Supreme Court: Outside Attorney's Confidential Investigation Report is Exempt from Ohio's Public Records Law

Today, a per curiam Ohio Supreme Court dismissed a mandamus action brought by the Toledo Blade seeking the investigation report written by a private attorney on behalf of a governmental body on the grounds that the report was exempt from Ohio’s public records laws because of the attorney-client privilege. State ex rel. Toledo Blade Co. v. Toledo-Lucas Cty. Port Auth., Slip Opinion No. 2009-Ohio-1767. The report had been prepared after the Toledo mayor alleged that the port authority’s president was having an extramarital affair with the port authority’s chief outside lobbyist in violation of authority rules, etc. The port authority retained its outside law firm to conduct an investigation, which included reviewing documents and interviewing employees and other witnesses. The attorney prepared a report, which was distributed to each member of the authority’s board. “The board members were informed that the report was confidential and could not be shown or disclosed to any third party. Following a subsequent special session, copies of the report were returned to the law firm.” The authority then fired the president.

In response to the newspaper’s public records request, the authority provided copies of all documents reviewed by the attorney in the course of her investigation, but did not produce a copy of the report itself, claiming attorney-client privilege. According to the Court, “R.C. 149.43(A)(1)(v) excepts ‘[r]ecords the release of which is prohibited by state or federal law” from the definition of “public record.’ ‘The attorney-client privilege, which covers records of communications between attorneys and their government clients pertaining to the attorneys’ legal advice, is a state law prohibiting release of these records.’”

The Court rejected the newspaper’s argument “that the factual portions of the investigative report are not covered by the attorney-client privilege, because they do not constitute legal advice.” The common law attorney-client privilege “protects against any dissemination of information obtained in the confidential relationship. . . . In fact, most courts that have expressly addressed the issue of whether an attorney’s factual investigations are covered by the attorney-client privilege have determined that such investigations may be privileged. . . . For example, in Upjohn v. United States , 449 U.S. 383, 390-39, the United States Supreme Court recognized that the “first step in the resolution of any legal problem is ascertaining the factual background and sifting through facts with an eye to the legally relevant.” “[T]he Upjohn pronouncement hardly stands alone. Courts have consistently recognized that investigation may be an important part of an attorney’s legal services to a client.” The Court concluded that “the relevant question is not whether [an attorney] was retained to conduct an investigation, but rather, whether this investigation was ‘related to the rendition of legal services. . . . The attorney-client privilege “does not require the communication to contain purely legal analysis or advice to be privileged. Instead, if a communication between a lawyer and client would facilitate the rendition of legal services or advice, the communication is privileged.”

In short, “[t]he [attorney-client] privilege applies when legal advice of any kind is sought from the legal advisor in that capacity and the client’s confidential communication relates to that purpose.”

Before the attorney-client privilege applies to communications relating to investigative services, the client for whom the investigation was conducted must show that other legal advice or assistance was sought and that the investigation conducted was integral to that assistance.” After applying this test to the facts here, it is manifest that the factual investigation conducted by attorney Grigsby was incident to or related to any legal advice that the attorneys hired by the port authority would give concerning the mayor’s allegations of misconduct by the port authority president. More specifically, the attorney’s investigation required her to draw upon her legal training and experience as well as her knowledge of the law governing the port authority and its policies and personnel. Both the port authority and its outside counsel knew that the investigation was replete with various legal issues and consequences that would be better resolved by the port authority employing its long-time attorney to conduct the investigation and prepare the report. Legal issues included interpretation of Hartung’s employment contract, an analysis of ethics law and criminal law, potential tort claims by Hartung and Teigland, and the construction of a confidentiality provision in the settlement agreement concerning a previous port authority investigation. Legal analysis facts in the investigation is integrated throughout the report.

Insomniacs can read the full opinion at http://www.sconet.state.oh.us/rod/docs/pdf/0/2009/2009-ohio-1767.pdf

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Court of Appeals: Affirms OCRC Ruling that Employer Illegally Terminated Pregnant Employee Who Did Not Qualify for Leave Under Employer’s Policy

Last month, the Licking County Court of Appeals reversed the trial court and affirmed a ruling by the Ohio Civil Rights Commission that a nursing home employer violated the Ohio Civil Rights Act when it terminated a licensed practical nurse who sought medical leave on account of her pregnancy because she had yet not been employed for one year and did not qualify for any leave of absence under the employer’s leave of absence policy. Nursing Care Mgt. of Am., Inc. v. Ohio Civ. Rights Comm., 2009-Ohio-1107. The Court agreed that the Ohio Civil Rights Act requires Ohio employers to provide pregnancy/maternity leave even if does not otherwise provide any leaves of absence to male or female employees under similar circumstances. In other words, the Ohio Civil Rights Act does not merely require that pregnant employees be treated the same as male employees, it requires the employer to provide maternity leave even if similarly disabled male employees are not entitled to a leave of absence.

According to the court’s opinion, the plaintiff nurse was hired by the nursing home, which provided medical and other leaves of absence to employees only after they had completed one year of service. Before the plaintiff had completed eight months, her physician indicated that she required a medical leave of absence because of her pregnancy and could return six weeks after delivery; she gave birth days later. The employer terminated her three days after she gave birth because she had not completed one year of employment, but called and offered her re-employment just a few weeks later (before she was physically able to return to work according to her own physician). The plaintiff never returned the employer’s calls or returned to work. Instead, she filed a Charge of Discrimination with the OCRC and remained unemployed for another nine months.

The Court agreed with the OCRC that the OCRA requires employers to provide a reasonable amount of maternity leave to all employees and cannot impose a length of service requirement, even if the requirement applies equally to all employees. In particular, Ohio Administrative Code § 4112-5-05(2) provides ““(2) Where termination of employment of an employee who is temporarily disabled due to pregnancy or a related medical condition is caused by an employment policy under which insufficient or no maternity leave is available, such termination shall constitute unlawful sex discrimination.”

Indeed, Ohio Administrative Code § 4112-5-05 (6) provides that even “if the employer has no leave policy, childbearing must be considered by the employer to be a justification for leave of absence for a female employee for a reasonable period of time. Following childbirth, and upon signifying her intent to return within a reasonable time, such female employee shall be reinstated to her original position or to a position of like status and pay, without loss of service credits.”

The Court did not address whether the plaintiff had sufficiently mitigated her damages by refusing to accept the employer’s unqualified offer of reinstatement.

Insomniacs may read the full decision at

New I-9 Form FINALLY Goes Into Use on Friday, April 3, 2009

After fits and starts, the Obama Administration has apparently finally blessed the new I-9 form which the Bush Administration announced in December 2008. All employers must begin using the new I-9 form on Friday, April 3, 2009 for all new employees who begin work as of that date.

As faithful readers may recall, USCIS announced in December 2008 that a new I-9 form would become mandatory for all employers on February 2, 2009. However, this new I-9 form was not placed on the USCIS website until the end of January 2009 – days after the Obama inauguration and only days before the mandatory deadline. Then, on Friday, January 30, 2009 -- only a week later and only one business day before the new form became mandatory -- the Obama administration announced that employers could not use the new form until April 3, 2009. Indeed, the new administration re-opened the review and public comment period on the I-9 form revisions until March 3, 2009.

Even though it is entirely possible that the Obama Administration will again pull the rug out from under us with only one day to go before the April 3 deadline, I am willing to risk a prediction that the form can now be used by employers on Friday.

Insomniacs can access the new I-9 form at http://www.uscis.gov/files/form/I-9_IFR_02-02-09.pdf. There are also Spanish versions available on the USCIS.gov website.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Despite Union Conflict of Interest Supreme Court Enforces Arbitration of Employees’ ADEA Claims Based on CBA’s Reference to ADEA in Arbitration Clause

Today, the United States Supreme Court (in a 5-4 decision) reversed the Second Circuit Court of Appeals’ refusal to enforce the arbitration clause and held that a “a provision in a collective-bargaining agreement that clearly and unmistakably requires union members to arbitrate claims arising under the Age Discrimination in Employment Act of 1967 (ADEA) . . . is enforceable.” 14 Penn Plaza LLC v. Pyett, No. 07-581. The plaintiffs were members of the SEIU and their collective bargaining agreement provided, among other things that age, race, sex discrimination was prohibited and that “[a]ll such claims shall be subject to the grievance and arbitration procedures (Articles V and VI) as the sole and exclusive remedy for violations. Arbitrators shall apply appropriate law in rendering decisions based upon claims of discrimination." The Court held that this “clear and unmistakable” waiver of their statutory ADEA right to a jury trial was enforceable because the union was the authorized bargaining representative for the plaintiff employees and “the collective-bargaining agreement's arbitration provision expressly covers both statutory and contractual discrimination claims.” The Court brushed off the inherent conflict of interest between the union and its members’ discriminate claims, finding that those issues could be better resolved through the political process, and through breach of fair representation and discrimination claims brought against the union by the employees.

According to the Court’s opinion, one of the joint-employers owed an office building which engaged the other joint employer (a maintenance and cleaning service). The plaintiffs were employed as night watchmen. With the union’s consent, the building management replaced the other joint employer with a unionized security firm (affiliated with the joint employer) which could supply licensed security guards. Thus replaced, the plaintiffs were then reassigned to positions as night porters and light duty cleaners. They objected and filed a grievance under the CBA that the reassignments constituted, among other things, age discrimination and that they were denied seniority benefits and overtime.

