Supreme Court Lengthens
Time Employees Can Sue

The City of Chicago may incur an expense of $45 million in hiring discrimination payouts as a result of a recent U.S. Supreme Court ruling.

Here are the

The Implications

In its recent decision awarding damages and pensions to minority fire department applicants, the U.S. Supreme Court makes it easier for applicants and employees to file unlawful discrimination actions in some situations.

The Court's decision in Lewis v. City of Chicago means an illegal discriminatory event occurs each time an employer uses a previous discriminatory action (such as giving a discriminatory test) in a following, new employment practice. Each following new event begins a period of 300 days in which an applicant or employee can legally file a discrimination action.

What are the ramifications of this decision?

Each time an employer uses or applies an initial unlawful practice, the employer triggers possible exposure to an illegal discrimination action.
A sequence of actions (based on the first discriminatory action) will likely involve a number of individuals, not just one. The result could be an increase in claims involving groups of individuals and not just one person.
This means that employers who lose such actions likely will face much higher payouts to the winning parties, just as the city of Chicago is facing the possibility of paying out up to $45 million in damages and pension obligations to the 132 individuals discriminated against in the Lewis v. City of Chicago case.
If your business or organization currently uses pre-employment selection criteria (such as testing), you should reexamine the practices. Ensure that each criteria and test will not have an illegal disparate impact on individuals protected from discriminatory employment practices.
Check that each selection criteria and test that your organization uses is job-related and tailored to the needs of the job. If a criteria or test does have a disparate impact, it will be legal only if there is a legitimate business necessity for it.
Make sure that you can prove – to a jury and a court – that the criteria and tests your organization uses really do predict required and successful performance for each job position.
Finally, consult with an attorney and HR professional for guidance in your hiring practices.

Record Retention Requirements

Employers covered by federal anti-discrimination laws must keep certain records. EEOC regulations require that employers keep all personnel records for one year. If an employee is involuntarily terminated, his or her records must be retained for one year from the termination date.
Under the Age Discrimination in Employment Act, employers must also keep:

All payroll records for three years.

Any benefit plan information (for example, pension and insurance).

Any written seniority or merit system for the full period the plan or system is in effect and for at least one year after its termination.

Under the Fair Labor Standards Act, employers must retain payroll records for at least three years. In addition, employers must keep for at least two years all records (including wage rates, job evaluations, seniority and merit systems, and collective bargaining agreements) that explain the basis for paying different wages to employees of opposite sexes in the same establishment.
If a discrimination charge is filed, records must be kept longer. Consult with your attorney for more information.

The decision means other employers could also be at risk n the future... because of one key element in the Court's decision: The 300 day limit an employee has to file a discrimination claim can sometimes be much longer than 300 days following an initial discriminatory event.

Here is a recap of the Supreme Court's unanimous discrimination-in-hiring decision:

The case began in July 1995 when Chicago gave a written examination to 26,000 people seeking jobs with the city's fire department.

Six months later, the city announced in a press release the results of the test and explained that it would fill openings with a lottery from among test takers who scored 89 or higher (out of 100). These applicants were called "well qualified." Individuals scoring below 65 were told they didn't pass the exam. Those who scored between 65 and 88 were rated "qualified" and informed they probably would not be considered because of the sufficient number of applicants scoring in the "well qualified" range.

In May 1996, a lottery selected applicants from among the "well qualified" individuals. Another lottery in October 1996 chose applicants for positions. This type of selection, using results from the first test, was repeated nine more times during a six-year period.

In March 1997, an African-American man, Crawford Smith, who had scored in the "qualified" range on the written test, filed a discrimination charge. He alleged that the city's use of the test in selecting individuals to hire resulted in an illegal disparate impact on black applicants, which violated Title VII of the U.S. Civil Rights Act. (The "well qualified" group was 76 percent white.) Five other applicants joined Smith in the action.

Title VII has a 300-day period in which a person can file a discrimination action in situations like this. The individual has 300 days to file the action from the time the alleged discrimination (the "unlawful employment practice") occurs.

The individuals in the Chicago case filed the action well beyond 300 days after taking the test. Therefore, the city argued, the applicants' case should fail because it wasn't filed within the time period required by law.

