Labor & Employment Insights
Summer/Fall 2002

SUPREME COURT CLARIFIES "CONTINUING VIOLATIONS"
...BUT SOME MAY WISH IT HADN’T

 Jill Stricklin Cox

Few concepts in employment litigation law have caused more confusion than that of the "continuing violation." Simply put, a "continuing violation" is a way for courts to assess liability for allegedly illegal acts even if they occurred outside the statute of limitations. Plaintiffs love to contend that an employer’s conduct constituted a "continuing violation" as much as employers love to deny it.

The U.S. Supreme Court recently clarified the concept for claims brought under Title VII of the Civil Rights Act of 1964 in National RR Passenger Co. v. Morgan. However, the clarification is likely to be unwelcome for most employers, except perhaps for those with operations out west, who are accustomed to worse from the Ninth Circuit.

An example may illustrate what’s at stake. Suppose an employee was sexually harassed on a daily basis for two years. She finally tells her employer what has been going on, and the employer gives the alleged harasser a final warning, which stops the conduct for two more years. Then, on day one of Year Five, the alleged harasser pats her on the knee. The next day, she files a charge with the Equal Employment Opportunity Commission.

The determination of continuing violation is critical to each side’s case. If there is a continuing violation, the employee may sue, not only for the pat on the knee, but also for the two years of harassment that occurred before she reported it to the company. If the harassment is not a continuing violation, then the employee may sue for only the pat on the knee, which—though offensive—probably would not be enough for her to maintain a viable harassment claim.

Under the Supreme Court’s standard in Morgan, the key will be whether the lawsuit is based on a "discrete act" of discrimination or retaliation, in which case there will be no continuing violation, or upon a hostile work environment theory, in which case there might be. Using our example, because the plaintiff is suing for harassment (hostile work environment), the timely pat on the knee will open the door for her to recover for the more severe harassment that she endured in Years One and Two, as long as the conduct was sufficiently related to be part of the same hostile environment.

Generally speaking, terminations, failures to promote, denials of transfer, or refusals to hire would all be "discrete acts" and not continuing violations. However, even these acts may not be time-barred if the employee is prevented from discovering the alleged discrimination earlier – either because the facts were not available to the employee, or because the employer misrepresented the facts. It’s also likely that an act like a termination that followed a course of harassing conduct would be considered part of the "hostile environment" continuing violation.

The Court did not leave employers completely defenseless, however. Under the Morgan decision, the defense of laches, which applies when the plaintiff fails to diligently pursue his or her claims and the delay harms the defendant, is available to employers in continuing violation cases. To assert the laches defense, the employer must show that it has been prejudiced in its ability to defend the plaintiff’s claim in some tangible manner—for example, because witnesses have disappeared, memories have faded, or pertinent records have been lost or destroyed. This is a very real risk with a charge or lawsuit filed years after key events occurred. Moreover, under Morgan, an employer’s "intervening action" may interrupt an otherwise "continuing" hostile work environment, rendering all preceding conduct time-barred. Using our example again, even under Morgan, a court might find that the final warning issued to the harasser in Year Two was enough of an intervening act to bar a suit or charge that was not filed until Year Five.

One clear outcome of the Morgan case is that an employer’s efforts to prevent and, if it occurs, correct workplace harassment have become even more crucial, now that the statute of limitations defense is curtailed. Thus, it is more important than ever that employers adopt effective no-harassment policies, provide employees with complaint mechanisms, conduct appropriate training, and promptly address harassment when it occurs. When considering whether to extend limitations periods or let employers use the laches or "intervening act" defenses, courts are more likely to rule in favor of employers who "did the right thing" and took appropriate measures to prevent and correct unlawful conduct.

And, not coincidentally, "doing the right thing" will also allow employers to assert the defenses developed by the Supreme Court in Ellerth v. Burlington Industries, Inc., and Faragher v. City of Boca Raton for cases involving harassment by a supervisor in which the plaintiff suffers no "tangible job detriment" as a result of workplace harassment: that (1) the employer had remedial measures in place to address harassment in the workplace; and (2) the plaintiff failed to avail himself or herself of those remedial measures. Indeed, the Ellerth/Faragher defense may be all an employer has these days.

Morgan isn’t great news, but it may not be that bad, either. Even in the most conservative circuits, time-barred allegations could often be used as "background evidence" even though recovery for the "background" was not available. Employers and their lawyers have always known that this "background evidence"" can be highly prejudicial to a jury.

