Obama's First Law Sends A Clear Message To Employers

President Obama signed the Ledbetter bill into law today. The bill overturned the Supreme Court’s ruling in Ledbetter v. Goodyear Tire & Rubber, which held that employees must file a discrimination claim within six months after being discriminated against. Ledbetter argued that the Supreme Court should apply a type of continuing violations doctrine to her situation. Under such a theory, Ledbetter argued that the first discriminatory act (receiving a lower than deserved raise because of her gender) continued with each additional pay raise because pay raises are cumulative over time. Therefore, she alleged that even though she had no evidence that her pay raises during the applicable 180 day time period to file a suit were discriminatory, the original discrimination continued into this time period. The Supreme Court rejected this argument, but now the new law allows employees to file a lawsuit 180 days after receiving their final paycheck, even if the discrimination took place decades earlier.

The new law removes any time limits on pay discrimination claims. A discrimination case can now be brought long after evidence has gone stale or witnesses have died, which was the case with Ms. Ledbetter's former boss. There is no doubt that this will result in more litigation against employers. 

What is the effective date that this law applies?  May 28, 2007.  And yes, that is not a typo - the law is retroactive.  This is the date of the Supreme Court's decision in the case. 

What Does Obama Have Next For Employers?

The Paycheck Fairness Act. This bill, which Obama co-sponsored while in the Senate, provides for stronger remedies under the already existing Equal Pay Act. This Act was coupled with the Ledbetter bill, but Democrats were worried that the two bills together would raise too much of an opposition to their passage. Therefore, the PFA was severed from the Ledbetter bill, and will definitely be placed on the President’s desk in the next couple of months, if not sooner.

The PFA would create a new, more difficult legal standard for employers to meet in showing that their pay structures were not discriminatory. Under the new standard, employers would have to show that wage disparities are job-related, not sex-based, and could only use a defense if they prove that business necessity demands the unequal pay. Under the current Equal Pay Act, employers need only show that the difference in wages results from “any factor other than sex” and the employer does not have to show a business necessity for the difference in pay.

As James Sherk of the Heritage Foundation points out:

Under the PSA, the government will inject itself into areas of business over which it has no experience. For instance: Does experience constitute a "bona fide factor other than sex"? A woman earning less than a man with more experience could argue that her employer should be required to send her to training and then pay them identical wages. She would have a strong case to argue that experience was not a "bona fide" factor because an alternative employment practice would eliminate the disparity.

The paycheck fairness legislation would also require the use comparable worth in creating "voluntary" wage guidelines for industries, and makes class action lawsuits on these grounds easier to bring. The Wall Street Journal notes:

Voluntary or not, these guidelines would become the basis for more litigation against companies that didn't follow them. Meanwhile, the bill strips companies of certain defenses against claims of sex-based pay discrimination. It also makes it easier to bring class actions, and it allows plaintiffs to claim unlimited punitive damages even in cases of unintentional discrimination.


Richard Posner Offers Economic Analysis of Employee Free Choice Act

The impending passage of the "Employee Free Choice Act" has received a great deal of publicity in recent months.  The Act would essentially eliminate secret balloting in union representation elections and allow government arbitrators to impose contract terms when negotiations reach an impasse. 

The conventional wisdom is that the Act will make it far easier for unions to obtain recognition and press for higher wage rights.  Passage is considered a virtual lock because Obama and the new Democratic majority are under irresistible pressure to "payback" unions for their massive support in the '08 election.

To the extent that any political argument could slow the "Free Choice Act" juggernaut it may be that the beginning of a potential economic depression is simply not the right time.  In this regard, Richard Posner, who is both an economist and a sitting Seventh Circuit Justice, draws an interesting historical analogy to the New Deal/Great Depression era in his recent post on The Becker-Posner Blog.  

