Allyn & Fortuna LLP
Paula Lopez, February 20, 2015.
It is important for employers to always implement proper policies as a tool for staving off litigation. While doing so employers should understand that the statements contained in their policies are binding on them in the same manner that they would be on their employees. Therefore, they should take the proper steps to ensure that their policies accurately reflect the state of the law so as to not expose themselves to legal liability that otherwise could be avoided.
A Michigan employer learned this the hard way in the recently decided Sixth Circuit case Tilley v. Kalamazoo County Road Commission. In Tilley, the Sixth Circuit reversed the district court’s order dismissing Terry Tilley’s claims against his former employer under the Family Medical Leave Act (“FMLA”). The court ordered a trial on the issue of whether Mr. Tilley’s employer is equitably estopped from denying that he is an “eligible employee” under the FMLA based on statements contained in the employer’s personnel manual even though Mr. Tilley does not meet the statutory definition of “eligible employee” under the FMLA.
In his lawsuit against the Kalamazoo County Road Commission (“Commission”), Mr. Tilley claimed, among other things, that his employer interfered with his right to FMLA leave and retaliated against him for taking FMLA leave when it terminated him for failing to complete certain job assignments within a specified deadline. Mr. Tilley stated that he failed to complete the tasks within the deadlines because he needed to take time off work for medical reasons which he believed were protected under the FMLA because of statements contained in the Commission’s personnel manual, and which he claims to have relied on in taking the leave. Mr. Tilley suffered symptoms of a heart attack and was taken to the hospital before he completed the tasks. While on leave, he received paperwork from the Commission confirming his eligibility for FMLA leave. When he returned to work a few days later he was terminated.
An employee is eligible to take job-protected leave under the FMLA if he or she meets the following three requirements at the time of seeking the leave: (1) the employee has been employed by a covered employer for at least 12 months; (2) the employee has worked at least 1,250 hours in the prior 12 month period; and (3) the employee works at a location that employees at least 50 employees within a 75-mile radius (50/75 Threshold).
In Tilley, the section of the personnel manual discussing FMLA leave stated that employees were eligible to take leave if they “accumulated 1,250 work hours in the previous 12 months” and made no mention of the 50/75 Threshold required under the statute for eligibility. There was no dispute that Mr. Tilley met the first two eligibility requirements for FMLA leave. However, at the time Mr. Tilley sought leave there was no evidence that he worked at a location employing 50 employees within a 75 mile radius and therefore did not satisfy the third eligibility requirement under the FMLA. Consequently, the district court dismissed Mr. Tilley’s FMLA claim finding that he is not an “eligible employee” under the Act.
On appeal, the Sixth Circuit agreed that as a matter of law Mr. Tilley is not an “eligible employee” under the FMLA. However, it found that he had made a sufficient showing to create a question of fact as to whether the Commission is prevented from asserting his ineligibility as a defense to the FMLA claims under the doctrine of equitable estoppel. The doctrine of equitable estoppel prevents a party from alleging a certain fact based on its own prior conduct. In this instance, for the court to apply the doctrine of equitable estoppel based on the statements contained in the Commission’s personnel manual, Mr. Tilley had to show the existence of (1) a definite misrepresentation as to a material fact; (2) that he reasonably relied on the misrepresentation; and (3) that his reliance on the misrepresentation resulted in a detriment to him.
As to the first requirement, the Sixth Circuit found that the statements contained in the personnel manual constitute unambiguous and unqualified statements that Commission employees, like Mr. Tilley, who accumulated 1,250 work hours in the prior year, are covered under the FMLA and eligible to apply for benefits. The Court noted that the Commission could have qualified the statement by adding the 50/75 Threshold requirement and avoided liability. However, because they failed to add that language Mr. Tilley is able to satisfy the misrepresentation element of his equitable estoppel claim.
