Allyn & Fortuna LLP
Diana Uhimov, January 14, 2015.
On Monday, the U.S. Supreme Court denied review of the Sixth Circuit’s holding in Kalamazoo County Road Commission v. Deleon, permitting employees to bring an action for workplace discrimination after being given a position that the employee had actually pursued. The suit was brought by Robert Deleon, a 53-year-old Mexican-American man who had worked for the Kalamazoo County Road Commission for 25 years. Deleon applied for a vacant position that involved working in an office located in a garage with diesel fumes, but the job was offered to another candidate. After that candidate left the position, Deleon was transferred to the job without the $10,000 salary bump he requested to compensate for the hazards, but the requested raise was denied. Deleon complained about the hazards when in his new position, and then took medical leave for issues caused by exposure to the fumes, as well as a work stress related mental breakdown. When he was ready to return to work, Deleon was terminated for exhausting all of his time off. The Supreme Court’s decision not to grant certiorari elicited a harsh dissent from Justice Samuel Alito—it is rare to dissent from a denial of review—that was not joined by another other justices.
In declining the Commission’s appeal, the high court upheld a January 2014 Sixth Circuit ruling, which found that a job transfer can constitute an adverse employment action, even where the employee had requested the transfer, as long as the work environment was “objectively intolerable.” An adverse action is retaliation against an employee or job applicant who opposes discriminatory practices, or participates in an employment discrimination proceeding. For an action to be deemed adverse, there must be “an injury or harm” that “a reasonable employee would have found . . . materially adverse.” Examples of adverse actions include, inter alia, termination, refusal to promote, threats, unjustified negative reviews, and assault.
Deleon claimed that the transfer was a deliberate attempt to thwart his employment and that he raised concerns about the hazards of the new position. His suit alleged that there was a hostile work environment characterized by racial insensitivity and derogatory comments throughout the course of his employment, and brought claims under the Equal Protection Clause, Title VII and the Age Discrimination in Employment Act. A plaintiff must show that he suffered an adverse employment action in order to establish all three causes of action.
Initially, a Michigan district court granted summary judgment in favor of the employer. However, the Sixth Circuit reversed in a 2-1 decision. The court reasoned that Deleon’s ultimately rejected request for ‘hazard pay’ suggest that Deleon may not have really requested or wanted the position. Opposing Judge Jeffrey S. Sustton dissented on the basis that an employer’s decision to grant a transfer requested by the worker himself cannot be an adverse employment action. Justice Alito’s dissent issued on Monday referred to Sutton’s assessment as a “common-sense conclusion.”
Alito’s strong five-page dissent referred to the Sixth Circuit’s holding as “clearly wrong” and urged the Court to overturn it. “The decision of the court below is unprecedented and clearly contrary to the statutes on which respondent’s claims are based. I would grant the petition for certiorari and summarily reverse,” Justice Alito wrote. “An old maxim warns: Be careful what you wish for; you might receive it. In the Sixth Circuit, however, employees need not be careful what they ask for because, if their request is granted and they encounter buyer’s regret, they can sue.”
Notably, Alito pointed out that Deleon had apparently not given any indication of his purported change of heart about wanting the transfer, and that Deleon continued to seek the transfer after finding out it wouldn’t be accompanied by a salary increase. He also said Deleon knew the position would involve exposure to diesel fumes when he applied for it. Although the Sixth Circuit held Deleon’s assignment was “involuntary,” Alito maintained that didn’t make the transfer adverse, since Deleon demonstrated interest in the job for months.
While the Supreme Court declined to comment on why it rejected the petition for certiorari, it can be interpreted to indicate that the case was not worth expenditure of the court’s resources, or that a majority of Justices want to evaluate the issue following a trial on the merits. The Commission will have an opportunity to file another petition to appeal should a trial be decided in Deleon’s favor. Alito cautioned that although the strangeness of this decision may reveal that the holding will not appear in future cases, if not reversed, it will be binding law in the Sixth Circuit. Accordingly, employers should keep detailed records of all employee complaints and requests.
Nicholas Fortuna, December 23, 2014
On December 10, 2014, in the matter of Purple Communications, Inc. a divided National Labor Relations Board held that workers have a statutory right to use an employer’s email system to engage in discussions about the terms and conditions of their employment (National Labor Relations Act, Section 7 rights) while on nonworking time. Section 7 of the NLRA grants employees the right to communicate about the terms and conditions of employment for the purpose of “collective bargaining or other mutual aid or protection.” In Purple Communications, Inc., the Board found that an employer who has granted access to its email system for work purposes must allow access for Section 7 purposes as well.
