Recreational Marijuana Is Now Here

By:  Claudia D. Orr, Plunkett Cooney 

Recreational marijuana is now legal in Michigan and there are already several dispensaries (mostly in Ann Arbor) selling the product.  So, what should employers now be doing?  Reviewing and revising their drug testing policy!

The Michigan Regulation and Taxation of Marihuana Act, MCL 333.27951, et seq., specifically provides, in relevant part, the following:

This act does not require an employer to permit or accommodate conduct otherwise allowed by this act in any workplace or on the employer’s property. This act does not prohibit an employer from disciplining an employee for violation of a workplace drug policy or for working while under the influence of marihuana. This act does not prevent an employer from refusing to hire, discharging, disciplining, or otherwise taking an adverse employment action against a person with respect to hire, tenure, terms, conditions, or privileges of employment because of that person’s violation of a workplace drug policy or because that person was working while under the influence of marihuana.

MCL 333.27954 (3)(emphasis added).  As you may know, current testing methods only demonstrate that marijuana is in a person’s system, but they cannot determine whether someone is “under the influence” at the time of the test.  Thus, it is essential for an employer to have a policy that prohibits the use of illegal substances, including marijuana which remains unlawful under federal law, and provides for testing.  Without the policy, an employer will have to prove that the employee was under the influence while at work (i.e., blood shot eyes, smelling like marijuana, slurred speech, munchies…). This is often difficult to do.

Federal contractors are required to maintain a drug free workplace, including prohibiting the use of marijuana. But, more importantly, this is a safety and productivity issue for all employers.

I am recommending to most of my clients that they continue to test employees and terminate any employee who tests positive for so long as marijuana remains unlawful under federal law and/or until testing methods improve. Employers who do not have a drug testing policy should adopt one as soon as practicable. These policies should be written by an experienced employment attorney, such as the author.

In addition, out of fairness, employers who have a policy should alert employees that nothing has changed: testing positive for marijuana, even if smoked or ingested outside of work during non-working hours, will result in the termination of employment.  You do not want to a good employee to fail a drug test thinking this is now acceptable, if it is not under your company’s policies.

This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM) and an arbitrator with the American Arbitration Association. She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html

 

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. December 2019.

Are your arbitration agreements “up to code”?

By: Melissa M. Tetreau, Bodman PLC

Employers for a variety of reasons, including procedural expediency, confidentiality, and avoidance of a jury, regularly use arbitration agreements. Obviously, the most critical part of an arbitration agreement is ensuring its enforceability. To many employers, it seems only fair that an employee who files a claim against it should be required to pay a portion of the arbitrator’s fee and costs. But, employer beware. If an employee brings a claim under a law which provides for the losing party to pay the prevailing party’s attorney fees, these fee-splitting provisions may be invalid.

On November 22, 2019, the Eleventh Circuit Court of Appeals (covering Alabama, Georgia, and Florida), invalidated the fee-splitting portion of P.I.P., Inc.’s arbitration agreement.[1] Three former P.I.P. employees filed a lawsuit alleging violations of the Fair Labor Standards Act (“FLSA”) and seeking, among other things, costs and attorneys’ fees pursuant to the FLSA. Because they had signed employment contracts that included an arbitration provision, P.I.P. asked the trial court to send the parties to arbitration.

In response, the employees pointed out language in the agreement stating that each party “will pay its own fees and expense, including attorney fees.” The employees argued this language invalidated the arbitration provision because they were entitled to have P.I.P. pay their attorney fees and costs as a remedy under the FLSA. They claimed that the agreement improperly denied them that right.

P.I.P made the logical response – the arbitration agreement simply required each party to pay their own way through arbitration. Nothing in the agreement barred the arbitrator from shifting the fees after he or she made a decision. The trial court disagreed and invalidated the arbitration provision. After P.I.P. appealed, the Eleventh Circuit Court of Appeals agreed with the trial court. It found that because the arbitration provision stated that each “party to any arbitration will pay its own fees and expense,” the arbitrator had no discretion to shift fees after a decision. Since the employees could prevail at arbitration and not receive the attorneys’ fees and costs they would be entitled to, that portion of the arbitration provision was invalid. The court of appeals sent the case back to the trial court to decide if only the fee-splitting provision was invalid, or if this invalidated the entire arbitration provision. If the trial court decides the latter, P.I.P will be forced to defend the case in court.

