Category Archives: legal issues

Risks of the Recovery

Better times are coming. More people are looking for work. Wages are thawing out. Defined-contribution employer matches are returning.

But before your workforce rebuilding goes full bore, consider the landmines of the recovery, Matthew S. Effland, employment lawyer with Olgetree Deakins, told attendees at the Society for Human Resource Management’s 2010 conference.

Despite the name of his session, “And the Tide Rolls Back In — Legal Issues in Rebuilding Your Workforce Post-Recession,” Effland’s warnings were not confined to the law. He spoke a lot about “survivor anger” spreading through corporate America right now — among people who’ve been working on frozen wages, doing the jobs of laid-off former co-workers as well as their own, and feeling minimized by their companies’ efforts to infuse new blood into the organization by recruiting outsiders and paying them higher salaries than their own.

“Think about what you can do to make sure you’re taking care of the survivors,” said Effland. “Their disgruntlement can lead to litigation if you’re recruiting from outside to replace a position equal to theirs at a higher wage.”

Also be careful not to “give into the pressure” to selectively re-hire laid-off employees, those problem workers you were able to let go of in the name of hard times. Those who are not re-hired when others are, or who are told to reapply for the same position, “will feel some sense of entitlement, and may sue, and may have a case” if they fall under a protected class, he said.

“Avoid the shortcuts and the push for speed-hiring,” Effland said. “And make sure you fully document your hiring process. When you decide not to hire someone back, you better be able to justify it and explain it in a court of law.”

Some Disquieting — and Costly — Facts

Every 1.5 percent increase in unemployment equals a 21 percent increase in employee lawsuits, said Shanti Atkins, president and CEO of ELT in a standing-room-only session on “2010 EEO Trends” at the SHRM convention in San Diego.

She also noted that corporate spending on legal fees and costs to defend employment cases jumped 54 percent from 2008, and that 2009 saw the second highest number of discrimination claims filed with the U.S. Equal Employment Opportunity Commission in U.S. history.

Retaliation is now the most common claim filed, followed by race discrimination and sex bias.

What many front-line managers don’t know — and it is they who “are the ones creating the risk, she said” — is that a retaliation claim can succeed whether or not the underlying discrimination claim has any basis in fact.

Another thing managers don’t understand, she said, is that no “incredibly dramatic” actions are required to show that retaliation has occurred. It can be a cold shoulder, poor work assignments, a series of minor events.

And the average jury verdict for a retaliation claim? $200,000.

Facilitating Age-Bias Suits

Proposed federal legislation that would overturn a U.S. Supreme Court decision last year has a “real good chance of becoming law,” said Mike Aitken, SHRM’s director of government affairs.

The Protecting Older Workers Against Discrimination Act would not only overturn Gross vs. FBL Financial Services, but would go beyond it, he said during the organization’s annual conference.

In a 5-4 vote, the justices ruled that employees must show age discrimination was the direct cause of an adverse employment decision, and was not just one of the factors playing a role in that decision.

The proposed law would find it unlawful if age was “a” motivating factor. In addition, that standard — known as a mixed-motive standard — would also be applied to all federal discrimination, retaliation and whistleblower suits.

So, HR beware: With the aging of the workforce, it may be hard for companies to avoid age being a factor in employment decisions.

Forbes Sees Brighter Future, Faulty Past

As the opening keynote speaker at the Society for Human Resource Management’s 2010 Annual Conference in San Diego, Steve Forbes didn’t exactly focus on HR. But his message Sunday was well-received nonetheless: Better times are just around the bend.

Forbes, president and CEO of Forbes Media and editor-in-chief of Forbes magazine, reassured thousands of attendees that the signs are there for a recovering economy: a growth rate at or above 4 percent, consumers beginning to spend again, Asian economies growing … .

“Employment is the only real continuing disappointment,” said Forbes. “There is great uncertainty out there.” He went on to rehash a little history, reminding his listeners that the economy did its share of ebbing and flowing in the 1970s — “when there was growth, then it hit the wall, then there was growth, then it hit the wall again.”