We especially do not need an uptick in adversarial unionism during what increasingly appears to be a depression. The fact that Democrats in Congress should be pressing for a revival of the union movement at this time indicates a lack of understanding of the economics of depressions. A depression involves a severe reduction in output, resulting in a reduction in inputs, including labor inputs: hence increased unemployment. Adversarial unions increase unemployment, by obtaining wage increases that reduce employers' output by increasing labor costs. A similarly incoherent New Deal program of fighting depression combined sensible measures like going off the gold standard, expanding the money supply, and increasing employment by public-works programs with output-restricting programs like the National Industrial Recovery Act, which encouraged the formation of producer cartels, the Agricultural Adjustment Act, which curtailed agricultural output in order to raise farmers' incomes--and the National Labor Relations Act (the Wagner Act), which encouraged the formation of workers' cartels: adversarial unions such as the United Auto Workers. Some economists believe that such measures prolonged the depression. They certainly did not shorten it.

Incidentally, for those interested in a high-level policy discussion concerning the economic impact of law and legislation The Posner-Becker Blog is first-rate.

Can Employers Conduct Surveillance On Employees Taking FMLA Leave?

I expect that many more employers will be asking their employment counsel if they can conduct surveillance on employees who they expect are lying about their health status given today’s economy and the new FMLA regulations.  

There have been a few courts that have addressed this issue. As one court in Colburn v. Parker Hannifin (1st Cir., 2005) noted that the FMLA prohibits employers from taking certain actions against employees:

In addition to the grant of substantive rights, the statute sets forth a list of prohibited acts at 29 U.S.C. § 2615:

(a) Interference with rights

(1) Exercise of rights
It shall be unlawful for any employer to interfere with, restrain, or deny the exercise of or the attempt to exercise, any right provided under this subchapter.

(2) Discrimination
It shall be unlawful for any employer to discharge or in any other manner discriminate against any individual for opposing any practice made unlawful by this subchapter.

(b) Interference with proceedings or inquiries
It shall be unlawful for any person to discharge or in any other manner discriminate against any individual because such individual -- (1) has filed any charge, or has instituted or caused to be instituted any proceeding, under or related to this subchapter; (2) has given, or is about to give, any information in connection with any inquiry or proceeding relating to any right provided under this subchapter; or
(3) has testified, or is about to testify, in any inquiry or proceeding relating to any right provided under this subchapter.

The court in that case concluded that the statute prohibits “both interference and discrimination.” This is the key issue – whether the employer’s conduct interferes with the employee’s protected leave. In Colburn, the employee claimed to be too dizzy to drive to work, but was caught working out at the gym while on leave. There the court found that the employer’s surveillance did not violate the FMLA.

Courts in the Seventh and Sixth Circuits have also held that employers may conduct surveillance of employees suspected of abusing their FMLA leave.

Does this mean that employers can always conduct surveillance on their employees? No. Employers need to be sure the surveillance does not go too far and invade the employee’s privacy, or the employee’s family members’ privacy.  A court's analysis will be whether the investigation interferes with the employee's FMLA leave.  But as many of these cases point out, if an employee travels on the plane (Crouch v. Whirlpool (7th Cir. 2006)), or works for husband’s business mowing lawns (Vail v. Raybestos (7th Cir. 2008), then these activities conducted in the public possibly could be monitored by an employer.

Congress Vastly Expands Time to File Discrimination Lawsuits

Since its inception, Title VII has created remedies for any "adverse employment actions" that are  motivated by race, sex or other prohibited reasons.  A string of Supreme Court cases from at least the early 1970's had always held that the statute of limitations for discrimination claims should begin to run from the date of a discriminatory decision was made, regardless of how long the effects of the discrimination might last. 

For example, if a California employee believed that she was denied a promotion because of her sex, she had to file a complaint within 300 days of the promotion denial to challenge the decision.  But no more.  

Under the newly enacted Lilly Ledbetter  Fair Pay Act of 2009, such an employee may file a complaint based on every subsequent paycheck that is allegedly lower due to the prior discrimination.       

For purposes of this section, an unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.

The interesting thing about the Act is its inherently retroactive nature.  For example, if an employee was denied a promotion in 1965 her statute of limitations expired approximately 43 years ago.  But if she has been earning less money ever since as a result of that decision, it now appears that a new cause of action has been created for her to sue to based on the lingering present affects of this long-ago discrimination.

The Act amends the statute of limitations rules for Title VII, The Age Discrimination in Employment Act (ADEA), as well as the Americans with Disabilities Act ("ADA").  It is also a safe bet that the California Legislature will soon amend the FEHA to add corresponding language.       

