Wednesday, April 4, 2007

EMPLOYMENT LAW QUARTERLY | Spring 2007, Volume IX, Issue i

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TOOLS OF THE TRADE: Properly Verifying Employee FMLA Leaves

By Patrick M. Watts

If you are an employer with more than fifty employees, you have probably faced the task of validating an employee’s Family and Medical Leave Act (“FMLA”) leave of absence. Generally speaking, the FMLA provides employers with four methods of validating an employee’s need for leave: certification, clarification, second (and third) opinions, and recertification. These valuable employer tools are also riddled with the complexity of exceptions, prohibitions, and strict usage rules that employers must clearly understand prior to applying any verification method.

Certification: require and double check CHPs. The first method an employer may use to validate an employee’s FMLA leave is requiring the requesting employee to provide it with a completed “Certification of Healthcare Provider,” or CHP. The employer must provide the employee with a CHP form within two days after the employee provides notice that he or she needs a leave of absence that may be FMLA-qualifying. A sufficient CHP under the FMLA includes: (1) the date the serious health condition began; (2) the probable duration of the condition; (3) relevant medical facts; and (4) a statement that the employee is unable to work. Zashin & Rich recommends that employers utilize the Department of Labor’s (“DOL”) template CHP, or “WH Form 380.”

The employee must return the CHP to the employer within the time period that the employer specifies. However, the employer must allow the employee at least fifteen (15) days to return the form. If the employee fails to provide the form within the specified time, the employer may delay, and possibly deny, the protected status of the employee’s leave. If the employee provides an incomplete CHP, the employer must notify the employee and provide him or her with a reasonable opportunity to cure the deficiency. If the employee then fails to cure the deficiency, the employer may reject the employee’s request for leave.

Under the FMLA, a CHP is sufficient to validate an employee’s leave of absence if (1) the employee completes the CHP; (2) the employee provides the CHP within the specified time period; (3) the CHP indicates that the employee requires time off from work due to a serious health condition; and (4) a health care provider signs the CHP. Some courts have held that if the CHP is left unchallenged when provided, an employer may not later challenge the CHP’s validity in litigation. Moreover, according to the DOL, an employer cannot unilaterally reject a CHP that meets the above criteria. Instead, the employer should utilize the other methods of validation that the regulations provide.

Clarification: contact the employee’s health care provider. Upon receiving a complete CHP, the employer may seek clarification if the employer first obtains the employee’s permission. However, the employer may contact the employee’s healthcare provider only through another healthcare professional.

If the CHP is complete, the employer may seek clarification only of information already contained in the CHP. The employer cannot seek additional information from the healthcare provider that does not clarify information already provided.

Recertification: require the employee to recertify the condition. The FMLA’s regulations cover four recertification situations: (1) pregnancy, chronic conditions, and permanent conditions; (2) conditions that cause an incapacity of more than thirty days; (3) intermittent conditions; and (4) all other situations not covered under (1) through (3).

An employer may request recertification every thirty days—but only in connection with an absence for pregnancy, chronic conditions or permanent conditions. For conditions involving incapacity of more than thirty days, an employer may request recertification only after the initial duration of incapacity stated in the employee’s CHP passes. For intermittent leave, an employer may request recertification only at an interval equal to or greater than the period specified in the employee’s CHP. Employers may request recertification every thirty days for all other circumstances.

However, these rules have a few important exceptions. Employers may request recertification sooner than the above rules allow if: (a) the circumstances described in the original CHP change significantly, or (b) the employer receives information that casts doubt on the employee’s reason for the leave. An employer can also require recertification upon a request for an extension of leave, so long as the leave is not due to pregnancy, a chronic condition, or a permanent condition. Finally, if an employer requires an employee to attain recertification, the employer may not then also require the employee to attend a second or third opinion concerning that recertification.

Second (and third) opinions. In addition to clarifying and seeking recertification of an employee’s condition, an employer may request a second medical opinion if the employer has reason to doubt the validity of an employee’s CHP. An employer must, however, grant an employee a provisional leave of absence while awaiting the second opinion. The employer may choose the second-opinion physician, but the chosen physician cannot be a regular provider of services to the employer. The employer must bear the cost of the second opinion and any reasonable out-of-pocket travel expenses that the employee incurs to obtain the second opinion.

