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Feature Article

EMPLOYEES NO LONGER NEED DIRECT EVIDENCE OF AGE DISCRIMINATION TO SUE AN EMPLOYER
In a long-awaited decision, the Supreme Court of the United States recently ruled that employers can be held liable for age discrimination even in the absence of any direct evidence of such bias, if a company’s otherwise neutral policy affects older workers more than younger workers. This type of claim is commonly known as a “disparate impact” claim, and up until this ruling, there was great disagreement among the nation’s federal appellate courts as to whether the Age Discrimination in Employment Act (ADEA) allowed disparate impact claims, or whether employees were limited to only those claims where there was direct evidence of age bias such as a negative comment about an employee’s age. Given the advancing age of the baby boomer generation, and with over 70 million workers currently over the cut-off age of 40, this decision has the potential to greatly impact the way companies do business. A lawyer for the AARP called the Supreme Court’s ruling in Smith v. City of Jackson a “shot in the arm for age-discrimination plaintiffs.”

In the underlying case, the police department in Jackson, Mississippi instituted a new pay scale designed to compete with the private sector, with newer officers receiving a higher percentage raise than those who had been on the force for a longer time. The older police officers claimed that the new pay scale was a form of age discrimination, because it had a “disparate impact” on them as compared to their younger counterparts. But the older officers had no direct evidence of age bias by the department in formulating the policy, so they had to rely on statistical evidence to make their case.

Disparate impact claims that rely on this type of statistical evidence have previously been sanctioned by the Supreme Court for most types of discrimination, such as under Title VII of the Civil Rights Act or the Americans with Disabilities Act (ADA). However, age discrimination is covered under the separate ADEA, which has different language than Title VII, and so it has long been an unanswered question whether the ADEA envisioned the broader disparate impact claims.

While the Supreme Court upheld the validity of the age discrimination disparate impact claim, it did create a unique and potentially potent defense for employers. The Court said that as long as a company’s policy is “based on reasonable factors other than age,” it is legal even if it has a disparate impact on older workers. This “reasonable factor” defense is not available for disparate impact claims brought under Title VII or the ADA. In fact, even though the older police officers were victorious in getting their disparate impact claim recognized by the Supreme Court, the Court ruled against them on their substantive claim because the Jackson police department was able to show how the new pay scale was based on “reasonable factors other than age.”

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The Court Report

McLEAN SAKS FIFTH AVENUE HIT WITH $1.6 MILLION VERDICT FOR LURING SUIT SALESMAN AWAY FROM MALL COMPETITOR
The Arlington Circuit Court recently entered a $1.6 million verdict against Saks Fifth Avenue, Inc. in a lawsuit brought by competitor James, Ltd., a high-end men’s clothier located just across the Tyson’s Galleria mall from Saks. The court found that Saks went to extreme lengths to hire two employees away from competitor James despite knowing that the employees were bound by a non-compete agreement and that the employees provided Saks with information regarding James’ customers. Saks’ co-defendant in the case, Doug Thompson, was the former James employee who agreed to work for Saks only after Saks agreed to indemnify him if James sued him. Thompson was James’ top salesman with annual sales approaching one million dollars.

James’ allegations against the defendants included breach of fiduciary duty, interference with contract and business expectancy and statutory conspiracy. In their defense, Saks and Thompson argued that the non-compete was unenforceable. The non-compete agreement restricted employees from work with a competitor within a one mile radius of the James store for a period of three years.

The court explained that the agreement was clearly binding and enforceable given that the geographic limitation under the agreement left employees who decided to resign from James with a significant portion of metropolitan D.C. in which they could work. In addition, because of this limited geographical restriction of the non-compete, the three year limitation was appropriate. The restrictive covenant was no greater than was necessary to protect the interest of James.

Employers should heed the warning presented by this court’s ruling. If an employer is considering whether to hire someone who is covered under a non-compete, the employer should seek independent counsel for advice on the enforceability of the agreement. In addition, in order to stay clear of any claims of conspiracy, employers should be especially careful not to support or engage in any activities with the potential employee that could be perceived as an attempt to lure away the customers of a competitor, including accepting from the potential employee information about the clients or other business information of the competitor.