The Supreme Court's Answer

The deciding issue before the Supreme Court was simple: Exactly when did the illegal employment practice" happen?

The city of Chicago conceded that the test given applicants was unlawful and that it did result in illegal disparate impact on minority applicants. So the Court's decision hinged on that key question, "When did the unlawful employment practice occur?"

Here's how the Court answered: "A plaintiff who does not file a timely charge challenging the adoption of a practice may assert a disparate-impact claim in a timely charge challenging the employer's later application of that practice as long as he alleges each of the elements of a disparate-impact claim."

The Court explained that determining whether a plaintiff's charge is timely requires "identify[ing] precisely the 'unlawful employment practice' of which he complains." To prevail in an illegal discrimination case, the complaining party must demonstrate that the employer uses a "particular employment practice" that causes a disparate impact on the basis of race, color, religion, sex, or national origin.

Then the Court stated, "Petitioners' claim satisfied that requirement. Title VII does not define 'employment practice,' but we think it clear that the term encompasses the conduct of which petitioners complain: the exclusion of passing applicants who scored below 89... when selecting those who would advance. The city 'use[d]' that practice in each round of selection."

In other words, each of the 11 times the city used the results of a discriminatory test to make hiring selections, the city engaged in a separate "unlawful employment practice."

Decision Could Lead to Future Problems

The city of Chicago also warned that if the Court ruled as it did, it would "result in a host of practical problems for employers and employees alike." Employers may face new lawsuits for practices they have used regularly for years. By the time the later legal actions are taken, "evidence essential to their business-necessity defenses might be unavailable (and in the case of witnesses' memories, unreliable)."

The Court dismissed the city's warning, stating: "... it is not our task to assess the consequences of each approach and adopt the one that produces the least mischief. Our charge is to give effect to the law Congress enacted."

Under applicable law, the judged added, "Congress allowed claims to be brought against an employer who uses a practice that causes disparate impact, whatever the employer's motives and whether or not he has employed the same practice in the past."

If there is an issue, the Court added, "it is a problem for Congress, not one that federal courts can fix." (Lewis v. City of Chicago, No. 08-974, 5/24/10)

[NOTE: Information and guidance in this article is intended to provide interesting and helpful information on the subjects covered. It is not intended to provide a legal service for readers' individual needs. For legal guidance in your specific situations, always consult with an attorney who is familiar with employment law and labor issues.]

Employee’s Deficient Performance Rather Than His Age Was the Reason Behind His Termination

Robert Senske was fired from his position as a high-ranking sales manager with Sybase, Incorporated. Senske was hired when he was 55 years old, and he was 58 years old on the day he was fired. Sybase said it fired Senske because a client complained about his performance and because he was dilatory in completing required paperwork, was persistently tardy for meetings, and was not a team player. Senske said he was fired because his manager considered him too old.

Senske sued Sybase under the Age Discrimination in Employment Act (“ADEA”), alleging that Sybase concocted fictional reasons to fire him in an attempt to disguise age discrimination. The district court concluded that no reasonable jury could find that discrimination, rather than Senske's performance deficiencies, was the root cause for Senske's termination and granted summary judgment to Sybase. On appeal, the Seventh Circuit affirmed, agreeing with the district court's conclusion that no reasonable jury could find that his age was the real reason behind Senske's termination.

Robert Senske v. Sybase, Inc. U.S. Court of Appeals 7th Circuit, -- F.3d ----, 2009 WL 4348328 (C.A.7 (Ill.)) Dec 3, 2009. The Seventh Circuit Court of Appeals’ jurisdiction includes Illinois, Indiana and Wisconsin.

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Maid Service Owes Workers More Than $3.5 Million in Back Pay

The owners of a Southland residential cleaning service were taken into custody and later released after failing to comply with a court order directing payment of $3.5 million in back wages, plus interest, fines and liquidated damages to at least 385 workers.

"It is unconscionable that an employer would continue to disregard the obligation to pay vulnerable workers, even after being ordered to do so by a federal judge," said Secretary of Labor Hilda L. Solis.