Although this decision is not binding on courts in Michigan, it demonstrates the trick bag in which arbitration agreements can put employers. While the story may be complicated, the moral is simple: review your arbitration agreements with experienced counsel.

Melissa Tetreau is a member of the Detroit SHRM Legal Affairs Committee and an attorney with the law firm of Bodman PLC.  She can be reached at MTetreau@bodmanlaw.com.

                                     

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article.  November 2019.

[1] Hudson v. P.I.P., Inc., No. 19-11004 (11th Cir. Nov. 22, 2019).

What Disabilities Does the ADA Cover?

By: Melissa Tetreau, Bodman PLC

 

To answer the title’s question, the ADA covers only current disabilities – at least according to the Seventh Circuit (covering Illinois, Indiana, and Wisconsin). To many of us, this seems like the obvious answer. However, Ronald Shell, an applicant for employment at Burlington Northern Santa Fe Railway Company (BNSF), thought otherwise.

Shell applied to work as an intermodal equipment operator with BSNF, where he would operate cranes and work around other heavy equipment.  Due to these job responsibilities, BNSF classifies this position as “safety sensitive.” BNSF requires all applicants to safety sensitive positions to undergo a medical examination after receiving a conditional offer of employment.

Shell was treated no differently. After BNSF extending him a conditional offer of employment, it sent him for a medical examination. The examination revealed that Shell, who is 5’10” and 331 pounds, had a BMI of 47.5.

Why does this matter? BNSF had a policy of not hiring applicants for safety sensitive positions who had a BMI of 40 or higher. Its reasoning was that individuals with a BMI of 40 or higher are at a substantially higher risk of developing certain medical conditions, such as sleep apnea, heart disease, and diabetes. BNSF believed that a safety sensitive employee with a BMI of 40+ could experience a health issue and lose consciousness at any moment, including while operating heavy machinery.

As a result of Shell’s BMI, BNSF rescinded its offer. Unsurprisingly, Shell sued for discrimination on the basis of a perceived disability under the ADA. At the trial court, BNSF moved for summary judgment arguing, among other things, that Shell’s obesity was not a disability and there was no evidence that BNSF regarded him as having a disability. The trial court denied BNSF’s motion. The court agreed that obesity is not a disability under the ADA, but found a question of fact as to whether BNSF regarded Shell has having the allegedly obesity-related conditions of sleep apnea, heart disease, and diabetes.

BNSF appealed to the Seventh Circuit Court of Appeals. The Seventh Circuit reiterated that the ADA covers individuals who are “regarded as” disabled.  The ADA defines this as “being regarded as having [a physical or mental] impairment.” 42 U.S.C. 12102(1)(C). The Court emphasized the present participle in that definition – having. “It does not include something in the past that has ended or something yet to come.”[1] The Court then looked at a further definition of “being regarded as having such an impairment,” which is when an employee is discriminated against “because of an actual or perceived physical or mental impairment.” 42 U.S.C. 12102(3)(A). As the Court noted, a disability that does not yet exist can be neither actual nor perceived.

The Seventh Circuit reversed the trial court’s denial of summary judgment and held that the ADA’s “regarded as” prong does not cover future disabilities. Although this case is not binding on any courts in Michigan, which is in the Sixth Circuit, the decision is in line with other courts that have addressed the issue.  Nonetheless, when an outcome turns on interpreting a “present participle,” employers are well-advised to consult with their experienced employment counsel when making those sorts of decisions under the ADA.

Melissa Tetreau is a member of the Detroit SHRM Legal Affairs Committee and an attorney with the law firm of Bodman PLC.  She can be reached at MTetreau@bodmanlaw.com.

                                     

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article.  November 2019.

[1] Shell v. Burlington Northern Santa Fe Railway Company, No. 19-1030 (CA 7, Oct. 29, 2019).

Employers take note: DOL nets record $322 million in back pay in FY2019

By: Miriam L. Rosen, McDonald Hopkins, PLC

With the end of the federal government’s 2019 Fiscal Year on September 30th, the various regulatory agencies are now reporting their “results.”  Think of it as earnings report season for public agencies.  One agency touting its 2019 accomplishments is the Department of Labor’s Wage and Hour Division (WHD), which enforces the Fair Labor Standards Act (FLSA).

