For the week of August 25, 2008
The Uniformed Services Employment and Reemployment Rights Act (USERRA) was enacted to protect the rights of veterans and members of the uniformed services, and is broadly construed in favor of those individuals. The Act specifically states that a returning veteran must be "promptly reemployed" after an honorable discharge from military service and requires that, in most cases, reinstatement is made to the position which the individual would have held had he or she not left for military leave. The 6th U.S. Circuit Court of Appeals has held that a police department’s delay in re-employing a returning Army reservist violated the USERRA, even though the delay was based upon the employee’s suspected dishonesty. Petty v. Metropolitan Govt. of Nashville-Davidson County, 6th Cir., No. 07-5649, Aug. 18, 2008.
Brian Petty was a member of the Army Reserve with the Army National Guard. In 1991, Petty was hired by the Metropolitan Government of Nashville-Davidson County ("Metro") as a police officer. In October of 2003, Petty’s unit was called up to active duty in Operation Iraqi Freedom. Petty was assigned to Camp Navistar in Kuwait, where he was in charge of running a section of that camp. In mid-2004, an inspector discovered a five-gallon container of homemade wine during an inspection of Petty’s quarters. Although Petty claimed that his supervisor asked him to manufacture the wine, he ultimately admitted some personal use and also admitted sharing some alcohol with a female enlisted soldier, both of which were against the Military Code of Justice. After his arraignment, Petty submitted a request to resign his commission. Upon his resignation, the charges against him were dismissed and Petty was discharged "under honorable conditions (general)" on February 1, 2005.
On February 28, 2005, Petty visited Metro to request re-instatement to his position. On that date, the Police Department instituted a return-to-work process, which was applied to all officers returning from an extended leave, regardless of the reason for that absence. As part of that process, Petty provided to Metro an incomplete copy of his discharge form DD-214 (minus the language related to the specifics of the charges against him), but signed a form which would have allowed Metro to obtain all of his military paperwork.
During the three weeks of the return-to-work process, Petty did not receive any salary or benefits. Upon his return to work in March, Petty was assigned to an office job, and not to his original position. At that point, Metro initiated a formal investigation centering on a charge that Petty was untruthful in his return-to-work paperwork. In spite of the fact that Metro determined the charge to be "unfounded" and returned Petty to work, the head of the Police Department’s Office of Professional Accountability (OPA), Kennetha Sawyers, continued to look into the issue, and ultimately obtained a complete copy of the DD-214, which indicated the reason for Petty’s resignation from the Army to be "in lieu of trial by court martial." Sawyers then began a second investigation, and Petty continued his desk-job assignment.
Petty filed a lawsuit alleging that Metro delayed his rehiring and then did not properly reinstate him, both in violation of the USERRA. When the lower court granted summary judgment in favor of Metro, Petty appealed. The Sixth Circuit reversed, finding in favor of Petty. The appellate court based its decision on the fact that Petty had fulfilled the criteria for reinstatement – his request for reemployment was timely, and his discharge was "honorable" – but that Metro did not comply with the Act’s requirement to promptly reinstate Petty to his former position. When Metro raised Petty’s possible dishonesty as a defense, the Court responded by reminding Metro that the USERRA allows an employer to terminate a former serviceman for "cause" after reemployment, but does not allow an employer to use that same "cause" as an excuse not to reinstate that individual at all.
This decision was based upon the amount of time it took to reemploy Petty and the fact that he never was re-placed into his former position, in spite of the lack of evidence that he was able to do that job. Although Metro isn’t ruling out further action in this matter (it could ask for a hearing of the entire Court, since this matter was decided by a single judge), the decision that USERRA does not permit a delay in reinstatement is noteworthy. While the argument that a police department should be able to "screen" returning employees for safety reasons has some intuitive logic, the Court’s language was clear and uncompromising: "Metro was not permitted to limit or delay Petty’s reemployment by requiring him to comply with its return-to-work process." Employers should be aware that the language of the USERRA expressly states that the Act supersedes any policy, plan, or practice that limits the rights or benefits accorded to returning military personnel.
