April 8, 2006
GM and ERISA Stock Drop Litigation
This story from The Auto Channel about GM's motion to dismiss being denied by a district court in Michigan in an ERISA fiduciary class action could not be more timely.
Yesterday, I participated in an Employee Benefits Symposium at the John Marshall Law School (which was excellent by the way) at which two management side attorneys spoke about the acute problem which is ERISA stock drop litigation.
Stock drop litigation occurs when a company stock loses value and drops in price and, as a result, the company's retirement funds which own sometimes substantial amount of company stocks (either through an employee stock ownership plan (ESOP) or an eligible individual account plan (EIAP), suffers significant losses too.
The allegation usually in such a stock drop case is that the officers of the company, who were also fiduciaries for the plan, had a fiduciary obligation to disclose certain material information about the company to the plan so that it would not continue its imprudent investment strategy of investing in the company.
These cases put companies like GM in a difficult position because on the one hand they must comply with securities law with regard to disclosure of material nonpublic information and, on the other hand, as ERISA fiduciaries must act in the best interests of the participants and beneficiaries of the plan under ERISA.
Consistent with the prediction of the conference speakers yesterday, companies are generally unsuccessful winning motions to dismiss in such cases. This is because there are just too many unknowns: from whether the relevant company officials were acting as fiduciaries to the plan in such circumstances to whether they had an affirmative obligation to disclose the pertinent information under ERISA's fiduciary provisions.
It will be interesting to see if yesterday's speakers are also accurate in predicting that once one of these cases makes it by the motion to dismiss stage, the case will inevitably settle on terms favorable to the plaintiffs.
This might be so, but the larger issue that lurks is how to reconcile conflicting securities and employee benefit laws in this area and how to prevent D&O and fiduciary insurance from becoming so expensive that no one wants to be a plan fiduciary for ERISA purposes anymore.
It's Not Easy Being A Witch
An employee with a bus company for a Minnesota school district alleges that she was fired for being a witch with pagan religious beliefs. Of course, it didn't help that her former companion, who was running for governor as a vampire, had a platform of improving education, giving tax breaks to farmers, and publicly impaling terrorists, rapists and drug dealers (I had previously posted about this story here).
There is actually an interesting employment law question lurking in this case. Julie Carpenter, the former companion of the vampire, claims she was fired for impermissible religious reasons because of her pagan beliefs. The school district points out that she was not an employee of the school district, but of the bus company and thus, cannot be sued. However, Carpenter's attorney released a letter showing that the school district asked the bus company to release the bus driver because she was a bad role model for the kids.
If these allegations are true, it may be that Carpenter can sue the school district as a joint employer under Title VII if the school district exercised adequate control over the school distrcit, vampires and witches notwithstanding.
And as far as the substance of the allegation, my friend Steve Befort of the University of Minnesota Law School rightly points out in this Associated Press article (we law professors get involved in some weird stories): "It's one thing to say you're not a proper role model because you're a vampire or a witch, and another thing to say it's really based upon a religious belief."
Hat Tip: Wasted Blog
April 7, 2006
Hurricane Katrina and Wage & Hour Violations
Apparently, according to this article on HR.BLR.com, there has been much underpayment and non-payment of workers who have been assisting in the rebuilding of the Gulf Coast in the aftermath of Hurricane Katrina.
The Department of Labor's Wage and Hour Division has made clear that regardless of the less than ideal conditions in such areas, it intends to enforce federal wage and hour laws to the fullest extent of the law.
In this regard:
The U.S. Department of Labor has joined the U.S. Department of Justice's Hurricane Katrina Fraud Task Force, saying it will enable better coordination and prosecution of violations of wage and hour laws.
Part of the issue it seems is that, "many individuals working in the Gulf Coast region are recent immigrants with limited knowledge of workplace protections."
This is good news especially from an Administration which initially sought (albeit unsuccessfully) to suspend prevailing wage laws under the Davis-Bacon Act after the hurricane.
Federal Court in TN Orders Arbitration
In a case released yesterday, the U.S. District Court for the Western District of Tennessee ordered an employee to arbitration despite the employee's arguments that her arbitration agreement was (1) adhesive because she was not given an opportunity to read the agreement before she signed it, and (2) unenforceable because of the risk that substantial fees would be imposed on her. The court, however, nonetheless ordered arbitration because (1) under Tennessee law, a signatory to a contract is bound to that contract regardless of whether she read the contract; and (2) the arbitration agreement at issue appeared to require the employer to bear most of the arbitration costs.