For FY 2019, the WHD collected $322 million in back pay from employers surpassing the FY 2018’s record collections of $304 million. Announcing the results, the DOL noted that more than half of the back pay amount – $186 million – came from employers who failed to pay employees time-and-a-half overtime for work beyond 40 hours in a week. Another $40 million came from back pay for failure to pay employees at least the federal minimum wage of $7.25 per hour.

The record collections come at a time of significant activity for the DOL.  With numerous vacancies and leadership changes at the DOL in the first two years of the Trump Administration, employers saw little change in the aggressive enforcement positions taken in the Obama era.  However, in April 2019, a new WHD Administrator, Cheryl Stanton, was sworn in and is now implementing changes to WHD policies and investigation procedures that many employers expected to see much earlier in the Trump Administration.  Following the resignation of DOL Secretary Alex Acosta in July, the new Secretary of Labor, Eugene Scalia, took office on September 30th and is widely expected to work more collaboratively with employers.

After years of fighting about the salary level for exempt employees, the DOL finalized a new rule in September 2019 raising the current salary level for exempt white collar status from $23,660 per year to $35,568 annually. The new rule is effective Jan. 1, 2020.  Employers should take steps to implement that new rule by reviewing the classification of current exempt positions under the new $35,568 threshold.

The new salary rule also provides an opportunity for employers to evaluate non-exempt pay practices to ensure that the types of errors that resulted in $322 million in back pay do not exist in their own organizations. Common pay practice errors that can result in FLSA violations include failing to count all hours worked, failing to include bonus or incentive pay in calculating the regular and overtime rate, failing to pay for travel time, automatic meal break deductions, and rounding errors. As embedded pay practices, these errors can sometimes be overlooked for years, but can result in significant liability when they are discovered in a DOL audit.

Employers should consult with their employment attorneys for advice on the new salary level rule, compliant pay practices, and other steps to avoid wage/hour violations.

This article was written by Miriam L. Rosen, who is Chair of the Legal Affairs Committee of Detroit SHRM and Chair of the Labor and Employment Law Practice Group in the Bloomfield Hills office of McDonald Hopkins PLC, a full service law firm. She can be reached at mrosen@mcdonaldhopkins.com or at (248) 220-1342.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. October 2019.

EMPLOYEE’S ABUSE OF LEAVE DOOMS HIS FMLA CLAIMS

By: Carol G. Schley, Clark Hill PLC

A recent decision from the Sixth Circuit Court of Appeals affirms the importance of precise documentation and diligent monitoring by an employer when an employee takes FMLA leave.

In LaBelle v. Cleveland Cliffs, Inc., Kevin LaBelle worked as a quality-control lab technician, which required him to make repetitious motions while standing with his arms outstretched for up to 12 hours per day.  The employee also had avascular necrosis, which caused him to suffer constant pain in his shoulders.  In 2016, the employer granted Mr. LaBelle intermittent leave under the FMLA pursuant to a doctor’s certification that stated Mr. LaBelle “intermittently will have exacerbations that limit work,” and that he will need to miss work during “flare ups” that occur about once per month for three day periods.  Based upon the certification, the employer informed Mr. LaBelle that he could take intermittent FMLA leave for “up to four medical appointments per year and for monthly flare-ups, which could last up to three days per episode.”  The notice to Mr. LaBelle also confirmed that FMLA leave was “limited to the condition specified” in the medical certification.

The employer soon noticed a suspicious pattern.  Mr. LaBelle tended to take his intermittent FMLA leave in conjunction with other scheduled days off, weekends and vacation days.  The employer hired a private investigator who on two occasions recorded Mr. LaBelle playing golf when he was out on FMLA leave.  The employer conducted an internal hearing, at which Mr. LaBelle said his shoulders hurt every day, so he understood his intermittent leave could be taken at any time of his choosing.  He also admitted to playing golf when he was out on FMLA leave, but said that playing golf was much less aggravating to his shoulders than performing his job duties.  At the conclusion of the internal hearing, the employer determined that “if Mr. Labelle was experiencing a shoulder flare-up that prevented him from working, he would not be able to golf and that if he could golf he could work,” and terminated his employment.

Mr. LaBelle filed a lawsuit against the employer asserting FMLA interference and retaliation claims.  As support for his claims, Mr. LaBelle referenced internal emails discussing his absences from work, in which a manager referred to Mr. LaBelle as a “hot potato” and stated that he would “dearly love to get at least one of these slackers.”