The grievances proceeded to arbitration. However,

“[a]fter the initial arbitration hearing, the Union withdrew the first set of . . . grievances--the age-discrimination claims--from arbitration. Because it had consented to the contract for new security personnel [at the office building], the Union believed that it could not legitimately object to respondents' reassignments as discriminatory.”

The plaintiffs then filed Charges with the EEOC alleging that their transfers had violated ADEA, but the EEOC dismissed the Charges as lacking substantiating evidence. With their right-to-sue letters in hand, the plaintiffs then filed suit in federal court and the employers moved to compel arbitration of their claims under the Federal Arbitration Act. The District Court refused to compel arbitration on the grounds that a union cannot waive the individual statutory rights of employees to pursue ADEA claims in a collective bargaining agreement. The Second Circuit Court of Appeals affirmed, stating that “it could not compel arbitration of the dispute because Gardner-Denver, which ‘remains good law,’ held ‘that a collective bargaining agreement could not waive covered workers' rights to a judicial forum for causes of action created by Congress.’”

The Court’s majority found that the union and employers

“collectively bargained in good faith and agreed that employment-related discrimination claims, including claims brought under the ADEA, would be resolved in arbitration. This freely negotiated term between the Union and the RAB easily qualifies as a ‘conditio[n] of employment’ that is subject to mandatory bargaining. . . . The decision to fashion a CBA to require arbitration of employment-discrimination claims is no different from the many other decisions made by parties in designing grievance machinery.”

Rejecting the argument that the union is not authorized to bargain away the employees’ statutory rights,

“[a]s in any contractual negotiation, a union may agree to the inclusion of an arbitration provision in a collective-bargaining agreement in return for other concessions from the employer. Courts generally may not interfere in this bargained-for exchange. ‘Judicial nullification of contractual concessions ... is contrary to what the Court has recognized as one of the fundamental policies of the National Labor Relations Act--freedom of contract.’"

In that the ADEA does not preclude the arbitration of ADEA claims, there is nothing in the NLRA which precludes unions from negotiating that the employees’ future ADEA claims are subject to the grievance and arbitration provisions of the CBA.

“Examination of the two federal statutes at issue in this case, therefore, yields a straightforward answer to the question presented: The NLRA provided the Union and the [employers] with statutory authority to collectively bargain for arbitration of workplace discrimination claims, and Congress did not terminate that authority with respect to federal age-discrimination claims in the ADEA. Accordingly, there is no legal basis for the Court to strike down the arbitration clause in this CBA, which was freely negotiated by the Union and the [employers], and which clearly and unmistakably requires [plaintiffs] to arbitrate the age-discrimination claims at issue in this appeal. Congress has chosen to allow arbitration of ADEA claims. The Judiciary must respect that choice.”

In reaching this decision, the Court brushed off contrary language from Gardner-Denver, which indicated that union arbitrations – while suitable for contractual claims -- were not an appropriate forum for resolving discrimination claims and questioned the competence of arbitrators to decide federal statutory claims.

The Court also dismissed its earlier concerns in Gardner-Denver about the inherent conflict of interest between a union and its individual members.

“[I]n arbitration, as in the collective-bargaining process, a union may subordinate the interests of an individual employee to the collective interests of all employees in the bargaining unit. . . . ‘The union's interests and those of the individual employee are not always identical or even compatible. As a result, the union may present the employee's grievance less vigorously, or make different strategic choices, than would the employee.’”

Nonetheless, the Court found that “there is ‘no reason to color the lens through which the arbitration clause is read’ simply because of an alleged conflict of interest between a union and its members.. . . . . This is a ‘battl[e] that should be fought among the political branches and the industry. Those parties should not seek to amend the statute by appeal to the Judicial Branch.’”

Moreover,

"‘[t]he conflict-of-interest argument also proves too much. Labor unions certainly balance the economic interests of some employees against the needs of the larger work force as they negotiate collective-bargain agreements and implement them on a daily basis. But this attribute of organized labor does not justify singling out an arbitration provision for disfavored treatment. This ‘principle of majority rule’ to which [the plaintiffs now] object is in fact the central premise of the NLRA. . . . In establishing a regime of majority rule, Congress sought to secure to all members of the unit the benefits of their collective strength and bargaining power, in full awareness that the superior strength of some individuals or groups might be subordinated to the interest of the majority." . . . It was Congress' verdict that the benefits of organized labor outweigh the sacrifice of individual liberty that this system necessarily demands. [The plaintiffs’] argument that they were deprived of the right to pursue their ADEA claims in federal court by a labor union with a conflict of interest is therefore unsustainable; it amounts to a collateral attack on the NLRA.”

In any event, the union members may sue the union directly for failing in their duty of fair representation or for its own age discrimination.

The ”NLRA has been interpreted to impose a "duty of fair representation" on labor unions, which a union breaches "when its conduct toward a member of the bargaining unit is arbitrary, discriminatory, or in bad faith. . . . This duty extends to "challenges leveled not only at a union's contract administration and enforcement efforts but at its negotiation activities as well. . . . Thus, a union is subject to liability under the NLRA if it illegally discriminates against older workers in either the formation or governance of the collective-bargaining agreement, such as by deciding not to pursue a grievance on behalf of one of its members for discriminatory reasons. In this case, the plaintiffs also had “brought a fair representation suit against the Union based on its withdrawal of support for their age-discrimination claims. . . . Given this avenue that Congress has made available to redress a union's violation of its duty to its members, it is particularly inappropriate to ask this Court to impose an artificial limitation on the collective-bargaining process.”

Insomniacs can read the full court opinion at http://

Franklin County Court of Appeals Affirms Dismissal of Age and Disability Claims Brought by Fire Fighter

Last week, the Franklin County Court of Appeals affirmed the dismissal of disability and age discrimination claims brought by a fire lieutenant who was passed over for a promotion to captain. Sheridan v. Jackson Twp. Div. Fire, 2009-Ohio-1267. In short, the court agreed that plaintiff’s foot/ankle impairment was not “substantially limiting” when it did not preclude him from performing his firefighting duties. The age discrimination claim was dismissed because the successful candidate was only seven years younger than the plaintiff and the law does not require the employer to promote the oldest candidate.

According to the court’s opinion, the plaintiff claimed to have a disability “based on the fact that he has undergone several foot/ankle surgeries. Although he stated that these medical problems prevent him from running, mowing the lawn, or walking long distances without pain, the fact remains that he can still perform the duties of his job with the fire department. . .. Mere difficulty in standing or walking is not sufficient to establish a substantial limitation on the major life activity of walking . . . Even moderate difficulty in walking may not establish a substantial impairment . . . . Because [the plaintiff] is able to perform his occupational duties—fighting fires—it is difficult to conclude that he has a disability of the substantially limiting variety. This precludes relief under the ADA.”

Insomniacs can read the full court opinion at http://www.sconet.state.oh.us/rod/docs/pdf/10/2009/2009-ohio-1267.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with an attorney.

DOL Publishes Model Notices for COBRA Subsidy Under Stimulus Act to Be Sent by Employers Before April 18

As summarized here on February 23, 2009, the recently enacted American Recovery and Reinvestment Act of 2009 (the “Act”) contains a provision where the federal government will partially subsidize the continuation of medical insurance coverage for involuntarily terminated employees for up to nine months if they are eligible for continued medical coverage under COBRA or similar state law. The continued medical coverage is available to any employee who participates in an employer-sponsored health plan and who is involuntarily terminated after September 1, 2008 but before December 31, 2009 – even if the employee did not initially elect to continue medical coverage after his or her termination. Under the Act, the Department of Labor is required to publicize acceptable model notices by mid-March 2009 and employers are required to send by April 18, 2009 the revised notice to all employees involuntarily terminated since September 1, 2008 (and to other eligible individuals who lost medical coverage between September 30 and February 16). The DOL has recently published on its website the model notices required by the Act and they can be accessed at http://www.dol.gov/ebsa/COBRAmodelnotice.html.

As explained by the DOL, the Act mandates that health “plans notify certain current and former participants and beneficiaries about the premium reduction. The Department created model notices to help plans and individuals comply with these requirements. Each model notice is designed for a particular group of qualified beneficiaries and contains information to help satisfy [the Act’s] notice provisions.”

The DOL has created three potential model notices:

1) The “General Notice (Full version) Plans subject to the Federal COBRA provisions must send the General Notice to all qualified beneficiaries, not just covered employees, who experienced a qualifying event at any time from September 1, 2008 through December 31, 2009, regardless of the type of qualifying event. This full version includes information on the premium reduction as well as information required in a COBRA election notice.”

2) “The Abbreviated General Notice: The abbreviated version of the General Notice includes the same information as the full version regarding the availability of the premium reduction and other rights under [the Act], but does not include the COBRA coverage election information. It may be sent in lieu of the full version to individuals who experienced a qualifying event during on or after September 1, 2008, have already elected COBRA coverage, and still have it.”

3) “Alternative Notice Insurance issuers that provide group health insurance coverage must send the Alternative Notice to persons who became eligible for continuation coverage under a State law. Continuation coverage requirements vary among States, and issuers should modify this model notice as necessary to conform it to the applicable State law. Issuers may also find the model Alternative Notice or the abbreviated model General Notice appropriate for use in certain situations.”

