Monday, October 27, 2014

Opening a door? Michigan's medical marijuana law and unemployment benefitsIn

In Braska v. Challenge Manufacturing Co.,  the Michigan court of appeals considered consolidated appeals concerning  whether an employee who, after using medical marijuana in accordance with Michigan's statute and who was discharged after testing positive on a drug test at work, could be denied unemployment benefits.  The court affirmed the circuit court cases which overturned the decisions of the Michigan Compensation Appellate Commission which had disqualified the employees from receiving benefits.

The court of appeals reviewed the immunity section of the statute which provides that a patient who possesses a card shall not be subject to penalty in any manner or denied any right or privilege including but not limited to civil penalty or disciplinary action by a business or occupational or professional licensing board for the use of medical marijuana in accordance with the statute.  There was no argument that the employees in question misused the medical marijuana and therefore, the issue focused on whether the denial of benefits was a penalty.

The panel reviewed a Michigan Supreme Court case which referenced a dictionary to define "penalty" and stated it was a punishment imposed for the violation of law or rule.  Since the word was modified by the phrase "in any manner," the Court held that immunity was to be given the broadest application and applies to both civil and criminal penalties. The court rejected the Department's argument that the employees were terminated for failing a drug test and not for marijuana use.  The panel stated that the employees would not have been failed but for the marijuana use.

The Department also argued that the 6th Circuit's decision in Casias v. Wal-Mart Stores, 695 F. 3d 428 (6th Cir. 2012) supported the argument that the statute did not apply to private employers.  Casias held that the immunity provision did not apply to the termination of an employee for using medical marijuana since the statute did not apply to private employers.

The panel noted that the Casias decision is not binding on the court and that the issue of whether the immunity clause applies in cases involving actions solely by private employers was not before it.  The denial of benefits involves state action and not employer conduct.  The panel emphasized that the only reason the employees tested positive was that they used medical marijuana; the denial of benefits was therefore a penalty.

Do employers need to be concerned about the validity of zero tolerance drug policies with testing as it pertains to employees who are covered by the statute?  The Michigan law is the result of a ballot initiative and no the product of the normal legislative process.  It was promoted by groups obviously in favor of the use of medical marijuana, and the immunity clause is broad.  Is termination for failing a drug test a "penalty" and isn't discharge a "disciplinary action by a business?"  After Casias, employers thought they were protected.  It is not as certain now, and the issue is likely to wind up before the Michigan Supreme Court.

Friday, October 24, 2014

Not your typical independent contractor case

The Michigan court of appeals does not frequently have the opportunity to review cases dealing with the issue of whether an individual is an independent contractor or an employee.  In Cole v. Bada Bing Club and Atlantis Lounge , the court reviewed the issue in, to say the least, an unusual fact setting.

The plaintiff was beaten in the basement of the Bada Bing Club by the club's manager and three other individuals.  He was taped to a chair; beaten and hit with a gun; and drilled through the hand with an electric drill.  The four men were convicted of criminal charges, and the plaintiff sought damages from Atlantis Lounge, the club's owner for vicarious liability for the manager's conduct and negligence is hiring and supervising the manager.  The trial court determined that the manager was an independent contractor and therefore the lounge could not be held liable.

The court of appeals affirmed the dismissal.  The court found that the manager hired and fired the employees; paid the expensed of the club; maintained financial records; and made decisions about the business.  The manager paid a set amount in rent each month to the Atlantis lounge to run the club and paid himself from any profits that were made.  The lounge owner came to the club once a week to collect rent and did not direct the manager's work activities or otherwise exercise control over the manager. The lounge's owner and the manager testified that they had a verbal agreement giving the manager control over the club.  Plaintiff did not produce any evidence to refute the defendants' facts.

On appeal, the plaintiff argued that the court should apply the economic realities test rather than the control test.  The court noted that the economic realities test applied to the determination of employee status in the context of administering social legislation such as workers' compensation.  The control test applies in tort actions to determine whether a defendant has exercised control over an individual so as to give rise to tort liability.  The right of control test considers who controls the work, the hours, the process, and the methods of work involved.  Where the emphasis is on the result and not the ability to control the method of work, the individual at issue is an independent contractor.  The court noted that the plaintiff had failed to identify any non-delegable duty on the part of the owner.

The ultimate moral of this case may well be to choose your evening activities wisely.

Thursday, October 16, 2014

Microsoft and protected concerted activity under the NLRA: A chilling effect?

Employers are now well aware that the NLRB is reviewing their policies, procedures, and employee handbooks to see if there is either a direct prohibition against employee conduct protected under § 7 of the NLRA or if there is a "chilling" effect on those rights.  Employers are also finding out just how expansive the scope of protected concerted activity is under the Obama Board.  Against this backdrop, Business Week posted an article concerning comments made by Microsoft's CEO concerning female employees asking for wage increases and whether the comments might violate the Act. 