The court held that Mr. LaBelle could not state a viable FMLA interference claim, as there was no dispute that he was granted FMLA leave by the employer, despite hostility to his absences as shown by the manager’s emails.  The court also granted summary judgment to the employer on Mr. LaBelle’s FMLA retaliation claim, as its decision to terminate him had a basis in fact.  Per the court:

Cliffs approved LaBelle’s request for intermittent FMLA leave for two reasons: (1) attending medical appointments and (2) taking three days off per month for a “flare-up.” Even crediting LaBelle’s explanation of why it was ok for him to golf, or why he “stacked” his leave, LaBelle did not take FMLA leave for “flare-ups” or medical appointments. He took FMLA leave because he was in constant pain and would take leave around vacations or weekends to give himself as much rest as possible. But occasional rest to alleviate low-level background pain is not what his FMLA leave was for… If LaBelle had constant pain that required occasional long weekends to mitigate, he should have requested FMLA leave for that purpose.

The key takeaway from this case is that accurate documentation and careful monitoring by an employer is a must when handling FMLA claims.  Here, the employer’s written notice to Mr. LaBelle describing the circumstances under which he could take FMLA leave tracked the doctor’s certification regarding his condition.  Because Mr. LaBelle’s time off was outside the authorized scope of his leave, the employer did not run afoul of the FMLA when it decided to terminate him.

Another takeaway from this case that has general applicability is to exercise prudence when putting things in writing (including emails) about an employee.  While the manager’s emails about getting “slackers” like Mr. LaBelle ultimately did not prevent the employer from prevailing, under other circumstances such statements can be fatal to an employer’s defenses, or at least be sufficient to prevent an employer from prevailing on summary judgment.

Carol G. Schley is a member of the Detroit SHRM Legal Affairs Committee and an attorney at the law firm Clark Hill PLC.  She can be reached at cschley@clarkhill.com or (248)530-6338.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article.  October 2019

 

Court Refuses to Enforce Shortened Limitations Period for Title VII Claims

 By: Carol G. Schley, Clark Hill PLC

 

Michigan courts have long recognized the enforceability of shortened statute of limitations provisions in employment-related documents, such as applications and employment agreements.  In general, these provisions significantly shorten the time period that applicants or employees would otherwise have under law to assert claims and file lawsuits against the employer.  Recently, however, the U.S. Sixth Circuit Court of Appeals held that shortened statute of limitations provisions are unenforceable for claims asserted in federal court under Title VII of the Civil Rights Act of 1964, which prohibits discrimination based upon race, color, religion, sex and national origin.

In Logan v. MGM Grand Detroit Casino, Barbrie Logan commenced employment with MGM in 2007.  As part of the hiring process, she signed an application that included a provision requiring her to bring any claims against MGM “no more than six (6) months after the date of the employment action that is the subject of the lawsuit.”  Ms. Logan subsequently resigned her employment on December 4, 2014, which she asserted was a constructive discharge.  She filed an EEOC charge 216 days later, alleging sex discrimination and retaliation in violation of Title VII, and the EEOC issued her a right to sue letter in November 2015.  On February 17, 2016, 440 days after she resigned her employment, Ms. Logan filed a lawsuit against MGM.  The trial court dismissed Ms. Logan’s claims on summary judgment, finding that they were barred by the 6 months limitations period in her employment application.  However, the Court of Appeals reversed and reinstated her claims, primarily relying on two grounds for its decision.

First, the court discussed the detailed enforcement scheme that is encompassed within Title VII, which includes: (i) a requirement that the claimant first file a charge with the EEOC before pursuing claims in court; (ii) specific deadlines for filing an EEOC charge (180 days or 300 days depending on the circumstances); (iii) a deadline for the EEOC to investigate the charge; and (iv) a deadline for the claimant to file a lawsuit once the EEOC issues a right to sue letter (90 days from receipt of the letter).  Further, the court noted that, unlike other federal statutes, Title VII does not only provide for damages to a claimant, but also requires the EEOC to investigate and mediate the dispute as a first step in an attempt to reach a resolution.  According to the court, “Any alterations to the statutory limitation period necessarily risk upsetting this delicate balance, removing the incentive of employers to cooperate with the EEOC, and encouraging litigation that gives short shrift to pre-suit investigation and potential resolution of disputes through the EEOC and analog state and local agencies.”

