Wednesday, April 16, 2014

One for the whistleblower

The Michigan Court of Appeals historically has not been a good place for plaintiffs who sue under Michigan's Whistleblowers' Protection Act.  When a decision goes in favor of a plaintiff, it is worth noting, even if the decision is per curiam and unreported.  In Williamson v. G & K Management, a panel upheld the lower court's denial of summary disposition and upheld a jury verdict in favor of the plaintiff.

The focus in the case was on whether the plaintiff had established that her discharge was causally connected to her protected activity.  The defendants did not contest that the plaintiff had engaged in protected activity and that her discharge would qualify as an adverse employment decision.

The defendants operated a nursing home which was investigated by the state because of two incidents.  While a number of employees participated in the investigation, plaintiff was one of two employees readily identifiable in the state report because they had no peers in the positions referenced by the investigators.  The plaintiff was terminated less than ten days after the report was issued by the state for allegedly failing to make sure that the proper size tracheotomy tube was in a resident's room.

The plaintiff's supervisor interrogated her during the investigation as to what she was telling the state investigators, and on one occasion, asked the plaintiff to lie about the existence of a written policy.  In a staff meeting, the supervisor stated that someone was leaking information to the state and looked directly at the plaintiff.  Plaintiff's department was the only one audited by the employer after the report was issued even though other departments were identified as having violations.  The state investigation had revealed no problems with the existence of back up ventilators which was the basis of her termination.

Plaintiff sought copies of daily audit checklists which she maintained would show there was no problem.  The checklists were not produced in discovery because they had been destroyed.  The defendants admitted that they did not review the checklists prior to making the decision to terminate the plaintiff.  The destruction of the checklists to a jury instruction dealing with the adverse inference that could be drawn from the destruction.

The panel stated that the trial court had correctly discerned the existence of several factual questions for the jury.  The evidence amassed in discovery supported the denial of summary disposition.  The panel found that the timing also supported an inference that the termination was causally related to the protected conduct which was coupled with the fact the employee handbook provided for the immediate suspension of employees who commit offenses for which termination upon the first offense is appropriate.  There was no suspension of the plaintiff.

Many of the cases which have come before the court only had temporal proximity of the protected conduct to the timing of the discharge to support the claim.  Here, as reviewed by the court, the facts supported an argument that plaintiff was singled out for scrutiny and ultimately discharged and that the information she  provided was adverse to the defendants' position.  The failure to treat the offense as one for which immediate termination was appropriate under the handbook undercut the defendants' position as to the severity of the offense.  The destruction of the checklists may well have been the final piece the jury needed.  The court's recitation of the facts provides a guide of how not to treat a whistleblower.  If the evidence supports the argument you singled out an employee who is a whistleblower, you are likely to be going to the jury.


Thursday, April 10, 2014

Do as I say...: The EEOC and credit checks

On October 10, 2010, the EEOC held a public hearing on the impact that the use of credit history has on employee selection and potential discrimination.  The press release  summarizing the hearing carried the by-line that some witnesses said the practice can have a disparate impact on minorities and is not predictive of job performance.

Fast forward to the 6th Circuit's decision in EEOC v. Kaplan Higher Education Corp.  The EEOC had filed suit based on its theory that the practice of reviewing credit history caused the company to screen out more African American applicants that white applicants which created a disparate impact in violation of Title VII.  The district court had granted summary judgment to Kaplan.

While the court's decision is 7 pages long, its first and last paragraphs are really all that need to be read.  In the first paragraph, the court notes that the EEOC is suing Kaplan "for using the same type of  background check that the EEOC itself uses."  The court quoted from the EEOC's handbook which states "{o}verdue just debts increase temptation to commit illegal or unethical acts as a means of gaining funds to meet financial obligations."  The court stated that Kaplan had the same concerns and runs credit checks for positions that provide access to student financial loan information.

With respect to the evidence in support of the EEOC's position, the court stated, The EEOC brought this case on the basis of a homemade methodology, crafted by a witness with no particular expertise to craft it, administered by persons with no particular expertise to administer it, tested by no one, and accepted only by the witness himself.   Summary judgment was affirmed.

Kaplan obtained a discovery order requiring the EEOC to produce its own hiring practices.  The court's view of the "do as I say, not as I do" approach is evident from its language.  One might expect the agency to issue a "stand down" order to review the bases for cases it has filed and plans to file.  One might also expect the agency to simply view this decision as one court's opinion and pursue its agenda with respect to use of credit history. 