The employer may require a third opinion if the second opinion conflicts with the information contained in the initial CHP. The employee and the employer must jointly agree on the third-opinion healthcare provider. The third opinion is final and binding. The employer must pay for the third opinion as well as any reasonable out-of-pocket travel expenses the employee incurs to obtain the third opinion. An employer must provide an employee with a copy of any second or third opinion within two days of the employee’s request.

Employers with a thorough understand of these FMLA tools of the trade have the ability to not only avoid liability for improper administration of employee leave, but also to curb abuse.

FALLING ON DEAF EARS: Willful Disregard of Safety Precautions Cuts Off Comp

By Steve P. Dlott

In a case that generated national publicity, the Ohio Supreme Court recently denied temporary total disability compensation to an employee whose reckless conduct precipitated his work injury.

In State ex rel. Gross v. Industrial Commission, a sixteen-year-old employee working at a KFC restaurant sustained severe burns after he lifted the lid of a pressure cooker containing boiling water. The employee filed a workers’ compensation claim and began receiving temporary total disability benefits (“TTD”), which an employee injured on the job can receive for lost earnings while recovering.

The company investigated the accident and determined that the employee had willfully failed to follow safety instructions and procedures regarding the proper use and operation of the pressure cooker. The employee handbook specifically advised employees to never boil water in a pressure cooker to clean it. The handbook warned employees that violating any safety guideline that caused an injury was a dischargeable offense. Additionally, a warning label affixed to the top of the pressure cooker reminded employees not to close the lid with water or cleaning agents in the pot.

These were not the only warnings the employee ignored. The employee’s supervisor had previously warned him not to put water into the cooker to clean it. The investigation further revealed that on the night of the accident, the employee’s supervisor directed him to drain the water from the cooker. The employee ignored his supervisor, instead leaving water in the cooker and heating it with the lid on. Moments later, a second co-worker warned the employee not to open the cooker’s lid because the now boiling water was under extreme pressure. The employee ignored all warnings, including the warning label on the cooker, and opened the lid. As a result, he injured himself and two of his co-workers. At the conclusion of its investigation, the company fired the employee.

The employer then asked the Industrial Commission of Ohio to terminate the employee’s TTD compensation as of the date of his termination. The employer contended that the employee’s termination constituted a voluntary abandonment of employment, which can disqualify an employee from TTD benefits. Generally speaking, “voluntary abandonment” means a person leaves his or her job for a reason unrelated to the injury. The Industrial Commission agreed that the employee’s termination for workplace misconduct constituted a voluntary abandonment of his employment and terminated the employee’s TTD benefits. The employee took his case to the Tenth District Court of Appeals, which reversed the Industrial Commission’s decision. The Company appealed to the Ohio Supreme Court.

On appeal, the employee denied that he abandoned his employment. The employee argued that if a claimant is already disabled at the time of separation from employment, and thus does not have the physical capacity for the employment, there can be no abandonment. The employee claimed, therefore, that because his doctor certified temporary total disability months before he was fired, he could not have abandoned his job. The Court disagreed, finding that the employee’s disability and the misconduct occurred simultaneously. Moreover, the Court reasoned, “the date of disability onset preceded the date of termination only because the Company investigated the accident first rather than firing him on the spot, which, given the gravity of the misconduct, may not have been unwarranted.”

The Court also rejected the appellate court’s application of its precedent, including Coolidge v. Riverdale Local School District, to classify the employee’s separation from employment as involuntary. Coolidge, the Court explained, was an employment case that did not involve the claimant’s eligibility for TTD compensation or any other workers’ compensation law. The employee in this case “was not fired because of absenteeism or any work rule or policy related thereto” but rather “because he directly and deliberately disobeyed repeated written and verbal instructions not to boil water in the pressurized deep fryer and injuries followed.”