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EMPLOYEE WHO COMPLAINED ABOUT LACK OF STAMINA AND PROBLEMS CONCENTRATING WAS NOT DISABLED UNDER THE ADA
An employee who filed a disability discrimination claim under the Americans with Disabilities Act (“ADA”) alleging that her rheumatoid arthritis and fibromyalgia substantially limited her stamina, concentration and ability to work because she required regular breaks and could not make her 62 mile commute without stopping, was unable to establish that her medical conditions significantly restricted her ability to perform major life activities as required under the ADA, the Western District of Virginia recently held in dismissing the case of Papproth v. E.I. DuPont De Nemours and Company.

The Plaintiff in Papproth v. E.I. DuPont provided her employer with a doctor’s note stating that her rheumatoid arthritis and fibromyalgia required her to take breaks to walk and stretch every 40 to 60 minutes, to rest for at least 30 minutes each day, to stop and stretch during her 62 mile commute to work, and prohibited her from working extended hours. The Plaintiff’s doctor noted that her productivity level was only about 60% of her former productivity level. The Plaintiff ultimately resigned her position after having received an unsatisfactory evaluation at work.

To receive the protection of the ADA, the Plaintiff was required to establish, among other things, that she had a medical impairment that substantially limited a major life activity, which means a person is significantly restricted from performing a major life activity such as walking as compared to the average person. The court noted that the Fourth Circuit has not addressed the question of whether concentration and stamina are major life activities as contemplated under the ADA, although several other courts have determined that they are not major life activities. The court did not decide whether stamina and concentration constitute major life activities under the ADA, noting that even if they were, the employee failed to establish that she was so impaired by her ailments to merit the protections under the ADA.

The court explained that the measure of substantially limited must be compared to that of the average person. The court further explained that in order for the employee in this case to show that her medical conditions substantially limited her ability to work, she needed to show that her conditions restricted her in the performance of a wide range of jobs, not just the job that she had with the Defendant. Plaintiff failed to do this since there was a wide range of jobs closer to her home that did not require such a long commute, and in addition, numerous jobs existed that would not have required her to sit for such long periods of time.

The outcome of this case is consistent with most Fourth Circuit cases finding that employees will not prevail in a disability discrimination case asserting that a medical condition substantially limits the employee’s ability to work when there are numerous jobs that the employee could perform without being significantly restricted. At least in the Fourth Circuit, the ADA does not allow an employee to prevail in arguing that she is substantially limited in her ability to work when she focuses only on her current job or on one particular job.

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ARLINGTON GROCERY STORE DECLARES EMPLOYEE’S MENNONITE ATTIRE VIOLATES DRESS CODE POLICY
A local Harris Teeter grocery store recently told a female employee, who came to work wearing a traditional Mennonite cape dress and bonnet, that her attire was in violation of the store’s dress code policy, which requires employees to wear khaki trousers or a skirt with a navy polo and red apron. This is the latest example of a conflict that can arise between company dress codes and an employee’s religious customs. A few years back, a Rastafarian working for a security company was singled out because his dread locks violated the company’s appearance code.

The Harris Teeter employee’s attire was consistent with Mennonite custom, which requires that females wear a bonnet and a long dress with a short cape. When the Mennonite was first hired, she asked Harris Teeter if she could wear her bonnet to work and the store approved her request. The employee initially came to work wearing her bonnet and clothing that complied with the uniform policy. However, more recently the employee came to work in a long dress with a cape made from khaki material. She said the material was approved by her supervisor. She covered the khaki dress with a navy polo shirt, but was told her attire did not conform to Harris Teeter’s dress code. According to Harris Teeter, if the Mennonite employee presents a letter from her pastor stating that the cape dress is the required dress for her religion, and if the Mennonite dress meets safety and sanitation guidelines, then the grocery store may approve of her wearing her Mennonite attire while at work. The employee is seeking legal advice from the Arlington Human Rights Commission.

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IF IT LOOKS LIKE A DUCK AND QUACKS LIKE A DUCK, CALL YOUR LAWYER
A federal district court in Pennsylvania recently ruled that the “quacking” noise created by a human duck call is not distinctive enough to qualify for trade secret protection. The case arose when a former employee of Ride the Ducks, an amphibious vehicle tour company, began to work for a rival company, Super Ducks. Ride the Ducks sought an injunction, requesting the court to enjoin Super Ducks from using duck call noises during their tours and demanding that Super Ducks terminate Mr. Saeger. In addition to denying trade secret protection for the duck calls, the court also held that Ride the Ducks’ employee training program designed to encourage customers to “quack” using the duck call was not unique enough to issue a preliminary injunction to enforce a confidentiality agreement.

