Issues in Employment Law

May 2001

Employers should notify its employees immediately at the commencement of leave that it will consider ANY long term sick leave as leave pursuant to the Family and Medical Leave Act, , and further request that the employee verify that the leave is for a "serious health condition," in light of a recent Federal Appeals Court decision.

In Strickland v. Water Works and Sewer Board of the City of Birmingham, 239 F.3rd 1199, 79 Empl. Prac. Dec. P40,375 (11th Cir. Jan. 22, 2001), a employee requested leave which qualified under the Family and Medical Leave Act, while he was still eligible for his employee benefit of a certain number of paid sick days. Nine days into his leave, the employer terminated his employment. The employee sued, claiming that the employer had violated his FMLA rights. The employer responded that he had not yet exhausted his paid sick days, thus he was not using FMLA time, and his employment was unprotected by the act. The 11th Circuit Court of Appeals, which decides Federal law in Alabama, Georgia and Florida, decided that nothing in the FMLA allows an employer to choose whether an employee's leave is paid, therefore unprotected, or unpaid, and protected. The Court stated that if leave qualifies as FMLA leave, it is irrelevant whether it is also paid or unpaid. Additionally, the Court held that an employee could claim both the twelve weeks of unpaid MLA leave and any additional amount of paid leave provided by the employer, unless the employer, by policy or notice, requires that both leaves run concurrently.

Our advice to employers is to have a policy that requires any accrued paid sick time to run concurrently with any FMLA leave requested by the employee. Also, employers should discontinue any policy that may be in place requiring employees to use their paid leave first, as this will not protect employers from FMLA liability.

Employers who wish to avoid litigation with employees over employment practices should require each new employee to sign an "equitable" arbitration agreement, as recently permitted in one of the most important Supreme Court decisions in this area.

In what has been regarded as the most important decision in the field of Alternative Dispute Resolution, the United States Supreme Court, in Circuit City Stores, Inc. v. Adams, 532 US _____, (2001), soundly and decidedly rejected the proposition that employment contracts were excluded from coverage of the Federal Arbitration Act, and instead upheld the legality of an employer requiring an employee to submit ALL employment disputes, including discrimination, to mandatory binding arbitration, so long as the arbitration and the agreement requiring it was "fair." (The Supreme Court did note that the Federal Arbitration Act may not apply to employees who work in transportation fields.) Building upon cases such as Harris v. Greentree Financial Corporation, 183 F.3d 173 (3rd Cir. 1999), the Supreme Court strengthened its support of arbitration agreements and repeated that Federal Courts will generally enforce agreements to submit disputes to arbitration, unless the arbitration provision would be "unenforceable, like any other contract." The standard to hold a contract unenforceable is quite high, and difficult to reach, meaning that most arbitration agreements will be upheld.

However, any arbitration clause needs to be carefully constructed so as to remain enforceable. Specifically, the clause must not be "inherently unfair," either in procedure, or costs. Courts will review each such clause for "unfairness" on a case-by-case basis, but the basic idea is that the provision must not excessively favor the employer to a degree that offends the court's sense of justice. For instance, arbitration should take place where the employee lives, or within a reasonable distance, costs of the arbitration should be either entirely or mostly borne by the employer, there must be some form of information exchange ("discovery" in the litigation context), and the clause must not limit the amount or types of remedies available to a claimant under the applicable statute (i.e. can't exclude punitive damages if the statute permits them.)

Employers can terminate an employee for being under influence of drugs or alcohol, or being in possession of drugs or alcohol, despite an employee's claims that alcoholism or drug addiction is a protected disability, which was recently reiterated by another Federal Court of Appeals.

In Pernice v. City of Chicago, 237 F.3d 783, (7th Cir. January 11, 2001), the Seventh Circuit Court of Appeals, which covers Illinois, Indiana and Wisconsin, decided and repeated the position that while the status of alcoholism or drug addiction may be disabilities under the Americans with Disabilities Act, behavior such as possessing drugs on company property is not protected by the ADA. In this case, a cocaine-addicted employee was terminated for possessing cocaine. The employee tried to claim that it was the result of his addiction, and therefore he couldn't be terminated for the possession. The Court held that nothing in the ADA prevents an employer from disciplining employee misconduct, finding that the possession of cocaine was a voluntary act.