Moreover, arguably, a more stringent deadline for filing hostile work environment claims might have encouraged employees to rush to the EEOC rather than jeopardize their rights. The Supreme Court’s more-leisurely standard could encourage employees to use their employers’ internal complaint mechanisms instead, thus possibly reducing the number of charges that are filed with government agencies.

Because Morgan is the law of the land, we might as well look at the bright side.

Jill Stricklin Cox (Winston-Salem, NC) practices in the area of employment litigation prevention and defense.

 This is a publication of Constangy, Brooks & Smith, LLC. The information contained in this newsletter is not intended to be, nor does it constitute, legal advice. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and experience. Copyright 2003 Constangy, Brooks & Smith, LLC.

From the Editor’s Desk
ARE WE BEING TOO HARD ON OURSELVES?

After the September 11 attacks on our country last year, there was some unjustified backlash against Americans of Middle Eastern origin and Muslims, and even against people who "looked like them."

But it seems to me that most Americans have taken the high road and have been careful not to retaliate against the innocent. The President took pains immediately after the attacks to emphasize that Islam was a "religion of peace" and that the terrorists’ behavior should not be considered representative of Islam. As a nation, we have tried hard to understand (if not necessarily agree with) the philosophy underlying Islam and the grievances of the people of the Middle East.

That’s why it bothers me when we are told, with very little factual basis, that there is an "epidemic" of anti-Middle Eastern/Muslim discrimination.

That’s right—according to the Equal Employment Opportunity Commission, there is a dramatic increase in discrimination against Muslims and Middle Easterners since September 11. The only problem is that the EEOC admits it didn’t maintain statistics on such types of discrimination before September 11—therefore, there is really no way for the Commission to say that there has been an increase. Perhaps so, perhaps not. Perhaps it is reasonable to assume that discrimination would increase in the wake of the attacks. But assumptions are not facts.

Presumably the EEOC has its heart in the right place. But I’d like to be able to trust our government to provide accurate information about so-called "epidemics of discrimination."

Speculation like the EEOC’s can actually hurt the cause of tolerance in our society. Creating a "damned if you do, damned if you don’t" attitude on both sides can be fatal to the cause of ethnic and religious harmony.

So, as the first anniversary of the attacks approaches, I’ll be hoping that we can look at ourselves honestly, neither minimizing nor inflating any discrimination that occurs as a result.

Robin E. Shea, Editor
Winston-Salem, NC

This is a publication of Constangy, Brooks & Smith, LLC. The information contained in this newsletter is not intended to be, nor does it constitute, legal advice. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and experience. Copyright 2003 Constangy, Brooks & Smith, LLC. 

CORPORATE ACCOUNTABILITY LEGISLATION CONTAINS ANTI-RETALIATION PROVISION. A NEW WAY TO SUE!
Robert P. Floyd, III

You probably didn’t think there could possibly be another way for your employees to sue you for retaliation. Well, think again—at least, if your company stock is publicly traded.

The new legislation signed into law in July by President Bush in the wake of the corporate scandals contains an anti-retaliation provision in addition to protections against conflicts of interest, self-dealing, and other financial misdeeds.

The Sarbanes-Oxley Act of 2002, also known as "An Act To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes," provides that it is unlawful to "discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment" because the employee has somehow participated in a fraud investigation.

Activity protected under the new statute includes providing information or otherwise assisting in an investigation of conduct that the employee "reasonably believes" violates certain provisions of the Securities and Exchange Act, any SEC rule or regulation, or any federal law prohibiting fraud against shareholders.

For the employee’s participation to be "protected," the investigation must be conducted by a federal regulatory or law enforcement agency, a member or committee of Congress, or the employee’s supervisor or supervisor’s third-party-designee.

The new provisions also protect employees who "file, cause to be filed, testify, participate in, or otherwise assist" in a proceeding related to alleged violations of the above-listed statutes, rules, or regulations.

Employees who believe they have been unlawfully retaliated against may file a complaint with the U.S. Department of Labor. If the Department of Labor has not resolved the matter within 180 days through no fault of the employee, then the employee may file suit in federal court. The DOL complaint must be filed within 90 days of the alleged violation.

Prevailing employees may be reinstated, receive back pay with interest, and may be compensated for special damages including litigation costs, expert witness fees, and attorneys’ fees.

The new provisions do not preempt any other remedies that might be available to the employee under state or federal law, or under any applicable collective bargaining agreement.

They will be codified at 18 U.S.C. §1514A.

Rob Floyd (Arlington, VA) practices in the areas of employment litigation prevention and defense, employee benefits, wage and hour, and independent contractor issues.