Lawsuit Seeks Ruling On Whether Obama is a "Natural Born" U.S. Citizen

Using natural origin or even citizenship as criteria for employment is obviously illegal for private sector employees.  Ironically, however, such discrimination is required for the most important job in the land. 

Article II, Section I of the Constitution provides that "No Person except a natural born citizen of the United States . . . shall be eligible to the Office of President."  This provision has barred figures from Alexander Hamilton to Arnold Schwarzenegger from presidential consideration.

Former American Independent Party presidential candidate, Alan Keyes, apparently thinks that the "natural born citizen" clause may bar Barack Obama as well.  According to the Complaint filed in U.S. District Court in Santa Ana yesterday as Alan Keyes v.  Barack H. Obama, et al., Keyes alleges that Obama has failed to sufficiently document that he is a "natural born" citizen.    

The Complaint alleges that public record documents raise significant "doubt" that Obama meets the Constiutional requirement as he was supposedly born in Kenya and was later granted Indonesian citizenship as a child in that country.  The lawsuit therefore seeks disclosure of Obama's original birth certificate or other verifying documents.  In the alternative, Keyes alleges that:

In the absence of such proof, the electoral college having elected Defendant Obama to President elect, the President elect, must be detrmined to have failed to qualify a valid President, whereby the Vice President becomes the Acting President under U.S. Constitution Amendment 20.

In short, the lawsuit is asking Mr. Obama to provide his original birth certificate, or else step aside for President Biden. 

This type of Constitutional lawsuit is usually squelched on grounds of standing, mootness, or justiciability.  But even if one looks on the suit as a mere political stunt, it nevertheless focuses attention on the "natural born citizen" clause and whether this requirement that has outlived its purpose. 


Change We Can Believe In??

Now that the Democratic Party controls Congress and the Presidency, significant changes appear to be coming in the Labor and Employment field. As stated in “The Corner,” (a blog maintained by the National Review), Democrats are expected to introduce several pieces of employment-related legislation in the next few months, including the Civil Rights Act of 2008. As Peter Kirsanow of the National Review writes, that Act would:

(1) Eliminate existing damage caps on lawsuits brought under Title VII and the ADA. Currently, the damage caps are $50,000 for an employer with 15 to 100 employees; $100,000 for an employer with 101 to 200 employees; $200,000 for an employer with 201 to 500 employees; and $500,000 for an employer with 500 employees or more;

(2) Add compensatory and punitive damages to the FLSA (wage and hour) so that an employee can recover those damages in addition to back pay (which can be doubled if a willful violation is found);

(3) Amend the FAA to prohibit clauses requiring arbitration of federal constitutional or statutory claims, unless an employee knowingly and voluntarily consents to this clause after a dispute has arisen or as part of a collective bargaining agreement;

(4) Make it easier for employees to recover expenses (like expert witness fees) even if they aren’t the prevailing party in a lawsuit in all respects;

(5) Give the National Labor Relations Board authority to award backpay to illegal immigrant employees;

(6) Provide individuals with private rights of action to sue federally-funded programs for disparate impact discrimination under Title VI, Title IX, the Rehabilitation Act of 1973, and the Americans with Disabilities Act (thereby undoing the Supreme Court’s decision in Alexander v. Sandoval);

(7) Condition states’ receipts of federal funds on their waiver of sovereign immunity against individual claims for monetary damages under the ADEA, the FLSA, and the Uniformed Services Employment and Reemployment Rights Act. This would reverse U.S. Supreme Court decisions that have barred these lawsuits against state governments; and

(8) Overturn the Supreme Court’s decision in Buckhannon Board & Care Home v. W. Va. Department of Health and Services, that limited the ability of civil rights attorneys to receive attorney’s fees under 42 U.S.C. § 1988.

All of this is in addition, of course, to the Lilly Ledbetter Paycheck Fairness Act and the proposed abolishment of the secret ballots in Union balloting. Stay tuned as this appears to be just the beginning of the significant employment-related changes that the Obama Administration plans to implement in the coming years.