Second, the Court of Appeals held that Title VII was enacted in order to be “national in scope” and “required uniform enforcement.”  Per the court, allowing parties to contractually shorten the statute of limitations, and allowing courts to determine whether or not such provisions were enforceable based upon state law, would undermine these objectives.  While the court recognized that Michigan courts have enforced contractual provisions shortening the statute of limitations to six months in the employment context, “[i]t is not difficult to imagine, however, that in a different state courts could come to an opposite conclusion on this determination.  This is turn would give rise to the anomalous result that similarly situated plaintiffs in different states would have different rights in the enforcement of wholly federal claims in federal courts.”

What is the upshot of this case for employers?  Statute of limitations provisions that conflict with the time frames in Title VII will no longer be enforced for Title VII claims asserted in federal courts located within the Sixth Circuit (which includes Michigan, Ohio, Kentucky and Tennessee).  However, such provisions will still be recognized and enforced with respect to claims brought in Michigan state courts and may also still be enforced by federal courts for other types of claims.  Therefore, requiring applicants and employees to sign a shortened statute of limitations provision is still recommended, as they are generally an effective way to shorten the time period in which the employer can be sued for many types of claims.  However, employers who require applicants and employees to sign a shortened statute of limitations provision should have the provision reviewed by legal counsel to ensure it encompasses all applicable claims and has the best chance of surviving judicial scrutiny.

Carol G. Schley is a member of the Detroit SHRM Legal Affairs Committee and an attorney at the law firm Clark Hill PLC.  She can be reached at cschley@clarkhill.com or (248)530-6338.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article.  October 2019

DOL’s New FLSA Salary Level Rule effective January 1, 2020

 By:  Miriam L. Rosen

 

On Sept. 24, 2019, the U.S. Department of Labor (DOL) issued the final rule on the new salary threshold for white-collar exempt status employees under the Fair Labor Standard Act (FLSA). The new rule changes the current salary level for exempt employees from $23,660 per year to $35,568 annually. The new rule will be effective Jan. 1, 2020.

Components of the New FLSA Salary Level Rule

In announcing the new rule, the DOL noted the following key components:

  • The standard weekly salary level changes from $455 to $684 per week (equivalent to $35,568 per year for a full-year worker).
  • The total annual compensation level for “highly compensated employees (HCE)” changes from the current level of $100,000 to $107,432 per year.
  • Employers are permitted to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level.

Significantly, the new rule does not change the job duties test related to exempt status and does not require annual automatic adjustments to the salary threshold.

The final rule updates the salary level threshold for exempt executive, administrative, and  professional employees for the first time since 2004. With a salary level increase that most employers consider reasonable, this rule will likely go into effect with minimal fanfare, unlike the unsuccessful effort in 2016 to raise the salary level to $47,476 annually. The DOL has estimated that the new rule will result in an additional 1.2 million workers will be entitled to minimum wage and overtime pay as the likely result change in status from exempt to non-exempt.

Next Steps for Employers

With the Jan. 1, 2020 effective date on the horizon, employers should take steps to prepare:

Review positions currently classified as exempt from overtime pay. There are two aspects to this review – determine whether employees currently in exempt positions meet both the new minimum salary requirement and the duties test for an overtime exemption.

  • The salary test. The new regulations require that as of Jan. 1, 2020 an employee in a white collar exempt position must be paid at least $684 per week. If the weekly salary is below that level, an employer must take some action.

An employer has two options:

  1. Raise employees’ pay to meet the new salary level requirement to maintain exempt status; or
  2. Convert the employees to non-exempt status and pay the employees for overtime worked over 40 hours in a week. 

In making this decision, employers should consider a number of factors that include: the employee’s current pay, the hours regularly worked by the employee, and the employer’s ability to control or manage the hours worked.

  • The duties test. Remember, a position classified as exempt must meet the salary and the duties test. Employers should use this regulatory change as an opportunity to review the classification of all exempt positions, regardless of salary level. Positions that meet the exempt status duties test are not always clear cut and changes in responsibilities and technology can muddy the waters even further. This is an opportunity to review and fix misclassification errors.

Ensure that timekeeping procedures are in place. Once it is determined that some employees will be reclassified as non-exempt, ensure that procedures are in place to properly track hours worked for these employees. For many newly non-exempt employees who have not tracked time worked, this will be a significant – and unpopular – change. Employers must also address such timekeeping items as travel time, lunch and break time, after-hours emailing and texting, and other compensable time issues.