Ride the Ducks alleged that Mr. Saeger violated his restrictive covenant by taking his skills acquired as a “duck boat” tour operator to Super Ducks. The company argued that it had taught Mr. Saeger how to operate a “quacker” as well as how to conduct a tour of Philadelphia using an amphibious vehicle. Ride the Ducks contended that it taught its tour operators broader principles of entertainment that would excite the tour participants. The tour operators play music during the tour (like the theme song from the movie “Rocky”), offer “witty and informative” commentary, and encourage customers to participate in the experience by “quacking” at each other throughout the tour. Ride the Ducks provides its customers with noisemakers called “Wacky Quackers,” whereas Super Ducks called its noisemakers “Kwacky Kwackers.”

The court settled the dispute between these dueling ducks, agreeing with Saeger and finding that his experience as a truck driver and boat pilot already provided many of the necessary skills, and that learning to “quack” and tell the history of Philadelphia were easy to obtain and not so difficult that they deserved to be protected by the restrictive covenant. The court emphasized that Ride the Ducks gave its “schtick” countless times a day, so that it was already available in the public domain for competing businesses to replicate.

Putting aside the comical nature of this dispute, trade secrets are often the key to a company’s survival, and therefore are no laughing matter. However, in order for such trade secrets to be protected in the courts, companies must go to great lengths to maintain their secrecy.

Ride the Ducks v. Duck Boat Tours, Inc., 2005 U.S. Dist. LEXIS 4422

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VIRGINIA-BASED FELD ENTERTAINMENT SUED BY FIRED LION CARETAKER AFTER CIRCUS LION DIES OF THIRST
A former employee of Virginia-based Feld Entertainment, who was hired to work as a caretaker for lions for Ringling Bros. and Barnum & Bailey Circus (“Ringling Bros.”), sued his employer after he was fired shortly after complaining that the lions needed water and one of the lions died. The employee had accompanied the lions on a train ride through the Mojave Desert, and his requests to stop the train to get the lions water during that trip were purportedly denied. The employee was terminated shortly after the train arrived in California, after being accused by Feld of causing a power outage. Consequently, he sued for wrongful discharge and emotional distress in a California state court alleging his termination resulted from his complaints about the treatment of the circus lions. Feld’s attempt to have the case removed to federal court was unsuccessful.

The employee brought solely state law claims, and he filed the lawsuit in California because that is the jurisdiction in which he was terminated. In an effort to remove the case to federal court, which is typically the desired strategy for employers, Feld Entertainment argued that the Labor Management Relations Act (“LMRA”) preempted the state law claims since the employee and employer were both parties to a collective bargaining agreement.

The court’s analysis of whether or not the employee’s wrongful discharge and emotional distress claims could be removed to federal court required the court to decide whether colorable state law claims existed and, if so, whether resolution of the asserted claims required the interpretation of the collective bargaining agreement. First, however, the court determined that California law applied to the tort claims raised by the employee because the law of place of the wrong is determinative over the issues of tort liability.

Ultimately the court found that the employee did not have a colorable claim for emotional distress because the actions of the employer occurred during and, were part of, the normal employment relationship and thus the claim fails under California law. However, the employee did have a valid claim under California law for wrongful discharge since the discharge violated fundamental principles of public policy, in this case, reporting a violation of the Animal Welfare Act. The court then determined that the wrongful discharge claim was not preempted by the LMRA because the resolution of this claim did not require the interpretation of a provision of the collective bargaining agreement since Feld Entertainment’s obligation to refrain from firing the employee did not arise from any provision in the collective bargaining agreement.

This case presents a few interesting lessons for employers. The first is that if an employee is terminated while traveling outside the home state of the employee and employer, the employer could be subject to a state law claim in the state where the actual termination took place. In addition, although the argument that LMRA preempted the state claims was not successful in this particular case, it is a good reminder that when a collective bargaining agreement is involved, this argument could be a helpful strategy when trying to remove a case to federal court.

