Ohio Modifies Ohio Civil Rights Act and Shortens Limitations Periods

 

What a long strange trip it has been.  Yesterday, Governor DeWine signed H.B. 352 into law.  While it is a scaled down version of what passed the Senate before Christmas, it addresses long-standing concerns with Ohio employment discrimination legal procedures and makes them more consistent and often still more generous than exist under federal law. Among other things, it generally shortens the limitations period for 4112 claims and some federal statutory claims to two years, requires exhaustion of remedies, incorporates specific federal defenses, and makes damages subject to tort cap limits, etc.  It still retains the right of employees to bring certain age discrimination and injunctive relief claims directly in court.

First, it shortens the limitations period for claims under O.R.C. § 4112, and federal claims under §§1981a, 1983 and 1985 to two years (from the existing six years), which is still twice as long as the federal limitations period under Title VII, the ADEA and the ADA, etc.  (The limitations periods for those federal statutes vary from state to state because they “borrow” the analogous state limitations period).  The limitations period begins to run from the date when “the alleged unlawful discriminatory practice was committed.”  This period will be tolled for Chapter 4112 claims as long as a Charge is pending at the OCRC, except that if the Charge was not filed until less than 60 days before the limitations period was about to lapse (i.e., on day 670), then the tolling will last another 60 days after the Charge is no longer pending at the OCRC.

Second, similar to federal law and with a few exceptions, it requires employees to first file a Charge with the Ohio Civil Rights Commission, before filing a lawsuit.   The time period for filing a Charge is the same as for filing a lawsuit: two years.   Employees may still request a right to sue letter from the OCRC prior to the conclusion of any OCRC investigation, but the OCRC may not issue the right to sue unless the Charge has been pending at least 60 days.

Third, with certain exceptions, employees cannot file suit unless they have a Right to Sue letter, have waited at least 45 days after requesting a RTS letter and 60 days since filing a Charge, or have received a letter where the OCRC found probable cause of discrimination to have occurred.   These conditions do not apply if the employee is only seeking injunctive relief or if the employee filed a timely charge with both the OCRC and EEOC and the EEOC has issued a right to sue letter (or if filing a lawsuit for age discrimination under §4112.14).   But, if the employee initially sought only injunctive relief from a court and later amends his or her complaint to include a claim for damages, the employee must have filed a timely OCRC Charge and comply with the right-to-sue letter requirements.   

Fourth, as with federal law, it eliminates individual liability of managers and supervisors under the statute.  The legislation notes that it intends to overrule the Ohio Supreme Court’s Genaro decision and to instead follow long-standing federal law on this issue.  

Fourth, it explicitly adopts the federal standard and affirmative defense from Faragher, for sexual harassment claims. 

Sixth, it makes verdicts for Chapter 4112 claims subject to the tort caps for non-economic damages.  

Seventh, it makes Chapter 4112 the sole and exclusive remedy for employment discrimination, which is similar to federal law.  In other words, there cannot be a common law wrongful discharge claims for violation of public policy against employment discrimination.

Finally, while it retains under §4112.14 the existing right of employees not subject to an arbitration agreement to file suit for age discrimination claims seeking only reinstatement, back pay, costs and attorney’s fees and the existing election of remedies, it added a few wrinkles.   The employee must still elect remedies (i.e., bring this direct action without being able to sue for compensatory or punitive damages or being required to file an OCRC Charge).   These direct actions are still subject to the new two year statute of limitations as described above.   Like other 4112 claims, that limitations period may be tolled if the employee filed a Charge with the OCRC making the same allegations. 

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. 