The owners of Southern California Maid Service and Carpet Cleaning Inc., Sergio Maldonado and Lorenza Rubio of Rolling Hills Estates, Calif., were taken into custody Friday, Oct. 30, and released Tuesday evening, Nov. 3, after appearing before the Honorable Andrew J. Guilford at the U.S. district court in Santa Ana, Calif. At the Nov. 3 hearing, the couple promised to pay $30,000 by Nov. 5. Maldonado and Rubio have until Nov. 12 to pay the balance of the $3.5 million.

The court sided with the U.S. Department of Labor in finding that the company had wrongly classified its home and carpet cleaners as independent contractors and failed to pay them the federally required minimum wage or overtime for hours worked over 40 per week.

The court awarded back wages to the workers on Aug. 21, 2007, following an investigation by the Labor Department's Wage and Hour Division. Judge Guilford also ordered payment of more than $1 million in liquidated damages for violations of the federal Fair Labor Standards Act (FLSA). In September 2008, the Labor Department filed for civil contempt charges for continued failure to comply with the order. In April 2009, the court ordered daily fines against the company of $2,000, plus an additional $200 per day each from Maldonado and Rubio. Despite repeated efforts by department attorneys, the company and its owners have failed to make any payments to the department or the workers.

Solis v. Southern California Maid Service and Carpet Cleaning Inc. Case Number: CV 06-3903 AG (MANx), U.S. District Court for the Central District of California, Nov. 2009

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The Alleged Sexual Harassment Was Not Sufficiently Severe Or Pervasive To Support a Title VII Claim

Andrea Anderson sued her former employer, Family Dollar Stores Of Arkansas, Inc., alleging sexual harassment in the form of a hostile work environment and actual quid pro quo sexual harassment in violation of Title VII and the Arkansas Civil Rights Act.

The United States District Court granted summary judgment in favor Family Dollar. On appeal the 8^th Circuit affirmed, holding that: (1) Anderson failed to make a prima facie case of sex discrimination as the conduct she relied on to support her claim was not sufficiently severe or pervasive to affect a term, condition, or privilege of her employment; the supervisor rubbed Anderson's shoulders or back, called her “baby doll” during a telephone conversation, made a one-time long-distance call suggesting that she should be in bed with him, and insinuated that she could go further in the company if she got along with him; and (2) there was no evidence to support Anderson’s claim that she suffered an adverse employment action as a result of her refusal to submit to the supervisor's implied or inferred demand for sexual favors; and (3) alleged harassment by coworker was not based on gender.

See Anderson v. Family Dollar Stores of Arkansas, Inc. --- F.3d ----, 2009 WL 2747013 (C.A.8 (Ark.), Sept 1, 2009)

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Employee's alleged good faith did not give him license to work for competitor in violation of non-compete covenant.

Even assuming that whether an ex-employee intended to violate a covenant not to compete might, in some circumstances, be relevant under Florida law to whether a preliminary injunction should issue to enforce the covenant, and even assuming that the ex-employee of a management consulting firm, in quitting the firm to accept a position to work for a direct competitor in Canada, reasonably believed that Canada was outside the geographic scope of the covenant not to compete, the alleged good faith nature of the employee's violation of the covenant did not prevent the district court, in accordance with a tolling provision in employment contract, from using the employee's breach as a basis to toll the six-month restrictive period and to prospectively enjoin the employee from working for the competitor for six months from entry of its order. The mere fact that the employee may have reasonably erred in determining the scope of the competitor non-compete covenant did not grant him a license to work for the competitor in violation of the agreement.

See Proudfoot Consulting Company v Derrick Gordon, US Ct. of Appeals, Eleventh Circuit, --- F.3d ----, WL 2256016 (Fla. July 30, 2009)

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U.S. SUPREME COURT MAKES IT HARDER TO PROVE AGE DISCRIMINATION

The Supreme Court has made it harder to prove discrimination on the basis of age, ruling against an employee in his mid-50s who said he was demoted because of his age.

In a 5-4 decision written by Justice Clarence Thomas, the court said a worker had to prove that age was the key factor in an employment decision, even if there was some evidence that age played a role. In other discrimination lawsuits, the burden of proof shifts to the employer once a worker shows there is some reason to believe a decision was made for an improper reasons. However, that no longer applies in age discrimination cases.

