For the week of July 28, 2008 – special healthcare law edition
In 2006, a federal district court allowed to stand a verdict for $22.5 million in favor of a cardiologist who sued a hospital and a department chairman after a five-month suspension of his cardiac catheterization lab (cath lab) and echocardiography privileges. See Poliner: A Texas-Sized Credentialing Verdict for Physicians, at (http://www.medlawblog.com/archives/-credentialing-poliner-a-texassized-credentialing-verdict-for-physicians.html). In a highly-anticipated decision, the 5th U.S. Circuit Court of Appeals has overruled that verdict, holding that the hospital and individuals involved in the peer review process are protected from money damages by the Health Care Quality Improvement Act (HCQIA). Poliner v. Texas Health Systems, 5th Cir., No. 0-11235, July 23, 2008.
Dr. Lawrence Poliner, an interventional cardiologist with a solo practice at Dallas’ Presbyterian Hospital, came under peer review after a number of patient issues were brought to the attention of Dr. James Knochel, chairman of the hospital’s Internal Medicine Advisory Committee (IMAC). After Knochel was presented with four different patient issues in 1998, he consulted with various hospital administrators and IMAC members, and determined that an “abeyance” – a temporary restriction – of Poliner’s cath lab privileges was necessary to allow an investigation as provided in the Medical Staff bylaws. Poliner was subjected to an abeyance, and then an extension of that abeyance, while the investigation proceeded. Upon completion of the investigation, the IMAC unanimously agreed that Policer’s cath lab and echocardiography privileges should be suspended. Although Poliner ultilized each internal appeal process available to him, each upheld the suspension, although his privileges ultimately were reinstated with conditions after five months.
In May 2000, Poliner sued Knochel, the hospital, and other physicians with roles in the peer review process. The defendants moved for summary judgment on multiple grounds, including immunity under the HCQIA. The district court analyzed the case as involving two separate peer review actions – the first consisting of the abeyance periods, and the second consisting of the five-month suspension. It entered summary judgment in favor of all defendants on the ultimate suspension, but denied summary judgment on the abeyance-related peer review process against the hospital, Knochel and two other doctors. That case was heard by a jury, which entered the “Texas-size” verdict referred to above, assigning monetary damages to Poliner’s state-law defamation claim. The defendants asked the district court for judgment notwithstanding the verdict (“JNOV”), which was denied. They then appealed to the Fifth Circuit, which reversed that denial and entered judgment in favor of the defendants, ending a 10-year saga of medical credentialing and peer review disputes.
The Fifth’s Circuit’s decision was based on a detailed analysis of the application of HCQIA to the facts of this matter. Congress passed the HCQIA to “improve the quality of medical care” by granting limited immunity from lawsuits for money damages to participants in professional peer review actions. In order for that immunity to apply, a “professional review action” must be taken: (1) in the reasonable belief that the action was in furtherance of quality health care; (2) after a reasonable effort to obtain the facts of the matter; (3) after adequate notice and hearing procedures are afforded; and (4) in the reasonable belief that the action was warranted by the facts known after a reasonable effort to obtain those facts. The Act includes a presumption that a peer review action meets those standards, unless that presumption is rebutted “by a preponderance of the evidence.” The Court then analyzed the “abeyances” imposed on Poliner under that criteria, and found that the participants were protected against monetary damages.
First, the Court found that Knochel’s imposition of the initial abeyance was taken in the reasonable belief that the action was in furtherance of quality health care. At the time of that decision, Knochel was aware of a number of recent patient issues involving Poliner; at the time of the extension of that abeyance, Knochel had become aware that a review of 44 cases indicated that Poliner had given substandard care in more than half. Based on those facts, the Court concluded that the defendants’ belief that restricting Poliner’s privileges during the investigation would further quality health care was objectively reasonable.
Next, the Court reviewed the totality of the circumstances, and found a reasonable effort of the part of defendants to “obtain the facts of the matter.” Poliner argued to the Fifth Circuit that at the time of the abeyance, there was insufficient evidence to label him as a “present danger” under the hospital’s bylaws. In one of the most interesting – and likely to be controversial – holdings in the case, the Court pointed out that immunity under the HCQIA is “not coextensive with compliance with an individual hospital’s bylaws.” Provided that a peer review process complies with the standards set out in the HCQIA, a failure to comply with a hospital’s bylaws does not automatically defeat a peer reviewer’s right to immunity from damages.
Third, the Court reviewed the procedural requirements imposed by the HCQIA to determine whether Poliner received the required adequate notice and hearing procedures. It cited an exception within the Act that allows an “immediate suspension or restriction of clinical privileges, subject to subsequent notice,” where the failure to impose such restriction may result in imminent danger to patients. The Court went on to find that the defendants were warranted in concluding that failing to impose temporary restrictions on Poliner may have led to that “imminent danger,” and that, therefore, the notice provided to Poliner regarding the abeyances was adequate to satisfy the HCQIA.
Lastly, the Court found that the abeyances were “tailored to address the health care concerns” that were being raised. The fact that the abeyances related only to the cath lab – leaving Poliner’s other privileges unaffected – made the restrictions reasonable.