Sixth Circuit Refuses Employee Claim for Age Discrimination and to Award Attorneys Fees to Prevailing FMLA Plaintiff

This morning, the Sixth Circuit issued a few employment decisions that may be of interest to employers and employees.  In the first case, the Court rejected the plaintiff’s age discrimination claim where she had been fired for insubordination.   Pelcha v. MW Bancorp, Inc.,  No. 20-3511 (6^th Cir. 1-12-21, amended 2-19-21).  The Court reiterated that the Supreme Court has held the ADEA does not permit mixed-motive cases, unlike Title VII.  Further, her evidence of stray remarks by the Bank’s president about an employee who was 40 years older than her were too vague and unrelated to her situation to constitute direct evidence that she had been fired because of her age.    In the second case, the plaintiff physician was denied prevailing party attorney fees in his FMLA claim by the arbitrator because he had failed to educate the arbitrator that the statute prevailed over contrary language in the arbitration clause and because he failed to submit any definitive evidence of the fees he was claiming.

In the first case, the plaintiff teller was fired by her long time banking employer for insubordination for refusing to submit a written request for time off until the day before her day off even though such requests were due a month in advance.  She argued that this was pretext for age discrimination.  The district court granted summary judgment to the employer and she appealed.

The plaintiff attempted to argue that she had proved age discrimination with direct evidence based on a few inflammatory statements that the Bank’s president made about another employee who was 40 years older than the plaintiff and that he wanted to hire younger tellers.  The Court disagreed.  “In reviewing direct evidence, we look for “evidence from the lips of the defendant proclaiming his or her . . . animus.”  . . .Inferences are not permitted.”

“Direct evidence is evidence that proves the existence of a fact without requiring any inferences” to be drawn.  . . . In other words, direct evidence is “smoking gun” evidence that “explains itself.”

                . . .

In determining the materiality of allegedly discriminatory statements, we consider four factors, none of which are dispositive: “(1) whether the statements were made by a decisionmaker . . . ; (2) whether the statements were related to the decision-making process; (3) whether the statements were more than merely vague, ambiguous or isolated remarks; and (4) whether they were made proximate in time to the act of termination.”

             . . . None of the statements were related to [the plaintiff]’s termination. In fact, they were not made in relation to any termination decision and were about an entirely different employee. Additionally, nothing in the record suggests that the statements were more than isolated remarks. Here, it appears as though these statements were only made once or twice to certain higher-level management employees.

                . . . Hiring younger tellers does not require the termination of older employees.

 . . ., in terms of timing, the comments in question come from late 2015 or early 2016, more than six months before her termination. We have previously suggested that time spans of six or seven months can be temporally distant.

That being said, such statements could be considered as circumstantial evidence to argue pretext if the plaintiff attempted to prove her case through burden shifting and to raise a “plausible inference of discrimination.”     Nonetheless, the Court found that the plaintiff failed to prove that the employer’s explanation for her termination – that she was insubordinate – was pretext for age discrimination.

First, the plaintiff could not prove that the explanation had no basis in fact.  She argued that she was not insubordinate because she had submitted a written request one day in advance and had obtained verbal approval a month in advance.  However, the Court pointed out that she had been required by her manager’s policy to submit the written request a month in advance and she had admittedly told her manager that she refused to do so because she disagreed with the policy.  She did not ultimately submit her written request until the day before her took time off.  Her “late completion of the form could not cure her original refusal to follow Sonderman’s directive.”

She also could not prove pretext with the isolated and sparse comments that the Bank president had made about another situation. Those comments “were not directed towards Pelcha, not directed towards anyone near Pelcha’s age, and not made in connection with any termination decision at all.”

She also could not show that her employer changed its explanation for her termination by also later documenting issues with her negative attitude and contribution to a negative work environment.  Prior decisions have held that “providing “additional, non-discriminatory reasons that do not conflict with the one stated at the time of discharge does not constitute shifting justifications”.

In addition, she could not show pretext by arguing that the employer failed to comply with its own progressive disciplinary policy.   The policy was clear of the typical steps in the process and clarified that some offenses would justify skipping some or all of the steps.  In conclusion, “an ‘employer may fire an employee for a good reason, a bad reason, a reason based on erroneous facts, or for no reason at all, as long as its action is not for a discriminatory reason.’”