Finally, the employee argued that allowing his negligent act to bar TTD compensation would reinsert negligence into Ohio’s workers’ compensation system, the purpose of which is to compensate injured employees regardless of fault. The Court rejected the employee’s characterization of his behavior as negligent, noting that he willfully ignored repeated warnings not to engage in the prohibited conduct.

The facts of this case illustrate the unfortunate truth that thoughtful, thorough safety procedures will not automatically trigger employee compliance. Employers should consider this decision as an opportunity to examine not only their own safety procedures, but their follow-through as well. Review employee manuals and ensure that they clearly identify and prohibit dangerous work conduct, as well as designate such conduct as a dischargeable offense. Insist that front-line supervisors enforce compliance with safety procedures by holding employees accountable for failing to follow them. A thoroughly written employment manual is meaningless without vigilant enforcement of its contents. Such precautions may not eliminate all workplace accidents, but they may, as illustrated in this case, dramatically reduce an employer’s financial exposure when a non-compliant employee files a claim following a workplace injury.

CONGRESS POKES THE BEAR — “Employee Free Choice Act” Passes the House, Awaits the Senate

By George S. Crisci*

On March 1, 2007 the U.S. House of Representatives passed H.R. 800, the “Employee Free Choice Act” (“EFCA”) by a final vote of 241-185 with eight abstentions. The bill, as written, amends the provisions of the National Labor Relations Act (“NLRA”) to permit union recognition based solely on signed employee authorization cards, impose limitations on the amount of time the parties have to negotiate a first contract, establish a mandatory dispute resolution procedure at the expiration of the initial bargaining period and increase the penalties on employers who violate the NLRA. This bill, if it passes the Senate and is signed into law, would be the most significant change to the NLRA since the 1947 passage of the Taft-Hartley Act.

At present, the National Labor Relations Board (“NLRB”) exhibits a clear preference toward a Board-certified election as the primary method for establishing union representation. Although an employer may voluntarily recognize a union informally or through a card check, the employer is not required to recognize a union based solely on card checks. If an employer questions whether a union represents the majority of the employer’s employees after a formal demand for recognition, the employer may file a petition with the NLRB requesting an election. The NLRA also provides that the employees and/or their bargaining representative may file a petition for election upon a showing that at least 30% of the employees in the proposed bargaining unit support the Union.

Upon a proper showing of interest, the NLRB conducts a secret-ballot election among the employees in the proposed bargaining unit. Both the Union and the employer are permitted to campaign during the time leading to the election, so long as neither party coerces or threatens employees regarding their decision. Once employees vote, the votes are tallied and the union is recognized as the bargaining representative for employees within the proposed bargaining unit if it obtains a majority of the votes.

Once a union is recognized, the parties have an obligation to bargain in good faith toward an agreement. So long as the parties bargain in good faith, there is no requirement that the parties actually reach an agreement. Rather, the parties are free to agree or not agree so long as each bargains in good faith with respect to the terms and conditions of employment.

If passed and signed into law, the EFCA would legislatively alter the Board’s stated preference for a Board-conducted election. The EFCA amendment would require the NLRB to recognize a union without an election “[i]f the Board finds that a majority of the employees in a unit appropriate for bargaining has signed valid authorizations designating the individual or labor organization specified in the petition as their bargaining representative.” To implement this legislative mandate, the EFCA also authorizes the Board to develop procedures “to be used by the Board to establish the validity of signed authorizations designating bargaining representatives.”

In addition to broadening the permissible methods for recognition of a union, the EFCA imposes time limits on negotiations for an initial contract between an employer and a union. The parties must meet within 10 days of receiving a written request from the other party to bargain collectively. If the parties are unable to reach agreement after 90 days, either party may contact the Federal Mediation and Conciliation Service (“FMCS”) to request mediation. The FMCS will then conduct mediation.

If the parties fail to reach a contract after 30 days of mediation, the EFCA requires the parties to submit the remaining open issues to an arbitration board established in accordance with FMCS rules and regulations. The arbitration panel will render a decision on the open issues binding on the parties for two years.