Associate Sues Skadden For Wrongful Termination -- Green v. Skadden Arps

A labor and employment law associate who was fired from the LA office of Skadden Arps has filed a lawsuit against his ex-employer for retaliation and wrongful termination. 

According to the complaint in Green v. Skadden Arps, Mr. Green wrote an internal performance review in which he accused his own boss and another associate of being "incompetent."  His employer allegedly did not appreciate Mr. Green's dedication to an unvarnished "upward review" process and he was promptly fired for his "poor judgment" in rendering such an "intemperate review."  

The Complaint contains some references to Mr. Green's alleged complaints about vacation and sabatical policies.  But the main thrust of the Complaint is that Skadden supposedly violated public policy by terminating his employment in retaliation for giving a "factually accurate performance review."   As a labor and employment attorney the plaintiff (who is representing himself in pro per) presumably recognizes that there is no public policy protection for internal complaints that other employees are "incompetent."

My guess is that the 50-page Complaint is intended more as a privileged forum for a detailed public airing of the alleged mismanagement, incompetence and deficiencies of his former employer and colleagues.  I can't say the case offers any profound lessons (except that calling your boss "incompetent" is a bad career move).  But anyone who is, or was, an associate navigating the politics of a Big Firm may find the whole affair has a certain voyeuristic entertainment value.             


Court Holds Employees' Contact Information Must Be Disclosed Despite Employee Agreement Stating Otherwise

To close out 2008 wage and hour law, an appellate court issued a ruling in Crab Addison, Inc. v. Superior Court.  The case is a very significant holding on employees' privacy rights in the context of wage and hour class actions. 

Crab Addison, Inc. (CAI), which operates Joe’s Crab Shack, refused to disclose employee names and contact information when asked to do so by plaintiff’s counsel in a wage and hour class action. Plaintiff, Martinez, argued that this information was necessary to meeting his burden of proving class certification was appropriate, he was entitled to the information, and production of the information would not violate the witnesses’ right to privacy.

CAI argued that its employees had a heightened expectation of privacy as to their contact information based on forms they signed regarding release of their contact information. After the lawsuit was filed by plaintiff, CAI had its employees sign a form stating the following:


            From time to time, Joe’s Crab Shack (the “Company”) may be asked to provide your contact information, including your home address and telephone number, to third parties. The Company may be asked to provide such information in the context of legal proceedings, including class action lawsuits.

            We understand that many employees may consider this information to be private and may not want it released. Accordingly, please indicate whether you consent to the disclosure of your contact information by marking the appropriate box.

  • No, I do not consent to the Company’s disclosure of my contact information to third parties.
  • Yes, I consent to the Company’s disclosure of my contact information to third parties.
  • I would like to be asked on a case-by-case basis whether I consent to the disclosure of my contact information to a particular third party, and my contact information should only be provided if I affirmatively consent in writing.

The bottom of the release forms contained the following:

            NOTE: Your response does not create a guarantee that the Company will not release your contact information as circumstances may require or warrant it. For instance, the Company may be required or compelled by law to disclose your contact information, regardless of whether you consent to such disclosure, or it may determine that it must do so should it determine that you are a witness in a lawsuit or should it be requested by law enforcement officers. In such an event, the Company cannot be held responsible for disclosing this information even if you have not consented to disclosure or asked for a case-by-case determination of disclosure.

Arguing that this release form created a heightened expectation of privacy, CAI said that if the employees’ contact information is disclosed, only contact information for employees who affirmatively “opt in” to have their information disclosed should be given to plaintiff's counsel. Defendant argued for an “opt in” process because it would result in a smaller number of employees’ contact information being disclosed. This is opposed to an “opt out” process by which the employees’ contact information is automatically disclosed to plaintiff’s counsel unless they object to the disclosure. 

The appellate court heavily relied on the recent case, Puerto v. Superior Court (2008) 158 Cal.App.4th 1242. In that case the court explained that “[t]he ‘expansive scope of discovery’ is a deliberate attempt to ‘take the “game” element out of trial preparation’ and to ‘do away “with the sporting theory of litigation—namely, surprise at the trial.”” [citations omitted] Therefore, discovery statutes are broadly construed in favor of discovery whenever possible in order to aid the parties in preparation for trial. The court also noted, however, that there needs to be a balancing of interests. In summarizing the Puerto case, the court stated:

The right of privacy in the California Constitution (art. I, § 1), ‘protects the individual’s reasonable expectation of privacy against a serious invasion.’” (Puerto v. Superior Court, supra, 158 Cal.App.4th at p. 1250, quoting Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360, 370.) 