According to the Court, Poliner failed to rebut the statutory presumption that the peer review actions taken were compliant with HCQIA. Because the defendants were therefore immune from money damages under that Act, the district court’s judgment was reversed and judgment was rendered for the defendants. While this particular long-fought battle may be reaching an end, questions related to the peer review process abound, including the confidentiality of peer review documentation in employment-related federal lawsuits, the interplay between hospital bylaws and the fairness of peer review processes, and how the Joint Commission’s revisions to MS.1.20 can best be utilized to affect the composition of a fair hearing committee. Healthcare entities, including both hospitals and physician groups, should be aware of these issues and of ongoing developments related to each, in order to effectively avoid unnecessary litigation and liability.
Thursday, July 31, 2008
Friday, July 25, 2008
Issue: President Bush signs new military tax break bill into law
For the week of July 21, 2008
A military bill that both sets forth new tax benefits and extends existing benefits was signed into law in June 2008 by President Bush. The Heroes Earnings Assistance and Relief Tax Act of 2008 ("HEART") provides certain tax benefits and affects 401(k) plans and health flexible spending accounts for active-duty military service personnel and their families.
The HEART Act permits (but does not require) sponsors of Cafeteria Plans with a health flexible spending arrangement to allow participants called to active duty to take distributions of the unused balance in their health flexible spending accounts, instead of mandating forfeiture of unspent monies in those accounts. Now, participants called to active duty may take a distribution of their unused balance to avoid forever losing the contributions. In addition, under the new Act, survivors of those who die during active military duty can put all or part of the death gratuity payments into a tax-deferred savings or retirement plan, even if the contribution puts them over the allowable annual limit. Further, National Guard and reservists can make penalty-free withdrawals from personal retirement plans.
Under HEART, small businesses that employ National Guard and reserve members, and that have agreed to pay the differential between salaries and military pay for employees called to active duty now can receive up to $4,000 in tax credit to offset those payments. Many employers gratuitously provide active duty employees a regular paycheck in the amount of the difference between the employee’s military pay and his or her regular salary. Pre-HEART, this created several administrative issues, as the IRS did not view the differential pay as wages, but rather as supplemental income. Under Section 415 of the Tax Code, a retirement plan may, but is not required to, treat such differential pay as "compensation". The new bill resolves that contradiction.
Now, any payments made by an employer after December 31, 2008 to an employee on active duty for a period of more than 30 days will be treated as "differential wage payments" to the extent the payments represent all or a portion of the wages the individual would have received from the employer absent being called to active military service. Any such payments will be subject to federal withholding rules and will be reportable as W-2 wages. Further, a participant on active duty who is treated as an employee due to receipt of differential wage payments is still entitled to take advantage of the rule allowing for distributions from a qualified plan, 403(b) plan or 457 plan upon commencement of military leave lasting at least 30 days.
The law also would modify the Uniformed Services Employment and Re-employment Rights Act (USERRA) to the extent that an individual who dies or becomes disabled while performing qualified military service will now be viewed as resuming employment in accordance with USERRA on the day preceding death or disability. HEART requires employers to make the applicable amendments to formal retirement plan documents and corresponding summary plan descriptions.
A military bill that both sets forth new tax benefits and extends existing benefits was signed into law in June 2008 by President Bush. The Heroes Earnings Assistance and Relief Tax Act of 2008 ("HEART") provides certain tax benefits and affects 401(k) plans and health flexible spending accounts for active-duty military service personnel and their families.
The HEART Act permits (but does not require) sponsors of Cafeteria Plans with a health flexible spending arrangement to allow participants called to active duty to take distributions of the unused balance in their health flexible spending accounts, instead of mandating forfeiture of unspent monies in those accounts. Now, participants called to active duty may take a distribution of their unused balance to avoid forever losing the contributions. In addition, under the new Act, survivors of those who die during active military duty can put all or part of the death gratuity payments into a tax-deferred savings or retirement plan, even if the contribution puts them over the allowable annual limit. Further, National Guard and reservists can make penalty-free withdrawals from personal retirement plans.
Under HEART, small businesses that employ National Guard and reserve members, and that have agreed to pay the differential between salaries and military pay for employees called to active duty now can receive up to $4,000 in tax credit to offset those payments. Many employers gratuitously provide active duty employees a regular paycheck in the amount of the difference between the employee’s military pay and his or her regular salary. Pre-HEART, this created several administrative issues, as the IRS did not view the differential pay as wages, but rather as supplemental income. Under Section 415 of the Tax Code, a retirement plan may, but is not required to, treat such differential pay as "compensation". The new bill resolves that contradiction.
Now, any payments made by an employer after December 31, 2008 to an employee on active duty for a period of more than 30 days will be treated as "differential wage payments" to the extent the payments represent all or a portion of the wages the individual would have received from the employer absent being called to active military service. Any such payments will be subject to federal withholding rules and will be reportable as W-2 wages. Further, a participant on active duty who is treated as an employee due to receipt of differential wage payments is still entitled to take advantage of the rule allowing for distributions from a qualified plan, 403(b) plan or 457 plan upon commencement of military leave lasting at least 30 days.