 This is a publication of Constangy, Brooks & Smith, LLC. The information contained in this newsletter is not intended to be, nor does it constitute, legal advice. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and experience. Copyright 2003 Constangy, Brooks & Smith, LLC.

 OTHER EMPLOYMENT TIDBITS

From an employment law standpoint, the anti-retaliation provisions are by far the most significant part of the Sarbanes-Oxley Act. However, employers should also be aware of the following miscellaneous provisions:

  • Prohibition of insider trading during pension fund "blackout" periods. With some exceptions, the new law prohibits directors or executive officers from trading during pension blackout periods. A blackout period is generally defined as a period of more than three consecutive business days in which at least 50 percent of the participants or beneficiaries of the plans are suspended from trading.
  • Requiring advance notice of pension fund blackout periods. The new law requires plan administrators to provide written, advance notice to participants and beneficiaries about the blackout period and related information. The SEC will create model notification forms for administrators to use.
  • Prohibition of "insider loans" to directors or executive officers.
  • Requirement of a "Code of Ethics" for senior financial officers.
  • Criminal penalties for anyone who "knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry" in records, documents or other tangible object with the intent of obstructing any federal investigation. (Note that this provision does not appear to be limited to corporate fraud investigations.)
The above is only a summary of the employment provisions of Sarbanes-Oxley. Employers are strongly advised to review the full text of the statute and consult with legal counsel regarding compliance. Sarbanes-Oxley also contains many non-employment-related provisions in addition to those summarized above, and clients should consult with their corporate counsel regarding those provisions.

Rob Floyd


Getting To Know Us

CHRIS MITCHELL (Birmingham, AL, employment litigation prevention and defense) received his bachelor’s degree with high honors in Industrial Engineering from Georgia Tech and his law degree, also with high honors, from the University of Alabama. Before he attended law school, Chris made his living in banking and farming. Chris has two daughters, Marlowe and Lindsye. When he is not practicing law, Chris enjoys horses and golf.

HANK KNIGHT (Columbia, SC, employment litigation and labor relations) is the head of Constangy’s Columbia office. He received his bachelor’s degree in English from Centre College of Kentucky and his law degree from University of South Carolina. Before law school, Hank was plant manager for a 500-employee facility, which sparked his interest in employment law. Hank is on the Advisory Board for the South Carolina Supreme Court's Specialty Certification in Employment and Labor Law, the Riegel and Emory Advisory Board for USC’s Graduate Program in Human Resource Management, and an Adjunct Professor at USC's Moore School of Business. He is past Chair of the Labor and Employment Law Section of the South Carolina Bar Association, president and founding member of the South Atlantic Chapter of the Industrial Relations Research Association, and past President of the Board of Directors of the Columbia City Ballet. Hank’s hobbies include sailing and woodworking. He and his wife, Kaye, have one daughter.

MIKE BLUMENTHAL (Kansas City, MO, employment litigation prevention and defense) received both his bachelor’s degree in English and his law degree from the University of Kansas. Mike is Chair of the Labor and Employment Committee of the Kansas City Metropolitan Bar Association and Chair of the Legal and Government Affairs Committee of the Human Resource Management Association of Johnson County. He is the author of several articles on employment law subjects and has been published in The Labor Lawyer, The Kansas City Star and The Business Journal for Kansas City. Mike holds the rank of Nidan, second-degree black belt, in Okinawan Kenpo Karate. He and his wife, Julie, have one daughter.

GINI PIEKARSKI (Winston-Salem, NC, employment litigation prevention and defense, affirmative action, and wage-hour) received her bachelor’s degree in Political Science cum laude from University of South Florida and her law degree summa cum laude from Syracuse University. Before attending law school, Gini was a middle and high school teacher. When she is not practicing law, Gini enjoys tennis, hiking, photography and, most of all, taking care of her new son with her husband, Brian.

JONATHAN MARTIN (Macon, GA, employment litigation prevention and defense, management training, and labor relations) received his bachelor’s degree in Banking and Finance cum laude from the University of Georgia and his law degree magna cum laude from Mercer University. Before he started at Constangy, Jonathan was a military lawyer for the Air Force Judge Advocate General’s Department and a Special Assistant United States Attorney. He is also a contributing author for the Mercer Law Review and Chair of the Employer’s Duties and Problems Committee for the Younger Lawyers Division, State Bar of Georgia. Jonathan’s hobbies include golf, community volunteer work and traveling with his wife, Beth, and their two children.