While contact information generally is considered private, this “does not mean that the individuals would not want it disclosed under these circumstances.” (Puerto v. Superior Court, supra, 158 Cal.App.4th at pp. 1252-1253.) While employees would not likely want their contact information broadly disseminated, this does not mean they would want it withheld “from plaintiffs seeking relief for violations of employment laws in the workplace that they shared.” (Id. at p. 1253.) Rather, employees similarly situated to petitioners “may reasonably be supposed to want their information disclosed to counsel whose communications in the course of investigating the claims asserted in [petitioners’] lawsuit may alert them to similar claims they may be able to assert.” (Ibid.)

The court said there were two major differences between this case and the Puerto case. First, in Puerto, the employer voluntarily disclosed the identities of the witnesses but sought to protect addresses and telephone numbers. Here, CAI sought to protect the names of employees as well as addresses and telephone numbers. Second, in Puerto there was no release form like the one used here.

In quickly rejecting defendant’s argument on the first issue, the court found that employees’/witnesses’ names do not have any more heightened protection than their addresses and telephone numbers, and therefore should be disclosed. 

The court then turned its analysis to the effect that the release forms had in this case:

CAI argues that these forms gave their employees a heightened expectation of privacy in their contact information, requiring that the contact information be given greater protection and making an “opt in” notice procedure proper. We are unconvinced by this argument.

We first address the question whether, as a matter of public policy, we should enforce a release form that may have the effect of waiving an employee’s right to notice of a pending class action lawsuit concerning the employer’s alleged violations of overtime and wage statutes. While not determinative, the Supreme Court’s recent opinion in Gentry v. Superior Court (2007) 42 Cal.4th 443 is instructive. In Gentry the court addressed the question “whether class arbitration waivers in employment arbitration agreements may be enforced to preclude class arbitrations by employees whose statutory rights to overtime pay [under the Labor Code] allegedly have been violated.” (Id. at p. 450.) The court noted the Legislature through its enactment in the Labor Code established “‘“a clear public policy”’” that “minimum wage and overtime laws should be enforced in part by private action brought by aggrieved employees.” (Id. at p. 455.) So great is the public policy protecting employees’ right to overtime compensation that the right is “unwaivable.” (Ibid.)

The court looked to a recent case, Gentry v. Superior Court, for guidance on this issue. Gentry did not deal with disclosure of putative class members’ contact information, but with arbitration agreements in which the employee agreed not to participate in class actions for wage and hour violations. The Gentry court observed that class arbitration waivers in wage and overtime cases would frequently exculpate employers for violations and undermine the enforcement of wage and overtime laws; second, current employees suing their employers run a greater risk of retaliation; and, third, that employees may be unaware of the violation of their rights and their right to sue.

Based on this analysis, the court in this case concluded that the release form used by CAI did not create a higher expectation of privacy in the employees’ contact information. The court found that “public policy concerns weigh in favor of enforcing unwaivable statutory wage and overtime rights through class action litigation over a right to privacy in “relatively nonsensitive [contact] information.” (citing Puerto v. Superior Court, supra, 158 Cal.App.4th at p. 1259.) The court held:

[T]o the extent the right to privacy is based on the release forms, there are strong reasons for not giving effect to those forms. Employees indicating that they did not want their contact information disclosed, or wanted disclosure on a case-by-case basis, were unaware at the time they signed the forms of the pending litigation to enforce their statutory wage and overtime rights through a class action lawsuit. We may presume that, had they known about the litigation, their response on the form would have been different. Additionally, the forms apprised them that their contact information could be disclosed if required by law, so they were aware of the limitation on privacy offered by the forms.

Therefore, Defendant was required to provide the employees’ names, addresses, and telephone numbers even though the release form had been utilized by Defendant in this case. The case is a must read for every wage and hour class action litigator in California.