In support of the second requirement, Mr. Tilley submitted a sworn affidavit stating that he reviewed the personnel manual before taking leave and believed he was eligible to take leave for his illness under the FMLA. He further stated that had he known he was not eligible for FMLA leave he would have returned to work after being released from the hospital and completed his job tasks, the incompletion of which were the basis for his termination. Both the Commission and the court were skeptical of Mr. Tilley’s claim that he only sought treatment for symptoms of a heart attack based on his belief that he was eligible for FMLA leave. However, the Court held that his sworn affidavit is sufficient to meet the reliance element and that it is up to a jury to determine Mr. Tilley’s credibility. Further, the Court refused to hold as a matter of law that Mr. Tilley’s reliance on the eligibility statements contained in the personnel manual was unreasonable, especially in light of the fact that the Commission itself had concluded that he was eligible for FMLA leave and sent him paperwork advising him of his eligibility.
The Court also found that Mr. Tilley met the third equitable estoppel requirement of showing that he suffered a detriment as a result of relying on the misrepresentation in the personnel manual. The detriment suffered is that Mr. Tilley was terminated, in part, because he missed the deadline to complete his job tasks because he sought medical treatment, which he claims to have only sought based on the statements in the personnel manual.
As a result of the Sixth Circuit’s decision, the Commission must continue to litigate Mr. Tilley’s claims in district court, whether through further motion practice attacking the merits of his FMLA claim or at trial and risk a finding of liability. The continued litigation and risks associated with litigation and the resultant drain on the Commission’s resources could have been avoided if only the Commission had reviewed its personnel manual to ensure that its FMLA leave policy was properly written. Tilley should be seen as a warning to employers that dedicating some time and financial resources to the creation and maintenance of proper policies can have long lasting benefits in avoiding time-consuming and costly litigation down the road.
Diana Uhimov, February 13, 2015.
Workplace relationships may be initiated at any time of the year, but the romantic theme of Valentine’s Day can lead to inappropriate behavior that employees might not otherwise engage in. That makes February an opportune time for companies to reevaluate their policies on office romance and harassment, and to remind employees of the rules.
A recent survey by Career Builder found that 37% of workers have dated a coworker. But when intraoffice relationships sour, employers can be subjected to legal claims of discrimination and sexual harassment, as well as complaints of favoritism. But an outright prohibition on workplace romance is impractical and unrealistic, and may violate the right to privacy in some jurisdictions. Therefore, employers must manage workplace relationships in a way that limits their liability and helps protect their employees.
Sexual harassment policies that set forth with particularity the prohibited conduct are essential for employers, but it’s not enough to establish a policy. There must be clear procedures in place for the investigation of complaints and consistent enforcement of the policy. To ensure enforcement, workers should have several safe and comfortable avenues for voicing sexual harassment complaints. If, for example, all complaints must be directed to a supervisor, and the supervisor is the offender, it is unlikely that the employee will speak up. When employers are made aware of issues early on, it provides an opportunity to take corrective action, reducing or even potentially eliminating the employer’s legal liability. An anonymous method for submitting grievances would be most effective, if feasible. Additionally, training supervisors on detecting the warning signs can bolster the uniform enforcement of sexual harassment policies.
While banning all romantic relationships is not realistic, companies should ban romantic relationships between supervisors and their subordinates. A relationship with a subordinate calls into question the supervisor’s objectivity, potentially affecting decisions about pay, promotions or other terms of employment. And in the event that the workplace relationship fails, subordinates who then face adverse employment action, or feel they’ve received unfair treatment may allege they’ve been discriminated against. Furthermore, if coworkers believe that another worker is receiving special treatment because of a relationship with a manager, employers may be perceived as biased, damaging company morale.
Several options exist for minimizing liability that may arise from the fallout from workplace romance. It is wise for companies to require disclosure of workplace relationships and to reassign employees when the relationship could lead to a conflict of interest. It is also recommended that companies prohibit any unprofessional conduct that could be viewed as offensive such as, public displays of affection. Another tool companies may utilize to help shield themselves from harassment claims is a “love contract”, wherein romantically involved employees promise that the relationship will not affect the work environment or employment decisions, and agree to comply with the sexual harassment and relation policies. This can help the employer establish that the relationship was consensual and that workers affirmed that they would follow company policy. Whatever policies the company may choose should extend beyond relationships between coworkers and cover worker-vendor, worker-client, and worker-contractor relationships as well.