The law also would modify the Uniformed Services Employment and Re-employment Rights Act (USERRA) to the extent that an individual who dies or becomes disabled while performing qualified military service will now be viewed as resuming employment in accordance with USERRA on the day preceding death or disability. HEART requires employers to make the applicable amendments to formal retirement plan documents and corresponding summary plan descriptions.
Issue: Employer’s inclusion of FMLA benefits in handbook may bind company, even without the requisite 50 employees
For the week of July 21, 2008
Under the Family and Medical Leave Act (FMLA) a qualified employee is one who has worked for at least 1250 hours during the previous 12 months. In addition, an employer is subject to the FMLA if it has at least 50 employees within a 75 mile radius. Recently, the 7th U.S. Circuit Court of Appeals held that an employee can proceed with state-law claims for breach of contract or promissory estoppel based on handbook language granting FMLA-type leave, even though the employer had less than 50 employees. Peters v. Gilead Sciences, Inc., 7th Cir., No. 06-4290, July 14, 2008.
Steven Peters was employed by Gilead Sciences as a pharmaceutical sales representative when he suffered a work-related injury in 2001. He re-aggravated the injury in 2002, and underwent corrective surgery in December of that year. At that time, he took what he thought was FMLA leave for 12 days. The day after beginning his leave, Peters received a letter from Gilead, stating the terms of his "FMLA" leave, and informing him of his right to reinstatement after leave. The letter tracked language that was set forth in the company’s employee handbook regarding employees’ entitlement to family and medical leaves. Although the letter and the handbook both included the 1250 hour/12 month language, neither included the 50-employees-within-a-75-mile-radius ("50/75") language and, in fact, Gilead did not have 50 employees within a 75 mile radius.
Peters returned to his position on December 16, 2002. In March, 2003, Peters began to experience an adverse reaction to his medication and took a second leave from March 4 until May 5, 2003. At that time, a letter was sent to him setting forth the terms and conditions of the leave, and again the letter omitted the 50/75 language. However, Peters did not receive this second letter.
In April of 2003, Gilead decided to replace Peters with another employee. On April 25, Gilead sent a letter to Peters, designating him as a "key" employee. Under the FMLA, that designation - which includes the highest paid 10% of all salaried employees – allows a company to replace such a key employee rather than hold his position open. The letter advised Peters that his position had been filled, but offered an alternative position to him, which he declined.
Peters then filed suit against Gilead, alleging a number of claims, including FMLA and state-law claims. Gilead filed a motion for summary judgment, which was granted on all claims except for Peters’ FMLA claim. His state-law promissory estoppel claim was not addressed – instead the lower court incorrectly allowed Gilead to re-characterize that claim as an "equitable estoppel" response to Gilead’s affirmative defenses. Gilead then filed for reconsideration, which the court granted, dismissing the FMLA claim.
On appeal, the Seventh Circuit pointed out that the lower court "did not address whether Gilead’s promises were actionable as a contract or under promissory estoppel." It pointed out that Peters had filed a state-law claim based upon his own reliance on Gilead’s representations - both in the handbook and the letters - which characterizes his entitlement to leave as based upon the FMLA. Promissory estoppel is applicable to a situation in which a promise may lack the elements of a binding contract, but has induced detrimental reliance on the part of the promisee. In this case, Gilead’s handbook had promised 12 weeks of medical leave, and had repeated that promise in its letters to Peters. Because Peters relied upon those representations, and had assumed that he would be reinstated to his position, the Seventh Circuit remanded the case for consideration of Gilead’s liability under state law.
Employers who do not come within the 50/75 requirement of the FMLA can offer FMLA-like benefits to their employees. However, a decision to offer such a benefit should be made consciously and after discussion with and recommendation from legal counsel regarding the effects and ramifications of such handbook or policy language. To fail to do so may result in unintended liability for damages under state law contract or promissory estoppel claims.
Under the Family and Medical Leave Act (FMLA) a qualified employee is one who has worked for at least 1250 hours during the previous 12 months. In addition, an employer is subject to the FMLA if it has at least 50 employees within a 75 mile radius. Recently, the 7th U.S. Circuit Court of Appeals held that an employee can proceed with state-law claims for breach of contract or promissory estoppel based on handbook language granting FMLA-type leave, even though the employer had less than 50 employees. Peters v. Gilead Sciences, Inc., 7th Cir., No. 06-4290, July 14, 2008.
Steven Peters was employed by Gilead Sciences as a pharmaceutical sales representative when he suffered a work-related injury in 2001. He re-aggravated the injury in 2002, and underwent corrective surgery in December of that year. At that time, he took what he thought was FMLA leave for 12 days. The day after beginning his leave, Peters received a letter from Gilead, stating the terms of his "FMLA" leave, and informing him of his right to reinstatement after leave. The letter tracked language that was set forth in the company’s employee handbook regarding employees’ entitlement to family and medical leaves. Although the letter and the handbook both included the 1250 hour/12 month language, neither included the 50-employees-within-a-75-mile-radius ("50/75") language and, in fact, Gilead did not have 50 employees within a 75 mile radius.
Peters returned to his position on December 16, 2002. In March, 2003, Peters began to experience an adverse reaction to his medication and took a second leave from March 4 until May 5, 2003. At that time, a letter was sent to him setting forth the terms and conditions of the leave, and again the letter omitted the 50/75 language. However, Peters did not receive this second letter.