4) “Notice in Connection with Extended Election Periods Plans subject to the Federal COBRA provisions must send the Notice in Connection with Extended Election Periods to any assistance eligible individual (or any individual who would be an assistance eligible individual if a COBRA continuation election were in effect) who:

A. Had a qualifying event at any time from September 1, 2008 through February 16, 2009 [i.e., lost their job and/or medical coverage]; and
B. Either did not elect COBRA continuation coverage, or who elected it but subsequently discontinued COBRA.

Insomniacs can read these provisions of the Act in full at http://www.dol.gov/ebsa/pdf/COBRAPremiumReductionProvision.pdf. The Department of Labor published the new model COBRA notice on its website at http://www.dol.gov/ebsa/cobra.html.

Ohio Court of Appeals Denies Injunction Against Employee Competition

Last month, the Lucas County Court of Appeals affirmed the denial of a preliminary injunction requested by an employer against two former employees who began working for a competitor in violation of their non-compete agreement because the employer could not show any irreparable harm in light of damage to its reputation by the prior termination of a franchise agreement and the fact that it could not identify the loss of any customers because of the former employees. E2 Solutions v. Hoelzer, 2009-Ohio-772.

According to the court’s opinion, the employer had an exclusive franchise agreement with an HVAC equipment manufacturer which accounted for approximately 90% of its business. The manufacturer then terminated the agreement and brought suit in federal court against the employer because: “an audit of company records disclosed what they considered to be a "pervasive pattern of deception to cheat [the manufacturer]" out of "well over $1,000,000" that they claimed had been retained by appellant and were due [the manufacturer].” The manufacturer then opened its own distribution facility and show room. Thereafter, two employees resigned and went to work for a competitor. In doing so, the employees notified two of the employer’s customers and also submitted bids to two of the employer’s customers. The employer brought suit against the two employees and their new employer and sought a preliminary injunction, which was denied.

As noted by the trial court, “The facts demonstrate that proof of any irreparable harm or business loss caused by [the former employees] would be very difficult, particularly in view of the substantial damage to the business by loss of the [manufacturer’s] franchise and damage to its reputation by allegations by [the manufacturer] of fraud. The trial court noted that the allegations of fraud were ‘well known in the business community.’ The trial court concluded: ‘The evidence thus would suggest that, if Plaintiff has suffered a loss of business, [the manufacturer’s] action in canceling the franchise are just as likely, if not more likely, to be the cause of such loss of business.’" In addition, although the employer could show that the employees approached two of its customers, it could not show the loss of any customers as a result of these solicitations. “Under these facts, [the court] conclude[d] that the trial court did not abuse its discretion in denying a preliminary injunction. The trial court reasonably concluded that [the employer] failed to establish by clear and convincing evidence that it would suffer irreparable harm if the injunction did not issue and that [the employer] was likely to succeed on the merits.”

The Court also affirmed the denial of any trade secret claim. First, the employees had never been subject to a confidentiality agreement. In addition, any marketing information which the employees possessed was rendered obsolete by the prior termination of the franchise agreement. Unlike the trade secret product information at issue in Procter & Gamble Co. v. Stoneham (2000), 140 Ohio App.3d 260, this case “concerned company practices in service operations before the termination of the [manufacturer’s] franchise and that [the employer’s] service business has substantially changed because of the [franchise] termination and dispute.” The employee’s “knowledge related to service business and existing building sales when [the employer] was a distributor for [the manufacturer’s] products . . .. Before the franchise termination, as a distributor, [the employer] would make equipment sales on behalf of [the manufacturer] directly to the customer. . . . Now the majority of service work remains work on [the manufacturer’s] equipment. [The employer], however, no longer holds the status of a [manufacturer] distributor to assist in securing sales of service contracts. It purchases parts and equipment for [the manufacturer’s] products used in service just like any contractor in town. The record lacks evidence to indicate that the same marketing strategy or cost structure applied to the service and existing building sales part of the [the employer’s] business after termination of the franchise.”

A plaintiff is required to establish actual irreparable harm or the existence of an actual threat of such injury when the equitable remedy of an injunction is sought. . . . In such a case, proof of irreparable harm must be by clear and convincing evidence. . . . . Such proof is lacking here. This case does not present tangible, highly technical or specific evidence of trade secrets held by either [employee] upon which it could be said that the likelihood of irreparable harm was immediate and concrete as considered by the First District Court of Appeals in Stoneham.

Insomniacs can read the full court opinion at http://www.sconet.state.oh.us/rod/docs/pdf/6/2009/2009-ohio-772.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with an attorney.

EEOC Announces Record Increase in Filings of Charges of Discrimination

Yesterday the EEOC announced “that workplace discrimination charge filings with the federal agency nationwide soared to an unprecedented level of 95,402 during [the 2008] Fiscal Year” (which ended in September). This is a 15% increase from last year. “The FY 2008 enforcement and litigation statistics, which include trend data, are available online at http://www.eeoc.gov/stats/enforcement.html.”

According to the FY 2008 data, all major categories of charge filings in the private sector (which includes charges filed against state and local governments) increased. Charges based on age and retaliation saw the largest annual increases, while allegations based on race, sex and retaliation continued as the most frequently filed charges. The surge in charge filings may be due to multiple factors, including economic conditions, increased diversity and demographic shifts in the labor force, employees’ greater awareness of the law, EEOC’s focus on systemic litigation, and changes to EEOC’s intake practices.

In particular, there were 95,402 total discrimination charges filed in the last fiscal year (compared to less than 83,000 in FY 2007), including 33,937 race discrimination, 28,372 sex discrimination, 10,601 national origin discrimination, 3,273 religion discrimination, 32,690 retaliation, 24,582 age discrimination, 19,453 disability discrimination and 954 Equal Pay Act Charges filed.

The FY 2008 data also show that the EEOC filed 290 lawsuits, resolved 339 lawsuits, and resolved 81,081 private sector charges. Through its combined enforcement, mediation and litigation programs, the EEOC recovered approximately $376 million in monetary relief for thousands of discrimination victims and obtained significant remedial relief from employers to promote inclusive and discrimination-free workplaces.

Insomniacs can read the full press release at http://www.eeoc.gov/press/3-11-09.html.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with an attorney.

DOL: Employers Must Pay Employee for Off-Duty Study, But Not for Off-Duty Class Offered by Employer Which Assists Employee Maintain Certifications

The DOL recently published three opinion letters regarding an employer’s obligation to pay non-exempt employees for time they spend studying or performing homework for mandatory and voluntary work-related coursework (both internet courses and in-person seminars). In short, the DOL indicated that employers must pay employees for time they spend studying and performing homework, although the employer could set limits on the amount of time employees are allowed to spend on such activities and discipline employees for violating those time limits. Moreover, even if the training was clearly related to an employee’s job, voluntary participation in coursework outside of working hours need not be compensated if, for example, the course corresponds to courses offered by independent bona fide institutions of learning. Thus, a pre-school which offered voluntary after-hours training to help employees maintain state-required certification – which would assist the employee gain employment at other pre-schools and which corresponded to courses offered at learning institutions– did not constitute compensable hours worked unless the state required the employer to provide the training.

In the first opinion letter, the DOL addressed “whether time spent by employees taking web-based prerequisite classes at home in preparation for a voluntary job-related training class is compensable time under the” FLSA. FLSA Op No. 2009-13 (1/15/09). In that letter, the employer employed “technicians who install, monitor, and service voice and data communications circuits,” including the Tellabs 5500. “Tellabs offers advanced training in the Tellabs 5500 equipment” and the employer hired Tellabs to conduct a voluntary training class during regular business hours for a few of the employer’s “technicians about the Tellabs 5500’s new and advanced features. . . . Technicians who take the class will be compensated for time spent in the class. . . . [However,] Tellabs requires that technicians taking the training class [to] first complete four web-based prerequisite classes. It is expected that the technicians will take the prerequisite classes on their own time at their homes . . . [and] that each prerequisite class will take approximately ten hours to complete.” The question posed was whether the employer was required to pay these technicians for the ten hours spent taking these web-based prerequisite classes from home.

As explained by the DOL, “[t]he FLSA requires than an employer compensate an employee for all hours worked. . . . This rule applies to work performed away from the premises or the job site, including work performed at home. ‘If the employer knows or has reason to believe that the work is being performed, he must count the time as hours worked.” 29 C.F.R. § 785.12.’”

“The Department’s regulations provide that certain training activities need not be treated as hours worked. The general rules for determining the compensability of training time are set forth in 29 C.F.R. §§ 785.27 through 785.32. . . . . As indicated in section 785.27, ‘training programs and similar activities need not be counted as working time if the following four criteria are met’:
a. Attendance is outside of the employee’s regular working hours;
b. Attendance is in fact voluntary;
c. The course, lecture, or meeting is not directly related to the employee’s job; and
d. The employee does not perform any productive work during such attendance.”

The DOL concluded that all but criterion (c) had been met in this situation “because the prerequisite classes are directly related to the technicians’ jobs. Section 785.29 provides that ‘training is directly related to the employee’s job if it is designed to make the employee handle his job more effectively as distinguished from training him for another job, or to a new or additional skill.’ The training classes and the prerequisite classes offer instruction to enable the technicians to perform their present jobs better by giving them greater abilities to use the [Tellabs 5500] network system they are presently using. By making the technicians better able to perform their jobs, the training and the prerequisite classes are directly related to the technicians’ jobs.”

