summary judgment in the company’s favor. Porter v. Erie Foods International, Inc., 7th Cir. No 08-1996, August 7, 2009.

Tremeyne Porter was the only African-American working on the third shift in Erie Foods’ Rochelle, Illinois facility. During his work shift on August 12, 2004, Porter saw a noose, made out of white nylon rope, hanging from a piece of machinery. An on-site supervisor, Santos, directed another employee to take down the noose, and then discussed the matter with Porter. She asked Porter if he knew who was responsible, but he denied knowing who the perpetrator was. Santos then tacked the noose to a bulletin board in her office, which was within sight of individuals passing that office. She later testified that she did so to remind her to follow up on the issue.

Early the next morning, Santos followed up with the first shift supervisor – asking if he had any information about the noose – and then informed her own supervisor (Jacobs) and a member of the human resources department (Goffinet) about the matter. Concerned, Goffinet immediately spoke to his own supervisor about the matter. That evening, Goffinet held a group meeting with Santos, Porter, and the entire third shift, stating that workplace harassment would not be tolerated, and reiterating the company’s anti-discrimination policy. Subsequently, Goffinet spoke privately with nine of the 15 third-shift workers, and held an extensive discussion with Porter. Porter told Goffinet that he “would not say” who made the noose, because he didn’t want anyone to be fired.

Around this same time, another co-worker, Alverez, showed a noose to Porter and to some other employees; Alverez then stated to Porter that if Porter showed the noose to anyone, he would “look for him,” which Porter interpreted as a threat to him and to his family. Shortly after, Goffinet followed up with Porter, asking for additional information on the reported harassment. During that meeting, Porter mentioned that he had been threatened by another employee, but would not identify that person. Goffinet then asked whether Porter wanted to change shifts. Porter declined the offer. Santos also continued to follow up with Porter during subsequent shifts, asking whether he knew who hung the noose, and asking first and second shift supervisors if they had obtained any further information.

On August 14, Porter filed a police report about the nooses, including co-worker names, but stated that he did not want the police to visit the workplace or the individuals – he simply wanted the harassment to stop. On August 16, a locker fell on Porter while he was changing into his work clothes. Porter was hit by the falling locker, but suffered no injury. After Porter reported the incident to Santos, Goffinet had the lockers bolted to the wall within a day.

On August 19, Porter quit his job. He ultimately filed a lawsuit alleging race-based harassment, constructive discharge, and retaliation. The district court granted summary judgment in Erie’s favor. That decision was upheld on appeal by the Seventh Circuit, based largely on the actions taken by Erie during the brief period of Porter’s employment.

Because Title VII is not a “strict liability” statute, an employer can defend against allegations of co-worker harassment by showing prompt and effective response to reports of such harassment. In this case, the Court determined that the steps taken by Santos and Goffinet show that they took the issue seriously and made a reasonable effort to bring the harassment to an end. (However, the Court also labeled Santos’ unfortunate placing of the noose on her bulletin board as “ill advised,” and found that it may have indicated a “lack of recognition of the powerful message of racial hatred that a noose evokes.”) The facts that both of these managers informed their own supervisors of the incident, made attempts to find out who was responsible, reminded employees of company anti-discrimination policies, and followed up with Porter, formed the basis of prompt and effective remedial action sufficient to defend against Porter’s claims of co-worker harassment. Further, because an employee has a duty to reasonably “avail [himself] of the employer’s preventive or remedial apparatus,” Porter’s failure to fully report or cooperate in the investigation of the harassing incidents undermined his claims. According to the Court, an employee’s subjective fears of confrontation or retaliation does not alleviate the duty to alert an employer to alleged harassment.

The important point for employers in this case is the Court’s statement that “In assessing corrective action, our focus is not whether the perpetrators were punished by the employer, but whether the employer took reasonable steps to prevent future harm.” Those “reasonable steps” will differ, depending on the specific facts of the situation being addressed. However, the actions taken by the company in this case should stand as a minimum checklist of a “prompt and effective” reaction to incidents of co-worker harassment.
 

