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Hot Tips in Employment Law 2013

By Harold M. Goldner

1. Score one for the employers.

The Supreme Court handed a stunning victory to employers everywhere when it held that claims of retaliation against those who had engaged in protected conduct under the anti-discrimination laws had to prove that “but for” their having engaged in such protected conduct, they would not have suffered the alleged retaliation. This “but for” analysis akin to traditional negligence concepts of proximate cause makes retaliation claims far more difficult to prove. Previously, if an employee showed that retaliatory motive was “one of” the reasons for the action, that employee could prevail on a retaliation claim, in what is better known as a “mixed motive case.”

While “mixed motive” remains a viable theory of liability for all protected classifications except age, it is now no longer viable in retaliation claims. University of Texas v. Nassar, 539 U.S. 244, 123 S.Ct. 2411, 156 L.Ed.2d 257 (2013).

Employment discrimination is insidious. It is almost always difficult if not impossible to show direct evidence of discriminatory intent. Mixed motive was one of the alternate theories that was designed to make that hurdle easier to handle. Deleting mixed motive from the retaliation quiver is more likely to lead to more retaliation as well as fewer claims.

I predict that Congress will respond to Justice Ginsburg’s spirited dissent calling for a legislative overrule, such as was done following the Lily Ledbetter case and gender-based wage discrimination, whenever it pulls its head out of its collective posterior and finally gets around to doing something other than repeatedly trying to repeal Obamacare.

2. Score two for the employers.

The second largest victory for employers in the recent Supreme Court term was the new restriction on what is meant by “supervisor” for purposes of Title VII harassment claims. You may recall that in the pair of cases known as Faragher/Ellerth from 1998, the Supreme Court held that an employer was strictly liable for a “supervisor’s” harassment where it failed to have a policy and procedure for employees to complaint about that supervisor’s boorish behavior.

In this term’s Vance v. Ball State, 133 S.Ct. 1619 (2013), Justice Alito writing for a 5-4 majority held that a supervisor is only one who “is empowered by the employer to take tangible employment actions against the victim.” As Justice Ginsburg noted in her dissent, Justice Alito’s opinion fundamentally “ignores the conditions under which members of the work force labor” by striking from the supervisory category “employees who control the day-to-day schedules and assignments of others.”

Employers may catch a break in the short term in such cases; but long term, I suspect that Plaintiffs and their lawyers will get better at identifying the real perpetrators of employer-endorsed harassment.

3. A new suspect classification.

The “classic” suspect classifications for purposes of anti-discrimination laws have always been: race, sex, age (over 40), national origin, and disability. These basic classifications are protected under Federal law and under state law, which adds a few things such as family status. Sexual orientation, gender identity and gender affinity are not protected classifications under Federal or State law however they are increasingly being treated as such under a growing number of county and township ordinances and laws. Philadelphia County, Bucks County, Allegheny County, Erie County to name just a few counties, Upper Merion Township, Cheltenham Township, East Norriton Township, Jenkintown Boro, Lansdowne Boro, and Lower Merion Township all have ordinances which protect people from discrimination based upon sexual orientation, gender affinity and gender identification.

And, oh, by the way, there is legislation introduced in both Harrisburg and Washington, DC that will also extend Federal and state protection on the basis of sexual orientation, gender affinity and gender identification. It may not pass this year, or even next year or the one after that, but it’s coming, and in many places it’s already here.

4. The NLRB is not broken, but Congress is trying hard to break it.

The D.C. circuit held in January of this year that President Obama’s three “recess appointments” to the NLRB were in violation of the Constitution’s limitations on recess appointments power and therefore overturned certain actions the Board had taken in the case involving the litigants. The NLRB has been a poor step-child of the executive branch for years (going back at least to George W. Bush’s first term), and the case is more about the extent of the recess appointment power of the President than the power of the NLRB.

This does not necessarily mean that everything the NLRB does is currently invalid. The case, for which the US Supreme Court has now granted certiorari, is more about recess appointments than about the power of the NLRB. Note, however, that all 3 recess appointees continue to hold their positions on the NLRB, and the NRLB’s official position is that it’s“business as usual” there.

By the way, the key criteria for recess appointments are that: (1) the Congress actually be “on recess;” (2) intrasession breaks don’t count as recesses; and (3) the vacancies must arise during the recess. How anyone can tell whether Congress is in session or on recess is another matter altogether. Canning v. NLRB, 705 F.3d 490 (D.C. Circuit 2013), cert. granted 2013 U.S. LEXIS 4876 (U.S., June 24, 2013).

5. Section Three of the Federal Defense of Marriage Act is invalid.

Section 3 of the Federal DOMA provided that “marriage” for all purposes under federal law, including the provision of federal benefits, was “only a legal union between one man and one woman as husband and wife.” (1 U.S.C. §7). It also defined “spouse” as “a person of the opposite sex who is a husband or a wife.” The Supreme Court held that this definition violates the 5th amendment’s guarantee of equal protection of the law as applied to persons of the same sex who are legally married under the laws of their state. U.S. v. Windsor, 133 S. Ct. 786, 184 L. Ed. 2d 527 (2013).