Review other policies and procedures. The reclassification of employees may also impact other employment policies such as time off benefits, telecommuting, flex-time, and incentive pay policies.

Prepare employee communications. It is critical to communicate these changes to employees in a clear and direct manner so that employees understand how their pay and hours will be affected. The communication should address timekeeping procedures and other policy issues. Newly non-exempt employees used to having workplace flexibility as exempt employees will need to understand requirements for timekeeping and getting approval for overtime work.

Employers should consult with their employment lawyers about the provisions of the new rule and use the next three months to prepare for the January 1, 2020 effective date.

This article was written by Miriam L. Rosen, who is Chair of the Legal Affairs Committee of Detroit SHRM and Chair of the Labor and Employment Law Practice Group in the Bloomfield Hills office of McDonald Hopkins PLC, a full service law firm. She can be reached at mrosen@mcdonaldhopkins.com or at (248) 220-1342.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. September 2019.

Lessons Learned – Part Three: The Oral Contract

By: Claudia D. Orr

 

This is the last article in my three part series called “Lessons Learned” pointing out the mistakes of others so we don’t step in the same messes. In the first article we discussed a case that showed how a no-fault attendance policy violated the Family and Medical Leave Act even though no points were assessed for taking such leave. The second article discussed just how expensive it can be when a human resources manager drops the ball and punitive damages are awarded in a Title VII case.

Today, we are going to look at the unsigned employment agreement in Rowe v Detroit School of Digital Technology, a recent unpublished opinion by the Michigan Court of Appeals.

In this case, plaintiff Christy Rowe had several discussions with Jamie Kothe about working for the school as the Director of Affiliate Affairs. Plaintiff contends that both she and Kothe agreed to an annual salary of $100K and an additional $1,000 per month for telephone and car allowance. Plaintiff drafted the agreement and provided it to Kothe. According to plaintiff, Kothe said it accurately reflected the terms that were agreed to verbally. However Kothe never signed it.

Although the contract remained unsigned, Rowe provided services to the school from November 7, 2016 through April 3, 2017. She received payments sporadically, including cash, for her work but received no compensation in February or March. That is when she submitted a letter to the school indicating it owed her over $26K in unpaid wages and phone/car supplemental pay.

According to Plaintiff, Kothe agreed the terms in the written contract were accurate, but didn’t sign it because she wanted her attorney to review it. According to Kothe, she declined to sign the agreement because she had not agreed to those terms and the school had only paid Plaintiff as an independent contractor for the work she performed and not as an employee.

The defendants moved for dismissal before discovery was conducted, which was granted. This is usually premature. Rowe appealed and the Court of Appeals reversed. Based on Plaintiff’s affidavit and text messages between her and Kothe referencing the job title and $100K, the court ruled that Plaintiff had a fair chance to uncover sufficient evidence during discovery to prove her claims, “notwithstanding the fact that the memorialization of that agreement was not signed by Kothe.”

There are several simple lessons in this case. First, don’t ever let someone start performing services for your company before the agreement (whatever it is) has both signatures. In addition, written communications during negotiations should indicate that, until the parties reach an agreement on all of the terms and reduce it to a writing signed by both, there is no enforceable agreement. Remember, in most situations, an oral agreement is enforceable. The fact that plaintiff performed services for several months may prove to be problematic for the defendant.

This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM) and an arbitrator with the American Arbitration Association. She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. September2019.

Lessons Learned – Part Two: Punitive Damages

By: Claudia D. Orr

 

I have been working on a three part series called “Lessons Learned.” The first article focused on a recent published case from the US Court of Appeals for the Sixth Circuit that held that a no-fault attendance policy violated the Family and Medical Leave Act. In case you missed it, there was a twist to the policy, so check it out. Points were not given for taking time off under FMLA as you may be thinking.

Today, we are going to learn from the mistake of a Human Resources Manager in a Title VII case that resulted in an award of punitive damages. To be clear, the Human Resources Manager did not discriminate or retaliate, he just dropped the ball.  Let’s look at the lengthy opinion from a high altitude so we can focus on just a couple of key points.

Hubbell v FedEx SmartPost, Inc. is another recently published opinion by the Sixth Circuit. The plaintiff worked for FedEx in Belleville from 2006 until the end of 2014. She had no discipline, several awards and certificates for excellent service and was promoted to a “lead” before getting a new “hub manager” in 2011. That’s when everything changed.