Additionally, the employer had moved for summary judgment, arguing that the employee had failed to comply with a provision in the arbitration agreement requiring the employee to file for arbitration within 90 days of discharge. The court overruled the motion, finding that the issue was for the arbitrator to decide. "Although the court cannot conclude, as a matter of federal arbitration law, that the ninety (90) day time limit is per se unenforceable, there are a number of legal and equitable reasons why an arbitrator might decide not to enforce the limit on the facts of this case."
The case is Hardin v. Morningside of Jackson, L.L.C., No. 1:05-1286-T-AN (W.D. Tenn. March 24, 2006) (Westlaw subscription required).
Sperino On Why McDonnell-Douglas Is Not Justified
Sandra Sperino (Illinois) has posted a provocative article on SSRN entitled: Flying Without a Statutory Basis: Why McDonnell-Douglas is Not Justified by Any Statutory Construction Methodology.
From the abstract:
The McDonnell-Douglas three-part burden-shifting framework has come under increasing attack in recent years. While policy arguments in favor of eliminating the standard are important, one of the strongest arguments in favor if its demise, is that the standard was adopted without proper regard to the operative text, the legislative history, and the broad policies of Title VII.
This Article examines the McDonnell-Douglas framework through four leading models of statutory construction and concludes that a satisfactory statutory justification for the test is lacking. While it arguably may have been appropriate to justify this lapse in the past by claiming that the test was merely an evidentiary standard and could be created through the Supreme Court's supervisory authority without reference to normal principles of statutory construction, this argument is no longer compelling. In recent years, courts have begun to water down or eliminate McDonnell-Douglas' use as an evidentiary standard by juries, and, in the process, weakened the argument for its continued legitimacy.
This is sure to be an article that generates a lot of comment in the employment discrimination law community. You can download it here.
Hat Tip: Legal Theory Blog
"Sex-Fueled Office Banter": Never a Good Thing
Yesterday's New York Post reported (free registration required) on a story about a Morgan Stanley executive technology employee who claims that he was fired after discovering, among other things, an X-rated email exchange between two of his female bosses. He is suing the company for some $30 million dollars in damages.
According to the article:
In his most recent affidavit, [Arthur] Riel argued that his discovery of a series of X-rated e-mail chats between his boss, information technology director Moira Kilcoyne, and executive director Rora Tanaka, led to his firing 13 months later.
What's ironic about all this is that:
In the wake of the firm's $54 million settlement of sexual-discrimination claims in 2004, Riel said he was ordered to run keyword searches for sexually graphic terms.
Read on now at your risk:
In one e-mail obtained by The Post, dated July 7, 2004, Tanaka describes her admiration for the prowess of Italian men, whom she called "Italian Stallions." She also graphically described her boyfriend's physical attributes as "The Italian Sausage."
An earlier thread discussed the possibility of Tanaka and her boyfriend joining Kilcoyne and her husband, who also works in Morgan's IT department, to attend the Adult Video News porn movie awards in Las Vegas.
Doesn't happen often on this blog, but I am speechless on this one. Hat Tip: Scott Moss PS
Doesn't happen often on this blog, but I am speechless on this one.
Hat Tip: Scott Moss
April 6, 2006
Is Pregnancy Discrimination Increasing?
Last Friday, NBC Nightly News did a segment on how there appears to be an increasing trend of pregnancy discrimination in the workplace.
This is a trend to be very concerned about given the sheer size of the problem with nearly 70 million women working and 3/4 of them having children at one time or another in their lives.
A transcript of the story and video in Windows Media are available online, and includes appearances by Mary Jo O'Neill, an EEOC attorney in Phoenix; Jack Tuckner, a women's rights attorney; and a woman who was fired two weeks after she told her employer she was pregnant.
ABA President's Conference on the Employment of Lawyers with Disabilities
The EEOC and the ABA's Commission on Mental and Physical Disability Law are co-sponsoring a conference on the Employment of Lawyers with Disabilities in Washington D.C. on May 22-23, 2006. There is a truly astounding group of disability law-types speaking at this conference from both academia and practice.