The Board did recognize that there may be special circumstances that justify specific restrictions on the use of the employer’s email system to discuss terms and conditions of employment. However, the burden is on the employer to demonstrate the need for such restrictions. The employer asserting special circumstances must articulate the interest at issue and how the interest supports the email use restriction it has implemented.
Purple Communications provides sign language interpretation services for hearing-impaired individuals. Its employees, known as video relay interpreters, provide two-way, real-time interpretation of telephone communications between hard-of-hearing and hearing individuals. The interpreters typically use an audio headset to communicate orally with the hearing participant on a call, leaving their hands free to communicate in sign language, via video, with the hearing-impaired participant.
In 2012, the Communications Workers of America (CWA) filed petitions for elections at Purple’s facilities in Long Beach and Corona, California. The CWA lost both elections, but filed objections with the Board. The CWA also filed unfair labor practice charges against Purple related to certain provisions in its employee handbook.
The handbook limited the use of all company technology, including computers, laptops and e-mail, to business purposes only. The employees were specifically prohibited from “engaging in activities on behalf of organizations or persons with no professional or business affiliation with the company; and sending uninvited email of a personal nature.”
In response to the objections filed, the Board overturned its decision in the matter of Register Guard, in which it held that employees do not have a right to use their employer’s email systems (or other electronic communications systems) for Section 7 purposes. In Register Guard, the Board justified it decision by stating that the employer’s property interest in its email system gave it the right to ban use of its electronic communication systems for non-work purposes.
In reaching its current decision, the Board called the majority’s analysis in Register Guard “incorrect,” noting that it undervalued the significance of communication as the cornerstone of Section 7 rights while placing undue emphasis on employers’ property rights. It also denounced the Register Guard majority’s failure to recognize e-mail as an increasingly “critical” mode of communication in the workplace, stating that the modern-day pervasiveness of e-mail has rendered it a natural (albeit virtual) “gathering place” for employees to communicate with one another, including about the terms and conditions of their employment.
The Board’s decision, however, does not stop employers from continuing, as many do, to monitor their computers and email systems for legitimate management reasons, such as ensuring productivity and preventing email use for purposes of harassment or other activities that could give rise to employer liability. In general, management officials may observe employees’ exercise of Section 7 rights so long as those officials do not do something out of the ordinary, such as increase monitoring during an organizational campaign or focus monitoring on protected conduct or union activists.
The Board’s decision does not prevent the employer from establishing uniform consistently enforced restrictions, such as prohibiting large attachments or audio/video segments, if the employer can demonstrate that they would interfere with the emails system’s efficient functioning.
The decision in Purple Communications, Inc., together with other recent decisions, signals the NLRB’s increasing willingness to make it easier for employees to organize under the NLRA. Employers should reexamine their email and technology policies in light of this decision.
Paula Lopez, December 11, 2014.
There is no question that in recent years there has been a significant increase in employment claims filed against employers. While there are federal, state and local laws prohibiting discrimination in the workplace, state and local laws tend to be more expansive than federal statutes by offering greater protections to employees that can often result in larger rewards. As a result, employees often prefer to bring employment claims under state statutes like New York’s Human Rights Law (HRL) and New Jersey’s Law Against Discrimination (LAD). Courts in New York and New Jersey have given employers an arsenal of contract provisions that can be utilized to reduce the volume of employment claims filed against them and control the cost of litigating such claims. For instance, employers can incorporate provisions relating to the arbitration of employment claims, class action waivers (in both court and arbitration), and waivers of jury trials into their employment agreements and applications—which will be enforced. Recent decisions upholding a contractual provision shortening the limitation period for filing employment related claims in New York and New Jersey have strengthened employers’ arsenals.
The statute of limitations for bringing a claim under New York’s HRL is three years, while the statute of limitations for bringing a claim under New Jersey’s LAD is two years. A contractual provision included in an employment application that reduces employees’ time to file any employment related claims to six months was held to be enforceable by intermediate appellate courts in both New York and New Jersey. Both cases involved the same employer, Raymour & Flanigan, and the identical contractual provision was included in the company’s employment application. The provision included in a section immediately above the signature line entitled “Applicant’s Statement” stated the following:
I AGREE THAT ANY CLAIM OR LAWSUIT RELATING TO MY SERVICE WITH RAYMOUR & FLANIGAN MUST BE FILED NO MORE THAN SIX 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.
In the New Jersey case, Rodriguez v. Raymours Furniture Co., Inc. t/a Raymour & Flanigan, both the trial court and the Appellate Division held that the contractually shortened statute of limitations was enforceable and granted Raymour & Flanigan summary judgment dismissing an action filed nine months after plaintiff’s termination.