The new manager allegedly told plaintiff that she should accept/take a demotion “because ‘females are better suited to administrative roles and males are better suited to leadership roles.’” He also repeatedly disciplined her, had surveillance conducted to determine her bathroom usage, prohibited her from punching in early (although others did and they received “casual overtime” as a result), gave her poor performance reviews, demoted her and eventually fired her for supposedly leaving work early one day.

Along the way, plaintiff complained to human resources and thereafter filed a series of charges with the Equal Employment Opportunity Commission (EEOC). Eventually a civil lawsuit alleging sex discrimination and retaliation was filed. There was a trial and plaintiff was awarded $85,600 in front and back pay, $30,000 in non-economic damages (i.e., for emotional distress), $403,950 in punitive damages (which was reduced to $300,000 because it is capped under federal civil rights laws) and $157,733.75 in attorneys’ fees.

There were a lot of issues discussed in the appellate decision, including that, for retaliation claims, you only have to show employment actions, such as the surveillance, that would discourage an employee from exercising rights and not a materially adverse employment action as required for discrimination claims. Also, the appellate court noted that the temporal proximity, by itself, of issuing three disciplinary actions within two months of plaintiff’s first EEOC charge – one within 4 days – may be sufficient, by itself, to show the causal connection between the protected action and the retaliation.

However, what I found interesting was the discussion concerning the punitive damages because there are not that many cases involving these damages.

The court relied on the three part test in Kolstad v American Dental Assoc, 527 US 526 (1999), for determining the appropriateness of punitive damages. First, the plaintiff needs to show that the discrimination was perpetrated with malice or indifference to federal civil rights. Second, the plaintiff must show that the employer is liable because the person is a manager and acted within the scope of his employment. Third, if the plaintiff makes the requisite showing, the employer needs to demonstrate “good-faith” efforts to comply with the civil rights law to avoid punitive damages.

The company relied on an unpublished district court decision to argue that, without proof of “egregious” conduct, the award of punitive damages is improper. But the appellate court disagreed, saying that evidence of egregious conduct is but one means of satisfying the requisite proof of “malice or reckless indifference.”

The company pointed to its “implementation, promulgation, and training regarding anti-discrimination policies” to show the company did not act with malice or reckless disregard of employees’ federal rights. However, as the court explained, evidence of “malice or reckless indifference” focuses on the behavior of the individual who discriminated, not the company. Oddly enough, the fact that the company provided anti-discrimination training to managers actually supported the jury’s finding that the hub manager acted with malice or reckless disregard of federal civil rights. Moreover, implementing an anti-discrimination policy is not a shield in the Sixth Circuit to punitive damages.

A corporate Human Resources manager testified that if an employee had complained, her next step would have been to open an investigation. However, she also conceded that she did not know of any investigation or report by FedEx concerning any of the plaintiff’s complaints. FedEx attempted to argue that the plaintiff was simply relying on testimony from a witness who was unaware of the investigation.

It asserted that “[i]t is not accurate to say that FedEx never investigated, only that the HR Department did not.” The appellate court found this to be an implicit admission that the Human Resources Department had not investigated plaintiff’s complaints and found the suggestion that the legal department had conducted one to be unsupported by evidence. Thus, there was sufficient evidence to show that, despite its formal anti-discrimination policy, FedEx did not engage in good-faith efforts to comply with Title VII.”

Moreover, plaintiff testified that another “senior manager” from Human Resources had met with her to discuss her complaint of discrimination following the poor performance review and comment by the hub manager. However, she claimed the Human Resources Manager responded by saying “he preferred the term ‘favoritism’ to ‘discrimination’ because ‘discrimination’ was an ‘inflammatory word.’ Rather than addressing [plaintiff’s] concerns about discrimination, [he] told her that ‘maybe [she] just had a bad review, and to keep [her] head down, and let the managers do their job.’” Boom, the ball was dropped.

So, having a policy is obviously just the beginning of the good faith defense. An employer has to ensure that its managers are actually complying with it and that all complaints of discrimination are investigated, and the results documented. Finally, when an employee complains about sex discrimination, it is not sufficient to do what this human resources manager did – basically tell her to put on her big girl panties and sweep the complaint under the rug. Had the Human Resources Manager investigated, the treatment may have been halted and the employer could have avoided paying over a half million dollars to its former employee.

Next week, in the final article of the Lessons Learned series, I will tell you about the enforceability of an oral agreement and how to avoid a costly mistake facing an employer.