BE FLEXIBLE, BUT DON’T GIVE AWAY THE FARM TELECOMMUTING TOUGHLOVE

Telecommuting should not be an option for everybody. It should be a privilege to be earned. It should increase, not decrease, the employee’s productivity. How should you, the employer, evaluate telecommuting requests? Consider the following: 

The Nature of the Job
Is the employee’s work of such a nature that it can be performed away from the office? Obviously, a machine operator in a manufacturing plant or a cashier at the supermarket will not be able to do her job from home. There has also been controversy recently in HR circles as to whether an HR manager can telecommute and remain effective because of the need for face-to-face contact.

Can the quality and quantity of the employee’s work be measured, notwith-standing the remote location? In other words, if the employee decides to watch Oprah all day while "telecommuting," how quickly will you know it? In many jobs, it will be obvious immediately: customers, clients, or employees will begin complaining that they cannot reach him, or deadlines will be missed. In other jobs, where long-term tasks are performed, such slackness may not be noticeable for some time. If you can’t quickly determine that a person is goofing off, you may want to set interim deadlines so you can detect problems while they’re still at the manageable stage. If you can’t do that, you may not want to allow telecommuting.

Is the employee "exempt" or "non-exempt" under the wage and hour laws? As inegalitarian as it may seem, it is much easier to allow exempt employees to telecommute simply because they do not have to precisely account for every minute of their day.

"Who Is This Person, Anyway?"
Is the employee or the company willing and able to invest in a home "infrastructure" appropriate to the work to be performed? In other words, is the employee willing to buy a good home computer, printer, and fax machine; a dedicated modem line, or DSL or cable modem; confidential voice mail (so kids or other family members don’t hear work-related messages); a mobile phone; and a work space? If not, is the company willing to provide this? If neither, then telecommuting should not be allowed.

Is the employee self-motivated? Employees who need close supervision should not be allowed to telecommute.

Is the employee a good performer, or a marginal performer? Has the employee demonstrated personal integrity, or not? This, it is hoped, requires no explanation.

Is It Worth the Hassle?
And, finally, even if the job allows it and your employee is a peach, there are some other issues you should be willing to weather before you say "yes" to telecommuting:

  • Employers face possible workers’ compensation liability for on-the-job injuries and unsafe conditions but have little or no ability to monitor or control the physical work environments of telecommuters.
  • Wage-hour compliance, as discussed above, is difficult with non-exempt telecommuters.
  • Employees who telecommute need to understand that they may actually lose some freedoms: the freedom to quit at a predetermined time each day; the freedom to be left in peace during early mornings, evenings, and weekends. Flexibility is a two-way street.
  • Employees who telecommute need to understand that they will undoubtedly be excluded from some meetings and will miss out on some valuable "grapevine" information because of their physical absence from the workplace.
  • Employees who telecommute need to understand that they will be perceived as "not working" when they are at home. They may have to make affirmative efforts to let co-workers, customers, or clients know that they really are "on the job" even though away from the traditional worksite.

 BE BLUNT—WE CAN TAKE IT!

Is Constangy’s website a help or a hindrance to you?
Inquiring minds want to know.

We are revamping our website in the coming year, and we’d like to know what you think.

Please take a minute, go to http://www.constangy.com/survey.html, and fill out our survey. We will use your suggestions in designing the new website, which we expect to roll out in 2003.

(P.S.—Just in case you have never been to our website, you can enter at www.constangy.com. Check it out, and then fill out a survey. Thanks!)
 

VISA STATUS, DAY OR NIGHT!

Constangy is pleased to offer to its immigration clients the "InSight" online case management program, which allows clients to view in detail the status of employee visa matters 24/7. Clients may, at their option, even allow access to the employee-beneficiary. For more information, please contact Dan White at dwhite@constangy.com.

CAN I PITCH THOSE RECORDS YET?

Constangy’s Federal Record Retention Guide for 2002 is complete. If you would like a copy, please specify whether you prefer Word or Word Perfect format and send your e-mail address to Victoria Whitaker at vwhitaker@constangy.com.

 REASON PREVAILS…

Young government proofreader may have to work for a living, after all. The D.C. Circuit dramatically reduced an award of $840,000 in front pay to a proofreader who had won a sexual harassment suit against the Government Printing Office. Awarding the 34-year-old employee 26 years of front pay, until her retirement age, was "unduly speculative," the court wisely said. Even a sincere intention to stay on a job until retirement should not entitle one to front pay "for the remainder of her work life."

"Don Juan" not a protected status? The Michigan Supreme Court has held that termination for adultery is not "marital status discrimination" within the meaning of the state’s civil rights law. The plaintiff, a golf pro at a country club, cheated on his wife with a married woman. He was terminated after he left his wife to move in with his paramour and escorted the latter to club events, causing disapproving talk among the members of the club.