The Occupational Safety and Health Administration (OSHA) may issue citations for safety violations at construction sites.  Further, at those construction sites, OSHA may hold one employer responsible for the safety violations of other employers if the initial employer could reasonably be expected to prevent and abate the violations, based on some supervisory authority or control over the worksite.  OSHA takes such actions under its “multi-employer citation policy.”  Recently, in a logical extension of that general policy, the Occupational Safety and Health Review Commission (OSHRC) reversed its own initial determination and upheld a citation against a general contractor for a safety violation that the contractor did not commit and to which none of the contractor’s own employees were exposed.   Sect. of Labor v. Summit Contractors Inc., OSHRC, No. 03-1622, 7/27/09.

 

In that case, Summit Contractors was the general contractor on a college dormitory construction site in Little Rock, Arkansas in June 2003.  On June 18 and 19, an OSHA compliance officer observed and photographed employees of a sub-contractor, All Phase, working on scaffolds without fall protection.  Summit had four employees at the site on those days, each of who had oversight responsibility for subcontractors on the project, including All Phase.  Summit’s contract with the owner of the project assigned to Summit the “exclusive authority to manage, direct and control” the construction, and required compliance with “applicable laws.”  Summit’s contract with All Phase permitted Summit to terminate and remove All Phase if it disregarded OSHA regulations.  Based on those facts, OSHA issued a “serious” citation to Summit for the violation.   

 

An administrative judge upheld the citation, and Summit contested that decision.  An initial determination by OSHRC precluded the Secretary of Labor from issuing the citation to Summit as a “controlling employer” for a violation created by another employer Summit’s own employees were not exposed to the hazard.  The Secretary appealed the holding to the 8th U.S. Circuit Court of Appeals, which rejected that conclusion and remanded the matter for “further proceedings.”  On remand, the OSHRC reversed its initial determination, and concluded that Summit was a “controlling employer properly cited under the multi-employer citation policy for violative conditions it did not create and to which none of its employees was exposed.”  The reversal was based largely on the fact that although Summit was aware of the unsafe conditions with respect to the scaffolding, it failed to inform All Phase of that safety violation.  That inaction was determined to be a failure to take the required “reasonable steps and measures necessary to obtain abatement,” and was deemed sufficient to support OSHA’s designation of a “serious” violation.

 

The lesson is clear: in addition to an employer’s general duty to comply with OSHA’s safety regulations, any company deemed to have supervisory control over a worksite – especially if that responsibility specifically includes the power to correct safety and health violations – must exercise reasonable care to prevent and detect violations on the site, whether or not those violation affect the company’s own employees.  To do otherwise risks liability for the penalties associated with citation by OSHA.

 

The Age Discrimination in Employment Act (ADEA) prohibits employers from treating employees who are 40 or older adversely on the basis of their age. Recently, however, the 7th U.S. Circuit Court of Appeals held that an employee’s “obsolete skill set” which caused him to be of “declining value” to the company was sufficient basis to support an that individual’s termination during a reduction in force (RIF), and found that the termination did not constitute age discrimination. Martino v. MCI Communications Services, Inc., No. 08-2405, 7th Cir., July 28, 2009.

Guy Martino began his employment with MCI in 2005 at the age of 54 as a business solutions consultant (BSC). In that position, he provided support to sales teams, but did not spearhead actual sales. In addition to his salary, Martino received commissions on sales to which he was assigned to work. For instance, in October 2005, Martino was part of a team working on a deal that involved British Petroleum (BO), and which resulted in substantial revenue to MCI. Although his role in that deal was peripheral, Martino received credit that boosted his sales figures and resulted in a sizeable commission to him. In fact, the BP deal resulted in nearly 85% of all of the commissions earned by Martino during his entire tenure with MCI.

Following MCI’s merger with Verizon in 2006, Verizon undertook a “redundancy analysis” to identify duplicative positions, and to support a reduction in force. As part of that analysis, a distinction was made between individuals who sold “co-location” services – which involved a client’s purchase of space, power, and cooling for its servers in the company’s data centers, but retaining management of those servers – and “managed” services, in which MCI/Verizon actually managed those servers. Co-location services were more basic, and therefore less expensive. When Verizon took over those sales, it removed the BSC force from sales of co-location services and assigned responsibility to them for the sale of managed services. Martino had only limited experience with the sale of managed services, and therefore became a prime target for termination, along with five other BSCs, ranging in age from 33 to 45.

