Employment and Labor Relations Lawyer & Attorney : Porter Wright's Employer Law Report : Employment Litigation, Non-Compete, Trade Secrets

In Kentucky Retirement Systems v. EEOC, No. 06-1037, 2008 WL 2445078 (U.S. June 19, 2008), the Supreme Court recently held that “where an employer adopts a pension plan that includes age as a factor” (in determining eligibility for retirement with pension benefits), and the employer subsequently “treats employees differently based on pension status,” the plan does not automatically violate the Age Discrimination in Employment Act (ADEA). Rather, the Court held that the plaintiff challenging such a policy must show that the differential treatment was “actually motivated” by age. In a 5-4 decision — with a rather strange alignment of the justices — the majority, which consisted of Justices Breyer (who authored the opinion), Stevens, Souter, and Thomas and Chief Justice Roberts, reversed the Sixth Circuit’s en banc ruling striking down the pension plan as facially discriminatory.

[This post serves as a follow up to my earlier posts on March 26, 2008 and January 2, 2008 regarding the decision in Erie County Retirees Association v. County of Erie by the Third Circuit upholding the EEOC’s rule allowing employers to coordinate retiree healthcare benefits with Medicare benefits, effectively resulting in equal total benefits between younger retirees and older Medicare-eligible retirees but unequal amounts spent on the two groups’ benefits because a portion of the Medicare-eligible retirees’ payments come from Medicare.]

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Employers with federal contracts worth $100,000 or more entered into on or after December 1, 2003 will now be required to file a new form, VETS-100A, with the Veterans’ Employment and Training Service (VETS). Covered federal contractors must begin collecting the new information this summer and file their first annual reports on the VETS-100A form by September 30, 2009. 

Employers working on federal contracts of $25,000 or more that predate December 1, 2003 must continue to file the VETS-100 form. Some employers with contracts falling into both categories will be required to file both forms, although VETS predicts that most contractors will file either the VETS-100 form or the VETS-100A form but not both. Modifications of pre-December 2003 federal contracts made on or after December 1, 2003 create new contracts. Contractors subject to such modified contracts need only track and report under the new VETS-100A form for the modified contract – and only if the contract meets the $100,000 threshold.

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On March 27, 2008, the Supreme Court released two opinions addressing discriminatory retaliation in the workplace. In the pair of opinions, the Court broadened the scope of potential claims for retaliatory conduct by holding that: (1) employees may bring a private action for discriminatory retaliation under §1981; and (2) the Age Discrimination in Employment Act (ADEA) prohibits retaliation against federal employees who complain of age discrimination.

In CBOCS West, Inc. v. Humphries, the Supreme Court held 7-2 that under 42 U.S.C. §1981, retaliation itself is a form of prohibited discrimination when contractual rights are at stake, even though §1981 does not include the word “retaliation.” Although this particular issue had been addressed by several appellate courts, the Supreme Court had never addressed the question squarely.

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After more than a decade of effort, supporters of the Genetic Information Nondiscrimination Act (GINA) were finally granted their wish. Passed overwhelmingly by the Senate (95-0) and House (414-1), GINA was signed into law today, May 21, 2008, by President Bush. Title I prohibits genetic discrimination in the area of health insurance while Title II ensures nondiscrimination in the employment arena.

Employers have plenty of time to bring their plans and workplaces into compliance. The Act’s group health plan provisions are effective for plan years beginning one year after enactment. The employment provisions become effective 18 months after enactment – November 21, 2009.

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It may seem odd to include a statement in an employment application or offer that limits the time that an employee has to file legal claims that may arise later in the employment relationship. Recent case law, however, suggests that it is something that all employers should consider and decide if it is appropriate for their business and their employees.

In the last three years, a line of case law has developed in Ohio and the Sixth Circuit that allows employers to limit the time period by which employees must bring claims arising from their employment. The cases all involved employers that included in their employment applications a provision stating that, by signing the application and subsequently accepting employment, the employee agreed to bring all claims arising out of the employment relationship within a certain period of time—a time period that is shorter than statutory limits. Some of the applications stated that any claims had to be filed within a period of time as short as six months.