Whether this recovery can sustain itself, Forbes said, depends on the dollar: “You cannot get sustained recovery while the dollar remains low.” And why is the dollar low? “Because the Federal Reserve has simply been printing too much money,” he said. He likened a society with the perfect amount of money for optimal and sustained growth to a car running on the right amount of gas.

“You have the right amount of fuel, you move ahead,” said Forbes. “You put in too much fuel, you flood the engine. The feds have flooded the engine.”

He then went on to suggest a road map to a sustained recovery, one that would abolish the federal income tax code as we know it “and start all over.” He got a nice round of applause when he called for a flat tax. He got another round when he urged lawmakers to “put in conditions that allow people to get back on their feet, and make it simple to establish new businesses.”

He gave reasons for some of today’s unfolding crises: the BP nightmare in the Gulf, because BP — cited for many safety violations — chose not to “follow the rules” — and the healthcare crisis, because “the consumer is no longer in charge, because everyone is controlled by a third party… .”

His one warning shot to HR practitioners was to “stay on top of the strong head winds coming your way in the form of changing regulations,” because with this current administration and Congress, he said, “they’re coming.”

Rent-A-Center’s ‘Hollow Victory’ for Employers

The U.S. Supreme Court’s narrow 5-4 decision in favor of Rent-A-Center this week is certainly, on the face of it, a victory for employers. Once again, the court upheld the validity of pre-dispute arbitration agreements, and the validity of letting an arbitrator — not a court of law — decide whether such an agreement is enforceable in employee-dispute cases.

But this legal alert from Fisher & Phillips warns that the decision in Rent-A-Center, West Inc. vs. Jackson may, in fact, add fuel to the fire under the Artibtration Fairness Act of 2009 now pending in Congress, which would render any such pre-dispute agreement unenforceable. It also warns employers with arbitration agreements in place to get with their counsel and make sure they “stand muster under the new decision issued” Monday.

“By and large,” the alert reads, “many employers continue to find arbitration proceedings preferable to court proceedings, as they are usually cheaper, more efficient and lead to more employer victories and fewer large verdicts. However, because of these very reasons, there has been a growing resistance movement” to them.

“No doubt the advocates of that proposed legislation will point to [Monday’s] decision as further evidence of the need for employee protection. One day, employers could look back at the Rent-A-Center decision as a hollow victory, one that did nothing more than provide fodder for arbitration opponents in their continued quest to restrict employer rights.”

Vigilante Anti-Illegal Immigrationists?

Here’s a new twist in the ongoing fracas over immigration. Came across this piece in Thursday’s New York Times about residents of a small town in Nebraska who are so fit-to-be-tied over illegal immigrants in their midst that they forced a vote on the issue — fighting off challenges by some of their elected leaders all the way to the state Supreme Court.

Indeed, voters of Fremont, Neb., will be deciding this Monday (June 21) whether to ban businesses from hiring illegal immigrants and bar landlords from renting to them. Forget waiting for your governor to take the lead, eh? (Though it does appear Fremont’s proposal was written with help from an author of Arizona’s new anti-immigration law.)

Mind you, there are only about 25,000 residents in this 1850s-era railroad and farming town about 30 miles northwest of Omaha, and it’s nowhere near an international border. But those in favor of the bans say the number of Hispanic residents has climbed from 165 in 1990 to close to 2,000 now, and that many are living and working there illegally and are responsible for rising crime rates. They’re demanding that all Fremont businesses use the E-Verify system, something skeptics of the proposed law say most already do.

I’m wondering what the atmosphere at the polling places is going to be like on Monday. (I’ll try to keep you posted.) The story suggests many people in Fremont have stopped talking to one another because they’re not sure where everyone stands on this extremely heated and controversial — and, of course, very personal — issue.

More importantly, I’m wondering how far from this kind of development the rest of our American cities and towns might be.

Supreme Court Rules on Texting at Work

The U.S. Supreme Court has just unanimously ruled that a California police chief was within his constitutional rights when he viewed sexually explicit text messages sent by an officer’s work pager to two different women.