In April of 2003, Gilead decided to replace Peters with another employee. On April 25, Gilead sent a letter to Peters, designating him as a "key" employee. Under the FMLA, that designation - which includes the highest paid 10% of all salaried employees – allows a company to replace such a key employee rather than hold his position open. The letter advised Peters that his position had been filled, but offered an alternative position to him, which he declined.
Peters then filed suit against Gilead, alleging a number of claims, including FMLA and state-law claims. Gilead filed a motion for summary judgment, which was granted on all claims except for Peters’ FMLA claim. His state-law promissory estoppel claim was not addressed – instead the lower court incorrectly allowed Gilead to re-characterize that claim as an "equitable estoppel" response to Gilead’s affirmative defenses. Gilead then filed for reconsideration, which the court granted, dismissing the FMLA claim.
On appeal, the Seventh Circuit pointed out that the lower court "did not address whether Gilead’s promises were actionable as a contract or under promissory estoppel." It pointed out that Peters had filed a state-law claim based upon his own reliance on Gilead’s representations - both in the handbook and the letters - which characterizes his entitlement to leave as based upon the FMLA. Promissory estoppel is applicable to a situation in which a promise may lack the elements of a binding contract, but has induced detrimental reliance on the part of the promisee. In this case, Gilead’s handbook had promised 12 weeks of medical leave, and had repeated that promise in its letters to Peters. Because Peters relied upon those representations, and had assumed that he would be reinstated to his position, the Seventh Circuit remanded the case for consideration of Gilead’s liability under state law.
Employers who do not come within the 50/75 requirement of the FMLA can offer FMLA-like benefits to their employees. However, a decision to offer such a benefit should be made consciously and after discussion with and recommendation from legal counsel regarding the effects and ramifications of such handbook or policy language. To fail to do so may result in unintended liability for damages under state law contract or promissory estoppel claims.
Monday, July 14, 2008
Issue: Second Circuit says employer has a duty to reasonably accommodate employee with an obvious disability, even without a request to do so
For the week of July 14, 2008
The Americans with Disabilities Act (ADA) requires that employers engage in an "interactive process" and to work together with disabled employees to determine whether an employee’s disability can be reasonably accommodated. Recently, the 2d U.S. Circuit Court of Appeals held that Wal-Mart failed to engage in this process when it did not initiate the issue of accommodation with an employee whom it perceived to be disabled. Brady v. Wal-Mart Stores, Inc, et al, 2d Circ., No. 06-5486-cv, July 2, 2008.
Patrick Brady, a 19-year old with cerebral palsy, had worked successfully for two years at a local pharmacy prior to applying for a job in the pharmacy department of a Wal-Mart store in Centereach, New York. At the time of that application in 2002, Brady signed a document that stated that he could perform the tasks associated with the position of a Wal-Mart pharmacy assistant, "either with or without a reasonable accommodation." Brady was hired for the job, and was instructed to stock pharmacy merchandise and hand out prescriptions. However, Brady’s supervisor immediately appeared to be unhappy with his performance, and told him to "speed it up." While his work was done slowly, Brady did not hand out the wrong prescriptions, nor did he require assistance from anyone to perform the job at that time. At the end of his first shift, Brady requested a schedule for the upcoming week. Although Brady’s supervisor told him that she would call him with a schedule, she did not. Brady worked two more days in the pharmacy without incident and, at the end of the second day, asked again about a schedule. Again, the supervisor said she would call him; and again, she failed to do so. When Brady returned to the store to talk to her directly, the supervisor sent him to the personnel department. The personnel manager told Brady that he was being transferred out of the pharmacy, and that the only available position was collecting shopping carts and garbage in the parking lot. Brady understood the re-assignment to be a demotion, and felt that he was even less suited to it than to the position of pharmacy assistant.
After Brady’s transfer, his father approached the assistant store manager to discuss the situation. During that discussion, the manager mentioned that new employees typically were given a training period and that Brady had not been provided enough time to learn the pharmacy job. However, he then transferred Brady to the food department, where Brady was not provided with instructions or training and was not given the option of returning to the pharmacy. Brady also was given a work schedule that conflicted with his community college schedule, even though he had notified Wal-Mart of that limitation on his availability at the time of his employment application. Frustrated, Brady quit his job on the following day.
Brady then sued Wal-Mart, alleging violation of both the ADA and the New York Human Rights Act. He brought a number of claims, including a claim that Wal-Mart had filed to reasonably accommodate his disability. The case proceeded to trial, and the jury found in Brady’s favor on number of claims, including his failure-to-accommodate claim. Based on its findings, the jury awarded damages to Brady that ultimately amounted to $600,000 in compensatory damages, and $300,000 in punitive damages.
On appeal, the Second Circuit addressed a number of issues, including whether the district court erred in not granting Wal-Mart’s motion regarding judgment on Brady’s failure-to-accommodate claim. Wal-Mart argued that because Brady had never requested an accommodation and had testified that he did not think he needed one, the district court should have granted judgment as a matter of law on that claim. The Second Circuit disagreed, holding that while it is generally the responsibility of the disabled individual to inform the employer that an accommodation is needed, an employer who is aware of or perceives a disability is obligated to provide a reasonable accommodation for that known or perceived impairment.