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In Thompson v. North American Stainless LP, a divided Sixth Circuit panel expanded the class of persons protected from retaliation to include associated third-parties. In so doing, the Sixth Circuit created a split among the federal appellate circuits to have weighed in on this issue: the Sixth Circuit now expressly allows associational retaliation claims, and the Third, Fifth, and Eighth Circuits have expressly rejected them.

In Thompson, a woman filed a sex discrimination charge with the EEOC.  Three weeks later, the employer terminated the woman's fiance, who it also employed.  The fiance filed his own EEOC charge and, eventually, a lawsuit, and alleged that his termination amounted to retaliation for his fiance's EEOC charge.  In response, the employer argued, among other things, that there is no cause of action under Title VII for retaliation against associated third-parties.  The trial court agreed and dismissed the case.  The plaintiff appealed, and the EEOC filed an amicus ("friend of the court") brief in support of associational retaliation claims.

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This is an update to my prior post on January 2, 2008 regarding retiree healthcare benefits.

A legal battle dating back to 2000 regarding retiree benefits came to a close recently.  In 2000, the Third Circuit ruled that treating Medicare-eligible retirees differently than younger retirees violated the Age Discrimination in Employment Act (ADEA).  This prompted the EEOC to issue an exemption to the ADEA allowing employers to reduce or eliminate retiree healthcare benefits for Medicare-eligible retirees, while providing higher levels of benefits for those retirees who are not Medicare-eligible.  The American Association of Retired Persons (AARP) challenged the EEOC's authority to issue this rule.  The district court and Third Circuit rejected AARP's challenge. 

Recently, the U.S. Supreme Court, as anticipated, declined to hear AARP's appeal on this issue.  This means that, absent Congressional action amending the ADEA, employers can now provide retiree healthcare benefits and coordinate those benefits with Medicare without fear of violating the ADEA.

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Jackson v. Federal Express Corp., 2008 U.S. App. LEXIS 4802 (6th Cir. Mar. 6, 2008), is the latest in a series of Sixth Circuit decisions addressing the similarly-situated requirement in employment discrimination cases.  In Jackson, the Sixth Circuit confirmed the fact-specific nature of that inquiry and chided the district court for its “exceedingly narrow” construction of that element of discrimination claims. .For employers, the Jackson decision highlights the need to rely on practical, meaningful criteria – viewed in context – when making employment decisions based on employee comparisons.

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On March 5, 2008, the EEOC announced that employment discrimination charges increased by nine percent in 2007. This represents the largest one-year increase since 1993. Race discrimination continued to be the most commonly filed charge, followed by retaliation charges, which, for the first time, surpassed sex/gender discrimination charges. Employers also faced a record 5,587 pregnancy discrimination charges – 14 percent more than the prior record, which was set in 2006. In fact, most of the major charge categories saw double-digit percentage increases in 2007. As a result of these large increases, the EEOC recovered $345 million in monetary relief for charging parties, a 26 percent increase over the amount recovered in 2006.

These statistics can be explained just as easily by a heightened awareness of the law among employees, an increasingly diverse workforce, and increased job cuts as a result of a slow economy as by an actual rise in workplace discrimination and/or retaliation. Nevertheless, EEOC Chair Naomi Earp suggested that the statistics show that “[c]orporate America needs to do a better job of proactively preventing discrimination and addressing complaints promptly and effectively.”

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The Age Discrimination in Employment Act (“ADEA”) expressly states that a civil action cannot be filed until 60 days after a charge alleging unlawful discrimination has been filed with the EEOC. A primary rationale behind the charge-filing requirement is to allow the EEOC an opportunity to resolve the dispute by informal methods. To that end, the EEOC has developed a specific form, labeled “Charge of Discrimination.” In a decision issued yesterday, though, the U.S. Supreme Court held that a plaintiff should have been allowed to pursue her ADEA claim even though she did not file a formal charge with the EEOC until after she filed her court complaint. In Federal Express v. Holowecki, the Court ruled that plaintiff’s “Intake Questionnaire, and attached six-page affidavit was sufficient to satisfy the ADEA’s charge-filing requirement. The Court reached this conclusion even though the EEOC neither assigned a charge number nor informed Federal Express that a charge had been filed.

