But-For Cause Requirement Will Limit Employer Liability in Age Discrimination Cases

As predicted in a previous edition of this newsletter, Gross v. FBL Financial Services, Inc., 129 S. Ct. 2343 (2009) is one of the most important discrimination cases to be handed down by the Supreme Court in recent years. The Court was faced with the question of whether a plaintiff in an age discrimination case must present direct evidence of discrimination in order to receive a “mixed motive” jury instruction. However, the divided Court never addressed that question because it determined that under the Age Discrimination in Employment Act (“ADEA”), a plaintiff must prove that age was the but-for cause of the adverse employment action, not merely a motivating factor.

The Court noted that while it is not clear that Price Waterhouse v. Hopkins, 490 U.S. 228 (1989) would have been decided the same way today, Congress amended Title VII to add liability for discrimination when the improper consideration was a motivating factor for the adverse employment action. Justice Thomas, writing for the Court, stated that the ADEA was not similarly amended and thus the Court was not bound by Title VII precedent regarding this issue.

The Court’s opinion will have a significant impact because prior to this decision each circuit applied the burdenshifting framework to ADEA cases. It is less clear what effect the decision will have on state discrimination claims based on state analogs to the ADEA.

One thing that is certain is that plaintiffs will have a much harder time proving a discrimination claim based on age. Justice Breyer, dissenting, pointed out that but-for causation in a discrimination case is far from scientific and will force parties to confront problematic hypothetical inquiries in which the “employer will often be in a stronger position than the employee to provide the answer.”

While this decision favors employers, it may cause a Congressional backlash against the Supreme Court, placing employers in a worse position. Many predict a Ledbetter-like reaction from Congress, legislating a reversal of the Court’s decision. The opinion essentially invited Congressional action because it turned almost exclusively on the lack of any reference to “motivating factor” in the text of the ADEA. But if Congress decides to amend the ADEA, there is no guarantee that it will only add “motivating factor” text to the statute. Congress could take the opportunity to further broaden the ADEA. So while this may be a victory for employers, they may bear the brunt of the punishment for the Court’s opinion.

Written by Kevin B. Leblang and Robert N. Holtzman, Kramer Levin Naftalis & Frankel LLP
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Employment Agreement Shortening Statute of Limitation is Invalid

In Maria Pellegrino, et al. v. Robert Half International, Inc., the plaintiffs were former employees who sued for unpaid overtime, violation of meal and rest period rules, failure to pay commissions, and failure to provide accurate pay stubs. Each of the employees had signed an employment agreement providing that no claims against the company shall be valid if asserted more than six months after the employee’s termination. The employment agreement also provided that each employee expressly waived any statute of limitation to the contrary. The company asserted that the employees’ claims were time barred because they filed their lawsuit more than six months after termination. The employees argued that the contractual provision truncating the time frame in which to sue was invalid.

In certain situations, California law allows parties to agree to shorten the time period in which to sue. Whether a shortened time period is permitted depends upon the types of claims and rights involved as well as the reasonableness of the time period. The rights at issue in this lawsuit were all supported by strong public policy. The statutes regarding overtime, meal and rest periods, timely payment of commissions and pay stubs were designed to protect employees and the general public. Laws that are designed to benefit the public, as opposed to laws that merely benefit an individual, cannot be set aside in a private agreement between employer and employee. In addition, the six month time period in the employment agreement was substantially shorter than the time frame in which the employees would ordinarily be able to sue under the applicable statutes of limitation.

Enforcing the shortened limitation period provision would result in barring legitimate, unwaivable statutory claims by employees who failed to discover the employer’s error within six months of termination. The court, therefore, concluded that the contractual provision shortening the time to sue unlawfully restricted the employees’ ability to vindicate their statutory rights. The court refused to enforce the contractual provision shortening the limitations period to six months after termination because it was contrary to public policy.

Written by Sheppard Mullin Richter & Hampton LLP
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Employee Endorsements Can Now Lead to Employer Liability

Under guidelines recently issued by the Federal Trade Commission (“FTC”)—Guides Concerning the Use of Endorsements and Testimonials in Advertising, 16 CFR Part 255—an employer may now face liability for employee endorsements of its products and services, if the employment relationship is not disclosed. The guidelines, which took effect on December 1, 2009, require that employees who endorse their employer’s products or services, must “clearly disclose” the employment relationship within the endorsement.