The DOL also noted that none of the available exceptions applied in this situation. For instance, “[s]ection 785.31 states that even if the training is clearly related to an employee’s job, voluntary participation outside of working hours need not be compensated if, for example, the course corresponds to courses offered by independent bona fide institutions of learning. The prerequisite classes, which are focused on learning ways to utilize a particular product, do not appear to correspond to courses offered by bona fide institutions of learning.” Therefore, the DOL opined “that the Company is obligated to compensate technicians for the time they spend at home completing required prerequisite classes in order to take the voluntary but job-related Tellabs training classes.”

In the second opinion letter, the DOL addressed whether “time spent outside normal working hours by city employees studying for city-required training programs, seminars, and classes” constitute compensable hours under the FLSA. FLSA Op. No. 2009-15 (1/15/09). In that letter, the employer city required “certain employees to attend and pass various training programs intended to help the employees become more proficient at their jobs. The city employees attend training during normal work hours. During the training, the instructor informs the employees that they must read and/or study selected material and be prepared to discuss this material during the next class. Employees leave the classroom and go home or to their hotel (if the training is out of town) to study or read the assigned material.”

As indicated above, “[t]he FLSA requires that an employer compensate an employee for all hours worked.” However, under “certain circumstances, time spent by employees of state and local governments attending required training outside of regular working hours is considered to be non-compensable. 29 C.F.R. § 553.226(b). Examples of non-compensable time include time which is required by law for certification of public and private sector employees within a particular governmental jurisdiction (e.g., certification of public and private emergency rescue workers), . . . [or] required for certification of employees of a governmental jurisdiction by law of a higher level of government (e.g., where a State or county law imposes a training obligation on city employees), . . . even if all or part of the costs of the training is borne by the employer. 29 C.F.R. § 553.226(b)(1)-(3).”

Nonetheless, the DOL did not believe that the described training fell “within the regulations governing compensability of training time applicable to employees of state and local governments” and thus turned to FLSA regulations covered training time of private-sector employers [discussed above], “ which are set forth in 29 C.F.R. §§ 785.27 through 785.32.”

Applying the same criteria used in the prior opinion letter, the DOL found that the “time spent participating in the training programs” constituted compensable working hours because criteria (a), (b), and (c) were not satisfied. “Attendance is not voluntary, of course, if it is required by the employer. It is not voluntary in fact if the employee is given to understand or led to believe that his present working conditions or the continuance of his employment would be adversely affected by non-attendance.” 29 C.F.R. § 785.28. Further, “training is directly related to the employee’s job if it is designed to make the employee handle his job more effectively as distinguished from training him for another job, or to a new or additional skill.” 29 C.F.R. § 785.29. As a result, time spent in mandatory training is generally compensable.”

However, “[t]ime spent in outside study is not compensable if the studying is not required by the employer. See Wage and Hour Opinion Letter September 27, 1984 . . . (“Time spent in reading or studying at home would not be compensable hours of work if time is allotted during regular working hours but some employees voluntarily do extra work at home on their own to bolster their ability.”); Wage and Hour Opinion Letter July 17, 1980 . . . (time spent studying after regular working hours, in connection with a training program, is not compensable because the excess study is not required by the employer); Wage and Hour Opinion Letter July 27, 1971 . . . (supplemental after hours reading assignments that are not supervised or tested, and are not necessary to pass the final examination are primarily for the employee’s benefit and may be excluded from compensable hours of work).”

“When completion of homework is a requirement of a compensable training class, however, time spent completing assignments for such training is compensable. Mandatory homework is addressed in Wage and Hour Opinion Letter September 9, 1970 . . . which states,
[t]he employee’s participation in the program, both with respect to classroom work and . . . practice at home, is not voluntary . . . if . . . attendance is required for the continuance of . . . employment and if such . . . practice at home is necessary to qualify under the program. In such a case the time spent in classroom training as well as the time devoted to . . . practice at home would be considered as compensable hours of work which the employer may not disregard in determining the employee’s compensation.

“Therefore, the time spent outside the classroom and after normal work hours completing required assignments, such as the required reading and studying of materials that [are] describe[d], is compensable hours worked.” Nonetheless, the employer could “establish a specific amount of time to be spent completing assignments outside the classroom and after normal work hours.” The DOL “noted in 29 C.F.R. § 785.13:

[I]t is the duty of the management to exercise its control and see that the work is not performed if it does not want it to be performed. It cannot sit back and accept the benefits without compensating for them. The mere promulgation of a rule against such work is not enough. Management has the power to enforce the rule and must make every effort to do so.

“If employees spend more time completing the assignment than allowed by the city, the time may be compensable. See 29 C.F.R. § 785.12. The city could control the study time by allowing the employees a realistic time to complete their reading and study assignment within the class period or within the normal work day. See Wage and Hour Opinion Letter September 27, 1984 .” In other words, the employer must do more than promulgate rules or directions about the amount of study time which will be permitted; it must actively enforce that rule before it will be given weight by the DOL.

In the third letter opinion, the DOL addressed whether “time spent by child care center employees in State-mandated training programs, offered by the employer and required of the employee as a condition of maintaining her State certificate, is hours worked under the” FLSA. In that situation, the employer operates pre-schools and child care “facilities in several states.” “The facilities are licensed by the State and State-certified child care teachers and assistants staff the facilities.” The employer provided “in-service training or continuing education after regular business hours at day care centers in those states that require employees to take such training in order for the employees to maintain their state certification. The courses correspond to those offered by independent bona fide institutions of learning. Attendance at the training is voluntary and employees do not perform work during the training. The teachers and assistants may also attend training offered by other organizations that meet the state mandated training requirements.”

As discussed in the first two letter opinions, the DOL concluded that the employer met all of the criteria, except for criterion (c) because the training was job related. However, unlike the employer discussed in the first letter opinion, this employer fell within the exception:

With respect to criterion (c), 29 C.F.R. § 785.31 provides an exception from the requirement that the training not be directly related to the employee’s job where the training is for the benefit of the employee and corresponds to courses offered by independent bona fide institutions of learning. Voluntary attendance of such training by the employee outside normal working hours would not be hours worked even though the training is clearly related to the employee’s job. . . . . In the child care industry, [the DOL] regard[s] child care training to be for the benefit of the employees when it provides instruction of general applicability that enables an individual to gain or continue employment with any child care service provider. . . . Here, the courses correspond to those offered by bona fide institutions of learning and qualify the employees to gain employment with any child care service provider.

Therefore, the DOL opined “that the time spent by employees voluntarily attending in-service training or continuing education required by the State and provided at your client’s day care center is not hours worked under the FLSA. This is true even if the State requires that individuals may only be employed by the employer if they meet the in-service or continuing education requirements, so long as the State does not require the employer to provide the training.”

Insomniacs can read these letter opinions in full at http://www.dol.gov/esa/whd/opinion/FLSA/2009/2009_01_15_13_FLSA.htm, http://http://www.dol.gov/esa/whd/opinion/FLSA/2009/2009_01_15_15_FLSA.htm.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with an attorney.

EEOC Announces $50,000 Settlement with Auto Parts Retailer Over Failure to Hire Applicant with Cerebral Palsy Who Successfully Completed Internship.

Yesterday, the EEOC announced that it had reached a settlement with an auto parts retailer – Advance Stores Company, Inc. – where the store agreed to pay $50,000 and “to provide training on an annual basis to all of its managers, supervisors, and employees in its Norton, Va., store; post an employee notice regarding this settlement; and report any allegations of disability discrimination by job applicants at the company’s Norton location to the EEOC.” According to the allegations made in the EEOC’s lawsuit, the store violated the Americans With Disabilities Act when it refused to hire an applicant for a part-time sales position “because he has cerebral palsy. . . . The EEOC said that [the applicant] had successfully completed an internship as a salesperson at Advance Auto’s Staunton, Va., store through a training program in which he participated. The EEOC further charged that despite Sanders’ qualifications and experience obtained through the internship, Advance Auto did not hire him but did hire at least one other person who was less qualified than Sanders.” (EEOC v. Advance Stores Company, Inc. d/b/a Advance Auto Parts, Civil Action 02-08CV00011).

Insomniacs can read the full press release at http://www.eeoc.gov/press/3-9-09.html.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with an attorney.

DOL Releases New FLSA Opinions from Bush Era Including Letters Addressing Mandatory Use of Vacation or PTO During Temporary Shutdowns

On Friday, March 6, the Wage and Hour Division of the federal Department of Labor announced that it would be posting on its website 36 Administrator opinion letters (as well as and four Non-Administrator opinion letters) that were signed prior the January 21 Obama inauguration. Half of the posted Administrator opinion letters (which are designated with asterisk on the website) were not mailed before the inauguration and are, therefore, being withdrawn for further consideration by the Obama administration (even though they are being made available to the public for review on the website). This site will publish further details about some of the 18 Administrator letters which were both signed and mailed before the Obama inauguration. Today, this will include describing two of the Opinion Letters which address employers mandating use of vacation or Paid Time Off (PTO) during a temporary shutdown or closure of operations as a cost-savings measure during this recession.

In the first letter (FLSA Op. Ltr. 2009-2), the DOL addressed whether an employer “may require exempt employees to use accrued vacation time during a plant shutdown of less than a workweek without violating the salary basis test and thereby affecting their exempt status. The DOL indicated that this practice was permissible and had been approved as early as 2005:

Since employers are not required under the FLSA to provide any vacation time to employees, there is no prohibition on an employer giving vacation time and later requiring that such vacation time be taken on a specific day(s). Therefore, a private employer may direct exempt staff to take vacation or debit their leave bank account . . . , whether for a full or partial day’s absence, provided the employees receive in payment an amount equal to their guaranteed salary.