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The Supreme Court of the United States ruled in an age discrimination case that testimony by nonparties alleging discrimination at the hands of supervisors who played no role in the discriminatory acts challenged in the lawsuit was neither per se admissible nor per se inadmissible. Instead, the Supreme Court held that admissibility must be determined on a case-by-case basis and is within the discretion of the District Court. Sprint/United Management Co. v. Mendelsohn, No. 06-1221, February 26, 2008.

Ellen Mendelsohn sued Sprint under the Age Discrimination and Employment Act of 1967 (ADEA). In support of her claim, she sought to introduce testimony by five former Sprint employees who also claimed age discrimination even though none worked in Mendelsohn’s group or under the supervisors in her chain of command. Moreover, none of those witnesses heard any discriminatory remarks from Mendelsohn’s supervisors. Before the trial, Sprint moved to exclude the testimony, arguing that it was irrelevant to the central issues in the case because the employees were not similarly situated to Mendelsohn and the testimony would cause unfair prejudice. The District Court excluded the evidence and ruled that Mendelsohn could offer only evidence of discrimination against employees who were similarly situated to her, meaning that those employees had the same decision maker/supervisor and that there was temporal proximity.

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Many employers already walk on eggshells when it comes to dealing with employees who file discrimination charges against them, but they have always been able to rely on the common tenet in retaliation cases that temporal proximity, standing alone, will not establish retaliation. In Mickey v. Zeidler Tool & Die Co., however, the Sixth Circuit held that, “[w]here an adverse employment action occurs very close in time after an employer learns of a protected activity,” the timing of those events is “significant enough to constitute evidence of a causal connection for the purposes of satisfying a prima facie case of retaliation.” Though the majority opinion offers no guidance on what it means by “very close,” a concurring opinion from Judge Batcheldor suggests that, for the case to proceed to a jury solely on evidence of timing, that timing must be so close as to have been “virtually contemporaneous.”

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In an unusual procedural move, a Ninth Circuit panel issued a revised opinion and rejected—for the second time—Wal-Mart’s request to overrule a lower court decision granting class action status to a lawsuit by six women representing a class of more than 1.5 million female workers. Dukes v. Wal-Mart, Inc., Case Nos. 04-16688 and 04-16720, 2007 U.S. App. LEXIS 28551 (9th Cir. Dec. 11, 2007). The class includes all female workers—from part-time, entry-level hourly employees to full-time, salaried managers—at Wal-Mart stores from December 1998 to the present “who have been or may be subjected to Wal-Mart’s challenged pay and management track promotions, policies and practices.” The lawsuit alleges that female employees were paid less than men and given fewer promotions. If the case proceeds, it will be the largest sex discrimination case in U.S. history. The revised opinion addresses some of the criticisms directed toward the earlier opinion and changes some of the reasoning, though not the result, of the court’s earlier decision.

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On December 20, 2007, Governor Strickland signed into law the “Ohio Veterans Package” (Sub. H.B. 372), which is intended to support members and veterans of the armed services. Among other things, the Act exempts the estates of service men and women who die in active service from certain probate fees, exempts retired military personnel pay for military service from the Ohio income tax, and designates Interstate Routes 70 and 71 in Ohio as the “Purple Heart Trail.”

Perhaps the most significant change made by the statute - particularly for Ohio employers - is the addition of “military status” to the list of protected classes under R.C. 4112.02. This change means that employers are prohibited from discriminating against employees based on their military status in the same way that they are prohibited from discriminating on the basis of race, color, religion, sex, age, national origin, ancestry, or disability. The Act defines “military status” as “service in the uniformed services,” including voluntary or involuntary service in the U.S. armed forces, full-time National Guard duty, and duty or training for the Ohio Organized Militia. Questions sure to arise under this new legislation are whether it applies only to current military status, as opposed to veteran status, and whether, in light of the statute’s ban on publishing advertisements for employment that indicate a preference as to military status, it will bar employer preferences in favor of individuals based on their military status.

