2005 Year In Review

1. Employees May Maintain Age Discrimination Claims Based on Adverse Impact Theory (Smith v. Jackson, U.S. Supreme Court, 3/30/05): The U.S. Supreme Court opened the door to “disparate impact” claims under the ADEA. Disparate impact claims, those alleging a neutral policy disproportionately harms employees of one class, had previously been allowed only in race, sex, religion and national origin cases. In this case, the employer enacted a pay plan that granted a larger percentage raise to lower echelon employees for the purpose of bringing salaries in line with that of surrounding police forces. The Court held that employees need not prove the employer deliberately tried to discriminate against them because of their age under the ADEA, but that the employer’s policies disproportionately harmed them. However, while holding the employees had the right to bring the claim, the high court dismissed the suit, saying officers did not demonstrate the requisite disproportionate harm.

2. Time spent Donning and Doffing Required Protective Equipment and Travel to Work Site After Doing So Is Compensable Work Time (IBP, Inc v. Alvarez; Tum v. Barber Foods, U.S. Supreme Court, 11/8/2005): On November 8, 2005, the U.S. Supreme Court held that time spent by employees donning and doffing required protective gear and walking between changing and production areas is included within the definition of “workweek” and therefore compensable under the FLSA. The court held that donning and doffing required clothing and/or equipment that is “integral and indispensable” to employees’ work is a “principal activity” under the statute. In determining that the time spent walking to the production area is compensable time, the court equated this type of activity to time spent walking between two positions on an assembly line. However, the Court held that time spent waiting to don the first piece of gear qualified as a “preliminary” activity which is not necessarily “integral and indispensable” to a “principal activity”, and held that this time need not be counted as part of the employee’s workweek.

3. Failure of Employee to Cooperate with EEOC in Investigation of Discrimination Charge Barred Subsequent Court Lawsuit (Shikles v. Sprint/United Management Co., 10^th Cir., 2005): The EEOC had dismissed plaintiff’s administrative charge for failure to cooperate with the EEOC’s investigation. The plaintiff and his attorney failed to provide requested information, cancelled several scheduled interviews with EEOC personnel, and failed to return the EEOC investigator’s calls. The EEOC right to sue notice specifically stated that the plaintiff “failed to cooperate to the extent that it was not possible to resolve [his] charge.” The court dismissed the employee’s court claim of age discrimination because the employee’s refusal to cooperate with the EEOC during the charge process constituted a failure to exhaust his administrative remedies under the ADEA.

4. Non-pregnant Employee May Sue for Pregnancy Discrimination (Kocack v. Community Health Partners of Ohio, 6^th Cir. 2005): Former employee brought suit against prior employer, claiming she was not rehired because she had resigned from her full-time position two years prior because of pregnancy complications. Employee claimed that the employer asked questions regarding her future pregnancy plans and made comments that they did not want her rehired because of scheduling difficulties related to her previous pregnancy. The court rejected the employer’s argument that a plaintiff must show she was pregnant at the time of the alleged discriminatory action in order to make a prima facie case of pregnancy discrimination. The appeal court held that the Pregnancy Discrimination Act (PDA) prohibits discrimination against a woman “because of her capacity to become pregnant,” and concluded that the employee met the requirements to bring a case under the PDA because she had been pregnant in the past. (The court dismissed the case on other grounds.)

5. Job Application Provision Can Limit Statute of Limitations for Employment Claims (Thurman v. DaimlerChrysler, Inc., 6^th Cir. 2005): The Sixth Circuit Court of Appeals upheld the use of a clause within a job application that shortened the statute of limitations for employment claims brought by current and former employees. The job application contained the following statement:

I agree that any claims or lawsuits relating to my service with Chrysler Corporation or any of its subsidiaries must be filed no more and than six (6) months after the date of the employment action that is the subject of the claim or lawsuit. I waive any statute of limitations to the contrary.

The court determined that the contract provision was reasonable and provided the employee ample time to investigate her claim and file a claim for relief, if necessary.

6. Use of MMPI Personality Test in Violation of ADA (Karraker v. Rent-A-Center, 7^th Cir. 2005): The Seventh Circuit Court of Appeals held that an employer violated the Americans with Disabilities Act (ADA) when it administered the commonly used Minnesota Multiphasic Personality Inventory (MMPI) to employees seeking a promotion. The court ruled that the MMPI constituted a medical examination under the ADA, and the manner in which it administered the test violated the ADA.

7. Waiver of FMLA Rights Held Invalid (Taylor v. Progress Energy, Inc., 4^th Cir. 2005): After being terminated the plaintiff signed a general release and waiver of claims in return for $12,000. The plaintiff then filed a lawsuit which included a claim under the FMLA. The Fourth Circuit Court of Appeals reversed the dismissal of her FMLA claim holding that Department of Labor’s Regulation (29 CFR Section 825.220(d)) prohibits the waiver and release of FMLA claims without prior approval of either the Department of Labor or a court. The Fourth Circuit joins a growing trend of decisions of other federal appellate courts with this holding.