With so much of peoples’ lives spent at work, many social relationships are developed at the workplace, and office romances are inevitable. Thus, regardless of the size or type of business, having policies in place to address this situation will allow employers to be prepared.
By: Megan J. Muoio, February 6, 2015
As ride-sharing services such as Uber and Lyft expand across the United States, many employment law scholars are carefully watching two cases in the United States District Court for the Northern District of California. Both cases, O’Connor v. Uber Technologies Inc. and Cotter v. Lyft Inc., are wage-and-hour class action lawsuits in which drivers have challenged the companies’ classification of them as independent contractors rather than employees. Although the class action plaintiffs have sought to represent all Uber and Lyft drivers nationwide, the judges in both cases have limited the suits to drivers operating within California.
The Uber case follows a recent 2014 win in federal court by FedEx delivery-truck drivers who had been misclassified as independent contractors by FedEx, even though they were required to wear FedEx uniforms, drive company vehicles, and adhere to FedEx’s appearance standards. In the Uber and Lyft cases, the drivers also claim that they are employees and that, as a result, they are entitled to a 20% gratuity now being taken by the companies. The drivers claim that they are subject to the companies’ control over their work and that the companies screen the drivers and set the rate for fares. The drivers have made motions for summary judgment in both cases and seek a determination by the federal court that they are employees of Uber and Lyft.
In contrast, Uber and Lyft have argued that they are simply “referral services” or “lead-generating services” for drivers, who then use their own cars and control all aspects of the service provided to the end-user customers. In court in January 2015, judges in both cases hearing arguments on the drivers’ motions for summary judgment expressed skepticism and some hostility to the companies’ arguments. United States District Judge Edward Chen, in the Uber case, argued that Uber “could not operate and exist without the drivers” and that Uber’s control over rates and surge pricing might indicate control sufficient to classify the drivers as employees. In the Lyft case, United States District Judge Vincent Chhabria pointed out that California’s labor laws were “woefully outdated” to handle the setup between Lyft and its drivers, but the fact that Lyft retains control of many aspects of the business – including the ability to terminate drivers who do not accept enough driving jobs – may mean that the drivers are employees.
Judge Chhabria noted that the California Supreme Court had not been asked to apply California law to this particular situation and considered certifying the issue to the California Supreme Court for determination. Nonetheless, a review of the analysis of the classification of independent contractors versus employees under the federal Fair Labor Standards Act (FLSA) may provide some guidance. Under the FLSA, the facts determining the classification falls under three categories: behavioral control, financial control, and the type of relationship between the business and the worker. Behavioral control factors consist of the types and degree of instruction from the company, the system used to evaluate the worker, and the training provided by the company. Financial control consists of the investment required by the worker, whether the worker is subject to the possibility of incurring a financial loss, whether the worker is free to seek out other business opportunities, and the method of payment by the company. Finally, the evaluation of relationship considers how the parties work together despite the fact that the worker’s contract may state that he is an independent contractor, whether and what kind of benefits are provided, how central the worker’s services are to the company, and the permanency of the relationship.
Employment law watchers are waiting to see whether Uber and Lyft’s business model is permissible for two reasons. First, Uber is the most highly valued U.S. technology startup with a highly anticipated IPO in 2015. Uber recently was valued at $40 billion after conducting a new $1.2 billion funding round. The ride-sharing business is a popular one: on February 3, 2015, Google announced that it would enter the ride-sharing business to compete with Uber (but will be using self-driving cars).