This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM) and an arbitrator with the American Arbitration Association. She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. September2019.

Lessons Learned – No-Fault Attendance Policies

By: Claudia D. Orr

 

This is the first article in a three part series called Lessons Learned. Each article will discuss the mistakes of others so we can avoid stepping in the same messes. Today we are going to review an employer’s no-fault attendance policy that violated the Family and Medical Leave Act (“FMLA”). I know you are thinking that a no-fault policy violating FMLA is nothing new. Well, true enough. However, read on because there is a twist in Dyer v Ventra Sandusky, LLC, a recent published opinion by the US Court of Appeals for the Sixth Circuit.

As is typical for no-fault policies, the Ohio automotive supplier didn’t require employees to produce a note from a doctor or other evidence to justify an absence. The employee just got between .5 and 1.5 points assessed depending on whether the employee called in, was late or missed an entire shift, etc. Discipline was imposed along the way and 11 points resulted in discharge.

But, unlike the no-fault systems you are familiar with, this one did not assess any points, at all, when the absence was protected under FMLA or another leave law. So, how did they run afoul of FMLA?  Glad you asked.

The system provided for the reduction of one point if the employee had perfect attendance for a rolling 30 day period. What a nightmare for tracking, right? I am guessing this had to be the brainchild of someone in operations, not Human Resources, because there is plenty enough to track already.

If an employee took time off for vacation, bereavement, jury duty, military duty, union leave or holidays, the company treated it as a day worked and kept the employee on track towards achieving the 30 day one point reduction. If an employee used a vacation day for a day off under FMLA, it also kept the employee on track for the reduction. So far, so good.

But employees were not required to use paid time off while taking FMLA leave. That turned out to be the rub (and no good deed ever goes unpunished). Most of my clients require the use of paid time off for FMLA leave either until it is exhausted or until the employee is down to a certain number of vacation days left. Of course even if the company required employees to drop vacation in during FMLA leave, it is unlikely any employee would have enough time to cover 12 weeks’ worth of days off. Eventually, the employee exhaust their time and the system would still run afoul of FMLA.

Because it was optional, plaintiff decided not to use his vacation time when he missed work for migraines which he had approved as intermittent leave under FMLA. Thus, every time he missed work for this reason, the “forgiveness” clock started over with “day one” of the requisite 30 day period needed to drop a point.

Eventually plaintiff was fired for having 11 points. So, while the no-fault system did not add points for FMLA time, it classified the unpaid leave as a missed day that reset the 30 day point dropping forgiveness clock.

The company argued that unpaid FMLA was treated the same as all other non-FMLA leave for purposes of the point reduction and therefore permissible. If the day off was paid, it counted as being worked. If it wasn’t paid, it didn’t.

The appellate court wasn’t buying it. Every time the plaintiff returned from a FMLA absence and had the no-fault clock reset to day one, he was denied the flexibility of the company’s no-fault system that others enjoyed. While the policy did not “formally hinge point reduction on not taking FMLA leave, the practical result is the same for someone like [plaintiff] who must take frequent intermittent FMLA leave.”

The problem was that “an employee benefit, the accrual of which, like the accrual of other benefits or seniority, must be available to an employee upon return from leave. … [B]enefits accrued at the time leave began…must be available to an employee upon return from leave.” Wiping out an attendance point is an employee benefit that affords employees the ability and flexibility to manage their absences. Plaintiff was denied this benefit when he returned from FMLA and started over with day one of the 30-day clock. Thus, the policy violated FMLA.

One lesson is this: keep it simple. It amazes me sometimes just how convoluted a client’s attendance system can become. But more importantly, review your system very carefully when you create it to ensure that there aren’t any negative effects on FMLA leave (or now the Michigan Paid Medical Leave Act).

Speaking of the Michigan Paid Medical Leave Act, we are still waiting for the Michigan Supreme Court’s decision on the constitutional challenge to that law. If you are contemplating changing your attendance or paid time off benefit systems, its best to wait for the court’s decision or you may need to change it again when the opinion comes out…hopefully soon. We of course will let you know when it does.

Next week in Part 2 of the Lessons Learned series I will tell you how a human resources manager dropped the ball and it cost his employer $300K in punitive damages!  You won’t want to miss that!

This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM) and an arbitrator with the American Arbitration Association. She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html

 Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. September 2019.