Agreement’s Requirement To Forego Claims Of Future Discriminatory Conduct May Constitute A Materially Adverse Action

In Lester v. O’Rourke, the United States District Court for the North District of Illinois held that Plaintiff is entitled to trial on his Title VII retaliation claim after he signed a Last Chance Agreement (“LCA”) that settled pending Title VII claims and also waived claims that might be asserted if the employer disciplined or terminated him.

Plaintiff, a sixty-year-old African American man who worked for the Department of Veterans Affairs, filed discrimination claims against his employer. After engaging in multiple unsuccessful mediation sessions, Defendant offered Plaintiff a choice between signing the LCA or losing his job.  Plaintiff ultimately signed the LCA.  Shortly after transferring to a new location pursuant to the LCA, Plaintiff was terminated for allegedly violating performance and conduct-related provisions of the LCA.

Plaintiff alleged that Defendant unlawfully retaliated against him in violation of Title VII of the Civil Rights Act. The Court denied Defendant’s motion for dismissal of Plaintiff’s retaliation claim.  Simply stated, a claimant cannot waive future claims (only settle past ones).  Moreover, the Court concluded that the LCA provision barring future claims constituted a materially adverse action because it “would dissuade a reasonable worker from engaging in protected activity.”  Therefore, the Court permitted the Plaintiff to continue pursuit of his Title VII retaliation claim.

Employers must be cautious in entering into an agreement that requires employees to forego claims of future discriminatory conduct. Settlement agreements are enforceable if they are knowingly and voluntarily executed and comply with other legal requirements.  Overly broad agreements, like the one in question, create their own legal exposures.

Pregnancy-Related Restroom Breaks May Be Protected Under ADA, and Not Title VII

Claiming that frequent restroom breaks were required by a pregnancy-related medical condition, a former employee’s claims were allowed to proceed under the Americans with Disability Act, but not Title VII.  In Wadley v. Kiddie Academy International, Inc., plaintiff alleged that the employer discriminated against her because of a pregnancy-related disability by discharging her for leaving a classroom “out of ratio” when she left to use the restroom.  Upon learning of her pregnancy, the worker advised the employer of her previous miscarriage due to frequent urinary tract infections and provided a doctor’s note stating she frequently would need to use the restroom.   During one work day, she was the only individual assigned to a room.  She asked for help so she could use the restroom.  Eventually, a co-worker came to offer coverage so  plaintiff could leave to use the restroom.  Despite that coverage “accommodation”, she was discharged for leaving the classroom “out of ratio” when she left to use the restroom.

Plaintiff filed suit under the ADA and Title VII, but her lawsuit was dismissed under Title VII since there was no showing that men were treated more favorably than this female plaintiff. However, under the ADA a contrary ruling was rendered even though the ADA generally provides that pregnancy is not a disability.  While the condition is not a covered one, related medical conditions may be subject to ADA protection said the trial court. Under many states’ and cities’ fair employment practices laws, a similar denial can be expected.  As such, employers should engage in the interactive process, and seek to provide reasonable accommodation, unless the requested accommodation clearly creates an undue hardship.

Epic Impact: Will the Federal Arbitration Act Preempt Prohibitions on Arbitration of Sexual Harassment Claims?

With the increased attention being paid to the #MeToo movement and the existence of federal law that provides capped remedies and permits mandatory arbitration of sexual harassment claims,, states and cities are enacting legislation to create greater legal rights for sexual harassment claimants  For example, New York recently enacted legislation that, among other things, prohibits enforcement of pre-dispute agreements mandating arbitration of sexual harassment claims.  In the wake of recent U.S. Supreme Court decision in Epic Systems Corp. v. Lewis, one might wonder: Is the prohibition of voluntary arbitration agreements preempted by the Federal Arbitration Act?

In Epic, the Court reiterated that the Federal Arbitration Act (“FAA”) was enacted in response to the reluctance of some courts to enforce pre-dispute arbitration agreements. In its ruling, the U.S. Supreme Court reiterated that it is recognized law that courts must “rigorously [] enforce arbitration agreements according to their terms, including terms that specify with whom the parties choose to arbitrate their disputes and the rules under which that arbitration will be conducted.”  With this in mind, it is unclear whether state legislation, such as the one passed in New York prohibiting arbitration agreements, would be preempted by the FAA.  In other words, it is possible that the federal FAA and long standing court precedent favoring arbitration might override state law attempts to bar parties from agreeing to arbitrate.

We expect that there will be litigation challenging the New York law (and legislation in other states), which will focus on the pre-emption issue, i.e., can a nonfederal law override the FAA? For that reason, we suggest that employers consider back-up contractual jury trials waivers (covenants that are dependent upon state law and state court rulings).