Martino filed a federal court action, claiming age discrimination. While he conceded that the actual termination decision-makers did not discriminate against him, he invoked the “cat’s paw” theory to contend that his immediate supervisor was biased in favor of younger employees, and that the decision-makers were influenced by that bias. The cat’s paw theory is used when an adverse action is taken by an un-biased decision-maker, but on the basis of “singular influence” by a biased supervisor or manager. In this case, Martino argued that his direct supervisor sometimes called him an “oldtimer” which, according to Martino, indicated a bias in favor of younger workers. After stating that the term “doesn’t strike us as inherently offensive,” the court found that the two individuals who actually made the RIF decisions did an independent analysis of Martino’s qualifications, and based their decisions on business-related issues and skill-based criteria. According to the Court, the cat’s paw theory requires a “blind reliance” on input from a biased individual. That type of influence was not present with respect to Martino’s termination.

Martino’s skill set was limited, and Verizon’s increased focus on managed services, rather than collocation services, meant that Martino’s importance to the company was waning. Here, the Court specifically stated that while choosing to terminate someone on the basis of old age is impermissible, choosing to let someone go because they have an “obsolete skill set” is not discriminatory. The Court also noted that the U.S. Supreme Court’s recent decision in Gross v. FBL Financial Services, Inc. made this case especially difficult for Martino. Under that decision, it’s not enough for a plaintiff to prove that age was one of the motivating factors of the adverse action – instead the plaintiff must prove that but for his age, the adverse action would not have occurred.

In this case, the basis of the company’s success was its independent evaluation of employees’ skills and value to the company. Employers should make sure that independent investigations and decisions are fully documented, and that analyses are based on the needs of the company, in order to avoid the “cat’s paw” theory attempted by Martino. Further, training and counseling of supervisors and secondary managers should be undertaken to avoid the appearance of impropriety that is raised by remarks that could be interpreted as discriminatory.
 

The Uniformed Services Employment and Reemployment Rights Act (USERRA) protects members of the armed services against employment discrimination related to the benefits of their employment. The 7th U.S. Circuit Court of Appeals has held that such protection refers to employment benefits that are “extended generally to military and non-military employees alike,” and that discontinuing a benefit that had been extended only to employees with military obligations does not violate the USERRA. Crews v. Mt. Vernon, 7th Cir., No. 08-2435, June 2, 2009.

Ryan Crews, an officer of the Police Department in Mt. Vernon, Illinois, has been a member of the Army National Guard since 1988. As a Guard member, Crews is required to attend certain weekend training and preparedness exercises on a monthly basis. Under the collective bargaining agreement between the City and the police employees, the City has the discretion to establish work schedules to meet operational needs. Police officers’ weekly schedules typically consist of five 8-hour shifts and two days off. Crews’ military obligations frequently conflict with his work schedule. In these instances, the City has grants time-off to Crews (and other Guard member/employees) to attend drills. While the leave is unpaid, the City has allowed Guard member/employees to turn in their military pay in exchange for their regular City pay, so as not to incur any net loss in weekly wages. Guard member/employees also may allocate paid time off to days missed for military drill, thereby collecting both City pay and military pay for those days.

For several years, the City maintained a policy under which Crews was permitted to reschedule work shifts that fell on drill weekend, allowing him to use weekend-drill shifts as his weekly days off. This allowed Crews to collect military pay for the drill weekends, while also collecting his full weekly City pay. Three other Guard member/employees were granted this scheduling benefit between 2000 and 2003.

In 2006, the City hired two additional Guard member/employees. At that point, it was determined by the City that extending the policy to an increasing number of individuals would result in numerous and costly scheduling conflicts, because the policy allowed Guard member/employees to work weekday shifts that already were fully staffed. Following the policy’s rescission, Crews no longer can collect a full week’s pay during his drill weeks, unless he uses his limited paid time off. This problem is especially acute for Crews because, as a corporal, his regular work schedule is Wednesday through Sunday; he has no ability to bid for preferred days off like lower-ranking officers do.

