On March 1, 2011, the United States Supreme Court again increased employers’ exposure to employment discrimination claims. In Staub v. Proctor Hospital, 562 U.S. ___ (2011) (pdf), the unanimous Court concluded that employers may be held liable for unlawful discrimination if a lower level supervisor influences an adverse employment decision, even if the decision is ultimately made by an independent manager. The theory that an employer may be liable when it relies on facts supplied by a biased supervisor when making an adverse employment decision is known as the "cat’s paw" theory.

Staub claimed that Proctor Hospital’s Human Resources (HR) Manager relied on facts supplied by Staub’s supervisors, who were acting with anti-military animus in violation of the Uniform Services Employment and Reemployment Rights Act (USERRA), when the HR Manager terminated him. Staub admitted that the HR Manager did not have anti-military animus, but claimed that the facts provided by his supervisors were false, and that his supervisors provided the false facts because the supervisors wanted him fired because of his military Reserve obligations.

The focus of the Court’s decision was whether the supervisors’ anti-military animus was "a motivating factor in the employer’s action," in violation of the USERRA. Importantly, and unfortunately for employers, the Court pointed out that the "motivating factor" language from the USERRA is also found in Title VII of the Civil Rights Act. Therefore, it is clear that the "cat’s paw" theory is viable under Title VII.

The Court found that the actions of the supervisors, and the independent actions of the HR Manager, could be aggregated to produce a discriminatory employment action. Because the supervisors were agents of the Hospital, their actions could be imputed to the Hospital. If supervisors are motivated by unlawful discrimination, intend to cause the adverse action, and the intended action actually occurs, then the employer will be liable because the supervisors were acting on behalf of the employer. The decision leaves open the question of whether or not an employer may be held liable if an employment decision is influenced by non-supervisory coworkers.

The Court’s "cat’s paw" theory requires a showing that: (1) a supervisor; (2) acting within the scope of his or her employment; (3) performed an act that was motivated by discrimination; (4) which was intended by the supervisor to cause an adverse employment action; and (5) the act was a proximate cause of the adverse employment action. If such a showing is made, then the employer may be liable for discrimination.

The cat’s paw theory seems strikingly expansive, because the proximate cause element of the theory could expose employers to liability in extremely attenuated circumstances. Therefore, employers must take action now to brace for claims involving the cat’s paw theory. First, employers should ensure that their discrimination and harassment policies and procedures are up-to-date, and that they contain adequate reporting mechanisms. All employees must be made aware of the available discrimination reporting procedures.  In addition, these procedures should not require that employees first make reports of discrimination to their immediate supervisors. Please click here to view our prior post on this issue.

Also, if and when an employee reports discrimination, the employer must conduct a thorough investigation and take appropriate action. Employers considering terminating an employee should also conduct a thorough investigation and should attempt to establish the relevant facts independently if possible.  This is true particularly if there have been allegations of discrimination raised against the employee’s supervisor before or during the termination process.
 

On January 19, 2011, a three judge panel of the Superior Court of Pennsylvania recognized another exception to the at-will employment doctrine. In Haun v. Community Health Systems (pdf), the court affirmed the trial court’s order, which recognized a new exception to the at will rule, and refused to dismiss the wrongful termination claim of a former hospital employee. 

The at will employment rule basically provides that, absent an employment contract that provides otherwise, either the employee or the employer may terminate the employment relationship at any time and for any reason. However, over the years, the courts have created numerous exceptions to the rule that have greatly limited the ability of employers to terminate employees.

Haun, the former Chief Financial Officer of the hospital, filed suit against the hospital and other defendants after he was fired for bringing a medical malpractice claim against the hospital. Haun and his wife brought the malpractice claim on behalf of their newborn son who was seriously injured while in the hospital’s neonatal intensive care unit.

The Superior Court adopted wholesale the trial court’s decision regarding the wrongful termination claim without analysis. The trial court stated that there had been no prior determination that there is an exception to the at will employment rule that would bar termination of an employee who is suing an employer to protect the rights of his or her child. Nonetheless, the trial court went on to state that public policy supports allowing victims to receive compensation for medical malpractice, and supports parents asserting legal claims on behalf of their children. Therefore, the court found that Haun’s claims met the public policy exception to the at will rule, and the claims were not dismissed.