This holding has the potential to complicate an already unsettled issue for employers, when it applies - as in Brady’s circumstance - to a situation in which an employer views an employee as disabled, but the employee does not perceive himself to need an accommodation. Employers should be aware of this interpretation of the ADA’s requirement for an "interactive process" and should request assistance from both human resource managers and legal counsel when faced with an impaired employee who might require reasonable accommodation in order to do his or her job.
The Americans with Disabilities Act (ADA) requires that employers engage in an "interactive process" and to work together with disabled employees to determine whether an employee’s disability can be reasonably accommodated. Recently, the 2d U.S. Circuit Court of Appeals held that Wal-Mart failed to engage in this process when it did not initiate the issue of accommodation with an employee whom it perceived to be disabled. Brady v. Wal-Mart Stores, Inc, et al, 2d Circ., No. 06-5486-cv, July 2, 2008.
Patrick Brady, a 19-year old with cerebral palsy, had worked successfully for two years at a local pharmacy prior to applying for a job in the pharmacy department of a Wal-Mart store in Centereach, New York. At the time of that application in 2002, Brady signed a document that stated that he could perform the tasks associated with the position of a Wal-Mart pharmacy assistant, "either with or without a reasonable accommodation." Brady was hired for the job, and was instructed to stock pharmacy merchandise and hand out prescriptions. However, Brady’s supervisor immediately appeared to be unhappy with his performance, and told him to "speed it up." While his work was done slowly, Brady did not hand out the wrong prescriptions, nor did he require assistance from anyone to perform the job at that time. At the end of his first shift, Brady requested a schedule for the upcoming week. Although Brady’s supervisor told him that she would call him with a schedule, she did not. Brady worked two more days in the pharmacy without incident and, at the end of the second day, asked again about a schedule. Again, the supervisor said she would call him; and again, she failed to do so. When Brady returned to the store to talk to her directly, the supervisor sent him to the personnel department. The personnel manager told Brady that he was being transferred out of the pharmacy, and that the only available position was collecting shopping carts and garbage in the parking lot. Brady understood the re-assignment to be a demotion, and felt that he was even less suited to it than to the position of pharmacy assistant.
After Brady’s transfer, his father approached the assistant store manager to discuss the situation. During that discussion, the manager mentioned that new employees typically were given a training period and that Brady had not been provided enough time to learn the pharmacy job. However, he then transferred Brady to the food department, where Brady was not provided with instructions or training and was not given the option of returning to the pharmacy. Brady also was given a work schedule that conflicted with his community college schedule, even though he had notified Wal-Mart of that limitation on his availability at the time of his employment application. Frustrated, Brady quit his job on the following day.
Brady then sued Wal-Mart, alleging violation of both the ADA and the New York Human Rights Act. He brought a number of claims, including a claim that Wal-Mart had filed to reasonably accommodate his disability. The case proceeded to trial, and the jury found in Brady’s favor on number of claims, including his failure-to-accommodate claim. Based on its findings, the jury awarded damages to Brady that ultimately amounted to $600,000 in compensatory damages, and $300,000 in punitive damages.
On appeal, the Second Circuit addressed a number of issues, including whether the district court erred in not granting Wal-Mart’s motion regarding judgment on Brady’s failure-to-accommodate claim. Wal-Mart argued that because Brady had never requested an accommodation and had testified that he did not think he needed one, the district court should have granted judgment as a matter of law on that claim. The Second Circuit disagreed, holding that while it is generally the responsibility of the disabled individual to inform the employer that an accommodation is needed, an employer who is aware of or perceives a disability is obligated to provide a reasonable accommodation for that known or perceived impairment.
This holding has the potential to complicate an already unsettled issue for employers, when it applies - as in Brady’s circumstance - to a situation in which an employer views an employee as disabled, but the employee does not perceive himself to need an accommodation. Employers should be aware of this interpretation of the ADA’s requirement for an "interactive process" and should request assistance from both human resource managers and legal counsel when faced with an impaired employee who might require reasonable accommodation in order to do his or her job.
Sunday, July 13, 2008
Issue: Confidentiality provision in employment agreement may violate federal labor law
For the week of July 7, 2008
The National Labor Relations Act (NLRA) prohibits work rules that restrict discussion of wages or working conditions among employees or with a union, or rules which might "reasonably be construed" to restrict such discussions. Recently, the National Labor Relations Board held that a temp agency violated the NLRA by including a confidentiality provision in the employment contract between the temp agency and a temporary worker, and by terminating the worker for his violation of that provision. The Board held that the provision was unlawful because employees reasonably could construe it as restricting discussions with union representatives. In re: Northeastern Land Services, Ltd. and John Dupuy, NLRB Case No. 1-CA-39447, June 27, 2008.
Jamison Dupuy was employed by Northeastern Land Services (NLS), a temp agency, as a right-of-way agent to perform activities related to land acquisition for El Paso Energy, which was a client of NLS. At the outset of his assignment with El Paso, Dupuy was required by NLS to sign an employment agreement that included the following confidentiality language: "Employee also understands that the terms of this employment, including compensation, are confidential to Employee and the NLS Group. Disclosure of these terms to other parties may constitute grounds for dismissal."