According to the LA Times, Sgt. Jeff Quon sued the police department after learning that thousands of messages he separately sent to his wife and a girlfriend had been viewed by his police chief in Ontario, Calif. He previously won his case in the 9th Circuit Court of Appeals, but lost today because:

In this case, the high court said the police chief’s reading of the officer’s text messages was a search, but it was also reasonable.

Justice Anthony M. Kennedy agreed the police chief’s actions amounted to a search, but it was reasonable, he said, because it had “a legitimate work-related purpose.” He wanted to see whether officers were using their text pagers for police work or for personal matters. “Because it was not excessive in scope, the search was reasonable,” Kennedy said.

While it’s true that many, if not most, employers tell employees that they should have no expectation of privacy when using company-owned communication devices, an Associated Press report on the ruling reports that Kennedy also offered some advice to employees on the topic:

Kennedy said that it is true that many employers accept or tolerate personal communications on company time and equipment. But he suggested that employees who want to avoid the potential embarrassment of having those communications revealed might “want to purchase and pay for their own” cell phones and other devices.

Ultimately, one wonders if this ruling will prompt HR departments across the country to revise, with stronger language, their employees’ handbooks on the use of company-owned telecommunications devices and the accompanying lack of an expectation of privacy.

Or maybe they should just send out a text message to everyone with a company cell phone.

Banker Alleges Discrimination at Citibank

A steamy Friday morning brings us news of a steamy suit being filed against Citibank, alleging sexual discrimination against one of its ex-employees. The suit is being filed by Debrahlee Lorenzana, who formerly worked for Citibank:

Her bosses told her that “as a result of the shape of her figure, such clothes were purportedly ‘too distracting’ for her male colleagues and supervisors to bear,” she says.

[Her two male] managers gave her a list of clothing items she would not be allowed to wear: turtlenecks, pencil skirts,  and fitted suits. And three-inch heels.

Wage and Hour Division’s Aggressive Agenda

 The U.S. Department of Wage and Hour Division held a public stakeholders forum on May 21 to lay out its goals and regulatory agenda — and from the looks of the reports I found, employers better stay on their toes ’cause the feds they are a-watchin you, folks.

Noel Tripp, an attorney with one of the employment law firms I quoted in an April 5 news analysis — Jackson Lewis — was in attendance and filed this report. Reads more like a warning to me. At the very least, it seems clear the Department of Labor’s WHD is gearing up to enhance employees’ rights, but not necessarily bend over backwards to help employers do just that in the process.

According to a story posted by Roy Maurer of the Society for Human Resource Management, WHD Deputy Administrator Nancy Leppink started the forum by defending her agency’s March 24 decision to end its long-held practice of issuing opinion letters to employers’ specific questions about compliance (which my news analysis was about). Leppink told those in attendance the practice was dropped because the “cost benefit was not there.”

 Yet, in the same initial greeting, she touted WHD’s “ambitious agenda,” according to Maurer, and listed some of the agency’s more impressive accomplishments, including hiring 250 new investigators (with plans to hire 100 more in 2010) and starting the “We Can Help” campaign, aimed at reaching vulnerable workers who wouldn’t otherwise report violations and noncompliance (this last bit, ala Tripp).

Tripp also offers this parting shot: “Employers must recognize that the newly aggressive WHD is focusing on complance and [will] consider internal or external audits to review wage-and-hour compliance. Employers in traditional low-wage industries must take special notice of the WHD’s initatives.”

I would say ALL employers would be well-advised to open these links I’m providing here and read them very carefully. 

New Law Advisory from the DOL

Just wanted to make sure everyone saw this recent release from the U.S. Department of Labor about a new disability nondiscrimination law advisory — part of its new elaws Web site, an interactive site developed to help employers and employees understand their rights and responsibilities under numerous federal employment laws. Might want to check this stuff out and report back to us with your impressions and feedback! In fact, we’d appreciate it!