According to the press release:
The conference represents an opportunity for law students, attorneys, and others in the legal profession to network with one another, exchange information and ideas, and join forces in order proactively to address the many issues surrounding the need to increase employment and advancement opportunities. As people come together both to strengthen dialog and to devise specific concrete next action steps, leaders from law schools, private firms of all sizes, the judicial system, government agencies at every level, and public interest organizations in communities of every size may better enjoy the benefit that comes from aggressively recruiting, hiring, and promoting qualified individuals with disabilities who possess the kind of talent that anyone would want, not because the person has a disability, but more accurately because these individuals —like those without disabilities— have much to offer.
If you would like to attend the conference or would like to find out more about it, you can contact Michael J. Stratton at (202) 662-1570 or reach him by email directly at email@example.com.
"Wicked as Two Left Shoes"
Suits in the Workplace has a post about a women who celebrated when her supervisor had a stroke after a routine hernia operation and then subsequently died. Apparently, a la Pat Robertson, the employee felt this was God's wrath against the stricken supervsior.
Here's what the employee had to say (in her incoherent manner):
Praise the Lord Gussey God is good all the time. And he is in the delivering business. My supervisor has been a thorn in my side from day one but God gave Paul a revelation that he wished that they were cut off that trouble you and sad to say but God gave her time after time to repent but she was wicked as two left shoes. She constantly mistreated and today's she's in the judgment.
When as a result of her celebratory attitude and statements she was fired for inappropriate conduct by her employer, she sued the company under Title VII for race and religious discrimination.
To its credit, the court granted summary judgment to the employer, finding that the employee was fired for celebrating the death of her former supervisor, and not because of her race or her religious beliefs.
The case is West v. Shands Hospital & Clinics, Inc., No. 1:02-cv-00087 (N.D. Fla. March 23, 2006) (Westlaw subscription required).
I have my own thoughts about who is wicked in this whole scenario.
April 5, 2006
Never Say Retire
A couple of months back, I supplied some Saturday employment law humor with a piece from The Onion about how people were dealing with difficult retirement issues by just never retiring.
Well, as they say, real life is stranger that fiction. Here is an actual story about a study done by the MetLife Mature Market Institute which indicates that, indeed, a significant number of workers never plan to retire.
According to the Reuters.com article:
One in five older working Americans say they will never retire, whether out of financial need or to stay active and engaged, according to a study released on Monday.
Those who plan to keep working include a fifth of older workers who will be able to collect retirement benefits and roughly the same number of workers who have no such benefits like pensions, according to the survey of 2,719 U.S. residents between 55 and 70.
The oldest workers were most likely to keep working to stay active and engaged and least likely to keep working out of financial necessity, the survey showed.
But 72 percent of the workers in the study aged 55 to 59 said they need the income to live on.
Very interesting. Most just assume that people want to live their "golden years" in retirement on perpetual vacations or on various golf courses, but clearly a good number people see working as a long-term health strategy.
EEOC to Focus on Systemic Discrimination
Making the fight against systemic discrimination an agency-wide top priority, the EEOC yesterday adopted recommendations from an internal task force report that the agency focus on investigating and litigating systemic cases.
The task force, led by Commissioner Leslie E. Silverman, defined systemic cases as "pattern or practice, policy and/or class cases where the alleged discrimination has a broad impact on an industry, profession, company, or geographic location."
"By implementing the Task Force's recommendations, the Commission is sharpening its focus on systemic discrimination," Commissioner Silverman said. "Our field offices should handle all systemic investigations and litigation. That's where we have our greatest resources and strengths, not to mention a proven track record. Field offices should partner and share expertise to maximize Commission resources. Headquarters' role should be to assist and support the field's systemic program."
Massachusetts Universal Health Care and ERISA Preemption
The Massachusetts House and Senate have overwhelmingly approved a bill that would require individuals to have health insurance. The new system would work through a combination of incentives and regulations and, according to the Associated Press:
[R]equires all residents to be insured beginning July 1, 2007, either by purchasing insurance directly or obtaining it through their employer.
The plan hinges in part on two key sections: the $295-per-employee business assessment and a so-called "individual mandate," requiring every citizen who can afford it to obtain health insurance or face increasing tax penalties.
Under the plan, the state would create a fund to provide health insurance to the poorest segments of society and then would require those who are employed to get health insurance through their employer. Employers actually have a choice under this "play or pay system": they can either provide health insurance or pay $295 an employee per year into a state fund which will provide health insurance coverage for those who are employed but whose employers do not provide coverage.