According to the Ohio Legislative Service Commission’s status report, the Act goes into effect on March 24, 2008. In anticipation of this effective date, Ohio employers are advised to add “military status” to the list of protected classifications in their EEO statements and nondiscrimination/anti-harassment policies.

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In July 2007, the Fourth Circuit Court of Appeals held in Progress Energy v. Taylor, 493 F.3d 454 (4th Cir. 2007), that, under the Department of Labor’s (DOL’s) regulations and the Family and Medical Leave Act (FMLA), employees cannot waive their rights under the FMLA in a private agreement, such as a severance agreement.  To waive FMLA rights, the Fourth Circuit held that the agreement must first be court- or DOL-approved.  Progress Energy, supported by several other business groups, appealed the decision to the U.S. Supreme Court, citing a split between the Fourth and Fifth Circuits.  On January 14, 2008, the Supreme Court asked the DOL to submit its view on the issue.  This type of request is often a signal that the Supreme Court will review the decision. 

The background of the case is relatively simple.  Taylor, the employee, was terminated by Progress Energy as part of a reduction in force in which past performance evaluations were used to determine which employees to terminate.  Taylor received poor performance evaluations after several health-related absences that Progress Energy determined were not FMLA protected.  Although Taylor tried to have the evaluations changed, she was unsuccessful.  Upon her termination, Taylor and Progress Energy entered into a severance agreement where Taylor received $12,000 in exchange for waiving all rights to litigate.  The agreement did not specifically mention Taylor’s rights under FMLA, but it referenced rights under “other federal laws.”

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On December 26, the EEOC announced a new rule that makes it easier for employers to help retirees maintain adequate healthcare benefits.  In particular, employers that provide retiree healthcare benefits may coordinate those benefits with Medicare benefits without engaging in age discrimination based on the difference in ages between younger non-Medicare-eligible retirees and older Medicare-eligible retirees.

In today’s employment landscape, fewer employers provide retiree benefits.  This forces many retired employees to rely solely on Medicare benefits to cover increasing healthcare costs—at best, a difficult situation.  As a result, many employers are searching for viable ways to continue to provide healthcare benefits to retirees.  The most common and cost-effective way for companies to do so is for employers to coordinate employer-provided benefits with benefits provided by Medicare.  This is accomplished by:

1. supplementing the benefits provided by Medicare up to a specified level of coverage;
2. offering benefits after retirement but only until the retiree becomes Medicare-eligible; or
3. some combination of the two.

Although these approaches seem reasonable, courts questioned their legality under the Age Discrimination in Employment Act.  In Erie County Retirees Association v. County of Erie, a controversial decision issued in 2000 by the U.S. Court of Appeals for the Third Circuit, the practice of treating Medicare-eligible retirees differently than younger retirees was found to violate the ADEA.  In that case, the court held that the health insurance benefits provided to Medicare-eligible retirees and younger retirees must cost the employer the same amount.  Not surprisingly, most retiree healthcare plans violated the ADEA because employers typically spend significantly less on retiree benefits when those benefits only supplement Medicare’s coverage.  Faced with the prospect of spending more money for retiree benefits, many employers considered reducing or eliminating retiree healthcare benefits for both Medicare-eligible and younger retirees.

Perhaps recognizing the dilemma posed to employers that try to do right by their retirees, the Third Circuit recently provided an out: The court ruled that, notwithstanding the Erie decision and objections by the American Association of Retired Persons (AARP), the EEOC has the authority under the ADEA to enact regulatory exceptions to the ADEA's provisions.  Accordingly, the EEOC’s new rule provides an exemption from the ADEA for the longstanding employer practice of coordinating retiree benefits with Medicare coverage.  Employers and labor groups alike support the new rule.