Second, the Uber and Lyft cases could have wide-ranging effects for many other newly developing businesses in the “sharing economy.” There are many startup businesses coming out of Silicon Valley that use a similar independent contractor model and these business have attracted billions of dollars in venture capital funding. For example, Washio (laundry pickup and delivery), BloomThat (flower delivery), and Shyp (package delivery) all utilize independent contractors to provide services to customers through an app. Whether these businesses’ control over their independent contractors rises to the level of an employee-employer relationship varies from business to business, but increased attention on Uber and Lyft has called into question this increasingly popular business model.
A decision on the summary judgment motions in the Uber and Lyft cases is expected shortly.
Nicholas Fortuna, January 29, 2015
U.S. Occupational Safety and Health Administration (OSHA) is ramping up its whistleblower program by making it easier for employees to prove retaliation and issuing larger damage awards. These lower standards, higher damage awards, and increased cooperation between OSHA and other federal agencies will make it more difficult for employers to defend charges of retaliation from employee whistleblowers.
Whistleblower statutes protect employees from retaliation for reporting or preventing wrongdoing in specified circumstances. OSHA’s program covers 22 federal whistleblower statutes, including a myriad of workplace, transportation, environmental, and consumer product laws as well as the Affordable Care Act and Sarbanes-Oxley.
The whistleblower statutes generally protect employee activities and fall into four broad categories:
(1) Providing information to an employer or a government agency regarding any act or omission regarding that the complainant reasonably believes to be a violation of law;
(2) Filing a complaint or instituting a proceeding or investigation concerning an alleged violation of law;
(3) Testifying, assisting or participating in a proceeding or investigation concerning an alleged violation of law; and
(4) Objecting to or refusing to participate in an activity that the employee reasonably believes to be in violation of law.
The whistleblower statutes enforced by OSHA allow for wide-ranging remedies, such as back pay, compensatory damages, voiding discipline imposed, and in some cases, punitive damages, attorney’s fees, and preliminary reinstatement (if previously fired). Some of the statutes even allow the complainant, under certain circumstances, to file an action against the employer directly in federal court.
Now OSHA is seeking to make it easier to bring a claim of retaliation. OSHA’s Whistleblower Advisory Committee recommended a number of changes, which OSHA is currently working to implement. The changes sought are:
(1) Lowering the standard of proof for proving retaliation from a “preponderance of evidence” to ”reasonable cause;” (Said another way, OSHA is seeking to move from a standard of “more likely than not” to “a reason to believe.”)
(2) Extending the deadline for filing retaliation claims from 30 days to 180 days;
(3) Permitting appeals of OSHA’s decisions directly to the Department of Labor’s administrative law judges;
(4) Temporary reinstatement following an initial finding in favor of an employee;
(5) Expanding the opportunities for complainants to take their cases directly to federal court;
(6) Increasing the circumstances for employees to obtain punitive damages and attorneys’ fees;
(7) Prohibiting pre-dispute arbitration agreements that limit employees’ rights to file a retaliation complaint.
In 2014, OHSA and the National Labor Relations Board (NLRB) began coordinating their enforcement activities. OSHA started advising complainants that had untimely complaints to bring them before the NLRB which has a more generous statute of limitations of six months. In turn, the NLRB is educating OSHA agents on the best way to steer retaliation complaints to the NLRB.
Recently, OSHA has resorted to issuing significant damage awards to try to curb retaliation in the workplace: $200,000 for a railway employee who was fired for reporting a workplace injury and $160,000 in back pay to a pilot who was fired for refusing to fly an aircraft he considered unsafe. The damage awards issued by OSHA in 2014 totaled $21.5 million.
In all, employers will see stepped up enforcement of retaliation claims by OSHA, standards that make it easier for the employee to win, larger awards to the employees, and coordinated efforts between OSHA and the NLRB. To minimize the consequences of these changes, employers should implement an internal reporting system that allows employees to raise the specter of wrongdoing in the workplace without fear of retaliation. An employer should act quickly to address and remedy legitimate complaints before they are brought before OSHA or another outside agency. Finally, and perhaps most importantly, employers should train management on what conduct is considered retaliation and the protections afforded employees who bring complaints.
Paula Lopez, January 22, 2015.