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YACKITY YACK, DON’T TALK BACK—UNLESS, OF COURSE, YOU’RE UNION
We’ve all heard the phrase, “Don’t talk back to the boss.” Most employees know that shouting at or otherwise directing derogatory or profane language at a supervisor could jeopardize their job. While that is the case at most non-union workplaces, union workers who engage in such conflict with their supervisors enjoy extra protection under the National Labor Relations Act (NLRA). The extent of the protection afforded by the NLRA to union employees who confront management was the subject of two recent Fourth Circuit cases. Both cases involved varying degrees of confrontation by a union employee to his supervisor, for which the employees were reprimanded and terminated. In National Labor Relations Board v. Air Contact Transport, Inc., the employee raised his voice to the general manager at a party when asking about pay issues, which the Court found to be protected because the confrontation involved specific terms of work, and did not involve any excessively offensive language or threats. However, in Media General Operations. Inc. v. National Labor Board, the union employee told his supervisor that the company was racist and called the supervisor a redneck. The Fourth Circuit held that such a generalized rant employing offensive language did not fall under the protection of the NLRA, and therefore, the termination was proper.

Under the NLRA, a union member’s individual act is considered a protected activity if the purpose is to bargain, seek mutual aid or protection, enforce a collective bargaining agreement, seek or induce group action, or act on behalf of a group. While an employee may be engaged in a protected activity, if the method he or she uses to carry out that activity is so offensive or egregious, it falls outside the protection of the Act. Conduct that is unlawful, violent, a breach of contract, or simply indefensible, is outside the protection.

The employee in the Air Contact case was having an open discussion with the general manager and was yelling while exercising his opinion and even commented that the general manager’s answer was “bologna.” The Court found that although the employee was yelling, he was discussing pay issues relevant to all employees and that yelling did not automatically amount to insubordination or egregious conduct. While the employee in the Media General case was having an individual meeting with his supervisor and discussing unfair treatment in the workplace affecting all employees, the use of the terms “racist” and “redneck” did not advance a group issue. The Court found the employee’s derogatory attacks were simply his own feelings about the supervisor. The Court ruled that because the specific comments were so personal and egregious, they were outside the scope of the NLRA’s protection.

These two cases give both employers and union employees boundaries as to the scope of protection when engaging in discussions about workplace conditions. Employers do not have to tolerate threatening or abusive language just because an employee is a union member. Of course, employers do need to listen to and address employee complaints that are presented in a constructive manner, and that should be the case regardless of whether there is a union present.

Media General Link (PDF)
Air Contact Link (PDF)
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NEW FAIR CREDIT REPORTING ACT RULE SENDS EMPLOYERS TO THE STORE FOR MORE PAPER SHREDDERS
In these days of cutting edge technology and increasing identity theft through the use of technology, there is still concern regarding identity theft done the old-fashioned way, rummaging through garbage to find personal information. Employers who conduct credit background checks, criminal background checks or other background checks that involve obtaining a consumer report on their employees or applicants need to familiarize themselves with recent changes to the Fair Credit Reporting Act (“FCRA”) that address the disposal of consumer report information. This new rule, issued by the Federal Trade Commission (“FTC”) requires that any employer that obtains, maintains or otherwise possesses consumer information take reasonable measures to ensure that the information is protected from unauthorized access or use in connection with its disposal. The regulation, which is effective June 1, 2005, provides several examples on how to comply, including the implementation of and compliance with policies and procedures requiring the “burning, pulverizing, or shredding of papers” and “destruction or erasure of electronic media … so that the information cannot practicably be read or reconstructed.” For more information refer to: http://www.ftc.gov/opa/2004/11/factadisposal.htm.

The FCRA also requires an employer to notify an employee or applicant in writing if it intends to request a consumer report from a reporting agency and must obtain written consent from the employee or applicant before doing so. If the employer intends to take an adverse action, as defined under the Act, it must first fulfill notice obligations to the person against whom the action will be taken. An employer must also certify to the consumer reporting agency that it has complied with the notice requirements of the FCRA and that it will not use the information contained in the report for unlawful purposes. The notice to the employee or applicant must conform to the new model notice released by the FTC, found at http://www.ftc.gov/os/2004/11/041119factaappf.pdf. For more information on the FCRA, refer to: http://www.ftc.gov/os/statutes/fcrajump.htm.

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JUDGE FOR YOURSELF

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© Copyright 2005   Albo & Oblon, L.L.P.,  All rights reserved.
David Oblon, Managing Partner, Albo & Oblon
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