Of course, there is likely to be a legal challenge to this bill once it is signed into law under a theory of ERISA preeemption. Although at one point I opined that I thought whether this state law would be preempted by ERISA would depend on whether a plan was fully insured or self-insured, I now believe that the part of the Masschusetts law dealing with employer payments will be preempted regardless how the insurance plan is established.
This is because such a law that requires employers to play or pay is related to an employee benefit plan under Section 514(a) of ERISA in that it will impact how employers will administrate and operate their health plans and will potentially lead to the uniformity interests served by ERISA to be undermined. Thereafter, the law is not saved under the Savings Clause because the law is not specifically directed against entitles engaged in insurance as that language has been defined by the Supreme Court in Miller. Consequently, the Massachusetts law will probably not be saved from ERISA preemption.
Just my two cents and not that I favor this outcome, but this is the way it appears to me the ERISA analysis would come out.
Hernandez on Latino Inter-Ethnic Discrimination
Tanya Hernandez (Rutgers-Newark) has posted on the bepress Legal Repository: Latino Inter-Ethnic Discrimination and the "Diversity Defense."
From the abstract:
Thus far, scholars have not examined what that growing racial and ethnic diversity will mean in the individuated context of racial and ethnic discrimination claims. In other words, what will anti discrimination litigation look like when all the parties involved are non White but a racial hierarchy is alleged to exist nonetheless, and the plaintiffs are not necessarily interested in the group politics agenda of coalition building.
At the present time, the majority of inter ethnic employment discrimination claims that appear in the electronic databases of Westlaw and Lexis appear to be those in which Latinos are involved alternatively as victims and as agents of discrimination in the workplace. Latinos are thus the focus of this exploration of inter ethnic discrimination.
Examining the context of Latino bias may thus have much to tell us about the ability of legal actors to adequately recognize and articulate the harm of inter ethnic discrimination claims before a judiciary primarily steeped in an understanding of discrimination as solely a Black White phenomenon.
Furthermore, judges in these cases are inappropriately creating what this Article terms "the Diversity Defense" to discrimination allegations. The "Diversity Defense" describes the way in which legal actors view a racially "diverse" workplace as the equivalent of a racially harmonious workplace. This equivalence is implemented by viewing people of color as all the same, and overlooking the particular histories of racial animus within and across different ethnic groups. Section III therefore proposes that legal actors begin to address the particular litigation needs of inter ethnic claims through a theory of "functional racism." The Functional Racism Theory that the Article proposes is designed to enable decision makers to more effectively identify the occurrence of discrimination in inter ethnic contexts.
You can download this highly interesting and thought-provoking article here.
April 4, 2006
Member Kirsanow Podcast
Some of things he has to say about the current state of the American labor movement are truly unexpected in their optimistic tone. For example, Mr. Kirsanow believes that some meta-developments in the union-management context, including globalization and the increase use of technology in the workplace, have the potential to be favorable to revinvigorating the labor movement in this country. And far from being unhappy with a labor resurgence in this country, Kirsanow expresses his viewpoint that unions still have an important role to play in society.
And although many have discussed (and have railed against) the increased politicization of the NLRB during the Bush presidency, Kirsanow commented that although there are some controversial issues which go back and forth as the composition of the Board changes, by and large most cases decided by the Board are done so on an uncontroversial basis.
Indeed, this is the same conclusion I came to after studying about 850 NLRB decisions involving the inherently destructive standard of discrimination under Section 8(a)(3) (you can find my Florida State University Law Review article on that topic here).
In any event, the Kirsanow podcast can be found here and I think it has the potential of changing some people's mind about what type of Board Member he might be (although I am not that naive to believe it will change everyone's mind).
Cancer and the Prospective Employee
Here's an interesting post from The Cancer Blog about whether an individual recently diagnosed with cancer has an obligation to inform her prospective employer about her condition.
In the post, Dalene Entenmann concludes:
Simply put, if it does not affect your job performance, you are not required to tell a prospective employer about your cancer when applying for employment.
I think that's right, but the employer might find out about your condition whether you affirmatively tell them or not, as under the ADA an employer is permitted to require medical testing of conditionally hired individuals.
