Wednesday, April 29, 2009

Utah Statute Reducing Workers Compensation Benefits for Social Security Retirement Benefits Found Unconstitutional.

In Merrill v. Utah Labor Commission, the Utah Supreme Court ruled that the Utah Workers Compensation statutory provision that requires the reduction of workers compensation benefits by 50% of the Social Security retirement benefits received by an injured worker was unconstitutional under the "uniform operations of law" clause or article I, section 24 of the Utah Constitution. Although the Court pointed out in its opinion that several other states' supreme courts had determined that such a legislative policy did not violate similar constitutional provisions, the Utah Supreme Court concluded that it was simply "not rational" for the legislature to offset workers compensation benefits with social security retirement benefits.

Thursday, April 23, 2009

Utah’s Public Employers Are Not Required to Withhold Voluntary Political Contributions from Their Employees’ Paychecks

In Utah Education Association v. Shurtleff, the Tenth Circuit vacated its prior decision and upheld Utah’s Voluntary Contributions Act, which provides that a public employer cannot withhold from its employees’ paychecks any voluntary political contributions, including contributions to unions.

The Tenth Circuit initially agreed with the district court that the Act was unconstitutional because it violated public employees’ First Amendment rights. However, after the Tenth Circuit granted Utah’s petition for a rehearing, the United States Supreme Court, in Ysursa v. Pocatello Education Assoc., 129 S. Ct. 1093 (2009), upheld the validity of Idaho’s similar Voluntary Contributions Act. In Ysursa, the Supreme Court stated that a state “is not required to assist others in funding the expression of particular ideas, including political ones.” As a result, states are not required to “assist political speech by allowing public employers to administer payroll deductions for political activities.”

Based on the U.S. Supreme Court’s ruling, the Tenth Circuit stated it was obligated to vacate its prior decision and uphold the constitutionality of the Act because Utah and its political subdivisions, including cities, school districts, and special service districts, are “under no obligation to aid the Unions’ exercise of their First Amendment rights utilizing payroll systems.” This means that for any payroll deduction agreements entered into after 2001, the year the Act was enacted, the public employer is barred from withholding voluntary political or union contributions.

Be Careful When You Negotiate Severance Agreements!

In Creative Consumer Concepts, Inc. v. Kreisler, the Tenth Circuit---the federal court having jurisdiction over Utah---discussed several evidentiary matters arising out of a severance agreement gone bad. Creative Consumer Concepts, Inc., terminated the employment of one of its vice presidents in 2004. In terminating the relationship, the company offered the vice president a severance agreement. The severance agreement proposed by the company included a provision that waived all claims the vice president had against the company. Unbeknownst to the company, before signing the document, the vice president had changed the language of the release to include a release of any company claims against the vice president. Of course, the former vice president did not disclose the change, and the company official signing the document did not carefully review the agreement when she signed it on behalf of the company.

After the company discovered that the former vice president had embezzled almost a million dollars, it discovered the change in the language but nevertheless brought suit against the former vice president. The former vice president attempted to avoid liability by claiming the waiver was valid. The Tenth Circuit upheld several evidentiary rulings of the trial court that allowed the company to proceed and prevail against the vice president.

This case illustrates the importance of carefully reviewing and negotiating any severance agreements.

Monday, April 20, 2009

The Importance of Employer Record Retention and Destruction.

Many people will dismiss recordkeeping as a less-than-important topic that can easily be discussed in a few minutes at the beginning of a relatively short staff meeting. No matter how prevalent this view, it is wrong. In fact, aside from responsibilities that businesses have to keep records about contractual and formation issues, businesses that employ others have significant and important statutory and regulatory responsibilities with respect to their records. Improper or faulty recordkeeping practices subject employers to enormous potential liabilities. On the other hand, good recordkeeping practices can reap significant benefits for an employer.

For instance, private-sector employers who regularly employ more than fifteen employees in a given year and public-sector employers have a statutory and regulatory obligation to preserve certain records related to their hiring and employment practices. 42 U.S.C. § 2000e-8(c); 29 C.F.R. §§ 1602.12, 1602.14, 1602.31. An employer’s failure to preserve those records can lead to legal sanctions in a lawsuit brought against the employer for discriminatory conduct, such as being required to paythe opposing party’s attorney fees. See Broccoli v. Echostar Communications Corp., 229 F.R.D. 506, 514 (D. Md. 2005) (awarding attorney fees for failure to preserve documents relevant to a wage claim and Title VII discrimination and retaliation claim). In other cases, litigants have been sanctioned millions of dollars for “spoliation of evidence” for destroying evidence in cases brought against them. See, e.g., In re Prudential Ins. Co., 169 F.R.D. 598, 617 (D. N.J. 1997) (imposing sanction of $1,000,000 for destruction of documents in a class-action claim against Prudential). Other potential sanctions against an employer who fails to preserve documents include (1) exclusion of relevant evidence, (2) an inference that the documents destroyed were harmful to the employer, (3) default judgment, or (4) contempt sanctions. See Fed. R. Civ. P. 37; Utah R. Civ. P. 37; EEOC v. Jacksonville Shipyards, Inc., 690 F. Supp. 995, 997-98 (M.D. Fla. 1988) (applying Rule 37 analysis in case where party failed to preserve records as required by EEOC regulations).