Monday, August 25, 2008
Monday, August 18, 2008
Issue: Third party “peer review” records not always relevant in employment discrimination claim
For the week of August 18, 2008
The production of otherwise-confidential documents in employment discrimination cases continues to be addressed by federal courts at an increasing rate. The issue typically pits state-law protection for "peer review" documents against federal anti-discrimination laws and regulations, and has generated growing controversy among health care providers who routinely rely on the state-law protection afforded to such information. A federal district court in Michigan recently addressed a plaintiff/physician’s discovery subpoena to a non-party hospital for peer review records of "similarly situated" physicians, and granted that hospital‘s motion to quash the subpoena. The court skirted the issue of peer review protections, however, by simply finding that the documents requested were "not relevant" in the discovery phase of the case. Zamorano v. Wayne State University, E.D. Mich., No. 07-12943, Aug. 1, 2008.
Lucia Zamorano filed a lawsuit, claiming that she was terminated from her employment with Wayne State University (WSU) and with the University Neurological Surgeons (UNS) because of her gender. In the course of that legal action, Zamorano issued a subpoena to non-party POH Medical Center seeking peer review records for a number of UNS-related physicians, some of whom had been granted hospital privileges by POH. (Peer review records include information related to the doctor’s application for professional privileges, as well as the hospital’s determination regarding that application.) POH objected to the production of those records, arguing that such information was not relevant to Zamorano’s claims.
The court agreed with POH and granted the motion to quash. However, its decision was not based upon any specific state-law peer review protection, but rather on the scope of the applicable federal rule.
Zamorano alleges that she was treated differently than male physicians who were similarly situated to her. She requested peer review documents from POH in an attempt to affirmatively prove that she was as qualified or more qualified than the male doctors who were not terminated by WSU and UNS. Under the applicable federal rule - Federal Rule 26(b)(1) – parties may obtain any information that is "relevant" to that party’s claim. Such information does not, on its own, have to be admissible at trial, so long as it "appears reasonably calculated to lead to the discovery of admissible evidence."
The court reviewed Zamorano’s claims, reviewed the scope of the request for information from POH, and determined that the documents sought would not lead to admissible evidence. The court specifically stated that in order to prove discrimination, Zamorano would have to prove how WSU and UNS viewed the qualifications of the other doctors when WSU and UNS made determinations to hire or granted privileges to them. Information considered by other hospitals regarding the qualifications of those individuals would not be relevant, even under the broad scope of Rule 26(b)(1) and, therefore, POH’s motion to quash the subpoena was granted.
This decision once again adds to the confusion generated by the intersection of federal anti-discrimination laws and state-law protections for peer review information. Although the court made its decision based upon the wording of the applicable federal rule, it did not ignore the sensitive nature of peer review records. The court stated that the "shield of confidentiality" that normally protects peer review documentation "justifies greater caution for the Court in exercising its discretion regarding exposing the records to public scrutiny." Such language indicates an awareness of the importance of the state-law protections, and a willingness to protect the documentation when necessary, as in this case.
The production of otherwise-confidential documents in employment discrimination cases continues to be addressed by federal courts at an increasing rate. The issue typically pits state-law protection for "peer review" documents against federal anti-discrimination laws and regulations, and has generated growing controversy among health care providers who routinely rely on the state-law protection afforded to such information. A federal district court in Michigan recently addressed a plaintiff/physician’s discovery subpoena to a non-party hospital for peer review records of "similarly situated" physicians, and granted that hospital‘s motion to quash the subpoena. The court skirted the issue of peer review protections, however, by simply finding that the documents requested were "not relevant" in the discovery phase of the case. Zamorano v. Wayne State University, E.D. Mich., No. 07-12943, Aug. 1, 2008.