On Friday, January 16, 2015, the Supreme Court agreed to hear an appeal in four consolidated cases[i], challenging the Sixth Circuit Court of Appeals’ decision upholding same-sex marriage bans in Michigan, Kentucky, Tennessee, and Ohio. The Supreme Court’s decision to finally take up the issue of gay marriage was foreseen by Justice Ruth Bader Ginsburg, who told a Minnesota audience in September 2014 that if the Sixth Circuit’s forthcoming decision created a split among the circuits by deviating from other decisions striking down such bans, there would “be some urgency” for the Supreme Court to step in and decide the issue. This is precisely what happened.
The Sixth Circuit’s decision is in stark conflict with decisions from the Fourth, Seventh, Ninth and Tenth Circuits—which have all held similar state bans on same-sex marriages to be unconstitutional. In large part due to district and circuit court decisions invalidating state bans on same-sex marriages, there are currently 36 states, along with the District of Columbia, that allow same-sex marriage. It is now up to the Justices of the Supreme Court to resolve the split created by the Sixth Circuit’s ruling and hopefully resolve one of the most important civil rights issues of the 21st century.
In its decision granting certiorari, the Supreme Court limited the issues to be heard on appeal to two questions:
- Does the Fourteenth Amendment require a state to license a marriage between two people of the same sex?
- Does the Fourteenth Amendment require a state to recognize a marriage between two people of the same sex when their marriage was lawfully licensed and performed out-of-state?
Question 1 will be the subject of 90 minutes of oral argument and Question 2 will be the subject of 60 minutes of oral argument. Final briefs are to be filed by April 17, 2015 and it is expected that argument will be heard soon after. A decision will be rendered before the end of the Court’s Term in late June 2015.
The Sixth Circuit cases were brought by 16 couples who challenged state bans to same-sex marriages and their implications. One couple challenged Michigan’s state law, which defined marriage as a relationship between one man and one woman and which refuses to recognize any other unions, on the grounds that it violated the due process and equal protection guarantees of the Fourteenth Amendment. The couple challenged the law because they wanted to both be recognized as adoptive parents to each other’s adopted children so that in the event something happens to one of the parents, the family would not be split up. However, Michigan’s adoption laws do not permit unmarried couples to adopt jointly. After trial, the district court rejected Michigan’s bases for its marriage law, finding that the law could not satisfy rational basis review because it was not rationally related to a legitimate governmental objective.
The cases from Kentucky involve challenges by two groups of couples. One group, comprised of two couples, challenged the state’s marriage licensing law on the basis that the Fourteenth Amendment prohibits Kentucky from denying them marriage licenses. The district court ruled for the plaintiffs finding that Kentucky could not show a rational basis for its definition of marriage. The second group, comprised of four couples, challenged the portion of Kentucky’s law that refuses to recognize out-of-state same-sex marriages and sought to enjoin enforcement of the law. The basis for the challenge is that the ban violates their due process and equal protection rights. The district court also ruled for the plaintiffs in holding that Kentucky’s recognition ban could not survive rational basis review.
Ohio’s law refusing to recognize out-of-state same-sex marriages was challenged by two groups of plaintiffs on different grounds. One group, comprised of two couples, challenged Ohio’s refusal to recognize their out-of-state marriages on Ohio-issued death certificates on the basis that the refusal violates their due process and equal protection rights. After their spouses died, the surviving spouses, along with a funeral director (who joined in the suit) sought an injunction to require Ohio to list them as spouses on the death certificates. The district court ruled in favor of the plaintiffs finding, inter alia, that there is a fundamental right to keep existing marriages intact, classifications based on sexual orientation deserve heightened scrutiny, and Ohio failed to justify its law under either heightened scrutiny or rational basis review.
The second group, comprised of four same-sex couples married outside Ohio, sought to have Ohio recognize their marriages on their children’s birth certificates by listing both their names on the birth certificates. In the case of three couples, the children were born in Ohio, while the fourth couple lives in New York but adopted a child born in Ohio. The district court, on grounds similar to the other Ohio case, ruled in favor of the plaintiffs but expanded its remedy of the State’s recognition ban to include all same-sex couples and all legal incidents of marriage under Ohio law, not just the right to be listed as a parent on their children’s birth certificate.