Washington Law Limits Employer’s Right to Plaintiff’s Medical Records in Discrimination Cases

Effective June 7, 2018, employers defending claims brought under Washington’s Law Against Discrimination are constricted in their ability to obtain a plaintiff’s medical records, and are entitled to do so only if the plaintiff: (1) alleges a specific diagnosable physical or psychiatric injury as a proximate result of the defendant’s alleged conduct; (2) relies on the records or testimony of a health care provider or expert to support a claim for damages; or, (3) alleges failure to accommodate a disability or discrimination based on disability.   Absent any of the above, the records will be considered privileged and not subject to disclosure.  Further, even if one of the exceptions does apply, the law limits the available disclosure only to records relating specifically to the diagnosable injury or disability specifically at issue in the litigation, and, unless the court finds “exceptional circumstances,” to records created in the two (2) year time period before the alleged unlawful conduct occurred.

This new Law will severely limit the ability to explore the plaintiff’s pre-existing medical and mental health conditions. Consequently, it will limit the ability of defense counsel to argue that other issues in the plaintiff’s life (as opposed to the employer’s actions) may be the reason for a diagnosed mental health condition.  Ultimately, without this information, juries likely would award a higher amount of compensatory damages.

New Maryland Law Prohibits Arbitration Agreements for Sexual Harassment Claims, Requires Reporting of Sexual Harassment Settlements

Recently, Maryland’s Governor signed the “Disclosing Sexual Harassment in the Workplace Act,” becoming the most recent state to enact tougher sexual harassment laws in the wake of the #MeToo movement.  The Act, which will go into effect on October 1, 2018, prohibits employers from including in any agreement, policy, or contract a provision that waives any “substantive or procedural right or remedy” for claims of sexual harassment or retaliation for reporting sexual harassment, effectively barring employers from requiring employees to arbitrate these claims.  The Act also prohibits employers from retaliating against any employee who refuses to enter into an agreement that contains such a waiver.

Moreover, Maryland employers with 50 or more employees will be required to file a report with the Maryland Commission on Civil Rights no later than July 1, 2020 (and again on July 1, 2022) listing: 1) the number of settlements made by the employer after an allegation of sexual harassment; 2) the number of times the employer has settled allegations of sexual harassment made against the same employee; and, 3) the number of settlements of sexual harassment that contained non-disclosure or confidentiality provisions.  The Commission will compile the data and make each employer’s specific submission (including employer identity) available for public inspection upon request.

Neutral Hiring Practices Can Still Result in a Valid Discrimination Claim

Under the theory of “disparate impact,” even facially neutral policies can result in claims of discrimination when a “protected group” suffers a statistical disadvantage vis a vis another group (i.e., the rule of thumb is a twenty-percent disadvantage).  For example, in Andreana v. Virginia Beach City of Public Schools, the United States District Court of the Eastern District of Virginia denied a motion to dismiss and ruled that Plaintiff could proceed with a claim of age discrimination by alleging that the employer’s hiring process brought down the average age of its Information Technology Specialists by about three years when employees had to reapply for their positions following a restructuring.  While enough to get by a motion for dismissal, the worker still must show that he was qualified for the remaining positions and that age motivated the denial of placement.

An Employee’s Workplace Asthma Attack May Trigger FMLA Protections

Many times, timing is everything (or nearly so).  For example, in Dighello v. Thurston Foods, Inc. (and unlike the Eleventh Circuit’s ruling in Bailey v. Oakwood Healthcare, Inc., about which we recently wrote), the trial court held that a plaintiff who was discharged shortly after suffering an asthma attack at work plausibly alleged an FMLA retaliation and interference claim. In Dighello, plaintiff worked as a router and dispatcher for a wholesale food service distributor. Her position required her to work 12.5 hour shifts without breaks.  After four years on the job, she became ill with walking pneumonia and was absent for two days.  Upon return,  she requested a reduced work schedule as an accommodation.  The employer refused, insisting that the full schedule be worked.  Shortly thereafter, plaintiff suffered a bronchial asthma attack while in the office and went to the hospital for emergency treatment. When she returned to work and was advised that she was required to work the full 12.5 hour work days. Several days later, and following her refusal to commit to the full schedule, the employee was discharged.

For purposes of the Plaintiff’s retaliation claim, the employer conceded all elements besides whether the plaintiff exercised rights protected by the FMLA.  The Court found that seeking emergency medical treatment could qualify as protected FMLA leave and thus the plaintiff sufficiently stated a retaliation claim.  As for her FMLA interference claim, the Court noted that an employer’s failure to notify an employee of her FMLA rights may constitute interference if the lack of notice causes the employee to forfeit FMLA leave. Here, the plaintiff’s allegations that her employer instructed her to work 12.5 hour shifts, even after her asthma attack, were sufficient to show that the employer’s instructions may have had a “chilling effect” or fully prevented the plaintiff from taking FMLA leave.  Thus, the court permitted the plaintiff’s FMLA interference claim to proceed with respect to her asthma condition.