Wage and Hour Opinion Letter FLSA2005-41 (Oct. 24, 2005); see also 29 C.F.R. §§ 541.600, 541.602(a); 69 Fed. Reg. 22,122, 22,178 (Apr. 23, 2004) (“[E]mployers, without affecting their employees’ exempt status, may take deductions from accrued leave accounts.”). Therefore, the DOL opined “that the employer may require exempt employees to use accrued vacation time for any absence, including one resulting from a plant shutdown, without affecting their exempt status, provided that employees receive a payment in an amount equal to their guaranteed salary.” Notably, however, if “an exempt employee . . . has no accrued [vacation] benefits . . . or has a negative balance . . . [the employee must] still must receive the employee’s guaranteed salary for any absence(s) occasioned by the employer or the operating requirements of the business.” Wage and Hour Opinion Letter FLSA2005-41. In other words, exempt employees are entitled to be paid an amount equal to their full salary for every workweek in which they perform any compensable work (even just a few hours), and that payment may come from their accrued vacation/PTO bank or the employer’s payroll. Thus, if an employer wishes to avoid paying exempt salaries, the exempt employees must be furloughed in full week increments.

Insomniacs can read the full opinion letter at http://www.dol.gov/esa/whd/opinion/FLSA/2009/2009_01_14_02_FLSA.htm.

In contrast to the employer which mandated the use of vacation/PTO during brief plant shutdowns, the next employer sought clarification about whether it could “occasionally reduc[e] the hours worked by exempt employees due to short-term business needs (e.g., low patient census). In such cases, the employer [proposed to] offer[] “voluntary time off” (VTO) [on a first-come-first-served basis], where employees may, at their option, use paid annual, personal, or vacation leave, but continue to accrue employment benefits. . . . If there [were] insufficient volunteers for VTO, the employer [would] require[] “mandatory time off” (MTO) under a seniority-based rotational method. Exempt employees required to take MTO [could] use accrued paid leave or take unpaid MTO. If the employee elect[ed] not to use accrued paid leave or [did] not have sufficient accrued paid leave to cover the VTO or MTO, the employer [would] deduct[] the amount equal to the VTO or MTO from the employee’s salary, if it is shorter than one workweek. . . . [T]he employer does not pay [any] salary for [any] pay period [where the unpaid VTO or MTO lasts an entire workweek]. Salaried exempt employees may take VTO or be assigned MTO in one-day increments.”

The DOL noted that under 29 C.F.R. § 541.602(a), “[a]n employee will be considered to be paid on a 'salary basis' . . . if the employee regularly receives each pay period . . . a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed. . . . An employee is not paid on a salary basis if deductions from the employee’s predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business. If the employee is ready, willing and able to work, deductions may not be made for time when work is not available.” (emphasis added).

According to the DOL, “salary deductions due to a reduction of hours worked for short-term business needs do not comply with § 541.602(a) because they result from 'the operating requirements of the business.' 29 C.F.R. § 541.602(a). Thus, '[i]f the employee is ready, willing and able to work, deductions may not be made for time when work is not available.' Id . Deductions from the fixed salary based on short-term business needs are different from a reduction in salary corresponding to a reduction in hours in the normal scheduled work week, which is permissible if it is a bona fide reduction not designed to circumvent the salary basis requirement, and does not bring the salary below the applicable minimum salary. See Field Operations Handbook § 22b00; Wage and Hour Opinion Letter FLSA2004-5 (June 25, 2004) (“[R]ecurrent changes in the normal scheduled workweek . . . more likely would appear to be designed to circumvent the salary basis requirement.”). Unlike a salary reduction that reflects a reduction in the normal scheduled work week and is not designed to circumvent the salary basis requirement, deductions from salary due to day-to-day or week-to-week determinations of the operating requirements of the business are precisely the circumstances the salary basis requirement is intended to preclude. Therefore, in this instance, salary deductions due to MTO lasting less than a workweek violate the salary basis requirement and may cause the loss of exempt status. The employer is not, however, required to pay the salary for MTO of a full workweek. See 29 C.F.R. § 541.602(a) (“Exempt employees need not be paid for any workweek in which they perform no work.”).” (italics added).

Of course, as already discussed above, “[f]or employees on MTO, the 'employer[], without affecting [the] employees’ exempt status, may take deductions from accrued leave accounts' [i.e., vacation or PTO] provided employees receive their guaranteed salary.” In short, for MTO, as long as the employer pays an amount equal to the employee’s full salary, the employer may make deductions from the MTO employee’s accrued vacation and/or PTO bank without jeopardizing the employee’s exempt status. The employer may not, however, reduce the MTO employee’s salary if s/he has not accrued vacation or PTO.

The DOL also reminded the employer that “[s]ection 541.602(b)(1) states that ‘[d]eductions from pay may be made when an exempt employee is absent from work for one or more full days for personal reasons.' Salary deductions, therefore, may be made when exempt employees voluntarily take time off for personal reasons, other than sickness or disability, for one or more full days. For instance, an exempt employee paid $500 per week on a salary basis may take VTO for personal reasons for four days in a workweek and receive one fifth of the salary. The employee’s decision to take VTO, however, must be completely voluntary and not “occasioned by the employer or by the operating requirements of the business.” 29 C.F.R. § 541.602(a).” (emphasis added). Therefore, if the employee’s decision to take VTO is entirely voluntary and is not the result of pressure from the employer based on business conditions, the employer may – in addition to taking deductions from the employee’s accrued vacation and/or PTO bank – also make deductions from salary in full-day increments if the employee does not have any accrued vacation or PTO.

Insomniacs can read this opinion letter in full at http://www.dol.gov/esa/whd/opinion/FLSA/2009/2009_01_15_14_FLSA.htm.

If employers shorten an exempt employee’s workweek, the employer could argue that a reduction in salary is permissible. The DOL has approved such realities since at least 1988. (“[W]e have consistently taken the position that a bona fide reduction in an employee’s salary does not preclude salary basis payment as long as the reduction is not designed to circumvent the requirement that the employees be paid their full salary in any week in which they perform work. . . . Consistent with this position, we have stated that a fixed reduction in salary effective during a period when a company operates a shortened workweek due to economic conditions would be a bona fide reduction not designed to circumvent the salary basis payment.“).

However, there are risks with this as reflected in last October’s decision in Archuleta v. Wal-Mart Stores, Inc. 543 F.3d 1226 (10th Cir. 2008). In that case, Wal-Mart shortened some pharmacists’ workweek during the slow periods each year (i.e., summer) and correspondingly shortened their salary. More problematic, however, was that some store managers informally reduced the workweeks of some pharmacists in order to save money. The District Court entered summary judgment for the employer, but the Court of Appeals reversed as to two plaintiffs in October on the grounds that it was a factual issue whether the store managers were as attempting to evade those two employee’s exempt status by basing their “salary” on hours worked.

The Court of Appeals had earlier held that “an employer could prospectively change its employees’ salaries without defeating the exemption for professionals . . . unless the purported ‘salary’ becomes a sham—the functional equivalent of hourly wages. . . . “If . . . the salary changes are so frequent as to make the salary the functional equivalent of an hourly wage, [the court] will treat the ‘salary’ as a sham and deny the employer the FLSA exemption for professional employees.”

According to the court’s opinion:

“in response to Plaintiffs’ theory—that Wal-Mart prospectively changed their base hours, on which their salary was calculated, with such frequency so as to make them, in effect, hourly employees—Wal-Mart presented a report summarizing the number of times it changed Plaintiffs’ base hours during the time period relevant to this case. That report indicated that 75% of the 573 Plaintiffs, or 432, did not experience any change in their base hours.8 Of the Plaintiffs who did experience a change in their base hours, 99 Plaintiffs, or just over 17%, experienced only one such change. Twenty-four Plaintiffs, or 4.2%, experienced two changes. But “the average length” of time “over which those two changes occurred was four years and seven months,” and the “average time between those two changes was 11.3 months. The shortest time between those two changes was eight weeks (for two pharmacists).” Aplt. App. at 269. Two such changes during this time frame are not sufficient to defeat an otherwise valid exemption. . . .
.
Wal-Mart’s report indicated that it had changed the base hours for eight Plaintiffs three times during the relevant time period. But “[t]he average length” of time over which these changes occurred “was four years and five months,” and “[t]he average length of time between those changes was 10.3 months.” Aplt. App. at 270. “The shortest time between those changes was six weeks (for one pharmacist).”

In addition, two Plaintiffs experienced four changes in their base hours. “[T]he average length” of time over which these four changes occurred, however, “was four years and six months,” and “[th]e average time between those four changes was 7.8 months. The shortest time in between those changes was ten weeks (for one pharmacist).” Id. For that one pharmacist, the report indicated that, after employing that pharmacist from August 29, 1993 through February 5, 1998, Wal-Mart changed the pharmacist’s base hours on January 6, 1995; January 5, 1996; March 15, 1996; and October 26, 1997. “For the other pharmacist who experienced four base hour changes during his relevant period (four years and eight months), the time between each of those changes was 12 weeks or longer.” Id. at 271. We conclude that the frequency of these prospective changes was not sufficient to create a factual dispute as to whether Wal-Mart was, in fact, treating these pharmacists as hourly employees.

However, “there were many other instances in which Wal-Mart ‘informally’ or verbally changed a pharmacist’s base hours. In support of this allegation, Plaintiffs offered the affidavits of twenty-one plaintiff-pharmacists. Only eight of these twenty-one pharmacists specifically mentioned experiencing one or, at most, two changes in their base hours. This evidence is insufficient to create a factual dispute as to whether Wal-Mart was treating these pharmacists as hourly, rather than salaried, employees.”