Aside from the prophylactic reason of avoiding sanctions in litigation, there are several reasons to keep good and accurate employee records. The first reason is related to litigation—records are often the best defense against claims brought by employees against employers. If an employer is careful to document a history of performance problems, for example, it may be able to easily overcome a wrongful termination claim brought by an employee.

Additionally, the law requires that employers keep certain records. Federal and state anti-discrimination laws require most employers to keep records of employee selection, promotion, demotion, reduction in force, and termination. Additionally, labor and immigration statutes require an employer to keep proof of an employee’s eligibility for employment in the United States. Further, federal and state statutes require the maintenance and preservation of records of employee tax withholdings, payroll payments, salary and wage information, and tip income.

Further, records help employers manage their employees and plan for the future. Accurate and careful records will show trends that an employer can use for strategic purposes.

For a more thorough discussion of these issues and a document retention schedule, please see the complete article: Best Practices for Employee Recordkeeping.

Friday, April 17, 2009

Does Relatively Minor Sexually Harassing Behavior Trigger an Employee's Duty to Report the Conduct?

In a case decided on Thursday, the Tenth Circuit Court of Appeals---the appellate court having jurisdiction over Utah--- upheld the dismissal of a complaint brought by a woman against the Colorado Department of Transportation for sexual harassment and retaliation she claimed occurred while she was working for the agency as an administrative assistant. In the case entitled Pinkerton v. Colorado Department of Transportion, the Court considered, among other things, whether the employee had been unreasonable when she did not immediately report the first potentially sexually-charged remarks she heard to the appropriate officials. The Court held that she had an obligation to immediately report the first inappropriate remarks that her supervisor made---even when those remarks were immediately rebuffed and when there is no question that they would not have immediately been considered intolerable enough to constitute a hostile work environment. In a dissenting opinion, one of the judges pointed out that because "the first statement . . . was not sufficient to create a hostile work environment," it was simply wrong for the majority to conclude that the employee had been unreasonable in delaying the reporting of the conduct.
This decision appears to be a boon for employers. As written, the opinion seems to suggest that an employee must report every instance of potentially harassing behavior even when the behavior is relatively minor.

Monday, April 13, 2009

Fair Employer Investigations of Workplace Misconduct.

It happens to every employer. At some point, an employee comes to a manager, supervisor, or owner and explains that a coworker, or worse, a supervisor, has done something that the reporting employee does not like. The offensive conduct can be as minor as an employee showing up late or as serious as sexual misconduct. When the employee reports the problems, he or she usually wants a resolution. Most often the employee wants the resolution quickly. Often the issue can be resolved with a simple discussion. On other occasions, such as when an employee reports illegal activity, a more thorough investigation is often warranted. In fact, in some situations, an investigation will serve as a strong potential defense against claims of illegal practices.

Many claims warrant more thorough investigations. One such situation includes claims of sexual harassment. In 1998, the United States Supreme Court, in two separate cases decided on the same date, declared that an employer sued by an employee for claims of sexual harassment resulting in “no tangible employment action” can raise an affirmative defense that includes as elements the employer’s use of “reasonable care to . . . correct promptly any sexually harassing behavior” and the employee’s unreasonable failure “to take advantage of any . . . corrective opportunity provided by the employer.” Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 765 (1998); Faragher v. City of Boca Raton, 524 U.S. 775, 807 (1998). Reasonable corrective actions include internal investigations of the complaints. Enforcement Guidance: Vicarious Employer Liability for Unlawful Harassment by Supervisors § V.C.1 (June 18, 1999). Additionally, it may be unreasonable for an employee to refuse to participate in such an investigation. Other situations that may warrant more thorough investigations include claims that an employee has violated the law in such a way that the employer could be liable for the employee’s conduct, claims that an employee has stolen from the employer, or claims that could result in the dismissal of an employee who has a contractual restriction on the employer’s right to terminate his or her employment, such as union employees, or employees with a just-cause employment contract, or civil service employees.
Once an employer has determined to conduct an investigation, the employer must be careful to conduct a good investigation. Mistakes in investigations or in the conduct of an investigation can often lead to employee discontent or, in the worst case, additional legal violations. The hallmarks of a good investigation include the following:

An Objective Investigator. Most employees will view the selection of the investigator as the clearest sign of how seriously the employer is taking the claim. An investigator should never be a person who is claimed to have engaged in the conduct or to be associated with the underlying facts of the investigator. An independent human resource employee who is not below the alleged perpetrator in the supervisory chain is a good choice. For particularly sensitive matter or matters that are likely to end up in litigation, an outside investigator or lawyer may be the best choice.