During the course of the El Paso project, Dupuy experienced delays in getting paid. Because he felt that NLS was not helping him to resolve the problem, Dupuy told NLS that he was going to raise the issue directly with El Paso. Ultimately, Dupuy did contact El Paso, raising the late payment issue as well as another compensation issue related to reimbursement for the use of his personal computer. He also followed up with an e-mail to NLS on which he copied El Paso, mentioning the computer issue. NLS then terminated Dupuy’s employment, stating that he had "not lived up to [his] end of the bargain" when he failed to comply with the confidentiality provision of his employment agreement by discussing compensation issues with El Paso.
Dupuy’s claim was first heard by an Administrative Law Judge (ALJ), who dismissed the complaint. The ALJ found first that the confidentiality provision did not restrict NLS’ employees’ ability to discuss the terms of their employment with one another. He further found that although the provision did restrict the employees’ right to discuss terms and conditions of employment with third parties, NLS had proffered a legitimate business justification that outweighed the restriction on employees’ rights when it stated that it is engaged in a very competitive industry in which confidentiality of such terms and conditions is critical. Second, the judge determined that since the confidentiality provision was not unlawful, NLS did not violate the NLRA when it terminated Dupuy’s employment.
The Board reversed the ALJ’s decision, concluding that the NLS confidentiality provision was unlawful because employees reasonably could construe the language – which precluded discussions of compensation and other terms of employment with "other parties" – as prohibiting discussion with union representatives about those issues. Further, because an employer’s imposition of discipline pursuant to an unlawful policy constitutes a violation of the NLRA, Dupuy’s termination was found by the Board to have been unlawful.
Based upon its findings, the Board ordered injunctive relief that included rescission of the confidentiality language in the NLS agreements, along with restatement of Dupuy, and all references to his termination deleted from his personnel file. In addition, NLS was ordered to "make Jamison Dupuy whole for any loss of earnings and other benefits" caused by NLS’ actions.
Employers that routinely include confidentiality language in employment agreements and employee handbooks should periodically review that language to assure that it cannot be interpreted as precluding employees from discussing compensation or other employment terms and conditions with union representatives. Such interpretation can create unintended liability for employers under the NLRA.
The National Labor Relations Act (NLRA) prohibits work rules that restrict discussion of wages or working conditions among employees or with a union, or rules which might "reasonably be construed" to restrict such discussions. Recently, the National Labor Relations Board held that a temp agency violated the NLRA by including a confidentiality provision in the employment contract between the temp agency and a temporary worker, and by terminating the worker for his violation of that provision. The Board held that the provision was unlawful because employees reasonably could construe it as restricting discussions with union representatives. In re: Northeastern Land Services, Ltd. and John Dupuy, NLRB Case No. 1-CA-39447, June 27, 2008.
Jamison Dupuy was employed by Northeastern Land Services (NLS), a temp agency, as a right-of-way agent to perform activities related to land acquisition for El Paso Energy, which was a client of NLS. At the outset of his assignment with El Paso, Dupuy was required by NLS to sign an employment agreement that included the following confidentiality language: "Employee also understands that the terms of this employment, including compensation, are confidential to Employee and the NLS Group. Disclosure of these terms to other parties may constitute grounds for dismissal."
During the course of the El Paso project, Dupuy experienced delays in getting paid. Because he felt that NLS was not helping him to resolve the problem, Dupuy told NLS that he was going to raise the issue directly with El Paso. Ultimately, Dupuy did contact El Paso, raising the late payment issue as well as another compensation issue related to reimbursement for the use of his personal computer. He also followed up with an e-mail to NLS on which he copied El Paso, mentioning the computer issue. NLS then terminated Dupuy’s employment, stating that he had "not lived up to [his] end of the bargain" when he failed to comply with the confidentiality provision of his employment agreement by discussing compensation issues with El Paso.
Dupuy’s claim was first heard by an Administrative Law Judge (ALJ), who dismissed the complaint. The ALJ found first that the confidentiality provision did not restrict NLS’ employees’ ability to discuss the terms of their employment with one another. He further found that although the provision did restrict the employees’ right to discuss terms and conditions of employment with third parties, NLS had proffered a legitimate business justification that outweighed the restriction on employees’ rights when it stated that it is engaged in a very competitive industry in which confidentiality of such terms and conditions is critical. Second, the judge determined that since the confidentiality provision was not unlawful, NLS did not violate the NLRA when it terminated Dupuy’s employment.
The Board reversed the ALJ’s decision, concluding that the NLS confidentiality provision was unlawful because employees reasonably could construe the language – which precluded discussions of compensation and other terms of employment with "other parties" – as prohibiting discussion with union representatives about those issues. Further, because an employer’s imposition of discipline pursuant to an unlawful policy constitutes a violation of the NLRA, Dupuy’s termination was found by the Board to have been unlawful.