There was some good news for employers. While the Superior Court recognized a new public policy exception to the at will employment rule, the court rejected Haun’s tortious interference with contractual relations claim, which was brought against the hospital’s corporate parents. The court held that an at will employee cannot sue a third party for tortious interference with a currently existing at will employment relationship.

The recognition of another exception to the at will rule adds to the growing list of such exceptions. As recently as January 17, 2011, we reported that a federal court, the District Court for the Western District of Pennsylvania, had recognized another new exception to the at will rule. Employers faced with the need to discharge an employee must be aware of the growing list of exceptions to the at will rule to ensure that the discharge will withstand challenge. 
 

On November 11, 2010, we reported that the Hartford, CT Regional Office of the National Labor Relations Board (NLRB) issued a Complaint alleging that an employer illegally terminated an employee who mocked her supervisor on her personal Facebook page. Our post can be viewed by clicking here.

On February 7, 2011, the NLRB announced that it had settled the Complaint with the employer. Importantly, under the settlement, the employer agreed to revise its Internet posting policy, which the NLRB had alleged was overly broad and improperly restricted employees from discussing their wages, hours and working conditions with co-workers and others while not at work.

While this settlement was reached at the "Complaint" stage and did not established NLRB precedent, the Complaint itself is clearly an indication of how the NLRB views employees’ use of social media. Therefore, all employers, both unionized and non-union, should review and consider revising their electronic resources and Internet postings policies to ensure that those policies would not be viewed as overly broad or overly restrictive if challenged. 

This post was contributed by Anthony D. Dick, Esq., an Associate and a member of McNees Wallace & Nurick LLC’s Labor and Employment Practice Group in Columbus, Ohio.

The number of retaliation-based charges of discrimination filed with the Equal Employment Opportunity Commission (the “EEOC") has doubled from approximately 18,000 to 36,000 in the last ten years.  Last week, the United States Supreme Court issued a decision that surely will cause this trend to continue.  In a unanimous decision, the Court held in Thompson v. North American Stainless (pdf) that an employee who claimed he was terminated because his fiancée engaged in protected activity, could bring a retaliation claim against their mutual employer under Title VII of the Civil Rights Act of 1964 ("Title VII").

Plaintiff Eric Thompson met and eventually became engaged to Miriam Regalado while both worked for North American Stainless (“NAS”).  Subsequently, Regalado filed a charge of discrimination with the EEOC, claiming NAS discriminated against her because of her sex. Approximately three weeks later, NAS fired Thompson.  Thompson filed suit, alleging his termination was in retaliation for his fiancée’s protected activity.

Both the U.S. District Court for the Eastern District of Kentucky and the Sixth Circuit Court of Appeals ruled that Thompson did not have standing to sue for retaliation under Title VII because he had not engaged in any protected activity under the law.  The Sixth Circuit reasoned that the plain language of Title VII did not contemplate third-party retaliation claims.  The statute specifically provides that:  “It shall be an unlawful employment practice for an employer to discriminate against any of his employees . . . because he has opposed any practice made an unlawful employment practice by this title, or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this title.” 

In an opinion written by Justice Scalia, the Supreme Court determined that NAS’s alleged conduct was prohibited by Title VII.  The Court ruled that the anti-retaliation provision of Title VII must be construed broadly to prohibit any employer action that would “have dissuaded a reasonable worker from making or supporting a charge of discrimination.”  Applying this rule, the Court found that a reasonable employee certainly would be dissuaded from engaging in protected activity if she knew that the consequence would be her fiancé’s termination from the company.

NAS argued unsuccessfully that this standard will force employers into an unenviable position of having to try to identify whether an employee who is about to be terminated has a close relationship with someone who recently engaged in protected activity before taking an adverse action that could expose it to a third-party retaliation claim.  In rejecting this argument, the Court noted that, "[a]lthough we acknowledge the force of this point, we do not think it justifies a categorical rule that third-party reprisals do not violate Title VII." 