Wednesday, April 9, 2014

Remembering an angel

This post steps away from the normal subject and honors the memory of a special little girl...Lacey Holsworth who lost her battle with neuroblastoma.  For those of you who are not aware of the special relationship she had with Adreian Payne of the MSU basketball team,  look at this story.  At a time when college athletics seems more like a business than sports, the story renews the faith of diehard college basketball fans.  Her courage serves as an inspiration beyond her short life.

Some day two words will never be linked together...childhood cancer.  Until that day, we try to do what we can to support the patients and families who have to deal with it.  Thoughts and prayers to Lacey's family and to Adreian Payne, who had already lost his mother and grandmother.  Their relationship and the joy given to Lacey helps bring some smiles to an otherwise sad day. 

Friday, April 4, 2014

NLRB: If you can't say something nice, it doesn't matter

For employers who have delayed reviewing their policies and procedures that pertain to employee conduct, especially those pertaining to negative comments and criticism, the NRLB's recent decision in Hills and Dales General Hospital should motivate those employers to act now.  At issue was the company's policy with respect to Values and Standard of Behavior.

Three provisions of the policy were challenged.  The first dealt with negative comments about fellow team members including co-workers and supervisors.  The second required employees to represent the employer in the community in a positive and professional manner in every opportunity.  The third stated that employees will not engage in or listen to negativity or gossip.  An ALJ found the provisions dealing with negativity and negative comments violated the Act in that they would reasonably be construed to prohibit Section 7 activity.  The ALJ found no violation with respect to the provision dealing with positive conduct in the community., 

The Board upheld the two violations and rejected the employer's argument that extrinsic evidence is required to show that a rule is overly broad and ambiguous by its terms.  The Board also rejected the argument that the involvement of employees in the developing the rules removes any impermissible ambiguity as to the meaning and purpose.  The Board stated that employee consent or acquiescence cannot validate an otherwise improper rule.  In any event, the record was unclear as to the extent of the employee involvement.

Contrary to the ALJ, found a violation in the provision dealing with conduct in the community.  The ALJ had relied upon a rule in another case.  The Board stated that in that case, the language did not include closely related unlawful provisions.  The phrase "positive and ethical manner" in the permissible rule would be construed much differently than the phrase at issue..."positive and professional manner."  According to the Board, the term "positive" has a significantly narrower scope of meaning than the same term coupled with the word "professional, which is a board and flexible concept as applied to employee behavior.

The Board's decision and its examination of specific phrases underscores that this Board will resolve questions as to vagueness and overly broad language consistent with its view that such language would cause employees to construe it as prohibiting Section 7 activity.  To the extent an employer feels compelled to address "negative" language, it should be prepared to offer specific examples that remove any doubt that the rule does not impact protected conduct under Section 7.

Monday, March 31, 2014

The expiration of a contract and its effect on an arbitration provision

In Huffman v. The Hilltop Companies, the 6th Circuit addressed an issue of first impression:  the application of the strong presumption in favor of arbitration in a post expiration setting when the arbitration clause is not listed in a survival clause.  The employer had individual employment contracts with its employees which contained an arbitration clause and a survival clause.  The survival clause did not list the arbitration clause.

The employer considered the employees to be independent contractors and did not pay them overtime.  The employees filed a class action in federal court.  The employer moved to dismiss and to compel arbitration on an individual basis because the agreement did not provide for class wide arbitration.  The district court held that the arbitration clause had no post expiration effect because the more specific survival clause excluding arbitration "trumps" the more general arbitration clause.  It did not reach the issue of the class wide arbitration.

The 6th circuit reversed.  The court stated that at the heart of the dispute is whether the strong presumption in favor of arbitration controls or whether the omission from the survival clause constitutes a clear implication that the parties intended the arbitration clause to expire with the agreement.  The court held that when the ambiguity in an agreement involves whether arbitration exists, the strong presumption in favor of arbitration applies instead of a presumption in favor of the employees. 

The court stated that the parties did not clearly intend for the survival clause to be exhaustive, noting that a non compete requirement of 12 months remained in effect but was also not listed.  The omission of the non compete clause "invites" ambiguity as to which of the additional provisions the parties believed should survive.  The court noted that neither the severability clause nor the integration clause were listed in the survival clause.  Since it is just as plausible that the parties meant for the arbitration clause to survive, that possibility coupled with the presumption in favor of arbitration supports the employer's position. The court also held that since the agreement did not mention class wide arbitration, the provision did not authorize it and that the employees must proceed on an individual basis. 

Obviously employers do not want to find themselves in a position where their arbitration agreement has to be saved by an appellate court.  The case is another example of the need to say what you want to say.