Although the new guidelines are primarily concerned with celebrity endorsements, they also apply to more routine comments ordinary employees may make on social media outlets such as personal blogs, Facebook and Twitter. The FTC has stated, for example, that where an on-line blogger discusses a product manufactured by her employer, she “should clearly disclose her relationship to the manufacturer to members and readers of the message board” because knowledge of that relationship “likely would affect the weight of credibility of her endorsement” in the eyes of the public. If the employment relationship is not disclosed, both the employer and employee may face liability under Section 5 of the Federal Trade Commission Act (15 USC § 45 et seq.), which prohibits unfair or deceptive acts or practices in the marketplace. This is so even if the employee’s endorsement was not authorized or sponsored by the employer, and even where the actual endorsing statement is not misleading.

While the FTC has indicated that it is not necessarily going to take enforcement action against an employer for the statements of a single “rogue” employee, employers should nonetheless take proactive steps to help protect against potential liability by ensuring that their technology usage policies cover all electronic communications, employee blogging and use of social networking sites (e.g., Facebook, Twitter, MySpace, LinkedIn). The policy should also clearly inform employees whether they are permitted to discuss the employer’s products and/or services online. There are advantages and disadvantages to authorizing such discussions. Permitting employees to do so may well serve the interests of the employer by providing increased exposure through positive word-of-mouth. However, it could also yield negative statements about the employer or its products which are seemingly authorized by the policy. Where an employer elects to allow employees to discuss its products/services, the policy should state that employees who engage in such discussions are required to clearly and conspicuously disclose their relationship with the employer. The policy should also require employees to include a disclaimer within any online discussion of the employer’s products/services, such as, “any opinion stated is that of the employee, and is not authorized by the employer.”

Written by Jessica Satriano, Bond Schoeneck & King
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Non-Disabled Applicant Can Go to Trial Based on Company's Pre-Employment Medical Inquiry, says Eleventh Circuit

A non-disabled applicant for employment can proceed to trial under the Americans with Disabilities Act based on a company’s unlawful pre-employment medical inquiry, according to a recent decision by the Eleventh Circuit Court of Appeals, Harrison v. Benchmark Electronics Huntsville, Inc. (11th Cir. January 11, 2010).

The case arose when John Harrison was working as a temporary employee for Aerotek, which assigned Harrison to work at Benchmark Electronics Huntsville, Inc. (BEHI). Harrison has epilepsy and takes barbiturates to control his condition. Harrison applied for permanent employment at BEHI and consented to a drug test. When his drug test came back positive, his supervisor learned about it and was in the room when Harrison explained his epileptic condition to the medical review officer (MRO). Soon thereafter, his supervisor decided not to extend an offer to Harrison and asked Aerotek not to return Harrison to BEHI.

Harrison filed a charge with the EEOC, which determined that Harrison was not disabled. Harrison then sued BEHI under the ADA, claiming that BEHI engaged in an unlawful pre-employment medical inquiry under the ADA. The district court granted summary judgment to BEHI. The court ruled that, even assuming Harrison had a right to sue based on a pre-employment medical inquiry, BEHI was entitled to ask whether he had a legitimate use for such medication.

A panel of the Eleventh Circuit Court of Appeals reversed the district court’s decision. At the pre-offer stage, the court noted, an employer may not conduct a medical examination or make inquiries of a job applicant as to whether the applicant is an individual with a disability, or as to the nature or severity of such disability. An employer may only inquire into the ability of an applicant to perform job-related functions. Joining several other circuit courts of appeal, the court held that this prohibition is not limited to disabled applicants. “Allowing non-disabled applicants to sue will enhance and enforce Congress’s prohibition,” the court reasoned. “Moreover, a contrary reading would vitiate [the Act’s] effectiveness.” Quoting an earlier Tenth Circuit decision, the court wrote that “[i]t makes little sense to require an [applicant] to demonstrate that he has a disability to prevent his [potential] employer from inquiring as to whether or not he has [one].”

The court then addressed the merits of Harrison’s claim. First, the court noted that the ADA recognizes an exemption to the pre-employment inquiry rule for drug tests. Not only are drug tests permissible at the pre-offer stage, but so are follow-up questions in response to a positive drug test, such as: “What medications have you taken that might have resulted in this positive test result?” However, disability-related questions are still prohibited.

The court ruled that under the circumstances, i.e. because Harrison’s supervisor told him that his drug test was positive, because Harrison disclosed his prescription, and because the supervisor was present in the room when Harrison explained his medical condition to the MRO, “a reasonable jury could infer that [the supervisor’s] presence in the room was an intentional attempt likely to elicit information about a disability in violation of the ADA’s prohibition against pre-employment medical inquiries.” The court also ruled that a reasonable jury could infer that the supervisor based his decision not to hire Harrison on information gleaned from an improper medical inquiry.