The Tennessee case involved three same-sex couples challenging Tennessee’s law refusing to recognize their out-of-state same-sex marriages. The district court relied on other district court decisions within the circuit and elsewhere in preliminarily enjoining Tennessee from enforcing the law. Based on existing precedent, the district court determined that the plaintiffs would likely prevail on the merits of the case by showing that Tennessee’s recognition ban fails to satisfy rational basis review.
All four states appealed the district courts’ decisions. In a split decision of 2 to 1, the Sixth Circuit upheld Michigan, Kentucky, Ohio, and Tennessee’s laws banning same-sex marriage and/or refusing to recognize out-of-state same-sex marriages. The Sixth Circuit’s majority decision, authored by Judge Jeffrey Sutton, rejected the challenges to the laws finding that they do not violate the Fourteenth Amendment of the Constitution because under Judge Sutton’s interpretation of the original meaning of the Fourteenth Amendment there is no right to same-sex marriage.
In support of its decision, the Sixth Circuit considered itself bound by an 11 word Supreme Court ruling from 1973 in Baker v. Nelson, in which the Court rejected an appeal by a same-sex couple who was denied a marriage license by the state of Minnesota. In rejecting the appeal, the Supreme Court stated that the appeal did not raise a “substantial federal question.” Permeating throughout the Sixth Circuit’s decision is the majority’s belief that laws relating to marriage should be decided by the states in accordance with their legislative process and that any meaningful change to such laws should be accomplished through majority popular vote and not through the judiciary. Under this back drop, the Sixth Circuit’s majority ruling concluded that: (i) states have a rational basis for enacting laws recognizing opposite-sex marriages (rather than addressing the issue of whether states have a rational basis for enacting laws that recognize opposite-sex marriages while excluding same-sex marriages); (ii) there is no unconstitutional animus in laws banning same-sex marriages; (iii) there is no fundamental right to gay marriage; and therefore, (iv) heightened scrutiny does not apply to laws banning same-sex couples from marrying. The majority’s decision concluded by promoting a “wait and see” approach suggesting that if the Supreme Court takes up the issue it should not rush to constitutionalize a new definition of marriage to include same-sex couples, but should, instead, leave the issue to be resolved by the states and the people through the democratic process.
In dissent, Circuit Judge Martha Craig Daughtrey criticized the majority’s “wait and see” approach and its re-formulation of the issues on appeal. Judge Daughtrey believed the issue before the Sixth Circuit was whether the states’ laws violate same-sex couples’ rights to equal protection under the Fourteenth Amendment (as had been the approach taken by the majority of the District and Circuit Courts who decided the constitutionality of similar state bans). Instead, the majority turned the issue into whether the judiciary or the state legislature should decide how a state defines marriage within its borders.
Relying heavily on the reasoning underlying the decisions of the Fourth, Seventh, Ninth and Tenth Circuits in striking down similar state bans on same-sex marriage, Judge Daughtrey (like the district court judges presiding over the four cases on appeal), found that every basis asserted by the defendants for excluding same-sex couples from marrying had been invalidated. In fact, a decision by the Sixth Circuit affirming the district courts’ rulings seemed the obvious outcome to Judge Daughtrey that she posited whether the majority purposefully took such an incorrect position merely to create the circuit split that would force the Supreme Court to rule on this issue. Many who read the majority opinion, including myself, probably share in this notion.
Regardless of how the issue of the constitutionality of same-sex marriage reached the Supreme Court, a decision resolving the issue is eminent.
[i] The cases are Obergefell et al. v. Hodges et al. (case no. 14-556), Tanco et al v. Haslam et al. (case no. 14-562), DeBoer et al. v. Snyder et al. (case no. 14-571), and Bourke et al. v. Beshar et al. (case no. 14-574).