The Court refused to articulate a bright-line rule concerning how close a relationship must be to afford third-party retaliation protection, stating in pertinent part, “[w]e expect that firing a close family member will almost always meet the Burlington standard, and inflicting a milder reprisal on a mere acquaintance will almost never do so, but beyond that we are reluctant to generalize.”

In analyzing Thompson’s standing to sue under Title VII, the Supreme Court went on to find that the term “person aggrieved” under the statute includes a plaintiff who falls within the "zone of interests" sought to be protected by Title VII.  Thus, if Title VII “arguably sought” to protect that person’s rights, he or she has standing under Title VII; however, if the individual has interests that are only “marginally related to or inconsistent” with the purposes of law, no standing to sue exists.

According to the Supreme Court, Thompson had standing to pursue his own retaliation claim against NAS because he fell within the amorphous “zone of interests” contemplated by Title VII.

It should be clear that this case expands the bounds of employers’ potential liability under Title VII.  Now, more than ever, employers should use caution when taking adverse action against an employee whose spouse, family member, domestic partner or fiancé(e) recently engaged in protected activity.  And, as always, employers should document the specific reasons for employee terminations and follow established company policies to limit later arguments by a terminated employee that he or she was terminated because of a retaliatory motive on the part of the employer.

This post was contributed by Kelley E. Kaufman, Esq., an Associate in McNees Wallace & Nurick LLC’s Labor and Employment Law Practice Group.

In a recent decision, the Supreme Court of Pennsylvania evaluated whether a public employer’s ban on employee tobacco use in the workplace affected a "working condition" that was subject to the employer’s statutory duty to bargain with the union representing its employees. In Borough of Ellwood City v. Pa. Labor Relations Bd. (pdf), the Court held that, under the Pennsylvania Labor Relations Act, the municipal employer’s ban on the use of tobacco products in the workplace was a mandatory subject of bargaining.

The Borough of Ellwood passed an ordinance in 2006, which banned tobacco use on or in Borough-owned buildings, vehicles and equipment – a ban that applied to the Borough’s unionized police officers. The Borough unilaterally implemented the ban without bargaining with the union. The union subsequently filed an unfair labor practice charge against the Borough with the Pennsylvania Labor Relations Board, alleging that the Borough failed to bargain over a mandatory subject of bargaining. On appeal, the Court found for the Union, holding that tobacco use restrictions constitute a mandatory subject of bargaining – not an "inherent managerial prerogative." Thus, the Borough was obligated to bargain with the union over the tobacco restrictions.

The Ellwood Court also addressed potential conflicts between a municipality’s ability to enact legislation protecting the health, welfare, safety, and general welfare of its citizens with the rights of the police officers to collectively bargain. In reconciling this conflict, the Court noted that, while local legislation promoting clean air and warning of the risks of tobacco use was laudatory, such legislation cannot serve as a barrier to negotiations over the topic when it constitutes a working condition subject to mandatory bargaining.

Although the Borough is a public employer, the Court’s decision has implications for public and private employers alike. Many employers are subject to the Pennsylvania Clean Indoor Air Act and similar local ordinances which may impose restrictions on tobacco use in workplaces and public areas. However, unionized employers who unilaterally change existing policies and practices to comply with such restrictions may face challenges from the unions with which they deal. For this reason, it may be advisable for unionized employers to discuss applicable tobacco restrictions and the impact of these restrictions with the union before implementing changes.

Pennsylvania has long been considered an "employment at will" state – meaning that employers and employees may terminate their employment relationship at any time with or without cause or prior notice. However, the number of exceptions to the "at will doctrine" seems to grow every year. The year 2010 was no exception. In Hamovitz v. Santa Barbara Applied Research Inc., 2010 WL 4117270 (W.D. Pa. Oct. 19, 2010), the U.S. District Court for the Western District of Pennsylvania recognized a new exception to the at will doctrine involving an employer’s refusal to hire an applicant based on prior service in the National Guard.