Based upon its findings, the Board ordered injunctive relief that included rescission of the confidentiality language in the NLS agreements, along with restatement of Dupuy, and all references to his termination deleted from his personnel file. In addition, NLS was ordered to "make Jamison Dupuy whole for any loss of earnings and other benefits" caused by NLS’ actions.
Employers that routinely include confidentiality language in employment agreements and employee handbooks should periodically review that language to assure that it cannot be interpreted as precluding employees from discussing compensation or other employment terms and conditions with union representatives. Such interpretation can create unintended liability for employers under the NLRA.
Issue: Employer may use subjective criteria to defeat claim of pretext in ADEA case
For the week of June 23, 2008
The Age Discrimination in Employment Act (ADEA) prohibits an employer from failing to hire or promote an individual who is at least 40 years old because of that individual’s age. Once the individual establishes a prima facie case of discrimination – by showing that she was in the protected age group; that she was otherwise qualified for the position; and that a younger person was hired to fill the position – a legal presumption arises that the employer unlawfully discriminated against that individual. The burden then shifts to the employer to provide a non-discriminatory reason for the company’s failure to hire. The employee can demonstrate that the proffered reason was a "pretext" for discrimination by presenting evidence indicating that age was a determinative factor in the adverse employment decision.
When an employer fails to hire or promote an over-40 year old employee, and contends that the selected (but younger) candidate was more qualified, a comparative analysis of the qualifications is necessary to determine whether a jury could disbelieve the employer’s proffered reason for its decision. Often, however, an employer’s evidence consists of subjective evaluations of the candidates’ qualifications. Because such subjective information can be easily fabricated after-the-fact., courts typically will not allow an employer to rely exclusively on subjective criteria to avoid a finding of pretext.
Recently, the 8th U.S. Circuit Court of Appeals affirmed a lower court’s summary judgment in favor of a school district that relied largely upon subjective criteria to support its failure to promote a 60 year old teacher. Wingate v. Gage County School District, 8th Cir., No. 07-3492, June 16, 2008.
In that case, Nancy Wingate worked as a part-time teacher for the Gage County School District from 1977 until 2001. In 2001, Wingate decided to return to teaching on a full-time basis, and unsuccessfully applied for four different full-time positions over the next three years. In 2004, she applied for two more full-time positions, but was not interviewed for either of them. The positions were filled by a 28-year-old and a 31-year-old. The District contended that it did not interview Wingate because she was only an "average" teacher, had trouble handling large groups of students, and that the District would have had to hire a replacement to fill Wingate’s part-time position.
Wingate filed suit, alleging violation of the ADEA. In response, the District filed a motion for summary judgment. Because the District conceded that Wingate was able to set forth a prima facie case, a legal presumption arose that the District had discriminated against Wingate. The District then was required to provide a non-discriminatory reason for its actions. To satisfy its burden, the District asserted that the individuals hired were "better qualified" for the positions, and that Wingate was only "average," while the District endeavored to hire only "above-average" teachers. In addition to these subjective assertions, the District pointed out that the jobs applied for by Wingate involved large groups of students, and that her prior experience was with small groups of students. Further, the individuals hired had special education certification or experience, and Wingate did not.
Wingate presented no evidence sufficient to refute the District’s proffered reasons for not hiring her, other than to assert that because many of the reasons were subjective, they were simply a pretext for discrimination. However, the Court disagreed, stating that although is has cautioned against the use of subjective criteria, it has not "outright prohibited its use." The Court noted that the District did not rely exclusively on subjective criteria, but also used legitimate educational considerations in making the hiring decisions. Stating that the use of subjective criteria does not automatically give rise to an inference of age discrimination, the Court upheld the dismissal of Wingate’s case.
Employers should not interpret this decision as an invitation to base hiring decisions solely on subjective criteria. Instead, hiring decisions involving a subjective analysis also should include some objective criteria or other business-related considerations in order to avoid the possibility of a finding of "pretext."
The Age Discrimination in Employment Act (ADEA) prohibits an employer from failing to hire or promote an individual who is at least 40 years old because of that individual’s age. Once the individual establishes a prima facie case of discrimination – by showing that she was in the protected age group; that she was otherwise qualified for the position; and that a younger person was hired to fill the position – a legal presumption arises that the employer unlawfully discriminated against that individual. The burden then shifts to the employer to provide a non-discriminatory reason for the company’s failure to hire. The employee can demonstrate that the proffered reason was a "pretext" for discrimination by presenting evidence indicating that age was a determinative factor in the adverse employment decision.
When an employer fails to hire or promote an over-40 year old employee, and contends that the selected (but younger) candidate was more qualified, a comparative analysis of the qualifications is necessary to determine whether a jury could disbelieve the employer’s proffered reason for its decision. Often, however, an employer’s evidence consists of subjective evaluations of the candidates’ qualifications. Because such subjective information can be easily fabricated after-the-fact., courts typically will not allow an employer to rely exclusively on subjective criteria to avoid a finding of pretext.
Recently, the 8th U.S. Circuit Court of Appeals affirmed a lower court’s summary judgment in favor of a school district that relied largely upon subjective criteria to support its failure to promote a 60 year old teacher. Wingate v. Gage County School District, 8th Cir., No. 07-3492, June 16, 2008.