Ultimately, she also could not satisfy the prima facie case because she could not prove that she was treated more harshly than another, younger employee because the fact that a younger co-worker may have neglected to turn in the form is not the same as insubordination in refusing to turn in the form. “Neglecting to complete a time off form and defiantly refusing to do so upon being asked by a superior are significantly different actions.”

In the second case, the Court denied the appeal of a physician who was denied in arbitration attorney’s fees as the prevailing party on his FMLA claim.  Gunasekera v. War Memorial Hospital, No. 20-1340 (6^th Cir. 1-12-21).   The physician asserted (correctly) that attorneys’ fees are awarded under the FMLA statute to prevailing plaintiffs.  However, the arbitrator reasoned that the arbitration agreement provided that each party would pay its own fees and, in any event, his attorney had failed to submit evidence of the attorneys’ fees accrued to that point during the hearing.    The Sixth Circuit found that a mere error of law by the arbitrator does not constitute the necessary manifest disregard of the law (if that standard even still applied) as required to overturn an arbitration award.  This was particularly true when the arbitration briefs failed to argue that the FMLA provision overrode the terms of the parties’ agreement.    More importantly, the physician failed to submit any evidence to the arbitrator of the amount of his fees. “In that brief, Dr. Gunasekera merely asserted that he was entitled to receive ‘all of his legal fees,’ which exceeded $35,000.”  Without concrete evidence upon which to base an award of a specific sum, the arbitration could not have erred in failing to award fees to a prevailing party under the FMLA.  

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. 

DOL Clarifies that Employees Need Not Be Paid for Time Spent Commuting To and From Work Even if Employee Worked from Home Part of the Same Day

 

At the end of the year, the DOL issued a number of FLSA opinion letters of interest to employers.  One involves the common situation where an employee works from home part of the day and works from the office for several hours.  Admn Op. No. FLSA2020-19.  In some scenarios, the situation arises because the employee has a personal appointment (i.e., medical or school or childcare) in the morning or early afternoon and the employer gave permission for the employee to work from home before and/or after the personal appointment.   The employee performs no work while commuting between locations and sets her own schedule. The employer inquired whether it was required to compensate the employee for his or her commuting time to or from the office on those days. “[W]hen an employee (a) chooses to perform some work before traveling to the office or (b) chooses to perform work at home after leaving the office, and in either case has sufficient time in between her telework and office work periods to use effectively for her own purposes, the time she spends traveling between home and office is not compensable.”

It is well known that an employer need not compensate an employee for time spent commuting to and from work before and after his or her workday. An employer also need not pay an employee for time spent on personal pursuits.  The question becomes whether the activity is primarily for the benefit of the employer or the employee.   However, it is also known that employees are supposed to be paid at least the minimum wage for their workday.

In general, the period between the commencement and completion on the same workday of an employee’s principal activity or activities is considered compensable, a principle known as the continuous workday doctrine.  An employee is generally not considered to be on duty, and the continuous workday doctrine does not apply, until she has performed her first principal work activity of the day – that is, her first task that is integral and indispensable to the duties that she was hired to perform.  Unlike ordinary commuting time, travel that is part of an employee’s principal activity, such as travel between different worksites between the start and the end of the workday, is considered to be part of the day’s work and is compensable.

The DOL found that the employee’s travel time in the hypothetical scenarios was not compensable because the employee was either off duty or engaged in normal commuting.  Even though, for instance, the employee left work early to attend a school conference and re-commenced work from home after the school conference, the employee spent the time during her commute and attending the conference for personal reasons.  “Though the off-duty regulation speaks of an employee who has been ‘definitely told in advance that . . . [she] will not have to commence work until a definitely specified hour,’ it applies with equal force here where the employee may freely choose the hour at which she resumes working.”

Similarly, when an employee works from home prior to a personal appointment and then takes a break to visit her physician before driving to work, she has been off duty for the time that she spent driving and visiting her physician.   “Her time remains noncompensable until she reaches the office and resumes working.”