For employers in the Eleventh Circuit, the Harrison case offers a couple of valuable lessons. First, employers must not make prohibited pre-employment medical inquiries of any applicant, including applicants that are apparently or obviously not disabled. Harrison makes clear that any applicant is a potential plaintiff under the ADA.

Second, employers must be extremely careful with the handling of information obtained from drug tests. As Harrison illustrates, there is a fine and arguably fuzzy line between permissible follow-up questions following a positive drug test, and impermissible disability-related questions. To avoid crossing this line, employers may wish to consider administering drug tests only after making a conditional offer of employment to applicants. Once a conditional job offer is made, the employer may ask disability-related questions as long as this is done for all entering employees in that job category.

Written by Richard D. Tuschman, EpsteinBeckerGreen

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Adverse Employment Action Based On Gender-Related Non-Conforming Behavior and Appearance is Impermissible

Under Title VII, an unlawful employment practice is established when an employee demonstrates that gender is a motivating factor for an adverse employment action. Under that analysis, the 8th U.S. Circuit Court of Appeals has upheld the Title VII claims of a female hotel desk clerk who was fired after a company decision-maker complained that the employee lacked the pretty and “Midwestern girl” look desirable in a front desk employee. Lewis v. Heartland Inns of America, L.L.C., 8th Cir., No. 08-3860, Jan. 21, 2010.

Brenna Lewis began working for Heartland Inns of America in July 2005, starting out as a night auditor. In that job, Lewis worked the front desk from 11 p.m. to 7 a.m., doing it well enough to receive two merit-based pay raises and positive customer feedback.

In December 2006, Lewis’ manager, Lori Stifel, received permission over the telephone from the company’s Director of Operations, Barbara Cullinan, to offer to Lewis a daytime (7 a.m. to 3 p.m.) shift position on the front desk. Lewis accepted, and took over that position at the end of December. Although Cullinan initially had approved Lewis’ move to the day shift, her attitude changed after she met Lewis in person. At that point, Cullinan told Stifel that she wasn’t sure that Lewis was a “good fit” for the position, as Lewis lacked the “Midwestern girl” look that Cullinan felt was necessary at the front desk. By her own admission, Lewis is “slightly more masculine,” avoids makeup, and wears men's’ button down shirts and slacks. She has been mistaken for a male, and has been referred to as “tomboyish.” However, while Cullinan felt that front desk staff should be “pretty,” the front desk job description in Heartland’s personnel manual does not mention appearance.

Cullinan ordered Stifel to return Lewis to the overnight shift. When Stifel refused, Cullinan insisted that Stifel resign. Cullinan then required Lewis to re-interview for the day shift position, even though Lewis had held the position successfully for over a month. Lew protested, but attended the interview. Three days later, Lewis was fired. In its termination letter, Heartland stated that Lewis was “hostile” toward company policies and had attempted the “thwart” the interview process. Lewis then filed a lawsuit, asserting that Heartland fired her for not confirming to sexual stereotypes, and claiming that such conduct violated Title VII. The lower court disagreed and entered summary judgment in favor of the company. On appeal, the 8th Circuit reversed that decision, holding that sexual stereotyping can violate Title VII when it influences employment decisions.

Title VII prohibits discrimination based upon sex. In this case, Lewis provided evidence that Heartland found her unsuited for her front desk job based, not upon her work performance, but upon an appearance that was inconsistent with the company’s preferred feminine stereotype. At the summary judgment phase of a case, the question is whether a plaintiff has offered sufficient evidence from which a reasonable fact finder could find that the individual was discriminated against because of her sex. Here, the 8th Circuit found that Cullinan’s remarks, along with her discharge of Stifel for not taking Lewis off the front desk, and her imposition of a second interview even after Lewis performed successfully in the position, clearly provided such evidence.

The line between sexual orientation – which is not yet prohibited by federal law – and discrimination “because of sex” can be difficult to draw. However, employers must recognize that an employer who takes an adverse action against an individual because he or she does not fit within sexual stereotypes is engaging in sex discrimination because that discrimination would not have occurred but for the individual’s sex. If a company’s disciplinary actions are meant to punish or belittle non-compliance with gender stereotypes, the actions may constitute a violation of Title VII’s “because of sex” provision.

Written by Maria Greco Danaher, Ogletree Deakins
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