While this case is just another in a line of similar decisions, it does remind employers that even when faced with an alcoholic or a drug addicted employee, employers are still permitted to enforce disciplinary policies as to employee behavior in these areas without running afoul of the ADA.

The Americans with Disabilities Act does not necessarily require an employer to fill a position which the employer chooses, for a legitimate business reason, to keep unfilled, notwithstanding an employee's request to be placed in that position as a "reasonable accommodation," according to a Federal Appeals Court.

Under the Americans with Disabilities Act, an employer is generally required to provide reasonable accommodations to a disabled employee, which can include reassignment to another position. However, an employer is not required to bump another employee out of a position, or to create a new position or redefine a current position as a means to accommodate. In Ozlowski v. Henderson, 237 F.3d 837, (7th Cir. January 17, 2001), the court of Appeals for the Seventh Circuit, which covers Illinois, Indiana, and Wisconsin, went farther to hold that an employer is not required to fill an otherwise unoccupied position as an accommodation. The Court decided that if an employer has an unoccupied position, which it intends to keep unoccupied, this position does not become a possible vacant position to which a disabled employee can demand to be reassigned.

This decision follows the reasoning that an employer is not required to create work, or positions, or to make business decisions it would not have otherwise made, merely to accommodate a disabled employee.

An employer can terminate an employee for excessive absenteeism, even if that absenteeism is a result of a disability, according to a Federal Court of Appeals.

In Amadio v. Ford Motor Company, 238 F.3d 919, (7th Cir. February 1, 2001), an employee who suffered from hepatitis, and had taken 23 different medical leaves over three years, totaling approximately 18 months worth of leave, was unable to perform an essential function of his employment, namely, regular attendance, so that when the employer terminated his employment, the employer did not violate the Americans with Disabilities Act. The Court further stated that the granting of extended medical leave was not a reasonable accommodation, when attendance at one's job is an essential function of the job. Thus, it was irrelevant whether the employer knew of his disability, when it terminated him because there is no way to "accommodate" absenteeism.

What this can mean for employers is that an employee who violates the leave and absenteeism policy by being off of work excessively, whether due to a disability or not, can be terminated, without fear of violating the ADA, so long as the employer has a consistent policy on absenteeism which is also applies consistently.

Employers should consider purchasing additional employee practices or conduct insurance, as courts are becoming more and more likely to hold an employer liable for the actions of its employees.

As a rule, employers are responsible for the actions of its employees, and the damages that result therefrom. However, employers are also only responsible for that behavior of its employees which is "within the scope" of its employment. This used to mean that actions which were not actually related to the employment or the employer's business were not going to submit the employer to liability. As such, if an employee was to physically assault another employee or a customer, since this would not usually be part of the job, the employer wouldn't be liable for the injuries. However, in recent years, courts have become more and more likely to find an employer liable for these types of activities on the part of its employees. Examples of this expanding application of the "scope of employment" include Plummer v. Center Psychiatrists, Ltd., 252 Va. 233, 476 S.E.2d 172 (1996), where a psychiatrist had sexual intercourse with a patient, the Supreme Court of Virginia held that the position of therapist, which was the employment, created the means for this person to commit the assault, and was therefore within the scope of employment, subjecting the employer to liability for this act. Also, in Majorana v. Crown Central Petroleum Corp., 260 Va. 521 (2000), a gas station customer was assaulted by an attendant when she attempted to pay. The attendant refused to return her credit card as a means to continue the encounter, which culminated in an assault. The Supreme Court of Virginia held that the assault was within the scope of employment since the attendant achieved his opportunity through the use of his employment.