Appropriate and Timely Process. The process should be appropriate to the claim made. Additionally, the process should be conducted in as expedient a manner as is appropriate. A quick response, coupled with the appropriate level of investigation, increases the perception of fairness.

Objective Inquiries. An investigator should always conduct an interview or request statements from the person making the allegations. He or she should then speak with others who are also witnesses. Additionally, the investigator should assure all witness that there will be no retaliation for the statements that they make. At the same time, the investigator should inform the witnesses that it is a serious matter that should not be taken lightly. The questioning should be with open-ended questions requiring narrative responses as opposed to questions that suggest an answer. The investigator should not comment on any aspect of the investigation with the witnesses.

Keep Good Records. An investigator should record every interview if possible. Additionally, an investigator should keep good notes, making sure that the notes reflect suppositions and guesses.

Thursday, April 9, 2009

Discrimination Case Litigants Do Not Have a Constitutional Right to Effective Assistance of Counsel on Employment Claims.

The Tenth Circuit Court of Appeals---the federal court with jurisdiction over Utah---reaffirmed the longstanding principle that a litigant in a discrimination case does not have a constitutional right to effective assistance of counsel. In Grisby v. Boeing Corporation, the Court stated that the United States Constitution does not guarantee a civil litigant a right to effective assistance of counsel. It reaffirmed that the proper course for civil litigants to pursue for relief against allegedly ineffective attorneys is to bring malpractice claims.

Wednesday, April 8, 2009

Medical Benefits Must Be Apportioned in Occupational Disease Claims

The Utah Supreme Court issued two cases on Tuesday that reversed the Utah Labor Commission's interpretation of the Utah Occupational Disease Act. The Labor Commission had interpreted the act to provide that an employer was required to reimburse 100% of an employee's medical expenses for a condition caused by an occupational disease even if the employee's work was only a contributing factor to the development of the disease. For example, if an employee suffered carpal tunnel syndrome and it was determined that the workplace contributed only 10% to the development of the condition, the Utah Labor Commission required the employer to pay 100% of the medical expenses.

In two companion cases, Smith v. Utah Labor Commission and Ameritech v. Utah Labor Commission, the Utah Supreme Court said the Labor Commission was wrong, and the Court interpreted the statute to require the employer to only pay its proportionate share of the medical expenses.

Thursday, April 2, 2009

New Utah Law: Employers Must Create a Job Application Retention Policy or be Subject to a Fine!

The Utah legislature passed a sweeping new law applicable to all employers who employ more than fifteen employees. The Employment Selection Procedures Act, which Governor Huntsman signed on March 24, 2009, requires an employer to "maintain a specific policy regarding the retention, disposition, access, and confidentiality of information" gathered in the "initial selection process," i.e, the application process. In fact, the new law requires that an employer have a copy of the policy readily accessible to any applicant who wishes to see the policy before filling out an application. The policy also requires that all records obtained during the application process be destroyed within two years unless another statute requires their retention.

The law also restricts employers from asking for an applicants birthdate, social security number, or drivers license number until the applicant is offered a job or "the time in the employer's employment selection process when the employer obtains" certain background tests. It further restricts employers from using any information on an application for any other reason other than determining whether to hire the person, including sending them advertisements.

The failure to comply with the law subjects the employer to fines and civil damage remedies for the applicants.

Wednesday, April 1, 2009

The Supreme Court Upholds Mandatory Arbitration of Age Discrimination Claims in Union Contract.

In a decision issued today, 114 Penn Plaza LLC v. Pyett, the United States Supreme Court ruled that "a collective-bargaining agreement that clearly and unmistakably requires union members to arbitrate [Age Discrimination in Employment Act] ADEA claims is enforceable as a matter of law." In doing so, the Court acknowledged that it had previously expressed hostility toward mandatory arbitration clauses in discrimination cases. However, it noted that such hostility was a relic of history. While further acknowledging that a Union's ability, as opposed to an individual union member's ability, to exclusively control the negotiation of a collective bargaining agreement may place the individual union member at a disadvantage to assert his or her own rights, the Court found that such a concern did not create "a source of authority for introducing a qualification into the ADEA that is not found in the text." Accordingly, it ruled that the union members in this particular case had waived their right to bring their ADEA claims in federal court.