The DOL also concluded that travel time between home and office is not compensable under either the worksite to worksite doctrine or under the continuous workday doctrine.   While employees must be compensated for the time spent commuting worksite-to-worksite, commuting from home to worksite and visa versa is not the same activity, regardless of when it occurs because the employer is not requiring the employee to travel to or from home as part of her job.  Rather, she is travelling for her own purposes during off-duty time.

Off duty time is also not compensable under the continuous workday doctrine whether it occurs in the break room, off site or commuting while conducting personal errands.  The employee was also free to determine her own stop and starting times and was not required to commence work at a particular time during that day.  If the rule were otherwise, the employer could conceivably be required to pay for time that the employee spent napping for more than an hour, etc.

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 Rejects Non-Compete Clause to Prevent Surgeon From Changing Employers

 

Last month, the Ohio Court of Appeals affirmed a surgeon’s preliminary injunction against his former employer to prevent the enforcement of non-competition clause in his former employment agreement.  Castillo-Sang v. The Christ Hospital Cardiovascular Associates, LLC, 2020-Ohio-6865.   The Court agreed that that the clause was unreasonable in that it sought to prevent ordinary competition, not unfair competition, in attempting to prevent the surgeon from working for a nearby hospital.  The surgeon had already been trained before he was hired in 2015 and he possessed no confidential or trade secret information belonging to his employer.   Further, the clause put an undue burden on the surgeon in attempting to earn a living and provided a disproportionate benefit to the employer.  Finally, the clause injured the public’s interest when the surgeon was able to perform a necessary service which was in short supply.

According to the Court’s opinion, the surgeon had completed all of his medical training prior to being hired by the employer practice. His employment agreement contained a one-year non-compete clause that only covered Hamilton and contiguous counties.  While he honed his cardiac surgery skills over the next four years, there was no evidence that the employer had provided or enabled any significant or additional training.  He informed the employer that he intended to leave and claims that he was told that the non-compete clause would not be enforced against him.  He obtained employment with a Kentucky hospital and filed suit to attack the non-compete clause when the employer indicated that it would seek to enforce the clause against him.  The trial court agreed with the surgeon and the Court of Appeals affirmed.

Restrictive covenants are disfavored in the law, and “[t]his measure of disfavor is especially acute concerning restrictive covenants among physicians, which affect the public interest to a much greater degree. . .  Noncompetition agreements must be strictly construed in favor of professional mobility and access to medical care and facilities. . . . “[C]ourts have recognized that the greater scrutiny is mandated by public-policy considerations, since limiting the ability of a physician to practice may affect the public’s ability to obtain medical care.” . . .But even though not favored, covenants not to compete in the medical profession are not per se unenforceable, and will be upheld if they are reasonable.  . . . And, courts will enforce covenants against physicians to the extent necessary to protect an employer’s legitimate interests; if there is no legitimate interest to be protected, the noncompete is unreasonable.

By way of example,

Ohio courts have found legitimate protectable interests in upholding physician covenants not to compete. In Owusu v. Hope Cancer Ctr. of Northwest Ohio, Inc., 3d Dist. Allen No. 1-10-81, 2011-Ohio-4466, the court upheld a physician’s two-year covenant not to compete, finding that the medical center had a legitimate business interest in prohibiting the physician from using physician referral connections he developed as a result of employment with the medical center and that he could not use these connections to build a new practice.

The Court found that the covenant provided more protection than necessary to protect the employer’s legitimate business interests.  Because the surgeon had agreed in the employment agreement that the clause was reasonable and necessary to protect the employer’s interests in confidential and trade secret information, he had to now prove with clear and convincing evidence that the restrictions were in fact unreasonable.    The employer pointed to confidential information that he had concerning its future expansion plans, its pricing structure and its referral network.   However, its arguments were unconvincing.