Lucia Zamorano filed a lawsuit, claiming that she was terminated from her employment with Wayne State University (WSU) and with the University Neurological Surgeons (UNS) because of her gender. In the course of that legal action, Zamorano issued a subpoena to non-party POH Medical Center seeking peer review records for a number of UNS-related physicians, some of whom had been granted hospital privileges by POH. (Peer review records include information related to the doctor’s application for professional privileges, as well as the hospital’s determination regarding that application.) POH objected to the production of those records, arguing that such information was not relevant to Zamorano’s claims.
The court agreed with POH and granted the motion to quash. However, its decision was not based upon any specific state-law peer review protection, but rather on the scope of the applicable federal rule.
Zamorano alleges that she was treated differently than male physicians who were similarly situated to her. She requested peer review documents from POH in an attempt to affirmatively prove that she was as qualified or more qualified than the male doctors who were not terminated by WSU and UNS. Under the applicable federal rule - Federal Rule 26(b)(1) – parties may obtain any information that is "relevant" to that party’s claim. Such information does not, on its own, have to be admissible at trial, so long as it "appears reasonably calculated to lead to the discovery of admissible evidence."
The court reviewed Zamorano’s claims, reviewed the scope of the request for information from POH, and determined that the documents sought would not lead to admissible evidence. The court specifically stated that in order to prove discrimination, Zamorano would have to prove how WSU and UNS viewed the qualifications of the other doctors when WSU and UNS made determinations to hire or granted privileges to them. Information considered by other hospitals regarding the qualifications of those individuals would not be relevant, even under the broad scope of Rule 26(b)(1) and, therefore, POH’s motion to quash the subpoena was granted.
This decision once again adds to the confusion generated by the intersection of federal anti-discrimination laws and state-law protections for peer review information. Although the court made its decision based upon the wording of the applicable federal rule, it did not ignore the sensitive nature of peer review records. The court stated that the "shield of confidentiality" that normally protects peer review documentation "justifies greater caution for the Court in exercising its discretion regarding exposing the records to public scrutiny." Such language indicates an awareness of the importance of the state-law protections, and a willingness to protect the documentation when necessary, as in this case.
Friday, August 15, 2008
Issue: The USERRA does not pre-empt an employment contract’s arbitration clause
For the week of August 11, 2008
Federal law favors arbitration of disputes. While the U.S. Supreme Court has held that statutory claims - including employment-related issues – generally are subject to arbitration, it has not specifically addressed the arbitrability of claims under the Uniformed Services Employment and Re-employment Act (USERRA). Until recently, in fact, only one federal appellate court had addressed that issue, and had determined that claims related to the USERRA are subject to arbitration, if arbitration is required under a written agreement. Garrett v. Circuit City Stores, Inc., 449 F.3d 672 (5th Cir. 2006). Recently, the 6th U.S. Circuit Court of Appeals reached the same conclusion, finding that an optometrist who was called to military duty was required to arbitrate his claims related to demotion and earnings. Landis v. Pinnacle Eye Care, LLC, 6th Cir., No. 07-6204, August 11, 2008.
Dr. Timothy Landis, an optometrist, brought a law suit against Pinnacle Eye Care alleging employment discrimination based, in part, on his military service. Landis claimed that when he was called to active duty in Afghanistan, he negotiated certain employment terms that were to go into effect upon his return. However, neither Landis nor Pinnacle amended Landis’ existing written employment agreement to reflect those terms. Landis alleged that upon his return from Afghanistan, Pinnacle refused to honor the additional terms; he then filed a lawsuit claiming violation of the USERRA. The district court granted the company’s motion to stay the law suit, and ordered the matter to arbitration, based upon an arbitration clause in the original agreement. Landis appealed that decision to the Sixth Circuit, claiming that his rights to proceed under the USERRA would preclude arbitration.
After reviewing the situation, the Sixth Circuit affirmed the lower court’s decision. It did so based upon the wording of the agreement between Landis and Pinnacle, in which Landis agreed to resolve "any controversy, dispute or disagreement" related to the employment relationship, and which could not otherwise be amicably negotiated, through arbitration.