The crucial point, however, is that even though an employer can test a conditionally hired employee as much as they like, they will face a potential employment discrimination lawsuit if they do not hire the inidividual based on that test unless they can show that the diagnosed medicals condition does not permit the individual to perform the job in question.
In the final analysis, because employers might take into consideration impermissible considerations in denying someone a job such as whether a sick individual will cost them more as far as health insurance or require more time off under the FMLA (although, of course, they will never admit to taking these considerations into account), the sad truth is that the better practice in these instances is not to volunteer information about your medical condition.
Another Transit Strike
Taxi companies and carpooling groups reported an uptick in business as a Denver-area transit strike by bus drivers, train operators and mechanics entered its second day Tuesday.
The Regional Transportation District used private contractors to keep about 45 percent of its bus routes running Monday but closed light-rail operations and a shuttle service stretching along a downtown pedestrian mall.
What's interesting about this strike is that the union leadership of the transportation union agreed to a contract with the transportation authority, but 55% of the union members voted down the contract and decided to strike.
It does not appear that the strike is illegal per se the way it was under the Taylor Law in New York and "the state Labor Department has notified the union
that the strike would not jeopardize public safety and Gov. Bill Owens
has no plans to intervene, according to his spokesman, Dan Hopkins."
Uncertain Future for Striking NYU Grad Students
Inside Higher Ed has an update on the NYU Graduate Strike, which is now in its 16th week.
To date, NYU has not budged on its stance of refusing to bargain with the union that represents the graduate students. As you may recall, a recent NLRB decision had found that the students were not "employees" for purposes of Section 2(3) of the NLRA and therefore, did not have the same Section 7 rights to organize, collectively bargain, and engage in mutual aid and protection, as other employees do.
But to their credit, the graduate students are far from giving up the fight. Inside Higher Ed reports:
Many others, faced with losing their stipends, are back at work. The picket lines are smaller than they were last semester, but, with New York thawed from the winter, dozens of graduate students are back to marching in circles and beating drums in Greenwich Village, punctuated by the occasional honk of support. Graduate assistants on a number of other private institutions are watching closely to see which way the pendulum will swing for graduate student unions.
We also will be waiting to see how the pendulum will swing in the coming months and will update this story as developments warrant.
St. Antoine to Speak at St. Louis
Theodore J. St. Antoine will speak on Globalization and Workers' Rights on May 1 at St. Louis University School of Law's Center for Employment Law.
April 3, 2006
Sheepherders Wanted; Pay Bad, Living Conditions Worse
In the list of jobs immigrants perform that no U.S. citizen wants,
sheepherding must rank near the top. The 825 or so sheepherders who
work the nation's sheep farms -- mostly in California, Texas and
Wyoming -- are immigrants here on H-2A visas from Peru, Chile, Bolivia
and Mexico, according to the Western Range Association, an industry
Today's Washington Post has more on the plight on these forgotten laborers:
The seven sheepherders were eating lunch in a trailer with no toilet, heat or water, its leaky roof held down by a rope.
A lunch break, especially one together, was a rare event. But they were celebrating, sort of. Lambing season was ending. That's when the ewes give birth and the sheepherders who come to this country on three-year work visas put in their hardest 12- to 16-hour days, seven days a week.
Still, the sheepherders were steeling themselves for spring. From late March until fall, sheepherding is almost unbearably lonely. Each herder is driven deep into pastures far from town or even a paved road. For weeks on end, he sees no one but the boss, and rarely does he have a cellphone or radio.
Gee, and you thought working at Wal-Mart was bad.
More seriously, it is amazing that there are still workers in this country who must work under these inhumane conditions (91% don't have working toilets, some live in plywood trailers of 7 by 10 feet, and pay is infrequent at best).
State legislatures need to act to protect these workers and now.
Telecommute in the Nude, Anyone?
Apparently, a good number of workers do telecommute in the nude according to this survey reported on by the Jim Ware of the Future of Work Blog (through the UPI).
The survey by Insight Express and SonicWALL (how to do people come up with these survey ideas anyway?) found that:
About 39 percent of respondents of both sexes said they wear sweats while working from home, but 12 percent of males and 7 percent of females wear nothing at all, according to a survey of 941 remote and mobile workers worldwide.
As Jim points out, it is hard to know when these numbers are inflated and people are just claiming to engage in such behavior, but it is somewhat bizzare nonetheless.
And I'm not sure that I'm so comfortable with this aspect of the future of work.