1. Employee’s Lawsuit Alleging Discriminatory Discharge Based on Disability (Drug Addiction) Barred by Last Chance Agreement (Partlow v. Blue Coral-Slick 5, 7/28/05, Cuyahoga County Court of Appeals): Employer did not violate ADA and Ohio disability laws by discharging a recovering alcoholic and drug addict for cocaine use. The plaintiff was terminated after being arrested and charged with cocaine possession, and testing positive for cocaine use. Prior to arrest, the employer and plaintiff had entered into a “return to work agreement” following plaintiff’s rehabilitation for alcoholism and drug abuse. The agreement provided that plaintiff would “abstain from the use of alcohol or any controlled substance as identified in the Company’s Drug and Alcohol Policy” and that “failure to adhere to all terms of this agreement will be cause for termination of my employment.” The termination was based on the plaintiff violating the return to work agreement, which was not a violation of the ADA or Ohio Revised Code.

2. Male Employee Was Not Discriminated Against When Disciplined for Romantic Relationship with Co-employee (Koski v. Willowood Care Center of Brunswick, Inc., 5/26/04, Medina County Court of Appeals): Male plaintiff brought a claim of sex discrimination when he was disciplined for entering into a relationship with a female co-worker (who he later married), which was a violation of the employer’s policy on interoffice relationships, and the female was not similarly disciplined. The court found that plaintiff failed to show that he was “similarly situated” to the female employee, as he was a supervisor and she was not, which the court found was a “meaningful distinction”.

3. Ohio Public Policy Grounds Expanded (White v. Sears, 9/27/05, Franklin County Court of Appeals): The court held that the accurate record keeping requirements found in Ohio’s Minimum Wage Standards Act and the Fair Labor Standards Act established a clear public policy requiring maintenance of accurate employee time records for purposes of establishing a wrongful discharge claim. While the court dismissed the lawsuit on other grounds, this case has expanded the scope of wrongful termination cases to specifically recognize the public policy of accurate record maintenance, making it more important that all employee record maintenance statutes are closely followed by employers.

Please note that the above holdings may be subject to review and reversal by the Ohio Supreme Court.

1. McCrone v. Bank One Corp. (12/28/05, Ohio Supreme Court): Ohio statutory exclusion of psychiatric-only injuries does not violate Equal Protection clause of Ohio Constitution.

2. Ward v. Kroger (7/27/05, Ohio Supreme Court): Claimant who appeals allowance issue to court may only seek to participate in the workers’ compensation fund for those conditions which were addressed in the Industrial Commission Administrative which is being appealed.

3. Arce, State ex rel. v. Industrial Commission (3/2/05, Ohio Supreme Court): In a VSSR claim, if the machine at issue is an “installation or construction”, the safety code that governs is the one in effect at the time machine was placed in service rather than the code in effect at the time of injury; a machine of a large size and weight with no mobility and set for use in specific location is an “installation or construction”.

4. SBC/Ameritech State ex rel. v. Industrial Commission (9/27/05, Franklin County Court of Appeals): Self-insured employer who approved surgery and began paying TTD related to same may not later have that TTD vacated as due to non-allowed conditions.

5. R.C. Section 4123.90 Workers’ Compensation Claim May Be Waived Despite Language of R.C. 4123.80 (Schramm v. Appleton Papers, Inc., 7/15/05, Greene County Court of Appeals): An employee argued that the agreement she signed at the time of her termination waiving claims related to her employment or separation from employment did not preclude her from subsequently filing a workers’ compensation retaliation lawsuit under R.C. Section 4123.90 because R.C. Section 4123.80 prohibits the waiver of workers’ compensation claims. The court rejected this argument and, in granting summary judgment for the company, held that R.C. Section 4123.80 only prohibits the waiver of workers’ compensation benefit claims, not discrimination or retaliation claims.

6. 180-day Statute of Limitations Period for Workers’ Compensation Retaliation Claim Begins to Run on the Date of the Termination (Butler v. Cleveland Christian Home, 8/25/05, Cuyahoga County Court of Appeals): Employee’s R.C. Section 4123.90 claim was dismissed where the employee failed to file suit within 180 days of her termination – 180 day timeline starts as of date of termination, not date of receipt of termination letter.