While Landis argued that the USERRA pre-empted the arbitration clause, the Sixth Circuit disagreed. It pointed out the Supreme Court’s view that, although not every statutory claim may be appropriate for arbitration, parties who agree to arbitrate claims should be held to that agreement "unless Congress itself has evinced an intention to preclude waiver of judicial remedies for the statutory rights at issue." The Sixth Circuit then addressed the USERRA in some detail, and determined that nothing in the statutory language or legislative history of that Act demonstrated a Congressional intent to preclude arbitration. The Court also found that arbitration provides a fair opportunity for a claimant to present and prevail on a claim of a USERRA violation and that, therefore, arbitration of such claims is appropriate.
This decision is of interest to both employers and employees, and applies in any situation in which the terms and conditions of a work-related relationship are governed by a written agreement – including, arguably, an independent contractor situation. Parties to such agreements should be aware of the parameters of dispute resolution included in written agreements, and should be prepared to act consistently with those agreed-upon mechanisms before proceeding to lengthy and expensive litigation.
Federal law favors arbitration of disputes. While the U.S. Supreme Court has held that statutory claims - including employment-related issues – generally are subject to arbitration, it has not specifically addressed the arbitrability of claims under the Uniformed Services Employment and Re-employment Act (USERRA). Until recently, in fact, only one federal appellate court had addressed that issue, and had determined that claims related to the USERRA are subject to arbitration, if arbitration is required under a written agreement. Garrett v. Circuit City Stores, Inc., 449 F.3d 672 (5th Cir. 2006). Recently, the 6th U.S. Circuit Court of Appeals reached the same conclusion, finding that an optometrist who was called to military duty was required to arbitrate his claims related to demotion and earnings. Landis v. Pinnacle Eye Care, LLC, 6th Cir., No. 07-6204, August 11, 2008.
Dr. Timothy Landis, an optometrist, brought a law suit against Pinnacle Eye Care alleging employment discrimination based, in part, on his military service. Landis claimed that when he was called to active duty in Afghanistan, he negotiated certain employment terms that were to go into effect upon his return. However, neither Landis nor Pinnacle amended Landis’ existing written employment agreement to reflect those terms. Landis alleged that upon his return from Afghanistan, Pinnacle refused to honor the additional terms; he then filed a lawsuit claiming violation of the USERRA. The district court granted the company’s motion to stay the law suit, and ordered the matter to arbitration, based upon an arbitration clause in the original agreement. Landis appealed that decision to the Sixth Circuit, claiming that his rights to proceed under the USERRA would preclude arbitration.
After reviewing the situation, the Sixth Circuit affirmed the lower court’s decision. It did so based upon the wording of the agreement between Landis and Pinnacle, in which Landis agreed to resolve "any controversy, dispute or disagreement" related to the employment relationship, and which could not otherwise be amicably negotiated, through arbitration.
While Landis argued that the USERRA pre-empted the arbitration clause, the Sixth Circuit disagreed. It pointed out the Supreme Court’s view that, although not every statutory claim may be appropriate for arbitration, parties who agree to arbitrate claims should be held to that agreement "unless Congress itself has evinced an intention to preclude waiver of judicial remedies for the statutory rights at issue." The Sixth Circuit then addressed the USERRA in some detail, and determined that nothing in the statutory language or legislative history of that Act demonstrated a Congressional intent to preclude arbitration. The Court also found that arbitration provides a fair opportunity for a claimant to present and prevail on a claim of a USERRA violation and that, therefore, arbitration of such claims is appropriate.
This decision is of interest to both employers and employees, and applies in any situation in which the terms and conditions of a work-related relationship are governed by a written agreement – including, arguably, an independent contractor situation. Parties to such agreements should be aware of the parameters of dispute resolution included in written agreements, and should be prepared to act consistently with those agreed-upon mechanisms before proceeding to lengthy and expensive litigation.