What this means for employers is that behaviors normally held to be outside the scope of employment, which prevented the employer from being held responsible, are being found to be within the scope of employment, thus subjecting employers to financial liability for these behaviors of its employees. Even though costs of this type of insurance can vary both in the amounts of coverage and in deductible, with planning, this can prevent an unpredictable or unruly employee from harming, or sinking the company.

Employers may still hold former employees responsible for conduct that occurs when the employee leaves the company, notwithstanding the absence of, or in addition to, a "covenant not to compete," according to a recent state Supreme Court decision.

The Supreme Court of Virginia recently restated that an employee owes a fiduciary duty to its employer to do nothing which would harm the employer. For instance, in Feddeman & Company, CPA, PC v. Langan Associates, PC, 260 Va. 35, 530 S.E.2d 668 (2000), several employees of one accounting firm planned to quit en masse and take many of their current clients to another firm. The first employer successfully sued the new employer for the actions of these employees by claiming that they breached their duty to the first employer by planning to harm it, while still employed there, as well as conspiring with each other, and the new employer to interfere with the business relationships of the first employer and to harm it.

While rather a "sleeper" in the context of complicated and highly litigated "non-compete" agreements, this decision reminds employers, both former, and future, that certain collusions or actions may violate common-law rights and expectations, in addition to contractual ones, and both need to be particularly careful when recruiting from within a competitor, or when an employee joins a competitor.

Employers need to be poised to defend harassment and discrimination claims as soon as they are brought, and not wait for an EEOC investigation, especially considering recent Court Opinions.

In Walker v. United Parcel Service, Inc., No. 99-5159, (10th Cir. February 27, 2001), the 10th Circuit Court of Appeals, which is responsible for federal law in Colorado, Kansas, New Mexico, Oklahoma, Utah, and Wyoming, joined the growing majority of federal courts which have approved a policy which permits the EEOC to issue right to sue letters before the expiration of 180 days. The EEOC, by statute, is exclusively empowered to investigate claims of discrimination for 180 days before a claimant is permitted take her claims to court. If the Commission does not complete its investigation by the end of 180 days, the claimant can request that the Commission issue her a "Right to Sue" letter which permits the claimant to go to Court. However, several Courts are deciding that, if the EEOC determines that it cannot complete the investigation within 180 days, it can issue the "Right to sue" letter early.

What this means for employers is that when a claim of discrimination is made, the employer should endeavor to have its complete defense and response ready as soon as the claim is made, and not wait until the EEOC investigator calls, or expect to have 180 days before the case gets to court. The likelihood of an employer prevailing on a discrimination claim is directly related to grasping the initiative, and remaining consistent throughout. This is much easier done early in the process.

(However, Federal Courts in the District of Columbia have taken the opposite view-holding that the statute directs the EEOC to investigate for 180 days, therefore, the EEOC cannot issue the "Right to sue" letter prior to the expiration of 180 days, but this is the minority view of the Federal Courts.)

Employers would be well advised to rapidly and seriously investigate any and all allegations or suggestions of misconduct so as to be certain of its footing when making employment decisions about persons subject to such suggestions, according to a recent Federal Court Decision.

In EEOC v. Sears, Roebuck and Co., 243 F.3d 846, (4th Cir. March 16, 2001), an Hispanic employee on the West Coast was seeking employment within the company in the North Carolina area, but was ultimately not hired. The employee claimed that he was not hired due to his Hispanic heritage. The employer defended by claiming that the hiring person had heard that an employee from the West Coast who would be seeking employment in the North Carolina area had been accused of sexual harassment, and therefore concluded, without investigation, that this was the same employee, and declined to hire him. The employer tried to claim that the hiring person did not know of the employee's Hispanic heritage and could not have been discriminating. The Fourth Circuit Court of Appeals, which covers Virginia, West Virginia, North Carolina, South Carolina, and Maryland, ruled that the Employer could not rely on innuendo, or even mere accusation, without risking a determination that its legitimate business reasoning for making the hiring decision was a pretext for discrimination. (As it turned out, the employee in this case was NOT the same person as was accused of harassment.)