The CEO stated,  It's really not asking about a raise, but knowing and having faith that the system will actually give you the right raises as you go along.  And that, I think, might be one of the additional superpowers that quite frankly women who don't ask for a raise have.  Because that's good karma.  It'll come back, because that is the kind of person that I want to trust.  That's the kind of person I want to really give more responsibility to.  The CEO subsequently apologize and retracted his statements, noting that he was completely wrong.

Former NLRB Chair Wilma Liebman was quoted in the article as saying the comments fall into a "contentious" area.  The comments could be the basis of an argument that if you ask for a wage raise, you are not going to be trusted and if you are not trusted, you might be in jeopardy.  The article noted the  differing views on whether action taken in response would constitute concerted activity.

Employers would do well to remember a decision in which  Chair Liebman participated.  In Parexel International LLC,  an employee was terminated after complaining to a supervisor that the company favored South African employees with respect to pay raises.  The supervisor asked the employee if the employee had discussed the issue with other employees, and the employee responded that she had not. She was fired a week later.  In a 2-1 decision, the Board found that the termination was a pre-emptive strike to prevent the employee from engaging in protected concerted activity.  The termination prevented the employee from addressing the issue in the workplace and had the effect of keeping other employees is the dark about these matters, thereby preventing them from inquiring further into perceived wage discrimination.

Would there be a basis for a claim, notwithstanding the retraction, that the CEO's comments constituted a pre-emptive strike as recognized by former Chair Liebman?  Under the Bush Board, such a claim would have little chance, but under the Obama Board, the comments might be viewed as chilling protected concerted activity of seeking wage increases.  The fact the NLRA's ramifications of the comments are being discussed at all is an indication that employer actions will be viewed through the filter of the broadened interpretation of protected concerted activity.

Tuesday, October 14, 2014

Jimmy John's and non compete agreements: Secrets of the sandwich?

The Huffington Post posted a story concerning Jimmy's Johns use of non compete agreements with its employees and the filing of a proposed class action challenging the agreements.  The non compete prohibits former employees from working within 2 years of employment for any business which derives more than 10% of its business from selling submarine, hero-type, deli-style, pita and/or wrapped or rolled sandwiches within 3 miles of any Jimmy John's location.  The breadth of the geographic scope in the Greater Detroit area can be seen by accessing the on line store finder and looking at the overlap of the stores.  A former Jimmy John's employee in the suburban Detroit area would be unable to work virtually anywhere in a large area north and west of the city.  In addition, a former employee may not work for any Jimmy John's for a 12 month period following termination for any reason.

Under Michigan law, an employer may obtain a non compete agreement which protects its reasonable competitive business interest provided it is reasonable with respect to its duration, geographical area, and type of employment or line of business.  It is difficult to imagine what it is that a non manager employee might possibly know that would warrant a 2 year non compete barring employment in the restaurant industry. Secret sauce?   Imagine a former employee inquiring during an employment interview whether 10% of the business comes from selling sandwiches in question and the reaction to the question.  An employer cannot prohibit the employee's use of general knowledge or skill.  Reasonableness takes into account  the status of the employee and the competitive risk to the employer's business.

Perhaps there is something that Jimmy John's employees are exposed to that would justify the non compete agreement.  It appears, however, that the agreement is simply not reasonable or, more importantly, needed to protect the business.  Many employers incorrectly view non compete agreements as a way of keeping a former employer from working in the particular business.

The story suggested that the agreement with the limited future employee opportunities would keep employees "from rocking the boat" like trying to unionize the company.  It is more likely that the agreement will serve as an incentive to bring a union in to balance the difference in power and to remove burdensome conditions of employment.  Employees may view their situation as one where it is easier to bring in a union than to live with the specter of being sued at a new employer.

Tuesday, October 7, 2014

EEOC and wellness programs: Looking for "just right."

The EEOC recently filed its second lawsuit  challenging an employer's wellness program under the ADA.  The suit coincided with comments made by Commissioner Lipnic at a law firm's client briefing.  Commissioner Lipnic is quoted as saying that she thought it would be difficult to come with "bright line" rules for wellness programs and that employers should not expect guidance anytime soon from the agency.

According to the Complaint filed by the EEOC in the second lawsuit, an employee who was unable to complete the biometric testing and health risk assessment required for a wellness program because of his hospitalization was refused the opportunity to complete the requirements upon his return to work.  The employee was notified by letter that his health insurance was terminated because of his failure to complete requirements and was offered the opportunity to apply for insurance at the COBRA premium rate.  The employee was unable to afford the cost, and his insurance was cancelled.

In the first case filed by the agency, the complaint alleged that an employee refused to participate in a program that required medical examinations and made disability related inquiries was required to pay the entire amount for her health benefits and was subsequently fired.  The suit alleges that the employee was fired in retaliation for her good faith objections to the program.