Jack Gross had been a vice president of FBL Financial Services of West Des Moines, Iowa. But in 2001, he lost the title of vice president in a reorganization and two years later, some of his responsibilities were given to a colleague.

Gross sued under the federal Age Discrimination in Employment Act and a jury agreed that his age was a motivating factor in his demotion. Gross was awarded $46,945 in lost compensation in the lower court.

The federal appeals court in St. Louis, however, overturned the verdict, which was affirmed by the U.S. Supreme Court.

The Age Discrimination in Employment Act ("ADEA") does not authorize a mixed-motives age discrimination claim. When an employee alleges that he suffered an adverse employment action because of both permissible and impermissible considerations (i.e., a “mixed-motives” case), he must prove that the disparate treatment would not have occurred, "but for" his age.

Held: A plaintiff bringing a disparate-treatment claim pursuant to the ADEA must prove, by a preponderance of the evidence, that age was the “but-for” cause of the challenged adverse employment action. The Burden of persuasion does not shift to the employer to show that it would have taken the action regardless of age, even when the plaintiff has produced "some" evidence that age was one motivating factor in that decision. In the instant case, in which the plaintiff alleged that the employer's action in reassigning the plaintiff to a different position and reallocating the plaintiff's former job responsibilities to a younger co-employee was based at least in part on plaintiff's age, the Court of Appeals erred in concluding that the district court should not have given a mixed-motives jury instruction where plaintiff did not present any direct evidence of discrimination. A Mixed-motives jury instruction is never proper in an ADEA case.

See Jack Gross v. FBL Financial Services, Inc., 08-441, 557 US ___, June 18, 2009, 21 Fla. L. Weekly Fed. S958a

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Florida - District Court Holds That Pit Bosses Should Not Be Digging Into the Tip Pool

Recently, Florida joined other states that have been evaluating challenges to the members of "tip pools." In Wajcman, et al. v. Investment Corp. of Palm Beach d/b/a Palm Beach Kennel Club, the challenge was filed by several dealers employed by the Palm Beach Kennel Club between the years of 2004 and 2007.

Plaintiffs initiated this collective action alleging that Defendant violated the Fair Labor Standards Act (“FLSA”) while Plaintiffs were employed as poker dealers in Defendant's cardroom. Specifically, Plaintiffs claimed that Defendant violated the FLSA by mandating their participation in a tip pooling scheme, whereby the poker dealers were required to share their tips with the cardroom floor supervisors. According to Plaintiffs, the cardroom floor supervisors should not have been included in the tip pool because they did not have significant interaction with the customers and did not normally receive tips. The jury found in favor of Plaintiffs and concluded that Defendant's tip pool was invalidated by the inclusion of the floor supervisors.

The issue addressed by the Court in this decision was whether Defendant had presented sufficient evidence to demonstrate that its violation of the FLSA occurred in good faith and under the reasonable belief that it was compliant with the FLSA. If the Court found sufficient evidence of good faith and reasonable belief, then it had the discretion to limit or deny an award of liquidated damages, which is otherwise mandatory under the FLSA.

After reviewing the evidence, the Court concluded that although the employer had a subjectively honest intention to ascertain and act in accordance with the requirements of the FLSA, the employer's belief regarding its FLSA compliance was not objectively reasonable. Thus, the employer's good faith defense was precluded, and the poker dealers were entitled to liquidated damages for overdue wages based on the illegal tip pool.

See John WAJCMAN and Charles Ashmore v Investment Corp. of Palm Beach d/b/a Palm Beach Kennel Club, U.S.District Court, Southern District of Florida Case No. 07-80912-Civ-Hopkins, May 15, 2009.

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Supreme Court Justices Rule for White Firefighters in Reverse Discrimination Case

The Supreme Court ruled on June 29, 2009, in a case with enormous implications for workplaces across the country, that white firefighters in New Haven suffered unfair discrimination because of their race when the city scrapped the results of a promotional exam.

“The city’s action in discarding the tests violated Title VII,” the court held in a 5-to-4 decision, referring to a section of the Civil Rights Act of 1964. The majority said the city’s fundamental arguments were “blatantly contradicted by the record.”

And while the case concerned public employees, the ruling is also likely to affect private employers, since Title VII of the Civil Rights Act covers private employers as well as public ones.