AARP appealed  to the United States Supreme Court the Third Circuit's decision regarding whether the EEOC has authority to create the exception to the ADEA.  It seems unlikely that the Supreme Court will agree to hear this appeal.  If it does and decides in favor of AARP (this is unlikely), the rule's new exception to ADEA will not take effect.

The Supreme Court, however, has heard oral argument in a related case that will likely impact this area.  In Kentucky Retirement System v. EEOC, the Supreme Court considered "whether any use of age as a factor in a retirement plan is 'arbitrary' and thus renders the plan facially discriminatory in violation of the Age Discrimination in Employment Act."  The case involves disability retirement benefits and normal retirement benefits in which service years or a combination of age and service years determines eligibility for both, and thus, age is an indirect factor in determining eligibility.  The Supreme Court will decide if this plan violates the ADEA.  This may or may not impact the decision in Erie.

Bottom line for employers: The ADEA no longer poses an obstacle for employers that wish to treat retirees equitably by supplementing Medicare benefits for Medicare-eligible retirees and providing greater benefits for non-Medicare-eligible retirees.

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As further proof that no good deed goes unpunished, one Ohio appellate court has held that an employer’s affirmative action plan (AAP) may be used against it to prove discrimination. Strange as it may seem, the court’s decision highlights the risks associated with invalid AAPs and gives employers everywhere reason to reevaluate their efforts on this front.

In a reverse race and gender discrimination case, the Montgomery County Court of Appeals held that a public employer’s affirmative action plan could amount to direct evidence of employment discrimination at trial if the plan is found invalid under Title VII of the Civil Rights Act and the Equal Protection Clause of the Constitution. Mitchell v. Lemie 2007-Ohio-5757.

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The importance of leaving your personal life at home–particularly if it involves a penchant for pornography–is amply highlighted by the Second Circuit’s decision in Patane v. Clark, No. 06-3446 (2nd Cir. Nov. 28, 2007).  In Patane, the court upheld a female college secretary’s right to pursue a hostile work environment claim under Title VII and state discrimination laws based on her male supervisor’s pornographic video and website viewing habits.  Apparently oblivious to the development of sexual harassment law over the last 40 years or so, the supervisor–who happened to be the chair of the college’s Classics Department–allegedly viewed sexually-explicit videotapes for one to two hours every day on his office television, which was visible to his secretary through a glass partition.  He also left pornographic videos scattered across his office floor, viewed pornographic websites on his secretary’s work computer, and required her, as a part of her secretarial duties, to open his mail, which–you guessed it–included pornographic videotapes that the supervisor had delivered to his office.

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Last month, the Ohio Civil Rights Commission (OCRC) approved new maternity leave regulations requiring all Ohio employers having 4 or more employees to give each pregnant employee up to 12 weeks paid or unpaid maternity leave, regardless of whether the employee is in her first year of employment and regardless of whether she has previously exhausted any other leave that might have been available to her for non-maternity purposes. On Monday, December 3, 2007, the Joint Committee on Agency Rule Review (JCARR) voted 9-1 to reject the Commission’s proposal.

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Retaliation claims have long been some of the most difficult for employers to defend. What’s more, they become nearly impossible to avoid once employees engage in protected activity; almost any decision an employer makes after that point – short of pay increases and promotions – may prompt a disgruntled employee to challenge the decision as an act of retaliation. A recent Ohio Supreme Court case, however, provides some comfort to employers in this difficult area of the law.

On December 12, 2007, the Ohio Supreme Court held in Green-Burger v. Temesi, 2007-Ohio-6442, that it is not per se – or automatically – retaliatory for an employer to file a lawsuit against a current or former employee after the employee engages in protected activity. In its first consideration of the issue, the Court held that “the filing of a lawsuit by an employer against an employee or former employee who has engaged in a protected activity is not per se retaliatory.” Even more importantly, the Court ruled that, “if an employer can demonstrate that a lawsuit against an employee who has engaged in a protected activity is not objectively baseless, the suit shall be allowed to proceed,” and any attempts by the Ohio Civil Rights Commission (OCRC) to pursue a retaliation case against the employer will be stayed.

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