In Hamovitz, the plaintiff claimed that the employer refused to rehire him based on his service in the National Guard. In addition to filing statutory claims under the Uniform Services Employment and Reemployment Rights Act ("USERRA") and the Pennsylvania Military Affairs Act ("PMAA"), the plaintiff brought a common law wrongful discharge/failure to hire claim seeking the court to apply a "public policy" exception to the employment at will doctrine. In Pennsylvania, exceptions to the at will doctrine are rare. Under the "public policy" exception, a plaintiff may have a viable wrongful discharge claim if he can show that his termination violated a clear mandate of public policy.

In order to show that an employer’s actions offended a clear mandate of public policy, the plaintiff must show that he or she was terminated for: (1) engaging in conduct required by law or (2) refusing to engage in conduct prohibited by law. In such cases, the public policy cited by the plaintiff must have legislative or constitutional endorsement, and it must be clear and specific.

In Hamovitz, the court created a new exception to the at will doctrine: "where an employer’s actions impinge upon protected rights of employees." The court found that the employer in Hamovitz may have impinged upon the employee’s rights under the PMAA, and therefore, the plaintiff was allowed to proceed with his wrongful discharge claim.

By allowing this claim to go forward, the court also enabled the plaintiff to avoid the statutory limitations on damages found in USERRA and the PMAA. Although not available under the PMAA or USERRA, the court found that the plaintiff in Hamovitz would be entitled to recover punitive damages if he were to prevail on his common law wrongful discharge claim.

Unless the Hamovitz decision is reversed on appeal, this new exception to the at will doctrine may trigger a wave of litigation as plaintiffs seek broad interpretations of "actions that impinge upon protected rights of employees." Courts have long held that employees sacrifice certain rights in the workplace; for example, an employer may restrict free speech by prohibiting offensive language or behavior at work. Now, however, plaintiffs may argue that a termination, or even a refusal to hire, "impinges upon protected rights" in any number of situations that previously fell under the employment at will doctrine.
 

Today, Adam R. Long, Esq. of McNees Wallace & Nurick LLC’s Labor and Employment Group issued an Employer Alert titled "Effective January 10, 2011, New GINA Regulations Will Impact Common HR Practices."

The Employer Alert discusses the Genetic Information Nondiscrimination Act of 2008 (“GINA”), which prohibits the use of genetic information in employment decisions and restricts an employer’s ability to request, require, or purchase genetic information. GINA also requires employers to treat all genetic information as confidential medical information and places restrictions on the disclosure of genetic information. GINA applies to all employers who are covered by Title VII of the Civil Rights Act of 1964.  The Equal Employment Opportunity Commission has issued regulations that take effect on January 10, 2011, and clarify a number of GINA’s key employment-related requirements and prohibitions.

To read the Employer Alert click here. 

On December 21, 2010, the National Labor Relations Board ("Board") issued a Notice of Proposed Rulemaking (pdf), which, if finalized, would require employers to notify employees of their rights under the National Labor Relations Act ("Act"). If you would like to review the Board’s News Release regarding the proposed rule, please click here (pdf).

The proposed rule would apply to private sector employers covered by the Act, and would require posting of the notice were workplace notices are typically posted. The rule would require electronic posting of the notice if the employer typically posts workplace notices electronically.

Employers interesting in commenting on the proposed rule may do so by following the instructions in the proposed rule. All employers covered by the Act should be sure to stay tuned to ensure compliance, if the proposed rule is finalized.

The Commonwealth Court of Pennsylvania recently concluded that an employee who was found sleeping on the job four (4) times was entitled to unemployment compensation benefits under the Pennsylvania Unemployment Compensation Law ("Law"). Phila. Parking Auth. v. Unemployment Comp. Bd. of Review, 1 A.3d 956 (Pa. Commw. Ct. 2010) (pdf). Under the Law, an employee is not eligible for unemployment benefits if his or her unemployment is due to willful misconduct. Willful misconduct includes, among other things, a deliberate violation of the employer’s work rules. In cases involving a work rule violation, the employer has the burden of establishing that: (1) a work rule existed, (2) the former employee was aware of the rule, and (3) the former employee deliberately or intentionally violated the rule. If the employer can establish these three things, then the burden shifts to the employee to show that there was good cause for the rule violation.