In 2006, Crews filed a complaint against the City, alleging that the rescission of the work scheduling policy denied to him a “benefit of employment” based on his military status, in violation of the USERRA. The lower court denied Crews’ motion for summary judgment, and found in favor of the City. Crews appealed to the Seventh Circuit, which upheld that decision. According to the appellate court, the “benefit of employment” referenced in the USERRA is one that is provided to both military and non-military employees and, therefore, that law “reaches only discriminatory employment actions that provide military employees with fewer benefits.” Rescinding a preferential work schedule, thereby placing Crews on equal footing with other police department employees who required days off for non-military reasons, was not a violation of the USERRA.

The City’s ability, as set forth in the relevant collective bargaining agreement, to “establish work schedules to meet operational needs,” is likely to have been a factor in the Court’s analysis of this issue. Employers who plan to modify or eliminate preferential schedules previously granted to service member/employees should base such modification or elimination on a documented business reason. To do otherwise may support a claim of discriminatory treatment or retaliation under the USERRA.

USERRA does more than prevent discrimination and, according to the Department of Labor, “establishes a floor, not a ceiling, for the employment and reemployment rights and benefits of those it protects.” Therefore, nothing in the Seventh Circuit’s decision suggests that employers should not continue to provide greater benefits to military service members. Also, if such increased benefits are made part of a negotiated agreement, employers may be legally obligated to continue their implementation. In situations similar to this case, however, in which a more favorable work schedule was instituted solely for the convenience and benefit of military service members, it is likely that employers can modify or eliminate such benefit for business-related reasons without violating the USERRA.
 

As defined under the Americans with Disabilities Act (ADA), the term “discriminate” includes an employer’s failure to make reasonable accommodations to the limitations of a disabled employee. Reasonable accommodation may include reassignment to a vacant position within the company. The 10th U.S. Circuit court of Appeals recently held that a disabled employee could not support her failure-to-accommodate claim under the ADA, because she did not present evidence of any specific vacant positions to which she could have been transferred. Iverson v. City of Shawnee, Kansas, 10th Cir., No. 08-3264, June 17, 2009.

Michelle Iverson, a police officer with the City of Shawnee, Kansas, suffered a back injury while on duty in 2005. After undergoing surgery for her condition, Iverson was unable to pass a re-qualification test to return to her position as a police officer. She then requested accommodation in the form of a transfer to an open assignment with the City as a detective or non-officer, but was told that there were no jobs available. Iverson filed suit, claiming that she “could have performed numerous positions within the [City] with or without reasonable accommodation.” However, she did not specifically identify any position for which she believed herself to be qualified. Based on that failure, the lower court entered summary judgment in favor of the City. That decision was upheld on appeal to the Tenth Circuit.

For an employee to establish a prima facie case in a failure-to-accommodate claim, the employee must show that she is disabled, that accommodation within the existing job cannot reasonably be accomplished, that she has asked for reassignment to a vacant position, that she is qualified (with or without reasonable accommodation) to perform one or more vacant jobs, and that she has suffered injury because the employer did not offer reassignment to any appropriate vacant position. The Tenth Circuit held that these criteria assume that the burden is on the employee to specifically identify the vacant position or positions for which she believes herself to be qualified. Without such information, the employee cannot subsequently claim that the company’s failure to engage in the interactive process has caused an injury because there is no actual evidence that the interactive process would have likely produced a reasonable accommodation.

In Iverson’s case, she alleged generally that she “could have performed numerous positions within the [City] with or without accommodation,” and, in fact, argued that she could have performed positions as “detective, records technician, police dispatcher, and clerical or administrative positions within the City.” However, she failed to identify any specific position as available at the time that she was requesting reassignment. That failure led the Court to hold in favor of the City.

While this decision is limited to the Tenth Circuit, the court’s rationale is clear: an employee alleging that her employer failed adequately participate in the ADA’s interactive process will lose on summary judgment if she fails to show that a reasonable accommodation was possible, and that the process would have led to such accommodation. This case does not create an excuse for employers’ non-participation in a search for reasonable accommodation of a disability. However, it does point out at least instance in which the employee’s failure to provide sufficient input into the process can keep a case from going forward to a jury.