EEOC does good. The EEOC’s Cleveland, Ohio, office has found cause to believe that the National Education Association is failing to reasonably accommodate members’ religious beliefs. The teachers’ union requires annual written filings from members who object to paying dues on religious grounds. A teacher who wanted his dues donated to charity filed the charge against the NEA, saying that the union forced him to wait too long for an accommodation and that the paperwork requirement was too burdensome.

And then some. (Wow. Two "Prevails" for the EEOC? Amazing!) The EEOC also announced that it is formulating a rule that will allow employers to reduce retiree medical benefits, without running afoul of the Age Discrimination in Employment Act, once the retiree becomes eligible for Medicare or state retiree health benefits.

 REASON FLAILS…

Fitness chain lets itself go. Jazzercise has decided to abandon its requirement that fitness instructors have a "fit appearance" after being charged with weight discrimination by a 240-pound prospective aerobics instructor who was denied a job in San Francisco. (In her defense, she was 5’8".) The resolution of the charge was announced at International No-Diet Day.

"You’ve been a bad employer! Now I’ll have to punish you!" A California jury affirmed a sexual harassment verdict for a former employee of an adult store who alleged that his boss required him to "sample the merchandise" as part of his job duties, which included a variety of S&M toys. The boss also allegedly whipped him with a riding crop when he made mistakes on the cash register.

Ungrateful kids. A group of 40- to 49-year-olds sued their employer for age discrimination because the over-50’s got a better retirement benefit. Sadly, a panel of the U.S. Court of Appeals for the Sixth Circuit (Kentucky, Michigan, Ohio, Tennessee) agreed with them. Hats off to dissenter Judge Glen Williams of Virginia (sitting by designation), who pointed out what should have been obvious to all: "[T]he older a person is, the greater his or her needs become."

Stress’d practices. The following nameless employers have been slammed by the courts for allegedly engaging in some conduct that gives companies a really bad name: . . . an employer in Colorado, for going uninvited to an employee’s home five days after he’d suffered a heart attack, barging into his bedroom while he was partially undressed and in bed, and firing him . . . an employer in Delaware, for terminating a manager and offering him a severance agreement with all the proper age discrimination waiver language, but allegedly telling him "off the record" that he had to sign by the end of the next business day or lose his whopping $2,000 in severance pay . . 

SUPREME COURT SCORECARD

The U.S. Supreme Court has issued numerous decisions this year on employment law topics. The following is a recap:

EEOC v. Waffle House: EEOC is not barred from suing for victim-specific relief on behalf of employee who signed arbitration agreement with defendant employer.

Ragsdale v. Wolverine World Wide, Inc.: Employer who offers more than 12-week minimum of leave under Family and Medical Leave Act does not necessarily owe additional leave as penalty for failing to properly designate leave.

Toyota Mfg. Co. of Kentucky, Inc. v. Williams: Carpal tunnel syndrome is not ADA disability per se; to show substantial limitation in performing manual tasks, plaintiff must show that she had limitations in job-related tasks and in daily activities.
Barnett v. U.S. Air: In most instances, employer need not violate employees’ seniority rights to make reasonable accommodations under ADA.

Chevron U.S.A. v. Echabazal: Employer may decline to hire individual whose disabling condition poses a direct threat to his or her own health or safety.

Epilepsy Foundation v. NLRB: Court declined to review D.C. Circuit decision affirming that non-union employees have rights to representation in investigatory interviews.

National R.R. Passenger Corp. v. Morgan: Court clarified definition of "continuing violation" for purposes of statute of limitations under anti-discrimination laws.

Devlin v. Scardeletti: Court allows non-named member of class to appeal settlement of class action lawsuit over pension plan.

QUARTERLY QUIZ

Zaftig is perfectly able-bodied but is overweight. Her employer fires her because of her appearance. Has Zaftig’s employer violated the Americans with Disabilities Act?

ANSWER
In all likelihood, no. An ADA violation would require either an actual disability (which Zaftig doesn’t have, because she is "perfectly able-bodied"), a record (or history) of a disability, or a disability based on the perception of her employer. There is no indication that Zaftig has any of these.

Unless the employer thought she had health problems or "substantial limitations" as a result of her weight— as opposed to thinking she is unattractive—the termination probably does not violate the ADA.

On the other hand, a grossly or morbidly obese person may very well be "disabled" within the meaning of the ADA. And, of course, terminating an employee because of his or her appearance is almost never a recommended HR practice.