Insomniacs can read the court’s full opinion at http://www.ca10.uscourts.gov/opinions/07/07-1065.pdf. Insomniacs can review the index of all of the 2009 FLSA opinion letters at http://www.dol.gov/esa/whd/opinion/flsa.htm.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with an attorney.

Sixth Circuit: No Violation of Public Policy for Firing Employee For Bringing Weapon onto Employer’s Property.

Today, the Sixth Circuit affirmed summary judgment in favor of an employer which fired an employee for keeping a concealed weapon in his car in the employer’s parking lot in violation of the employer’s policy. Plona v. UPS, No. 08-5624.

According to the court’s opinion, the employer’s policy provided: “All UPS employees are prohibited from using or possessing a firearm . . . while on UPS property or while conducting official UPS business. This includes, but is not limited to: UPS vehicles, facilities (including parking lots, customer premises, etc.) and while on duty or during personal breaks.” The plaintiff “had previously signed an acknowledgment form stating that he was aware of this policy.” After the employer contacted the local sheriff “about a package containing possible contraband,” a K-9 search was conducted of cars in the parking lot. “During the search, one of the dogs identified [the plaintiff’s] car as a vehicle to inspect. [The plaintiff] consented to the search and informed the sheriff’s deputies that he had a firearm in the vehicle. The deputies found a .22 caliber Luger pistol under the front seat and its empty ammunition magazine in the glove compartment. [The plaintiff] did not have a permit to carry a concealed weapon and had not registered the pistol. The deputies confiscated the weapon and reported their findings to UPS. Two UPS officials then met with [the plaintiff], who conceded that he was aware of UPS’s weapons policies and admitted that he had knowingly left the pistol in his car. The UPS officials accordingly discharged [the plaintiff], effective immediately.”

The plaintiff “subsequently filed a lawsuit against UPS in federal court, alleging wrongful discharge. He claimed that his firing was in violation of the public policy regarding firearms embodied in Article I, § 4 of the Ohio Constitution.” The Sixth Circuit disagreed. “Although the Ohio Constitution provides a general right to bear arms, the state certainly does not have a “clear public policy” of allowing employees to possess firearms on the premises of their private employers. To the contrary, the Ohio legislature has specifically provided that employers may limit their employees’ rights to bear arms:

Nothing in this section shall negate or restrict a rule, policy, or practice of a private employer that is not a private college, university, or other institution of higher education concerning or prohibiting the presence of firearms on the private employer’s premises or property, including motor vehicles owned by the private employer.

Ohio Rev. Code § 2923.126(C)(1).” UPS was thus plainly within its rights, as codified in § 2923.126(C)(1), to prohibit its employees from possessing firearms in the parking area. Because [the plaintiff] cannot show that UPS violated a clear public policy of the state of Ohio, his wrongful-termination claim fails as a matter of law.” The Court also held that the plaintiff’s arguments concerning pretext were misplaced since no law had been violated and he was not a member of a protected class. Wanting to keep his gun away from his allegedly suicidal wife, while commendable if true, did not affect the employer’s right to terminate him for violating policy.

Insomniacs can read the full court opinion at http://

Franklin County Court of Appeals Affirms Removal of Civil Service Employee Because of Misuse of Employer’s Laptop Computer.

Last month, the Franklin County Court of Appeals affirmed the removal (i.e., termination) of a civil service employee on account of, among other things, failing to sufficiently protect sensitive information on his laptop computer, and failing to cooperate truthfully with the internal investigation. Long v. Ohio Dept. of Job & Family Servs., 2009-Ohio-643. However, the SPBR agreed that the employee had not violated policy by downloading AOL software in order to access his personal email or abused his telephone privileges by making personal telephone calls.

According to the court’s opinion, the employee was an audit manager and was issued a desktop and laptop computer in order to perform his duties. His “position and job responsibilities exposed him to sensitive client-based information related to Medicaid services, including Medicaid recipients' names and Social Security numbers, as well as dates and types of services provided. This information could be accessed via [his] desktop and laptap computers. All employees, including [him], were required to abide by [the employer’s] written work policies, including, as pertinent here, the ‘Standards of Employee Conduct,’ the ‘Computer and Information Systems Usage Policy,’ and the ‘Telephone Usage Policy.’” After the Ohio Inspector General received a complaint that the employee was engaged in fraud, an internal investigation was conducted. When questioned, the employee admitted “that he often permitted his staff to borrow his laptop computer while conducting field audits; however, he did not keep a written record showing to whom he loaned it. At the time of the interview, he was unsure if he had the laptop or if he had loaned it to a staff member.”

In examining the employee’s laptop, it was discovered that he had downloaded personal software onto the computer in order to access his personal email account and that pornography had been viewed. The employee also admitted that his cousin “used his laptop without his permission in early spring 2002; when he realized it was missing, he told [his cousin] to return it. He admitted that he had not properly secured the laptop, even though he suspected [his cousin] may have utilized his AOL account to send pornographic e-mails to women. [The employee] also acknowledged that he made personal long distance and local calls from his office telephone and failed to reimburse the state for those calls.” The cousin corroborated this explanation, although he contended that he sometimes had permission and did not know that the laptop computer was not the employee’s personal property. In reviewing the employee’s desktop computer, it was discovered that “e-mails with attachments containing pornographic photographs had been sent to and opened from the desktop and that at least one pornographic website had been accessed.”

The employer’s “standards of employee conduct and computer usage policies prohibited the downloading or viewing of non-work-related material, including pornographic websites, on state-issued computers.” The employee also argued that “unauthorized downloading of AOL software onto his laptop computer violated [the employer’s] computer usage policy. . . . . [which] prohibited use of computers by persons not employed by [the employer] and mandated that employees secure their computers to prohibit access by nonemployees.” In addition, the employer argued that the employee’s “personal local and long distance telephone calls from his office phone violated [the employer’s] telephone usage policy.”

The Administrative Law Judge did not agree that the employee violated the employer’s policy by downloading AOL software, accessing his personal email or making personal telephone calls. However, the ALJ agreed that the employee should be removed from his state civil service job because, among other things, he violated the employer’s policies in being evasive and providing implausible explanations during the employer’s internal investigation, in permitting and/or causing pornographic websites and other non-work related documents to be accessed on his laptop and desktop computer, in failing to take necessary precautions to prevent his laptop from being used by non-government employees when the laptop contained sensitive client information and was misused by his cousin in accessing and sending pornography, and in violating R.C. 124.34, as he engaged in dishonest and immoral conduct and neglected his duty by engaging in questionable financial dealings, being dishonest during the investigation, and engaging in the conduct described above.

The Court rejected the employee’s arguments that he was treated more harshly than similarly situated employees: “The issue of whether employees are similarly situated sufficiently to merit consideration as evidence of disparate treatment is for the trier of fact, i.e., the SPBR . . . Although the SPBR has discretion to consider evidence of disparate treatment in evaluating the appropriateness of discipline, the Ohio Administrative Code does not mandate absolute uniformity of discipline. 'An employee's discipline must stand or fall on its own merits.' " In any event, one of the allegedly comparable employees was not similarly situated because he was a non-supervisory bargaining unit employee who reported to a different supervisor, and not an exempt manager of ten people. In addition, that employee committed different rule infractions. The only other arguably comparable employee engaged in very different conduct by sending a single email falsely complaining about a subordinate.

Insomniacs can read the full court opinion at http://www.sconet.state.oh.us/rod/docs/pdf/10/2009/2009-ohio-643.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with an attorney.

EEOC: Store Pays $60K and Agrees to 5-Year Consent Decree After Laying Off Black Manager in RIF and Later Hiring White Managers.

Yesterday, the EEOC announced that Shopper’s Vineyard, a wine and liquor store in Clifton, New Jersey, agreed to consent decree to resolve a race discrimination lawsuit initiated on behalf of an African-American store manager who had been laid off in 2006. Pursuant to the five-year consent decree, the store will pay $60,000 and institute new anti-discrimination policies and procedures, including appointing an equal employment opportunity coordinator to insure compliance with Title VII and other anti-discrimination statutes, training managers regarding Title VII requirements on a regular basis, posting a notice to employees at the store about the decree, providing reports to the EEOC, and permitting the EEOC to monitor its compliance with the decree.

In its lawsuit, the EEOC alleged that the manager “was the only African American front-line manager at the Clifton store. Shopper’s Vineyard told [the manager] in 2006 that he was being laid off because of economic reasons, but [he] was actually laid off because of his race. Shopper’s Vineyard retained white managers with less tenure and experience and hired many new employees, including four new white managers, within the year after [the manager] was laid off.”

Insomniacs may read the full press release at http://www.eeoc.gov/press/3-4-09a.html.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with an attorney.

IRS Explains Employers’ 2009 Payroll Tax Credit for Subsidizing COBRA Premiums for Terminated Employees.

On February 26, 2009, the Internal Revenue Service released information about how employers may claim credits against their quarterly payroll tax payments in order to subsidize continued medical insurance of terminated employees under COBRA pursuant to the American Recovery and Reinvestment Act of 2009. According to the IRS, “Form 941, Employer’s Quarterly Federal Tax Return, will also be sent to about 2 million employers in mid-March. The form is used to claim the new COBRA premium assistance payments credit, beginning with the first quarter of 2009.” The revised instructions for Form 941 will “explain how to complete lines 12a and 12b, which address the COBRA premium assistance payments.”