The plaintiff in Rodriguez filed an action claiming that he was terminated in retaliation for filing a worker’s compensation claim and discriminated against based on his disability, in violation of New Jersey’s LAD. The Appellate Division’s decision in Rodriguez held that contractual reductions of a limitations period are enforceable so long as they are reasonable, not against public policy and not prohibited by statute. The decision provided a thoroughly reasoned and in-depth analysis of its bases for enforcing the contractual waiver of the applicable statute of limitations.
In addressing the plaintiff’s argument that the provision is unconscionable because the six month limitation is included in a contract of adhesion, the court acknowledged that in light of the unequal bargaining power between the employer and applicant, the employment application is a contract of adhesion but, that alone, is not a reason for rendering the provision unenforceable. The court cited to U.S. Supreme Court decision Gilmer v. Interstate/Johnson Lane Corp., which held that “the [m]ere inequality in bargaining power … is not a sufficient reason to hold that [such] agreements are never enforceable in the employment context.”
The court then considered whether the circumstances surrounding the employee’s execution of the application were procedurally unconscionable and found that they were not. Critical to the court’s determination were the following factors:
- Provision was contained in a short two-page contract;
- Provision was conspicuous in the contract (it was in bold, all caps, oversized print);
- Provision was contained in the Applicant’s Statement directly above the signature line;
- Provision was in clear, uncomplicated language; and
- The employee was not pressured into signing the application—he took it home and filled it out with the help of a friend and returned it the next day.
The court then looked at whether the application was substantively unconscionable—did it contain harsh, one-sided terms? In determining that the application was not substantively unconscionable, the court considered four factors: “(1) the subject matter of the contract, (2) the parties’ relative bargaining positions, (3) degree of economic compulsion motivating the ‘adhering party’, and (4) the public interests affected by the contract.”
With regard to the first factor—subject matter of contract, the court relied on long-standing case law recognizing a contractually shortened limitations period as a valid and legitimate provision to be included in employment contracts. In addition, the court noted that six months is the statutory limitations period for filing an administrative claim under LAD with the New Jersey Division on Civil Rights. As to the second and third factors—bargaining power and economic compulsion, the court held that even though Raymour & Flanigan was in a superior bargaining position, the employee was not forced to pursue the application if he did not agree with its terms and was free to apply for another job with another employer. The court stated that “anyone who needs a job is under some level of economic compulsion, but plaintiff has presented no evidence that his circumstances were any more egregious than those faced by another applicant seeking employment.” In addressing the final factor—public interests affected, the court held that a contractually agreed-upon six-month limitations period is not contrary to New Jersey’s public policy in favor of protecting workers’ rights and prohibiting discrimination in the work place because the shortened period is reasonable.
The court distinguished the enforceability of a contractually agreed-upon six month limitations period in the context of Federal claims subject to the exclusive jurisdiction and exhaustion of administrative remedies with the Equal Employment Opportunity Commission (“EEOC”). The court noted that a six-month contractual limitations period for such claims would be unenforceable because it often takes more than six months for the EEOC to review a claim and determine whether it will take action on behalf of a claimant or issue a right to sue letter. Therefore, a six-month limitations period would abrogate “a claimant’s ability to bring a claim and … be contrary to the public policy established for federal claims subject to EEOC jurisdiction.”
While the Appellate Division’s holding in Rodriguez remains good law, the New Jersey Supreme Court has granted the plaintiff certification to appeal the decision. Whether the Court will reverse the decision remains to be seen. However, in light of the Appellate Division’s thoroughly reasoned decision that is in-line with long-standing judicial precedent, a reversal seems unlikely.
As mentioned above, the identical provision at issue in Rodriguez was litigated last year in New York in the case, Hunt v. Raymour & Flanigan. Hunt involved employment discrimination and unlawful retaliation claims brought by a former employee of Raymour & Flanigan pursuant to Executive Law § 296 and Administrative Code of the City of New York § 8-107. The action was filed a little over nine months after the employee’s termination. Raymour & Flanigan’s pre-answer motion to dismiss based on the six-month contractual limitations period contained in the employment application was denied by the trial court. On appeal, the Appellate Division, Second Department reversed the trial court’s decision and dismissed the action.
The Second Department held that “parties to a contract may agree to limit the period within which an action must be commenced to a period shorter than that provided by the applicable statute of limitation. Absent proof that the contract is one of adhesion or the product of overreaching, or that [the] altered period is unreasonably short, the abbreviated period of limitation will be enforced.” Without going into the in-depth analysis undertaken by the Appellate court in Rodriguez, the Second Department held that by signing the employment application, the employee agreed to the shortened statute of limitations. Its application to Federal claims was not addressed by the court. No further appeal was sought by the plaintiff and Hunt remains good law in New York.
Therefore, even though employment claims are on the rise, employers in New York and New Jersey have tools available to them that can be incorporated into their employment agreements and applications to help offset the volume and costs associated in defending against employment claims.