“The purpose in allowing noncompetition agreements is to foster commercial ethics and to protect the employer’s legitimate interests by preventing unfair competition—not ordinary competition.” . . . The prevention of ordinary competition is not a legitimate business interest that can be protected by a restrictive covenant. . . . Therefore, a covenant not to compete is “valid only when the competition [it] restrict[s] is somehow unfair.”

In this case, the employer failed to identify any “targeted” physicians that it planned to recruit, “targeted” specialties where it planned to expand or particular markets and definite marketing plans that it planned to execute.  Further, its primary hospital indicated that all of the surgeons received the same training and investment and the prices were set by government payors and insurance companies, not the employer.  Further, cardiologists were the primary source of referrals to the cardiac surgeons and other hospitals were its primary competition, not the hospital where the plaintiff found employment.   Indeed, the evidence indicated that cardiac surgeons spent no time soliciting patients or referring cardiologists for business.   There was no evidence that the surgeon possessed, let alone used, any of the employer’s confidential information, or engaged in unfair competition using such information.

The Court also found that the non-compete clause put an undue burden on the surgeon even though he voluntarily resigned his employment and had a job offer in Columbus.   The surgeon testified that he moved to Cincinnati to be near his wife’s family, who provided child care, and his wife was employed at a local hospital.  He argued that commuting to Columbus would be a hardship and physically exhausting in a stressful and demanding profession.

Third, the Court agreed that it would injure the public to restrain the surgeon from performing minimally invasive Mitral Valve surgeries, which have far fewer complications and far quicker recovery times, etc. for patients.  None of the other surgeons at his new hospital could perform that particular procedure.

Finally, the Court found irreparable harm to exist because the surgeon would have to move in order to comply with the non-compete clause.  The defendant’s witness had agreed that burnout was a genuine factor by depriving a surgeon of rest and/or family time.

Interestingly, the parties have a pending claim involving the surgeon’s allegation that the employer only enforced the non-compete against Hispanic physicians.  That claim was not part of the preliminary injunction hearing or this appeal.  

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's Minimum Wage To Increase on January 1, 2021 and DOL amends FLSA's Tip Pooling Rules

At the end of September, the Ohio Department of Commerce announced that Ohio's minimum wage would increase again on January 1, 2021.  Ohio employers will also need to update the mandatory poster conveying the new wage and employee rights under Ohio's wage laws.  The new minimum wage has increased by a dime to $8.80/hour and a nickel for tipped employees to $4.40/hour plus tips.  With respect to tipped employees, the federal Department of Labor on Tuesday announced that it had issued a final regulation governing tip pools that will take effect in 60 days after publication in the Federal Register (assuming that the incoming administration does not rescind or postpone it before then).   As in prior drafts, employers who take the tip credit must promptly pay the tips and cannot require them to be shared with back-of-the-house workers or managers.  However, if the employer pays everyone at least the minimum wage and does not take the tip credit, then the employer may require that tips be shared with back-of-the-house employees (like cooks and dishwashers), but not with management.    Happily, managers may keep tips that are given to them directly by customers for services provided directly by them.  

The new FLSA regulation more explicitly regulates the meaning of "keeping" tips to restrict the delay in paying employees who participate in a tip pool. 

 (2) Full and prompt distribution of tips. An employer that facilitates tip pooling by collecting and redistributing employees’ tips does not violate section 3(m)(2)(B)’s prohibition against keeping tips if it fully distributes any tips the employer collects no later than the regular payday for the workweek in which the tips were collected, or when the pay period covers more than a single workweek, the regular payday for the period in which the workweek ends. To the extent that it is not possible for an employer to ascertain the amount of tips that have been received or how tips should be distributed prior to processing payroll, tips must be distributed to employees as soon as practicable after the regular payday.

The new regulation also governs and provides examples of when a tip credit can be taken for an employee who dual roles (as a tipped server and a non-tipped regular employee).