Employers should be ever mindful of their duty to avoid interference with an employee’s FMLA rights. What qualifies as interference may be subject to challenge.  As this decision illustrates, even certain work related comments may discourage an employee from taking FMLA leave.

Employer’s FMLA Policy and Legitimate Business Reason Lead to Early Dismissal of Employee’s Claim

In Everson v. SCI Tennessee Funeral Services, LLC., the federal court granted summary judgment dismissing Plaintiff’s FMLA claims because the worker  failed to follow Defendant’s FMLA notice requirements when requesting leave.  As discussed below, Plaintiff’s ADA claim also was dismissed.

In this lawsuit,  Plaintiff alleged, among other things, that Defendant retaliated against him for requesting FMLA leave.   The fact pattern is a common one.  It began several years earlier when Plaintiff requested time off for a medical procedure. Subsequently, Plaintiff informed the employer that he was going to need to have another procedure and requested one week off from work, which Defendant also granted.  Two days later, Plaintiff, a funeral director, was fired for leaving an embalmed body at one of Defendant’s facilities without refrigeration in violation of Defendant’s policy.

In its summary judgment motion, the employer asserted that Plaintiff failed to properly give notice of his intent to take FMLA leave.  According to the Defendant’s FMLA policy, Plaintiff was required to contact the Leave and Disability Center to make a request for FMLA leave.  Plaintiff countered that he provided notice to his supervisor each time he took off for a procedure.  Here, the Court found that Plaintiff could not establish a prima facie case because Plaintiff did not follow the proper notice and requirements for taking FMLA leave that Defendant established and as permitted under federal regulations.  The ADA claim also was dismissed because Defendant articulated a legitimate, non-discriminatory basis for Plaintiff’s termination.

Employers should review their FMLA policies to be sure they are detailed and specific as they can create, within the bounds of regulations, detailed procedures that employees must follow. By doing so, employers may be able to limit liability for certain FMLA claims.   Nevertheless, management training is recommended to help supervisors identify notice and other obligations.

“Unfortunate” and “Clumsy” Termination Does Not Equal Discrimination

In Bailey v. Oakwood Healthcare, Inc., No. 17-2158 (April 23, 2018), the 11th Circuit found that an employer’s decision to terminate an employee on the day she returned from maternity leave was not discriminatory because during her leave, the employer discovered deficiencies in performance and falsifications in her employment application.  The decision in Bailey reinforces that taking a protected leave does not insulate an employee from termination for poor performance and other inappropriate conduct.  However,  it should also serve as reminder that the perceived unfairness associated with a termination so close in time to taking a protected leave may result in a lawsuit (and the headache that come with it).   In so ruling, the Circuit concluded that the timing of the employer’s termination of Bailey was “unfortunate” and that the “manner in which the decision was communicated was clumsy.” Still, the 11th Circuit found “no fault” in Oakwood’s decision to terminate Bailey and noted that the Court had “no authority to interfere in the private personnel management matters, however unwise or unfair they may appear to be.”

Employers should always be cautious when terminating an employee who has taken a protected leave (or engages in other protected activity).  Where an employer has a good reason for termination and that reason is supported by objective evidence, an employer may consider (carefully) terminating that employee.  Be mindful, however, that even with objective evidence – such as a falsified employment application in this case – the employer could still be liable for discrimination or retaliation if, for example, it knew of other employees who engaged in similar activity but terminated only the one who engaged in protected activity.

Class Action Waivers in Employment Arbitration Agreements Do Not Violate Federal Labor Law

After years of litigation across the country and sharply divided rulings among the Circuits (some damning class/collective action waivers and others enforcing them), and over seven months after oral argument, the United States Supreme Court upheld the enforceability of arbitration agreements that include class and collective action waivers.  It was a close decision, 5-4, like many key workplace law rulings.  The ruling can be read here.

Having an arbitration agreement with a broad waiver against multi-claimant litigation can play a significant role in reducing  risk and the cost of defending claims.  If an employer is sued by an employee, for example, the claims would be “transferred” from state or federal court to an arbitral forum.  In that arbitration, the scope of claims  would be limited to the single claimant (rather than facing a jury trial and claims brought in behalf of a class).  An agency (e.g., DOL, EEOC) could still pursue a claim on a systemic or class basis, but agency litigation is far less frequent than private litigation.  Clearly, a class waiver agreement (and the avoidance of jury trials in federal and state courts) could materially reduce exposure and possibly legal fees.  Other than in “rocket docket” Circuits, arbitrations tend to occur more quickly than court adjudications, thus reducing potential back pay and spurring claims toward resolution while memories are fresh and witnesses are more likely to be available.

Jackson Lewis was counsel in one of the consolidated cases where the lower court held the waivers enforceable (Fifth Circuit), which was affirmed by the Supreme Court.  The other Circuits (Seventh and Ninth) were reversed.

For a more detailed analysis of the Court’s decision click here.

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