In Phila. Parking Auth., the former employee, who worked the 3:30 p.m. to midnight shift in the employer’s "money room," fell asleep during her shift on four (4) occasions in January 2009. Prior to these incidents, the former employee complained that there were long periods of time during her work day when she had no work to do. The former employee was diagnosed with sleep apnea and claimed that she needed additional work to keep her from falling asleep. Other than providing additional assignments on two (2) occasions, the employer did not provide her with any additional duties. After she was found sleeping four (4) times, the former employee was terminated under the employer’s rule prohibiting sleeping on duty.

The court held that the employer adequately proved it had a work rule prohibiting sleeping on duty, and that the former employee was aware of the rule. However, the court further held that the employer failed to adequately address the former employee’s requests for additional work assignments and, for this reason, she did not deliberately violate the rule – and did not commit willful misconduct. For this reason, the court awarded benefits to the terminated employee.

This decision is certainly unusual, and a warning that employers must take appropriate action when an employee complains that she does not have enough work to keep her awake!

Independent contractor arrangements have come under fire lately from both state and federal governments. Pennsylvania recently went a step further, enacting legislation governing independent contractor arrangements in the construction industry. On October 13, 2010, the Construction Workplace Misclassification Act (the “Act”) was signed into law. The Act provides criteria for classifying independent contractors within the construction industry and imposes a variety of penalties for misclassifying employees as independent contractors. 

I. What Are the Criteria for Independent Contractor Classification Under the Act?

The Act specifies that, in order to be properly classified as an independent contractor under the Act, and also for purposes of Workers’ Compensation and Unemployment Compensation, an individual must:

1.       Have a written contract to perform services in the construction industry for remuneration;

2.       Be free from control or direction over the performance of such services – both under the contract and in fact; and

3.       Be engaged in an independently established trade, occupation, profession or business with respect to such services.

Further, in order to meet the third part of the requirement, above, the individual must:

·         Possess the essential tools, equipment and other assets necessary to perform the services;

·         Be able to sustain a profit or a loss as a result of performing the services;

·         Perform the services through a business in which he or she has a proprietary interest;

·         Maintain a business location separate from the location of the person for whom he or she performs the services;

·         Previously have performed the services for another while free from direction or control and under a contract of service and in fact; or hold him or herself out as an independent contractor; and

·         Maintain liability insurance during the term of the contract of at least $50,000.

The failure to withhold income taxes or to pay unemployment contributions or workers’ compensation premiums may not be considered as a factor in the independent contractor analysis. 

II. What Constitutes a Violation Under the Act – and What Are the Penalties?

An employer – or an officer or agent of an employer – may be subject to a variety of penalties under the Act if he or she fails to properly classify an individual as an employee for purposes of the Unemployment Compensation Law or the Workers’ Compensation Act and fails to provide coverage required under those laws. Penalties may include both civil and criminal sanctions, as well as the possibility of a stop work order. 

Civil penalties can range from $1,000 per violation to $2,500 per violation for first-time and repeat violations, respectively. In addition, a stop-work order may issue as a result of violations of the Act. Such an order requires misclassified individuals to cease work within 24 hours of the order, which may result in the cessation of all of the employer’s business operations at each site where a violation occurred. Employers will be subject to an added $1,000-per-day penalty for each day that they conduct business operations in violation of an order. The order will continue until a subsequent court order releases it. 

The Act also provides for criminal penalties. Under the Act, each violation of independent contractor classification requirements will be graded as a second or third degree misdemeanor or a summary offense, depending upon whether the violation is found to be intentional or negligent. A summary offense conviction will require payment of $1,000 or less. 

Importantly, these penalties apply for violations separately – meaning each individual instance of independent contractor misclassification will be considered a separate violation under the Act. In addition, a non-employer third party who intentionally contracts with an employer knowing that the employer intends to misclassify employees also will be subject to the Act’s penalty provisions.

The Act goes into effect on February 10, 2011. In the interim, construction industry employers should carefully review their independent contractor arrangements for compliance with the Act’s criteria and take the necessary steps to ensure compliance on February 10, 2011 – and moving forward.