Sunday, August 10, 2008
Issue: Designation as “joint employer” requires some control over the work or working conditions of the employee
For the week of August 4, 2008
The Family and Medical Leave Act (FMLA) makes it unlawful for any employer to interfere with an employee’s rights under that Act. Although the Act itself does not address situations in which multiple entities may be viewed as "joint-employers" for purposes of the FMLA, the Department of Labor (DOL) has issued regulations setting out situations in which joint-employer liability may be found. Those situations typically involve circumstances in which an individual employee has a relationship with more than one company, including, for instance, the assignment by a placement agency of a temporary/contract employee to a second entity. If the placement agency determines the rate and method of pay, while the second company determines the work schedule and amount of supervision needed, those two companies might be deemed to be "joint-employers" for purposes of the FMLA. This issue becomes especially important when one of the two entities has less than the requisite "50 employees within a 75-mile radius" to come within the purview of the FMLA, but when added to the second company, falls within the applicable number of employees.
Recently, the 7th U.S. Circuit Court of Appeals addressed the joint-employer issue for the first time, and held that an emergency communications center was not a joint-employer with the city and county that financed and sponsored the center. Moldenhauer v. Tazewell-Pekin Consolidated Communications Center, et al., 7th Cir., No. 07-1118, July 31, 2008.
The City of Pekin and the County of Tazewell, both in Illinois, created a non-profit corporation in 1976 to provide emergency 911 communication services at an affordable rate. The entity, Tazewell-Pekin Consolidated Communications Center (referred to as "Tazcom"), serves 38 public and private entities. Denise Moldenhauer began working at Tazcom in 1983. After Moldenhauer was diagnosed with chronic pancreatitis in 1991, she began to miss work because of acute flare-ups. As her illness progressed, she missed additional amounts of work, and in 1998, Tazcom’s Executive Director (Thompson) began to express his concern over the amount of work being missed.
In May 2002, Moldenhauer notified Thompson that she wished to take leave under the FMLA. That request was denied, and Moldenhauer filed a complaint with the DOL. The DOL investigated the issue, and sent a preliminary letter, designating Tazcom, Pekin, and Tazerwell as joint-employers under the FMLA. In January 2003, Thompson suspended Moldenhauer for 20 days due to absenteeism, and ultimately terminated her employment in April 2003, when she continued to miss work.
Moldenhauer filed suit in federal court against the City, the County, and Tazcom, alleging violation of the FMLA. The district court granted summary judgment for defendants, finding that neither the City nor County controlled Moldenhauer’s work, and that Tazcom did not have sufficient employees to be liable under the FMLA. Moldenhauer appealed, but the decision was upheld by the Seventh Circuit.
The Court’s decision was premised on the fact that although the bulk of Tazcom’s operating funds are derived from the two municipal entities, that its offices are in space rented from Pekin, that its employees contract with Pekin for health and life insurance, and that its payroll was managed by Pekin, Tazcom is run by an Executive Director unaffiliated with either Pekin or Tazewell County. The Executive Director manages the day-to-day operations, including assignments and schedules, hiring and firing of employees, and the creation of a budget for the operation of Tazcom. Although multiple entities can be viewed as joint employers when each share the employee’s services or exert control over those services, in this case, neither the City nor the County was involved in Moldenhauer’s actual work. Therefore, the Court determined that the number of individuals employed directly by Tazcom (23) could not be consolidated with any other entity to create the requisite number of employees necessary to trigger FMLA liability. On that basis, the Court affirmed summary judgment in favor of the defendants, and dismissed Moldenhauer’s FMLA claim.
This case should be of particular interest to companies that "share" employees with a placement agency or other potential joint-employer. An entity with no direct involvement or control of an individual’s actual work is not likely to be deemed a joint-employer. However, such entities also should be aware that under the rationale of this case, a company can be a joint-employer by reason of its control of any aspect of an individual’s work, whether or not that control includes the ability to hire or fire the employee. Based on that fact, specific attention should be paid to issues related to medical leaves that might implicate FMLA rights and obligations, whether or not a company is the direct employer of the individual requesting the leave.