7. Coolidge Update: In Coolidge v. Riverdale Local School Dist., the Ohio Supreme Court ruled that an employee receiving temporary total disability (TTD) compensation under Ohio’s workers’ compensation statute may not be discharged solely on the basis of absenteeism or inability to work, when the absence or inability to work is directly related to an allowed condition. In the two (2) years since this decision, two Ohio Courts of Appeal have issued the following opinions applying Coolidge that provide employers with additional guidance:

Brooks v. Qualchoice, Inc., (9/29/05, Cuyahoga County Court of Appeals): Employee’s termination was not in violation of 4123.90 as employee was not receiving TTD at the time of termination; Coolidge court did not create a new public policy cause of action but, rather, expanded the type of action that constitutes retaliation under R.C. 4123.90 to include termination for absenteeism while on TTD.

King v. E.A. Berg & Sons, Inc., (12/15/03, Trumbull County Court of Appeals): Employer discharged an employee based upon her inability to perform her former job (with or with without reasonable accommodation) due to restrictions resulting from a work-related injury. The court found King’s case to be factually distinguishable from Coolidge because King’s case dealt with her inability to do the available work as a result of her injury and not because of absenteeism as in the Coolidge case.

1. FACT Act - New Regulations Regarding Record Destruction: In June, 2005, a provision of the Fair and Accurate Credit Transactions (FACT) Act became effective which directly affects employers who utilize consumer reporting companies (third parties) to conduct background checks or similar investigations on applicants or employees.

In an effort to reduce the risk of identity theft that could occur with the improper disposal of certain employee information, such as background and/or credit checks, the FACT Act now requires employers to properly destroy “consumer information” before discarding it. The Act does not require any set schedule of retention or destruction, but instead sets specific guidelines for the method of their destruction.

For the purposes of the Act, “consumer information” is defined as, “any record about an individual, whether in paper, electronic, or other form that is a consumer report (also known as a credit report) or is derived from a consumer report” that can identify the person individually. Only information that is received by a “consumer reporting company”, i.e. a third party used to conduct background checks on applicants or employees, is “consumer information”. Identifying information includes, but is not limited to, a person’s name, social security number, driver’s license number, and mailing address. Employers who receive “consumer information” on applicants or employees must take “reasonable measures to protect against unauthorized access to or use of the information in connection with its disposal.”

While the Act does not set forth specific methods for destruction, suggested methods include shredding or burning paper documents. Documents created and/or stored electronically also fall under the Act, and must also be properly destroyed. Employers can be held liable for actual damages suffered by employees whose identities are stolen as a result of improper record destruction. Employers may also be fined up to $2,500 per employee.

Employers should develop and follow record retention and destruction policies to ensure proper compliance with the FACT Act.

2. Wage and Hour Opinion Letter: Employer May Require Employee to Produce a New Certification Upon Beginning of New Leave Year (Wage and Hour Opinion Letter, 9/14/05): The Department of Labor (DOL) determined that an employer may require an employee to submit a new medical certification upon the first absence in a new 12-month leave year regardless of whether the employee had previously submitted a medical certification and recertification in the previous 12-month leave year. This is good news for employers in managing FMLA leaves particularly in cases where the employee is certified as having a chronic condition and submits an FMLA certification for sporadic unforeseeable absences. Until this DOL determination, the employer was limited to requesting and accepting re-certifications only. The significance of obtaining a new certification is that the employer may request a second and third medical certification in accordance with the FMLA regulations if the employer has reason to doubt the validity of the certification.

Don’t forget that the U.S. Citizenship and Immigration Services (USCIS) has mandated that the newly revised and released I-9 form be used by employers no later than January 1, 2006. You can find this form at: uscis.gov/graphics/formsfee/forms/i-9.htm.

Proper training of your supervisors and managers is an effective way to prevent various employment issues and also provide defenses if lawsuits arise. If your managers and supervisors haven’t been to training in any of the following areas in the past 12-24 months, make training part of your 2006 “to-do” list:

Consistent policy communication is another effective way to head off potential employment lawsuits or bolster the company’s defense of employment claims. Employee handbooks should be reviewed on an annual basis to ensure they are current and up-to-date. Make sure all employees have received the most recent employee handbook and have a signed receipt/acknowledgement form in their personnel file. Certain policies, such as injury reporting and anti-harassment/discrimination policies should be re-issued on a regular basis. Also consider company-wide training of all employees on policies and procedures.

Like the new I-9 mentioned above, forms and postings used by government agencies are constantly being revised and updated. Below are links to several agencies that have recently issued new or revised documents. Check the forms and postings you are currently using to make sure you have the most up to date version:

If you have any questions about the content of this alert letter or any other labor and employment question, please contact any member of the Wegman, Hessler & Vanderburg's Labor & Employment Group.

WHV Labor and Employment Law Client Alerts are intended as a report on developments in labor and employment law and are not intended to provide legal advice. The resolution of legal issues depends on the specific facts of each circumstance and the applicable laws.