It is also interesting to note that had the employees decided to first go to the NLRB and to file an unfair labor practice charge before filing suit, it is likely that the NLRB would have found the arbitration provision to have violated the Act. 

Tuesday, March 25, 2014

The 6th Circuit and the materially adverse action

In Laster v. City of Kalamazoo, the 6th Circuit found that the district court erred in dismissing the plaintiff's retaliation claim but upheld the dismissal of the constructive discharge claim.  In its decision, the court reviewed the elements of a prima facie under each claim.  The plaintiff was a security officer who was African American.  He claimed that he was subjected to heightened scrutiny and selective enforcement of rules and regulations which forced him to quit..

The court stated that under the discrimination claim, a plaintiff must establish an adverse employment action.  An adverse employment action is marked by a significant change in employment status such as hiring, firing, or demotion or a significant change in benefits; it requires an official act of the company which is in most cases documented.  The court found that the evidence did not show that the defendants deliberately created intolerable working conditions with the intention of making him quit.

With respect to the retaliation claim, the court stated that the  plaintiff must establish that he was subjected to a materially adverse action.  The burden in a retaliation action is less onerous than in the discrimination context.  The plaintiff must show that a reasonable employee would have found the challenged action materially adverse in that it well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.  The court emphasized that context matters.  In other words, an act that would be immaterial in some contexts is material in others.  As a result of the more liberal definition, actions not materially adverse for the purposes of a discrimination claim may qualify as such in a retaliation claim.

The court noted that the plaintiff established for purposes of a prima facie case that he faced heightened scrutiny; received discipline for breaking selectively enforced policies; was disciplined more harshly than similarly situated peers; and was forced to attend a pre-termination hearing based on unfounded allegations of wrongdoing.  These actions may well have dissuaded a reasonable employee from making a charge of discrimination.  As  result, the court found that there a genuine issue of material fact whether the plaintiff was subject to materially adverse action based on his formal and informal complaints to human resources and the EEOC.

The court emphasized that the lower court must analyze the claims of discrimination and  retaliation separately since the element of each claim are distinct.  As employers have often been advised, the retaliation claim is the claim that often avoids summary judgment.   There will be more emphasis in discovery on the issue of conduct which may establish a materially adverse action.

Monday, March 17, 2014

"Protected class" and the 6th circuit

In Shazor v. Professional Transit Management, Inc.  , the 6th Circuit reversed an award of summary judgment and found that the plaintiff had presented sufficient circumstantial evidence of race and sex discrimination to go to trial.  Defendants had argued the plaintiff was terminated for lying to the board of directors.  One of the issues was whether the plaintiff had been replaced by someone outside the protected class.  The plaintiff was an African American female who was replaced by a Hispanic female.

The court indicated it did not have to review whether summary judgment was appropriate on plaintiff's direct evidence claim because it found plaintiff had presented circumstantial evidence to establish a prima facie case and rebutted the nondiscriminatory reason offered by the defendant.  The court stated that it was clear plaintiff was replaced by someone outside of her racial class.  With respect to the sex discrimination claim, the court noted that it could not be "untangled" from her race discrimination claim.  The two characteristics do not exist in isolation.  The court stated, "African American women are subjected to unique stereotypes that neither African American men nor white women must endure.(citation omitted)  And Title VII does not permit plaintiffs to fall between two stools when their claim rests on multiple protected grounds"  The court went on to state that if a female African American plaintiff establishes a prima facie case of discrimination, a defendant cannot undermine it by showing that white women and African American men received the same treatment.  The court stated, "The realities of the workplace, let alone Title VII, will not allow such an artificial approach."

The court rejected the defendants' argument that it was "unwieldy" to ask whether the plaintiff was replaced by someone outside of he class.  Defendants argued the standard should be whether similarly situated, non protected individuals were treated better.  The court disagreed.

The court considered the defendants' argument that they were still entitled to summary judgment because they had an honest belief that the plaintiff had lied to the board.  The court stated that the defense required reasonable reliance based on the specific facts before the employer when it made the decision.  The court noted that in the present case, the investigation consisted of speaking with one person.  One conversation did not establish sufficient particularized facts about the truth behind the plaintiff's statement, much less her motive.  As a result, defendants failed to establish a foundation for the defense to apply.

It will be interesting to see if the lower courts find other protected class combinations also face the unique stereotypes that the 6th Circuit recognized with African American women.  Attempts to defeat a prima facie case by arguing the replacement was not outside the protected class will now be more difficult where two bases for discrimination exist.  With respect to the "honest belief" defense, employers will need to establish more that a nominal investigation for the establishment of particularized facts.  One conversation is obviously not enough.