The Family and Medical Leave Act (FMLA) makes it unlawful for any employer to interfere with an employee’s rights under that Act. Although the Act itself does not address situations in which multiple entities may be viewed as "joint-employers" for purposes of the FMLA, the Department of Labor (DOL) has issued regulations setting out situations in which joint-employer liability may be found. Those situations typically involve circumstances in which an individual employee has a relationship with more than one company, including, for instance, the assignment by a placement agency of a temporary/contract employee to a second entity. If the placement agency determines the rate and method of pay, while the second company determines the work schedule and amount of supervision needed, those two companies might be deemed to be "joint-employers" for purposes of the FMLA. This issue becomes especially important when one of the two entities has less than the requisite "50 employees within a 75-mile radius" to come within the purview of the FMLA, but when added to the second company, falls within the applicable number of employees.
Recently, the 7th U.S. Circuit Court of Appeals addressed the joint-employer issue for the first time, and held that an emergency communications center was not a joint-employer with the city and county that financed and sponsored the center. Moldenhauer v. Tazewell-Pekin Consolidated Communications Center, et al., 7th Cir., No. 07-1118, July 31, 2008.
The City of Pekin and the County of Tazewell, both in Illinois, created a non-profit corporation in 1976 to provide emergency 911 communication services at an affordable rate. The entity, Tazewell-Pekin Consolidated Communications Center (referred to as "Tazcom"), serves 38 public and private entities. Denise Moldenhauer began working at Tazcom in 1983. After Moldenhauer was diagnosed with chronic pancreatitis in 1991, she began to miss work because of acute flare-ups. As her illness progressed, she missed additional amounts of work, and in 1998, Tazcom’s Executive Director (Thompson) began to express his concern over the amount of work being missed.
In May 2002, Moldenhauer notified Thompson that she wished to take leave under the FMLA. That request was denied, and Moldenhauer filed a complaint with the DOL. The DOL investigated the issue, and sent a preliminary letter, designating Tazcom, Pekin, and Tazerwell as joint-employers under the FMLA. In January 2003, Thompson suspended Moldenhauer for 20 days due to absenteeism, and ultimately terminated her employment in April 2003, when she continued to miss work.
Moldenhauer filed suit in federal court against the City, the County, and Tazcom, alleging violation of the FMLA. The district court granted summary judgment for defendants, finding that neither the City nor County controlled Moldenhauer’s work, and that Tazcom did not have sufficient employees to be liable under the FMLA. Moldenhauer appealed, but the decision was upheld by the Seventh Circuit.
The Court’s decision was premised on the fact that although the bulk of Tazcom’s operating funds are derived from the two municipal entities, that its offices are in space rented from Pekin, that its employees contract with Pekin for health and life insurance, and that its payroll was managed by Pekin, Tazcom is run by an Executive Director unaffiliated with either Pekin or Tazewell County. The Executive Director manages the day-to-day operations, including assignments and schedules, hiring and firing of employees, and the creation of a budget for the operation of Tazcom. Although multiple entities can be viewed as joint employers when each share the employee’s services or exert control over those services, in this case, neither the City nor the County was involved in Moldenhauer’s actual work. Therefore, the Court determined that the number of individuals employed directly by Tazcom (23) could not be consolidated with any other entity to create the requisite number of employees necessary to trigger FMLA liability. On that basis, the Court affirmed summary judgment in favor of the defendants, and dismissed Moldenhauer’s FMLA claim.
This case should be of particular interest to companies that "share" employees with a placement agency or other potential joint-employer. An entity with no direct involvement or control of an individual’s actual work is not likely to be deemed a joint-employer. However, such entities also should be aware that under the rationale of this case, a company can be a joint-employer by reason of its control of any aspect of an individual’s work, whether or not that control includes the ability to hire or fire the employee. Based on that fact, specific attention should be paid to issues related to medical leaves that might implicate FMLA rights and obligations, whether or not a company is the direct employer of the individual requesting the leave.
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