The EEOC appears to establishing policy by litigation.  In May of 2013, the EEOC held a public meeting to address wellness programs under federal equal employment opportunity law.  The press release issued concerning the meeting stated as its headline, Employer Wellness Programs Need Guidance to Avoid Discrimination.  Commissioner Lipnic was quoted in the press release saying that the use of wellness programs will present more questions with respect to the federal laws the agency enforces and "I believe we have a responsibility where possible to let stakeholders know the Commission's position on these important questions."

To date, the EEOC has not indicated that it is not "possible" to let stakeholders know its position; apparently, however, the difficulty expressed by Commissioner Lipnic means it is not possible.  If the EEOC is having difficulty, imagine what employers are facing.  Employers are the "Three bears" to the agency's "Goldilocks."  The only way to know with certainty if a wellness program would be valid under the ADA is to have the EEOC sample it by investigation and lawsuit.

So far, the EEOC has viewed the shifting of the entire cost of health insurance to employees who choose not participate as violating the ADA.  Terminating an employee for refusing to participate will be considered retaliation.  Employers must be aware the agency's focus is on the voluntary nature of any wellness program participation.  Without guidance from the EEOC, employers have to avoid penalties for employees who do not participate and hope that the EEOC finds their wellness programs to be "just right."

Monday, September 29, 2014

Direct evidence of age discrimination and the 6th Circuit

The 6th Circuit recently reviewed an appeal from the grant of summary judgment in an action where a principal of a high school alleged his contract was not renewed because of his age.  In Scheick v. Tecumseh Public Schools , the court reversed the summary judgment and reviewed the significance of three age related statements.

One statement allegedly made during an evaluation dealt the desire of the district that the plaintiff retire. Two other statements allegedly made by the superintendent addressed the desire to have someone younger in the position.  In granting summary judgment, the district court stated that there was no direct evidence of age discrimination.

The opinion considered the statements, and with respect to the retirement comment, the court stated that to find the statement to be direct evidence, the court would have to made a inference to conclude that the use of the word "retirement" was a proxy for age as opposed to either years of service or a desire that he leave the position voluntarily.  It found the statement was not direct evidence.

The court found that the statements about wanting someone younger were not ambiguous and represent direct references to age.  In the context of circumstances they were made, the court stated that it was clear it was the board that wanted a younger person. 

The EEOC filed an amicus brief and took the position that the presentation of direct evidence of age discrimination necessarily precluded the entry of summary judgment.  The court noted that this issue had not been addressed the Supreme Court in Gross v. FBL Financial Svcs., 557 U.S. 167, 177-78 (2009). (Age must be the but for cause of the employer's decision.)  The court rejected the EEOC's position.  Even when the direct evidence has been offered, the question to be asked is whether the evidence, taken as a whole is sufficient to permit a rational trier of fact to conclude that age was the "but for' cause of the decision.  The court stated that in this case, the evidence taken  in the light most favorable to the plaintiff is sufficient to permit a juror to conclude age was the "but for" cause.

Employers will continue to be faced with allegations of age based comments.  At least in the 6th Circuit, the EEOC's position that summary judgment cannot be granted be granted in light of presentation of direct evidence is not the law.

Wednesday, September 24, 2014

The EEOC and press releases...never mind.

The EEOC uses its press room page on its website to announce the filing of lawsuits and the settlement of cases.  So far in September, the agency has issued 12 press releases announcing settlements and 17 press releases announcing the filing of litigation.  What does the agency do when it falls far short of the statements made in a press release, and the employer prevails in the litigation?  Does the EEOC issue a press release commenting on the case?  Does the EEOC retract the original press release which is now inaccurate?  The answer of course is no.

Consider the agency's litigation against Kaplan Higher Education Corp.  The agency issued a press release dated 12/21/10 announcing that it was suing Kaplan for rejecting job applicants based on their credit history since at least 2008.  The press release went on to state that the practice had an unlawful discriminatory impact because of race and is neither job-related nor justified by business necessity.  This is pretty strong stuff for public consumption.

The litigation did not go as the agency had hoped, and its attempt to overturn summary judgment was met by language from the 6th Circuit seldom seen in appellate opinions.  The court noted that the EEOC used the practice it now challenged and "brought this case on the basis of a homemade methodology, crafted by the 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."  This is also pretty strong stuff from a court.

Being sued by the EEOC is a no small matter, and the time and cost of defense for employers is significant.  The audience that would have access to the 6th Circuit's decision is far smaller than the audience of the original press release.

  On its website in the section concerning its role, the EEOC states that its role in an investigation is to fairly and accurately assess the allegations in the charge and to then make a finding.  Since the EEOC publicizes the cases where it decides to sue based on its "investigation," shouldn't it also announce when its assessment was not accurate as determined by a court where it had already stated the employer had discriminated?