The IRS also announced that “[e]mployers must maintain supporting documentation for the credit claimed. This includes:
• Documentation of receipt of the employee’s 35 percent share of the premium.
• In the case of insured plans: A copy of invoice or other supporting statement from the insurance carrier and proof of timely payment of the full premium to the insurance carrier.
• Declaration of the former employee’s involuntary termination.”

Additional information is available from the IRS at http://www.irs.gov/newsroom/article/0,,id=204505,00.html, http://www.irs.gov/newsroom/article/0,,id=204709,00.html, and http://www.irs.gov/newsroom/article/0,,id=204708,00.html.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with an attorney.

Franklin County Court of Appeals Denies Unemployment Compensation to Non-Profit Employee for Failing to Properly Supervise Client While on Cell Phone.

Last week, the Franklin County Court of Appeals affirmed the denial of unemployment compensation to the former employee of a non-profit organization after the employee disregarded the employer’s interests by taking a personal cell phone call while on duty and while a client youth sitting next to the employee then injected himself with an epipen. Brooks v. Ohio Dept. of Job & Family Servs., 2009-Ohio-817. The court rejected the employee’s arguments that other employees engaged in similar misconduct without being disciplined or terminated, that he had not violated any established policy and that he was treated more harshly than the new employee who was responsible for the epipen being unsecured.

According to the court’s decision, the employee had taken a number of youth clients to a camp when one of the youths returned to the van and sat in the front passenger seat. The employee joined him, chatted a while and then took a brief personal cell phone call. Another, new employee was responsible for the epipen being left out on the front seat console. The youth apparently opened the epipen and injected himself, requiring a trip to the hospital. Only the employee was fired. The ODJFS initially granted his application for benefits, but the hearing referee and, on appeal, the trial court, denied benefits:

“While claimant testified that he was not formally trained by UMCH [the employer] on the use of an EpiPen, he admitted that he knew that an EpiPen contains a spring-loaded needle to quickly deliver a dose of medication to someone who goes into shock as a result of severe allergies. He admitted that he knew that an EpiPen had been left resting on a console within the youth's reach. He admitted that he knew that he was not permitted to take personal cell phone calls while on duty, yet still turned his head for approximately thirty seconds to speak on his personal cell phone while he was supervising this youth. He admitted that the youth opened the EpiPen and injected it into finger while claimant was talking on his personal cell phone.”

The employee had argued that the Referee’s “just cause determination is unreasonable because the employer did not have a rule or policy prohibiting staff members from accepting or initiating personal calls while supervising youths.” However, the Court noted that the employee’s “own testimony belies his assertion, as he acknowledged that the employer had such a policy and that he knowingly violated it. Moreover, Ms. Roper testified that the employer ‘[has] a policy that the staff should not actively be supervising the kids while they're on their personal cell phone.’ Furthermore, ‘the critical issue is not whether the employee has technically violated some company policy or rule, but whether the employee by his actions [or inactions] demonstrated an unreasonable disregard for his employer's interests.' Here, the employer's best interests were served by appellant performing his duty to adequately supervise the youths in his charge and shield them from danger.” The employee “admitted that he was aware that an EpiPen containing potent and potentially harmful medication lay within reach of the youth; nonetheless, he did not confiscate the EpiPen and averted his attention from the youth to answer a personal telephone call. Appellant's actions and inactions potentially subjected the employer to liability had the youth suffered serious injury stemming from the injection of the medication. Thus, the [Referee] reasonably could view appellant's actions and inactions as detrimental to the employer's interests.”

The Court also rejected the claimant’s arguments that he was treated more harshly than the new employee who was responsible for the medications in the van and who was given only a written warning instead of being terminated. However, the Court agreed with the employer that he was treated differently because he had not received as much training as the claimaint and was not present to directly supervise the client youth at the time of the incident. As the most senior employee, the claimant also could have directed the newer employee to remove the epipen from the console, but he did not.

Finally, the court rejected the claimant’s testimony that other employees who had injured or placed client youths in danger were treated less harshly because he offered no evidence to support the other incidents aside from his own testimony.

Insomniacs may read the full court decision at http://www.sconet.state.oh.us/rod/docs/pdf/10/2009/2009-ohio-817.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with an attorney.

Supreme Court: State Need Only Rational Basis for Refusing to Subsidize Union Political Speech Through Payroll Deductions.

Yesterday, the United States Supreme Court reversed the Ninth Circuit and upheld an Idaho state law which precluded payroll deductions by state and local governments to support political speech and political activities by unions. (Payroll deductions for regular union wages were permitted). The unions sued, arguing that the prohibition violated their First Amendment rights. The Supreme Court noted that the state law did not prohibit the unions from engaging in political activities or speech; it merely refused to promote those activities through payroll deductions. Therefore, only a rational basis analysis applied; not strict scrutiny. Idaho's interest in avoiding the reality or appearance of government favoritism or entanglement with partisan politics was sufficiently rationale to support the legislative ban. Ysursa v. Pocatello Education Ass’n, No. 07-869.

As described by the Court, “[u]nder Idaho law, a public employee may elect to have a portion of his wages deducted by his employer and remitted to his union to pay union dues. He may not, however, choose to have an amount deducted and remitted to the union's political action committee, because Idaho law prohibits payroll deductions for political activities. In particular, “ Idaho's Right to Work Act declares that the ‘right to work shall not be infringed or restricted in any way based on membership in, affiliation with, or financial support of a labor organization or on refusal to join, affiliate with, or financially or otherwise support a labor organization.’ . . . “The First Amendment prohibits government from "abridging the freedom of speech"; it does not confer an affirmative right to use government payroll mechanisms for the purpose of obtaining funds for expression. Idaho's law does not restrict political speech, but rather declines to promote that speech by allowing public employee checkoffs for political activities. Such a decision is reasonable in light of the State's interest in avoiding the appearance that carrying out the public's business is tainted by partisan political activity. That interest extends to government at the local as well as state level, and nothing in the First Amendment prevents a State from determining that its political subdivisions may not provide payroll deductions for political activities.”

“Restrictions on speech based on its content are ‘presumptively invalid’ and subject to strict scrutiny . . . The First Amendment, however, protects the right to be free from government abridgment of speech. While in some contexts the government must accommodate expression, it is not required to assist others in funding the expression of particular ideas, including political ones. ‘[A] legislature's decision not to subsidize the exercise of a fundamental right does not infringe the right, and thus is not subject to strict scrutiny.’. . . Given that the State has not infringed the unions' First Amendment rights, the State need only demonstrate a rational basis to justify the ban on political payroll deductions. The prohibition is not ‘aim[ed] at the suppression of dangerous ideas,’ but is instead justified by the State's interest in avoiding the reality or appearance of government favoritism or entanglement with partisan politics. We have previously recognized such a purpose in upholding limitations on public employee political activities.”

“The question remains whether the ban is valid at the local level. The unions abandoned their challenge to the restriction at the state level, but contend that strict scrutiny is still warranted when the ban is applied to local government employers. In that context, the unions argue, the State is no longer declining to facilitate speech through its own payroll system, but is obstructing speech in the local governments' payroll systems. We find that distinction unpersuasive, and hold that the same deferential review applies whether the prohibition on payroll deductions for political speech is directed at state or local governmental entities. ‘Political subdivisions of States--counties, cities, or whatever--never were and never have been considered as sovereign entities.’ They are instead ‘subordinate governmental instrumentalities created by the State to assist in the carrying out of state governmental functions.’ State political subdivisions are ‘merely ... department[s] of the State, and the State may withhold, grant or withdraw powers and privileges as it sees fit. Here, the Idaho Legislature has elected to withhold from all public employers the power to provide payroll deductions for political activities.”

“The State's legislative action is of course subject to First Amendment and other constitutional scrutiny whether that action is applicable at the state level, the local level, both, or some subpart of either. But we are aware of no case suggesting that a different analysis applies under the First Amendment depending on the level of government affected, and the unions have cited none. The ban on political payroll deductions furthers Idaho's interest in separating the operation of government from partisan politics. That interest extends to all public employers at whatever level of government.”

Insomniacs can read the full opinion at http://www.supremecourtus.gov/opinions/08pdf/07-869.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with an attorney.

Stark County Court of Appeals Dismisses Whistleblower Retaliation Claim as Untimely

Earlier this month, the Stark County Court of Appeals dismissed as untimely a claim for wrongful constructive discharge based on an employee’s written allegations of theft against his supervisor to the Board President and city law director. Miller v. Rodman Pub. Library Bd. of Trustees, 2009-Ohio-573. In that case, the plaintiff maintenance supervisor wrote the President of a public library and the city law director about his suspicions that his supervisor – the Library’s Director of Operations – was stealing chairs from the library. When no action was taken for several months, the plaintiff supervisor resigned his position, citing his prior allegations. Just a few weeks later, the Operations Director was arrested, pled guilty, paid restitution and was incarcerated for a period of time. Five months after he resigned, the plaintiff supervisor filed suit against the library, claiming that he was constructively discharged in violation of Ohio’s Whistleblower statute and public policy. The trial court dismissed his claims for being filed more than 180 days after his alleged constructive discharge and the Court of Appeals affirmed.