In that case, Nancy Wingate worked as a part-time teacher for the Gage County School District from 1977 until 2001. In 2001, Wingate decided to return to teaching on a full-time basis, and unsuccessfully applied for four different full-time positions over the next three years. In 2004, she applied for two more full-time positions, but was not interviewed for either of them. The positions were filled by a 28-year-old and a 31-year-old. The District contended that it did not interview Wingate because she was only an "average" teacher, had trouble handling large groups of students, and that the District would have had to hire a replacement to fill Wingate’s part-time position.
Wingate filed suit, alleging violation of the ADEA. In response, the District filed a motion for summary judgment. Because the District conceded that Wingate was able to set forth a prima facie case, a legal presumption arose that the District had discriminated against Wingate. The District then was required to provide a non-discriminatory reason for its actions. To satisfy its burden, the District asserted that the individuals hired were "better qualified" for the positions, and that Wingate was only "average," while the District endeavored to hire only "above-average" teachers. In addition to these subjective assertions, the District pointed out that the jobs applied for by Wingate involved large groups of students, and that her prior experience was with small groups of students. Further, the individuals hired had special education certification or experience, and Wingate did not.
Wingate presented no evidence sufficient to refute the District’s proffered reasons for not hiring her, other than to assert that because many of the reasons were subjective, they were simply a pretext for discrimination. However, the Court disagreed, stating that although is has cautioned against the use of subjective criteria, it has not "outright prohibited its use." The Court noted that the District did not rely exclusively on subjective criteria, but also used legitimate educational considerations in making the hiring decisions. Stating that the use of subjective criteria does not automatically give rise to an inference of age discrimination, the Court upheld the dismissal of Wingate’s case.
Employers should not interpret this decision as an invitation to base hiring decisions solely on subjective criteria. Instead, hiring decisions involving a subjective analysis also should include some objective criteria or other business-related considerations in order to avoid the possibility of a finding of "pretext."
Sunday, July 6, 2008
Issue: Agoraphobic faculty member could not support ADA/FMLA claims
For the week of June 30, 2008
In an unpublished opinion, the 3d U.S. Circuit Court of Appeals has upheld a lower court’s determination that an associate professor’s termination was appropriate, even though the professor claimed that he was disabled by agoraphobia. Lloyd v. Washington & Jefferson College, 3d Circ., No. 07-2907, June 11, 2008.
Karl Brett Lloyd became an Associate Professor in the Information Technology Leadership (ITL) Department of Washington & Jefferson College in July 2002. In April 2003, the College instituted a policy that full-time faculty members were to be "on campus a minimum of four days per week, for at least four hours per day." However, Lloyd was permitted to spend three days a week on campus and to work from home for the rest of the week because of his agoraphobia. In January 2004, Lloyd took a leave under the FMLA for stress-related medical problems caused, he said, by Dr. Charles Hannon, the Chair of the ITL Department.
Upon his return in February 2004, Lloyd asked for additional accommodation to his schedule, and for certain additional FMLA leave. At that point, the College agreed to transfer Lloyd to a non-teaching position in the Information Technology Services Department, where he could work three days a week under a different supervisor, at his same salary. Lloyd was instructed to report for work at 9:00 a.m. on April 5, 2004 to accept the job. When he failed to report, he was considered to have resigned, and his employment was terminated. Lloyd ultimately filed suit, claiming violation of the ADA and the FMLA.
The district court granted summary judgment in favor of the College. The Third Circuit affirmed that decision, addressing each of Lloyd’s four arguments in turn.
First, Lloyd argued that his "record of impairment," as evidenced in part by his receipt of Social Security Disability benefits, precluded summary judgment on his ADA claim. The Court pointed out that it cannot regard a medical impairment as a "disability" under the ADA if there is no proof that the impairment substantially limits a major life activity. Here, Lloyd did not attempt to show how his receipt of benefits established any such limitation; he therefore failed to support his ADA "record of impairment" argument.
Second, Lloyd argued that he was substantially limited in his ability to think and to interact with others. However, the Court found that argument to be flawed, based on Lloyd’s ability to work and teach for three days a week, as well as to serve as a local borough councilman. Further, according to the Court, if Lloyd actually had been substantially limited in his ability to think and interact with others, he would not be a qualified person with a disability (able to do the essential functions of the job, with or without accommodation), since such abilities are essential functions for a college professorship.
Lloyd’s third argument -- that the College interfered with his exercise of FMLA rights by terminating him – was dismissed by the Court, which found that Lloyd failed to show the "serious health condition" required for an FMLA claim.
Finally, the Court found that Lloyd’s discrimination and retaliation claims failed because Lloyd could not show the requisite "adverse employment action." While Lloyd complained that the school improperly discharged him, the facts show that the College made numerous attempts to accommodate Lloyd, including the initial three day per week schedule, and a transfer away from his original supervisor.
The determinative issue in this case was Lloyd’s inability to support the argument that his agoraphobia created a disability under the ADA, or even a serious health condition for purposes of the FMLA. That fact, coupled with the College’s participation in the required "interactive process" in the form of its offer of a flexible schedule and transfer to another supervisor, supported the Court’s decision to affirm summary judgment in favor of the employer.
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