One common misconception is that the issue of recognition of marriages in one state by another state is a supremacy clause or “full faith and credit” issue. It’s not; there are many many cases which discuss just what is a “law or judgment” that is entitled to full faith and credit. The ultimate issue, whether sexual orientation, gender affinity or gender identification are protected classes under the equal protection clause for all purposes, has not yet come before the Supreme Court. But it will, and soon.

6. Wrongful Termination Liability Expanded.

Pennsylvania is an at will state. Any employee can be terminated at any time for a good reason, a bad reason, or no reason at all. However, when an employee is fired in violation of “public policy,” it may give rise to a claim of wrongful termination. Previously, “public policy” was thought to be only enunciations by the PA legislature or the United States Congress, i.e. a statutory enactment, such as the prohibition against firing someone for bringing a workers compensation claim (because there’s a workers compensation statute) or for attending jury duty (because there is a statute requiring one to obey a jury summons) AND that statute “must relate to the employer/employee relationship.” Recently, however, the Pennsylvania Superior Court held that “public policy” is not limited to public policies that only relate to the employer/employee relationship. While the wrongful termination claim in that case was dismissed, the court held that any termination that is “so obviously for against public health, safety, morals or welfare that there is virtual unanimity of opinion in regard to it” may support a claim for wrongful termination. Mikhail v. Pa. Org. for Women in Early Recovery, 2013 Pa. Super. 36, 63 A.3d 313 (2013).

7. Stupid Employer Mistake #1:

Just because an employer reports an employee’s income on an IRS Form 1099 does not mean that that individual isn’t an employee. The tax treatment of wages is only one of more than a dozen criteria used by the IRS, the courts and the government in classifying individuals as employees or independent contractors. For example, just review an IRS Form SS-8 which any individual can file for a ruling on whether that individual is an “employee” or an “independent contractor.” Other criteria include, but are not limited to: (1) amount of control exerted by employer; (2) whose tools are used; (3) where the work is done; (4) the freedom of the employee to “dictate their own place in the market;” (5) the essential nature of the employer’s business; and (6) whether there is actually a written agreement between the parties. See, for example, Nationwide Mutual Insurance Company v. Darden, 503 U.S. 318, 112 S.Ct. 1344, 117 L.Ed.2d 581 (1992).

8. Domestic workers and exemptions.

Right now, “domestic service workers in or about the private home of an employer” are exempt from overtime laws, but what about domestic service workers who are hired by agencies and sent to people’s private homes? This is a burgeoning area of litigation, and perilous territory for many employers. Bayada Nurses, who sent nurses to facilities and private homes to care for clients sought to avoid overtime payments claiming the “in home” exemption and was hammered by the Pennsylvania Supreme Court. This exemption was designed to exclude that person you hire for once a week or so to vacuum and dust from the wage and hour laws. But as governments look for additional payroll revenue at the same time the use of “leased” and “rented employees” expands, you can expect these types of exemptions to erode and vanish.

9. What kind of scrutiny?

Reviewing our Constitutional Law from the first year of law school, we are reminded that “strict scrutiny” is the most stringent standard of judicial review of governmental action by the courts. Strict scrutiny requires that the law or action be justified by a compelling government interest, the policy must be narrowly tailored to achieve that interest, and the law or policy must be the least restrictive means for achieving that interest.

In the most recent cases to challenge the use of affirmative action in academic admissions, the Supreme Court held that while race may have an appropriate but limited role in the admissions policies, the test of such policies is “strict scrutiny,” and that test was not properly applied by the trial court, and the matter was remanded. Generally, this means that government affirmative action policies remain viable, but will continue to be difficult to uphold. Fisher v. University of Texas, 570 U.S. 2013 (2013).

10. Let me give you a tip....

The minimum wage law applies to any employer who “suffers” an employee to work. Employers of tipped employees frequently get tripped up by the “tip credit,” thinking that by transferring the pressure of earning a tip to the employee they can avoid having to pay minimum wage. That is not the law, and Pennsylvania state laws and Federal law under the Fair Labor Standards Act are not always consistent. For any employee who earns more than $30 a month in tips, their employer is required to pay a minimum case hourly wage of $2.83. The most amount of tips that can be credited towards the hourly wage is $4.42. The minimum wage in PA is $7.25.

11. Make him stop....

Non-compete agreements must be supported by consideration (like any other contract). Offering a new position can be adequate consideration ONLY where the non-compete is executed at the beginning of employment and as a condition of employment. Where an employer seeks to impose a non-compete after hiring, continued employment alone is not adequate consideration to render the non-compete enforceable. The employer must offer new consideration, such as a bonus, better benefits, or other genuine consideration with the non-compete or it will be unenforceable.

12. I was just leaving....

While the Family and Medical Leave Act only extends to employers of more than 50 within a 75-mile radius, some municipalities, such as the City of Philadelphia, have enacted local leave laws. The Federal law provides that up to twelve weeks leave is extended to an employee of more than one year who themselves or an immediate family member has a serious health condition, is being deployed, or for maternity or paternity. The Philadelphia local ordinance provides that employers with more than 50 employees must extend up to eight weeks of leave to employees who are victims of sexual abuse or domestic violence. Employers of fewer than 50 must still provide up to 4 weeks such leave. That leave is concurrent with FMLA leave where the employee is also FMLA-eligible. 29 U.S.C. §2601 et sequitur; regulations at 29 C.F.R. §825 et sequitur. Philadelphia Code §9-1103. §9-3201.

Categories: Employment Law