(e) Dual jobs. (1) In some situations an employee is employed in a dual job, as for example, where a maintenance person in a hotel also works as a server. In such a situation the employee, if he or she customarily and regularly receives more than $30 a month in tips for his or her work as a server, is a tipped employee only with respect to his or her employment as a server. The employee is employed in two occupations, and no tip credit can be taken for his or her hours of employment in the occupation of maintenance person.  

(2) Such a situation is distinguishable from that of an employee who spends time performing duties that are related to his or her tip-producing occupation but are not themselves directed toward producing tips. For example, a server may spend part of his or her time cleaning and setting tables, toasting bread, making coffee and occasionally washing dishes or glasses. Likewise, a counter attendant may also prepare his or her own short orders or may, as part of a group of counter attendants, take a turn as a short order cook for the group. An employer may take a tip credit for any hours that an employee performs related, non-tipped duties contemporaneously with his or her tipped duties, or for a reasonable time immediately before or after performing the tipped duties.  

The new regulation also modifies rules for calculating tip credits and overtime compensation for tipped employees.

531.59 The tip wage credit. (a) In determining compliance with the wage payment requirements of the Act, under the provisions of section 3(m)(2)(A) the amount paid to a tipped employee by an employer is increased on account of tips by an amount equal to the formula set forth in the statute (minimum wage required by section 6(a)(1) of the Act minus cash wage paid (at least $2.13)), provided that the employer satisfies all the requirements of section 3(m)(2)(A). This tip credit is in addition to any credit for board, lodging, or other facilities which may be allowable under section 3(m). (b) As indicated in § 531.51, the tip credit may be taken only for hours worked by the employee in an occupation in which the employee qualifies as a “tipped employee.” Pursuant to section 3(m)(2)(A), an employer is not eligible to take the tip credit unless it has informed its tipped employees in advance of the employer’s use of the tip credit of the provisions of section 3(m)(2)(A) of the Act, i.e.: The amount of the cash wage that is to be paid to the tipped employee by the employer; the additional amount by which the wages of the tipped employee are increased on account of the tip credit claimed by the employer, which amount may not exceed the value of the tips actually received by the employee; that all tips received by the tipped employee must be retained by the employee except for a tip pooling arrangement limited to employees who customarily and regularly receive tips; and that the tip credit shall not apply to any employee who has not been informed of these requirements in this section. The credit allowed on account of tips may 141 be less than that permitted by statute (minimum wage required by section 6(a)(1) minus the cash wage paid (at least $2.13)); it cannot be more. In order for the employer to claim the maximum tip credit, the employer must demonstrate that the employee received at least that amount in actual tips. If the employee received less than the maximum tip credit amount in tips, the employer is required to pay the balance so that the employee receives at least the minimum wage with the defined combination of wages and tips. With the exception of tips contributed to a tip pool limited to employees who customarily and regularly receive tips as described in § 531.54, section 3(m)(2)(A) also requires employers that take a tip credit to permit employees to retain all tips received by the employee.

 

§ 531.60 Overtime payments. When overtime is worked by a tipped employee who is subject to the overtime pay provisions of the Act, the employee’s regular rate of pay is determined by dividing the employee’s total remuneration for employment (except statutory exclusions) in any workweek by the total number of hours actually worked by the employee in that workweek for which such compensation was paid. (See part 778 of this chapter for a detailed discussion of overtime compensation under the Act.) In accordance with section 3(m)(2)(A), a tipped employee’s regular rate of pay includes the amount of tip credit taken by the employer per hour (not in excess of the minimum wage required by section 6(a)(1) minus the cash wage paid (at least $2.13)), the reasonable cost or fair value of any facilities furnished to the employee by the employer, as authorized under section 3(m) and this part 531, and the cash wages including commissions and certain bonuses paid by 142 the employer. Any tips received by the employee in excess of the tip credit need not be included in the regular rate. Such tips are not payments made by the employer to the employee as remuneration for employment within the meaning of the Act. 

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.