The case was rooted in tests given in 2003 for promotion to lieutenant and captain. The exams yielded no black firefighters eligible for advancement, prompting the city to throw out the results and promote no one. That move, in turn, triggered a lawsuit by 18 white firefighters, one of them Hispanic, who claimed racial discrimination, or what is often termed “reverse discrimination.”

The ruling written by Justice Anthony M. Kennedy acknowledged that the city faced a “damned if you do, damned if you don’t” situation, as Justice David H. Sourter put it when the case was argued on April 22. That is, if the city had allowed the promotional exam to stand, it would have faced a lawsuit from black firefighters.

But the city’s dilemma did not justify scrapping the exam results, Justice Kennedy wrote, "Fear of litigation alone cannot justify the city’s reliance on race to the detriment of individuals who passed the examinations and qualified for promotions,” the majority said.

The terms “disparate treatment” and “disparate impact” were crucial to the New Haven case. As originally enacted in 1964, Title VII of the Civil Rights Act held employers liable only for disparate treatment on the basis of race, color, religion, sex or national origin.

But in a 1971 case, Griggs v. Duke Power Company, the Supreme Court interpreted Title VII as prohibiting, in some cases, employer practices that were neutral on their face but discriminatory in operation. These “disparate impact” practices are to be prohibited if the employer cannot show that they arise from “business necessity.”

Notwithstanding Justice Souter’s “damned if you do, damned if you don’t” observation when the case was argued, the majority concluded on Monday that the City of New Haven “cannot meet that threshold standard” of showing that it would have been liable to a suit under the “disparate impact” principle. In these circumstances, the standard for permissible race-based action under Title VII is that the employer must "demonstrate a strong basis in evidence that, had it not taken the action, it would have been liable under the disparate-impact statute." Consequently, this decision will change the landscape of civil rights law and casts continued doubt on the disparate impact theory of discrimination.

See Frank Ricci v John DeStefano, No. 07-1428 557 US ___, June 29, 2009.

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Only Written Complaints Are Protected against Retaliation by the Federal Wage-and-Hour Law

An employee who was fired after he orally complained about alleged violations of the Fair Labor Standards Act cannot sue his employer for retaliation under the law because he failed to put his grievances in writing, a federal appeals court in Chicago has ruled.

The 7th U.S. Circuit Court of Appeals said the anti-retaliation provision of the FLSA protects an employee from being fired because he or she has "filed any complaint."

"The natural meaning of the phrase 'file any complaint' requires submission of some writing to an employer, court or administrative body," the three-judge panel explained.

Kevin Kasten worked for Saint-Gobain Performance Plastics Corp. in Portage, Wis., from 2003 until he was fired in 2006.

At some point during his tenure Kasten took issue with the location of the company's time clocks. He orally told several supervisors that the location of the clocks meant that employees were not being paid for time spent putting on and taking off their required protective gear, in violation of the FLSA.

Saint-Gobain disciplined Kasten a number of times for failing to punch in on the time clocks, warning him each time that he faced termination if he did not adhere to the time clock policy.

Finally, the company suspended and then fired him for refusing to clock in as required.

Kasten sued Saint-Gobain in the U.S. District Court for the Western District of Wisconsin, alleging he was fired in violation of the anti-retaliation provision of the FLSA.

The court granted summary judgment to Saint-Gobain, finding that Kasten had not engaged in an activity protected by the statute because he had not "filed any complaint" about the allegedly illegal location of the time clocks.

The court concluded that although intra-company complaints were protected activity, unwritten oral complaints were not.

On appeal, the 7th Circuit affirmed.

First, the panel agreed with the lower court and several other jurisdictions that the plain language of the FLSA indicated that internal intra-company complaints are protected under the statute.

However, again under the plain language of the statute, purely oral complaints are not protected, the appeals court said.

The panel rejected Kasten's argument that the word "file" can mean "submit," deeming that usage "overbroad."

The 4th Circuit has found that oral complaints are not protected activity, while the 6th, 8th and 11th circuits have ruled that oral complaints or "voicing concerns" were protected activity, the court noted.

See Kasten v. Saint-Gobain Performance Plastics Corp., No. 08-2820, 2009 WL 1838291 (7th Cir. June 29, 2009).

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