The court found that Ohio Revised Code § 4113.52(D) required any civil action under the Whistleblower statute to be filed within 180 days. The Court of Appeals refused to consider the supervisor’s argument that the 180 should not begin to run until the Director had been arrested because the supervisor failed to file any response to the Library’s motion to dismiss at the trial court level. The Court also refused to recognize a public policy claim because the sole source of public policy identified to support that claim was the whistleblower statute (which required a claim to be filed within 180 days).

Insomniacs can read the full opinion at

Government to Subsidize 65% of Medical Continuation Coverage for Involuntarily Terminated Employees

The recently enacted American Recovery and Reinvestment Act of 2009 (the “Act”) contains a provision where the federal government will partially subsidize the continuation of medical insurance coverage for involuntarily terminated employees for up to nine months if they are eligible for continued medical coverage under COBRA or similar state law. (Ohio has a mini-COBRA statute that applies to employers which are not otherwise covered by COBRA at Ohio Revised Code 3923.38). The continued medical coverage is available to any employee who participates in an employer-sponsored health plan and who is involuntarily terminated after September 1, 2008 but before December 31, 2009 – even if the employee did not initially elect to continue medical coverage after his or her termination.

The government is partially subsidizing the insurance coverage by requiring employers to pay for 65% of the monthly premium and then recoup that amount from the quarterly payroll and FICA taxes the employer would otherwise be required to pay. Of course, the employee has to elect to continue medical coverage under the new Act and pay his or her 35% share of the monthly premium before the employer can reimburse itself through payroll tax withholdings. If the employee already paid the 102% share of the premium (for months after February 17, 2009), the employer can either reimburse the employee for the 65% or credit the overpayment towards premium payments for the next two months. (The subsidy cannot be used for months prior to February 17, 2009). Employers will also need to file a report with the IRS concerning the involuntary termination of an employee covered by the new Act, the amount of the payroll taxes used to reimburse the employer for the 65% of medical insurance continuation and the Tax Identification Numbers of all covered employees. The IRS will issue regulations and other guidance concerning the form and content of such reports.

The employee may elect to continue the same insurance coverage which the employee utilized during active employment, or if the employer permits it, the employee may elect a less expensive medical plan if such plan is also offered to the employer’s active employees and such plan offers more than merely dental, vision, flexible spending or an on-site clinic at the employer’s facility.

The subsidy will not constitute taxable income to the employee, unless the employee’s adjusted gross income exceeds $125,000 (for single filers) or $250,000 (for joint filers). These high income employees may elect to waive the subsidy in order to avoid having the amount of their taxes increased by the full amount of the subsidized premium (or a significant fraction of that amount).

As mentioned, the government subsidy is available for up to nine months, but may terminate earlier when the employee becomes eligible (i) for COBRA coverage eighteen months earlier (i.e., the nine month subsidy does not extend COBRA’s regular 18-month eligibility period); (ii) under another employer’s medical plan, social security income or Medicare; (iii) for coverage under a flexible spending arrangement or (iv) for coverage for treatment that is furnished in an on-site medical facility maintained by an employer which consists primarily of first-aid services, prevention and wellness or similar care. Employees are required to notify employers if they obtain other medical coverage or risk a 110% penalty.

Employees who did not earlier elect continued medical coverage have 60 days to elect subsidized coverage once they receive the employer’s revised notice of eligibility. The revised notice of eligibility must be sent to any employees terminated between September 1, 2008 and December 31, 2009 and must notify recipients of:
• The availability of subsidized premiums for continued coverage;
• The option to enroll in different coverage (if the employer permits this option);
• The forms necessary for establishing eligibility for subsidized premiums;
• The name, address and telephone number necessary to contact the plan administrator and any other person maintaining relevant information in connection with the subsidized premiums;
• The extended election period (for employees who failed to timely elect COBRA coverage prior to February 17, 2009); and
• The employee’s obligation to notify the plan if the employee becomes eligible for other medical coverage or social security income and the penalty for failing to comply with this obligation;

The Department of Labor is required to publicize acceptable model notices by mid-March 2009 and employers are required to send by mid-April 2009 the revised notice to all employees involuntarily terminated since September 1, 2008.

Insomniacs can read these provisions of the Act in full at http://www.dol.gov/ebsa/pdf/COBRAPremiumReductionProvision.pdf. The Department of Labor expects to publish the new model COBRA notice on its website at http://www.dol.gov/ebsa/cobra.html.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with an attorney.

Supreme Court Dismisses Appeal on Whether Wrongful Discharge Claim Is Valid Based on Safety Concerns Shared with Insurance Auditor

Today, the Supreme Court dismissed on procedural grounds an appeal of a case which has captured the attention of employment attorneys throughout the state. On February 6, 2008, the Ohio Supreme Court heard oral argument about whether public policy wrongful discharge claims should be recognized when the employee did not “blow the whistle” to either a government agency or management about safety concerns, but rather, complained to a private sector insurance auditor about his paranoia of being set up to be fired in a document of fire alarm inspections. The Court held today that there was no final appealable order from the trial court because that court had entered summary judgment in favor of the employer on several claims and then the plaintiff appealed only after voluntarily dismissing his remaining claims. Without a final appealable order, the plaintiff had no jurisdiction to appeal to the Ohio Court of Appeals and the employer could not appeal to the Supreme Court.

As reported in the July 9, 2007 FYI, the Montgomery County Court of Appeals reversed summary judgment in favor of the defendant employer on the wrongful discharge claim after the plaintiff was fired for insubordination after expressing concern about the employer’s fire alarm system with an insurance agent who had been present to inspect the employer’s premises and provide an insurance quote. Dohme v. Eurand Am., Inc., 2007-Ohio-865 (3/2/07). Notably, the plaintiff had not been fired several years earlier when he reported to the fire department that one of the fire alarms had malfunctioned during a fire. Instead, he was transferred to another position which made him responsible for the fire alarm system. A few days prior to his termination for insubordination, the employer had specifically prohibited all employees from speaking with the insurance agent who was scheduled to inspect the premises. Although the plaintiff had not been specifically authorized in writing to meet with the insurance agent, he says that he had been asked to fill in for an absent employee. He then provided a report to the agent about overdue fire alarm inspections and noted that “suspiciously” one of the overdue inspections had not been included on the report. Plaintiff testified that he did not want to be blamed for the omission.

The employer argued that no public policy was jeopardized or implicated by the plaintiff’s termination as required by Ohio law. “Moreover, Plaintiff's statements did not indicate a concern for work place safety. The plain language of his comments only indicates his own suspicion that the missing inspection report is an attempt by Defendant to set him up for a deficient job performance.” However, the Court of Appeals rejected this argument: “[T]he employee's intent is largely irrelevant in an analysis of the clarity element of a wrongful discharge claim. What is relevant is whether [plaintiff] did in fact report information to the inspector that encompassed a public policy favoring workplace safety. If [plaintiff] did so, then the trial court erred in granting summary judgment.” Under state and federal law, “[t]here is a clear public policy favoring workplace fire safety. Therefore, retaliation against employees who raise concerns relating to workplace fire safety contravenes a clear public policy. . . . An employee who reports fire safety concerns to the employer's insurance inspector, regardless of the employee's intent in doing so, is protected from being fired solely for the sharing of the safety information.”

The Court of Appeals also rejected the employer’s argument that the plaintiff had failed to report his concerns to a government agency and chose, instead, an insurance agent. The Court determined that this argument “ignores the fact that an insurer's requirements may function to avoid fire safety defects. When such requirements are imposed, or higher premiums are the alternative, an employer . . . is motivated to cure safety defects. The market thus plays a role different from that of government, which may issue citations, but perhaps more immediate and compelling. And, making the insurer aware of defects through its representative furthers the public interest in effective fire safety measures.”

The Court of Appeals also rejected the argument that an “employee must make some formal announcement that his statements are being made for the purpose of protecting the public policy favoring workplace safety. Employers are presumed to be sophisticated enough to comply with the workplace safety laws. When an employer directs employees to not speak to an insurance representative inspecting a premises, an implication arises that the employer wishes to cover up defects, including those that create a danger to employees. Supporting the employer's conduct endorses its efforts to conceal potential dangers. As the Jermer court recognized, the Supreme Court views employee complaints as critical to the enforcement of the State's public policy. We would be minimizing the importance of these complaints and the State's public policy were we to concentrate on the employee's intent in raising the safety concern rather than on whether the employee's complaints related to the public policy and whether the employer fired the employee for raising the concern.”

During the February 2008 oral argument, the Supreme Court was told that there was no authority supporting the appellate court’s holding that whistleblowing claims can exist even when the whistleblower did not share his or her concerns with a government agency or with management. Some of the justices’ questions indicated that they were skeptical of drawing a bright line for whistleblowing claims which would limit them to government agents or management. Rather, a suggestion was made that public policy might be better served if whistleblower claims were recognized when the concerns were shared with anyone with power to remedy an unsafe situation. The employer’s attorney suggested that such a rule could lead to whistleblower claims being brought when employees merely reported their concerns to co-workers or to their spouses. Questions then focused on whether the insurance auditor could have improved an allegedly unsafe condition such that public policy would be served by recognizing a whistleblower claim when the concerns are shared with an insurance company. Apparently, the trial court record had not been sufficiently developed on that point.

Months after oral arguments, the Supreme Court extended jurisdiction over an additional issue: whether the clarity element had been satisfied in the public policy claim.

As readers of this blog know, the Sixth Circuit last week dismissed whistleblowing and wrongful discharge claims when the employee failed to report his concerns to the appropriate government agency after making internal reports. See: