Adam Liptak of the New York Times had an interesting preview about an important employment law case scheduled to be argued before the U.S. Supreme Court this month.  In Ricci v. Destafano, scheduled for oral argument on April 22, 2009, the Court is being asked to determine whether the City of New Haven’s use, and then abandonment, of a firefighter promotional exam discriminated against white firefighters. 

As  Liptak wrote for the Times, Frank Ricci was an 11-year veteran of New Haven Fire Department who desired to advance to lieutenant.  To qualify for the promotion Ricci had to take a test that the City paid $100,000 to an independent testing company to develop.  The testing company , I/O Solutions, Inc., went to extraordinary lengths to ensure that the test was free of any racial bias.

Ricci wanted the promotion so badly that when the City offered the promotional exam, Ricci "gave up a second job and studied up to 13 hours a day.  Mr. Ricci, who is dyslexic, paid an acquaintance more than $1,000 to read textbooks onto audiotapes. He made flashcards, took practice tests, worked with a study group and participated in mock interviews."

Ricci finished 6th out of the 77 candidates that took the test.  However, because none of the 19 African American firefighters scored high enough to qualify for the promotion, the City threw out the test.  At this point it appears that the City was concerned about being sued by the African American firefighters who scored poorly on the test claiming that the test had a disparate or adverse impact on them.

Instead, Ricci (along with eighteen other firefighters) sued the City claiming that its abandonment of the test because none of the minority candidates qualified for promotion under the test constitutes unlawful discrimination. The trial court recounted that the City’s motives for abandoning the test that included fear of public criticism, the possibility of more lawsuits from minority applicants and a desire to promote diversity and manager role models for firefighters.

The case is likely to outline the extent to which an employer can go to further its goal of increasing racial diversity in the workplace.  And while most "reverse discrimination" lawsuits do not tend to do well in Court, the facts in Ricci make for an intriguing case for the Justices to consider.  For more background information and  "pregame" commentary on this case, the National Journal Magazine, the New Haven Independent and the Connecticut Employment Law Blog have some interesting articles.  Adversity.net has the results of the test by score and race.

I recently wrote about several leave of absence bills pending in the Texas Legislature. On March 25, Congressional Democrats introduced a bill to provide twelve weeks of paid federal family & medical leave –the Family Leave Insurance Act of 2009 (HR 1723).

Unlike the FMLA which only applies to employers with 50 or more employees within a 75 mile radius, the Family Leave Insurance Act of 2009 would apply to employers with 2 or more employees. Employees eligible for the new benefit include employees who earned wages (i.e., paid into the fund) with a covered employer for a minimum of 6 months prior to seeking benefits; and has been employed by the employer with respect to whom paid leave is requested for at least 625 hours of service during the previous 6 months.

Benefits are available to eligible employees who take the leave for the same reasons as FMLA (i.e., the birth or placement of a son or daughter; to care for a serious health condition of the employee or the employee’s family member, including a family service member; or due to a qualifying exigency arising from a close family member who is on or been called up to active military duty).

The employee’s benefit amount is dependent on the employee’s annual income and is calculated on a sliding scale.

  • Up to $20,000 is paid 100 percent of that employee’s daily earnings;
  • More than $20,000 but less $30,000 is paid the greater of 75 percent of that employee’s daily earnings; or 100 percent of the daily earnings of an employee with an annual income of $20,000;
  • More than $30,000 and not more than $60,000 is paid the greater of 55 percent of that employee’s daily earnings; or 75 percent of the daily earnings of an employee with an annual income of $30,000;
  • More than $60,000 and not more than $97,000, is paid the greater of 40 percent of that employee’s daily earnings; or 55 percent of the daily earnings of an employee with an annual income of $60,000; and
  • More than $97,000, an amount equal to 40 percent of the daily earnings of an employee with an annual income of $97,000.

The benefits would be paid from a federal trust fund. The trust fund would be funded from both employer and employee contributions. Employers and employees would both contribute .2 percent of each employee’s wages to the fund beginning on January 1, 2011. Small employers (under 20 employees) would pay a .1 percent premium. The law, if passed, would be administered like state unemployment benefit programs.

Finally, the bill provides anti-retaliation provisions; creates a new civil cause of action against employers that violate the anti-retaliation provisions; as well as potential administrative fines and penalties.

On April 3, 2009, the Supreme Court of Texas held that a premises owner who hires contractors to perform work on its premises and enters into agreements whereby the owner will provide workers’ compensation insurance to the contractor’s employees is entitled to the benefit of the exclusivity provisions of the workers’ compensation act and cannot be sued for negligence by the contractor’s employees.  In other words, a premises owner who contracts to provide workers’ compensation for its contractor’s employees gets to stand in the shoes of a general contractor and claim the benefit of the exclusivity defense.  For more commentary and analysis on this opinion, see the Supreme Court of Texas Blog.

According to the Centers for Disease Control, over 35 percent of all Americans are overweight and obese.  Last week, Senators Tom Harkin (D-IA), John Cornyn (R-TX) and Representatives Blumenauer (D-OR) and Mack (R-CA) have introduced the bipartisan Healthy Workforce Act.  (HR 1897, SB 803).  The bills would provide a tax credit to companies that offer effective and comprehensive wellness programs such as health risk assessments, health awareness and behavioral change programs.  According to Senator Harkin’s press release the bills would cover 135 million full and part-time employees and provide the tax credits to programs that provide meaningful incentives for program participation and employee committees that tailor programs to meet workforce needs.  Wellness programs typically promote physical activity and disease prevention such as weight loss and exercise programs, smoking cessation programs, and health screening programs.

The bills are supported by the American Heart Association and the U.S. Workplace Wellness Alliance, a group comprised of businesses, health care advocates, and nonprofit organizations dedicated to the vision that a healthier U.S. workforce.

Today, the U.S. Supreme Court held that provisions in collective bargaining agreements that clearly and unmistakably require union members to submit statutory discrimination claims to the grievance and dispute resolution provisions of the agreement are binding and enforceable. 

In 14 Penn Plaza LLC v. Pyett ,  a dispute arose over a commercial office building’s reassignment of night watchmen employees (whose duties were outsourced) to less desirable positions such as light duty cleaners and porters.  The reassigned employees, members of the Service Employee International Union, Local 32BJ, filed a grievance with the union contending that the reassignments violated, among other things, the CBA’s ban on age discrimination.  When the grievances were unsuccessful, the Union requested arbitration under the dispute resolution procedures of the CBA.  The union later withdrew the grievances to the extent they complained about age discrimination prohibited by the contract but continued to press for arbitration on the remaining claims.

The disgruntled reassigned employees then filed a charge of discrimination with the EEOC over their reassignment claiming the reassignments were discriminatory.   After the EEOC issued a right to sue letter and the employees sued in federal district court, the defendant filed a motion to compel arbitration relying on the language of the grievance and dispute resolution procedures of the CBA with the union that stated:

§ 30 NO DISCRIMINATION. There shall be no discrimination against any present or future employee by reason of race, creed, color, age, disability, national origin, sex, union membership, or any other characteristic protected by law, including, but not limited to, claims made pursuant to Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the New York State Human Rights Law, the New York City Human Rights Code, . . . or any other similar laws, rules, or regulations. All such claims shall be subject to the grievance and arbitration procedures (Articles V and VI) as the sole and exclusive remedy for violations. Arbitrators shall apply appropriate law in rendering decisions based upon claims of discrimination.

The trial court and Second Circuit Court of Appeal refused to compel arbitration holding that a CBA could not waive the bargaining unit members’ right to a judicial forum over statutory civil rights claims created by Congress.

The Supreme Court reversed holding that where the intent to submit statutory discrimination claims to the grievance and dispute resolution procedures of the CBA is clear and unmistakable (an issue that was not in dispute before the court –i.e., the parties agreed that the language was sufficiently explicit) nothing precluded the union’s ability to waive its members right to a judicial forum to resolve those discrimination claims.  A majority of the Court rejected the employee’s argument that the union was waiving important, substantive rights to be free from age discrimination. 

The Court noted that the union had not waived (nor could it) the employee’s right to be free from and to challenge employment actions that were based on unlawful motivations such as age discrimination.  Rather, the Court observed, the Union had merely negotiated for and agreed that such claims would be resolved in a forum other than a judicial one –i.e., arbitration.  Consequently, the Court held that to the extent the employees were to litigate their statutory age discrimination claims they would have to do so within the confines of the grievance and dispute resolution procedures of the CBA.

As a consequence of this ruling it is unlikely that unions will agree in future negotiations that their grievance and arbitration procedures include employment discrimination and civil rights claims.  Placing the unions in the position of using limited resources to arbitrate otherwise individual claims is unlikely to be something that benefits the majority of the bargaining unit members.  This potential conflict of interest is something most unions would prefer to avoid. 

Other commentators have suggested, and I agree, that the holding of this case is likely to be limited because Congress may seek to overturn it as it did with the Court’s Ledbetter decision.  See Jottings by an Employer’s Lawyer and The Delaware Employment Law Blog . 

Another potential consequence is that the existence of a mandatory arbitration provision in a CBA covering employment discrimination claims may be an important factor the EEOC considers in deciding whether to litigate over a particular charge of discrimination.  Under the current law the EEOC is not be bound by the grievance and arbitration provisions in CBA’s (nor individual employment contracts between employees and employers) and it could vindicate an employee’s rights in a federal judicial forum notwithstanding the CBA.

Until legislation is passed to overturn 14 Penn Plaza, employers and unions with CBAs that clearly and unmistakably include employment discrimination and civil rights claims in the grievance and dispute resolution provisions will now be forced to resolve those disputes in an arbitral forum.

On March 20, 2009 I posted an entry about several leave of absence bills pending in the Texas Legislature.  Today I want to highlight a few other bills that will effect Texas employers if passed.

  • HB 32  Prohibiting discrimination against employees of workers’ compensation nonsubscribers who sustain an injury in the course and scope of their employment.
  • HB 183  A bill to link the Texas minimum wage to the federal minimum wage.
  • HB 226 Prohibits an employer from discriminating against an employee that has refused to participate in an employer’s charitable deduction campaign.  
  • HB 978  To amend, and greatly expand, prohibited disability discrimination under the Texas Commission on Human Rights Act.
  • SB 730 prohibits an employer from implementing policies prohibiting employees from keeping legal firearms and ammunition in locked vehicles on the employer’s parking lot.
  • SB 986 To extend the statute of limitations for discrimination claims alleging discrimination in the payment of compensation.  State law equivalent of the Lilly Ledbetter Fair Pay Act.

There are also a number of immigration bills pending this session.  Michael Fox has detailed those bills on his blog.

 

Most wage and hour lawsuits in Texas focus on an employer’s alleged misclassification of an employee as exempt from overtime.  However, a recent jury verdict from a federal court in Houston teaches that even in a highly unregulated wage and hour state like Texas, there are other wage and hour provisions employers must comply with and that can lead to expensive and protracted litigation.

The Lawsuit

On March 25, a federal jury in Houston, Texas awarded 55 employees $270,000 plus interest and attorneys fees.  The employees in this collection action were current and former waiters and waitresses working for the Chili’s food chain who were required to contribute a percentage of their tips into the restaurant tip pool.  That tip pool allocated one percent of the total pool to "food expediters."    Food expediters are employees that set up trays of food and condiments that servers take out to customers.  The expeditors could be paid a salary or paid a higher hourly wage than the Texas waiters who are paid $2.13 per hour.  This dispute centered primarily around whether food expeditors were tipped employees under the Fair Labor Standards Act and whether the Chili’s tip pool requiring the tipping of expeditors was voluntary.

Tipped Employees and Tip Pooling Arrangements

Tipped employees are employees that customarily and regularly receive at least $30 a month in tips.  Tip pools requiring tipped employees to contribute a portion of their wages to a tip pool that is shared with other normally-tipped employees (e.g., bartenders and bus boys) are legal as long as a tipped employee is not required to contribute more than 15 percent of his or her wages to the pool and the pool is not shared with non-tipped employees.  Tip pooling with non-tipped employees must be completely voluntary and each tipped employee must determine for himself whether and how much to contribute to the pool.  If the tip pool includes non-tipped employees and is not voluntary it is an unlawful deduction from wages.

The Verdict

In the lawsuit, the employees alleged that Chili’s mandatory tip pooling arrangement that included typically non-tipped employees (i.e., the expediters) was an illegal deduction from wages.   A Houston jury agreed and awarded the servers the damages that resulted from these alleged illegal deductions.  And while the employees will only obtain an average of approximately $4,900 each from a final judgment, the significant cost to the employer will be in the court awarded attorney’s fees that have not yet been determined and will likely be high six figures or more.  According to Dave Faries at the Dallas Observer’s Food Blog (City of Ate), Chili’s parent company has announced that it will appeal the jury verdict.

Because the defendant in this case was a national restaurant chain I expect the verdict will prompt more lawsuits against restaurant chains challenging their tip pooling arrangements.

Following a GAO report that concluded that the Department of Labor inadequately investigated complaints from low-wage and minimum wage workers who claimed that their employers failed to pay the federal minimum wage, required overtime, and failed to pay employees their last paycheck the DOL has reacted. 

This week, Secretary of Labor Hilda Solis  announced that the DOL Wage and Hour Division would increase the number of investigators at its field offices by 150 to refocus the department on its enforcement responsibilities.  Since Texas has three field offices of the forty-five nationwide, on a prorata basis, Texas could see a net increase of ten investigators.

Additionally, Secretary Solis announced the intent to hire 100 new investigators to enforce the compliance of contractors receiving assistance under the American Recovery and Reinvestment Act. This renewed emphasis on enforcement efforts and an increased number of investigators will undoubtedly result in more frequent and active DOL investigations.  Texas employers should ensure that their classifications of employees as exempt are accurate and that their pay practices comply with the Fair Labor Standards Act to avoid being targeted by a more active DOL.

It seems likely that there will be some manner of labor organization reform to the almost seventy-five (75) year old National Labor Relations Act.  Three bills pending before Congress offer differing levels of reform.  

Pro-Labor:  Employee Free Choice Act of 2009 (H.R. 1409) Would require the National Labor Relations Board certify a union (without a campaign or election) that obtains signed authorization cards from a majority of the employees; requires companies and unions to enter into binding arbitration over the terms and conditions of an initial contract (binding for two years) if it cannot be agreed to after ninety (90) days of negotiations and thirty (30) days of mediation; and increases the penalties that can be assessed against employers found to have discriminated against an employee in violation of the NLRA.

Pro-Management:  Secret Ballot Protection Act (S.B. 478)  This bill would make it an unfair labor practice for an employer to recognize a union that has not been selected by secret ballot and also make it unlawful for a union to cause an employer to recognize and bargain with it in the absence of a secret ballot election.

Pro-Labor:  National Labor Relations Modernization Act (H.R. 1355)  This bill would require employers to provide labor organizations with equal access to the employees in the run up to a representational election.  It would require employers that intend to make presentations, provide handouts, display signage or have meetings to allow the unions to conduct the same activities and have the same access.  This bill does not, however, in its current form attempt to eliminate the secret ballot as the EFCA does.  

Labor organization reform is a priority for organized labor.  Maintaining the status quo, preserving the right to secret ballot elections is a priority of business.  With the emphasis each side is placing on the issue it seems likely to me that some form of reform will become law during 2009.  Stay tuned for more developments as we see which bill or compromise bill becomes law.

 

The EEOC recently released the latest statistics detailing the number of charges of discrimination filed in 2008.  Last year marked the largest number of charges filed in a single year totaling 95,402 charges of discrimination.  While every category of charges increased (and the total increased 15.2 percent over 2007), charges of age discrimination and retaliation increased the most at 28.6 and 22.6 percent respectively. 

Disability discrimination claims saw the least amount of growth at 9.6 percent.  However, with the passage of the ADA Amendments Act in 2008, I expect 2009 disability discrimination claims to be up sharply during 2009.  Equal Pay Act claims were also up 16.6 percent and with the passage of the Lilly Ledbetter Fair Pay Act, claims arising under that statute will also likely increase in 2009 and beyond.  With escalating unemployment, the deepening recession, and an increase in the EEOC’s budget, I expect charge filings for 2009 will again set an all-time record for charge filings across all categories and an uptick in resulting civil rights litigation against employers.