The EFCA also stiffens penalties and enforcement during organizing drives. Unfair labor practices are given investigative priority pursuant to Section 10(l) of the NLRA. Additionally, the EFCA permits the NLRB to seek injunctive relief upon an unfair labor practice charge of misconduct during an initial election campaign. Prior to this amendment, the NLRB had power under Section 10(j) of the NLRA to seek injunctive relief upon the issuance of an unfair labor practice complaint. These injunctive provisions are buoyed by increased financial penalties. Thus, if an employer is found to have discriminated against an employee based on his or her union activities during a representation campaign, the employer is liable for back pay and liquidated damages equal to two times the amount of back pay. Moreover, employers who willfully or repeatedly commit unfair labor practices during representation campaigns are subject to a civil penalty of up to $20,000 for each violation.

Should the EFCA become law, employers will want to redouble their efforts to prevent unionization prior to any organized union campaign. The best employer defense against unionization is to ensure that employees have no reason to seek a union in the first place.

*George S. Crisci is an OSBA Certified Specialist in Labor and Employment Law. George practices in all areas of employment and labor law. For more advice on traditional labor law issues or other employment law inquiries, please contact George at (216) 696-4441 or gsc@zrlaw.com.

SEPARATION ANXIETY: No Harm, No Injunctive Relief

By Lois A. Gruhin

In Aero Fulfillment Services, Inc. v. Tartar, a Vice President of Sales at a Cincinnati, Ohio-based fulfillment-services company resigned after fifteen years of employment to take a similar position at another fulfillment-services company. This prompted his former employer, Aero to seek injunctive relief in court—but not promptly enough to get it. Not that timing was its only problem.

Aero originally hired the employee in 1990. In 1998, the employee signed an employment agreement that contained non-competition provisions. The agreement restricted the employee from disclosing confidential information. It further restricted him, for twelve months following his separation from the company, from soliciting the company’s employees; and from competing within 100 miles of Cincinnati, Ohio. The agreement further stipulated that a violation of the covenants would result in irreparable injury and damage to the company.

The employee resigned in January 2005 and accepted a position with a fulfillment-services company based in Massachusetts. Six months later, Aero filed its complaint against the employee. About four months after that, in October 2005, Aero filed for injunctive relief. Aero claimed that the employee violated his agreement by disclosing its confidential information and trade secrets and using that information to solicit business in his new employment. At issue was “the Brock Study,” a marketing study that the employee used in a presentation at a fulfillment-services trade conference. Aero alleged that the employee used this information to solicit fulfillment-industry business.

To obtain a preliminary injunction, Aero had to establish, among other things, that it would suffer irreparable harm if the court did not grant the injunction. After a three-day hearing, the trial court denied Aero’s request, holding that it failed to present convincing evidence of irreparable harm, even if the employee had breached the confidentiality provision of his agreement.

An Ohio appellate court agreed, holding that Aero failed to show irreparable harm, for a number of reasons. First, Aero failed to show a threat of harm sufficient to justify equitable relief. The First District Court of Appeals explained that the company need not prove actual harm, as the mere threat of harm may be sufficient to grant an injunction, as it previously held in Procter & Gamble Co. v. Stoneham. However, “where the threat of harm is speculative, the moving party must do more than make a conclusory allegation of the threat of harm” to obtain an injunction. Otherwise, said the court, anyone could get one.

For example, in Stoneham, the evidence was “overwhelming.” The employee in that case worked in Procter & Gamble’s hair care division as a senior-level manager responsible for international marketing. In that role, he became familiar with all things hair-conditioning: development of new products; revitalization of existing products; product-specific market research results; product-specific financial data; technological developments in existing and new products; and a ten-year marketing plan for a best-selling hair-conditioning product.

When the employee went to the international division of a company whose hair care products competed with Procter & Gamble’s products, Procter & Gamble went to court. In that case, a threat of harm existed because the employee possessed years of product-specific knowledge and began working in a position that caused him to directly compete with his old employer and his old product line. The Stoneham decision was based on the “inevitable-disclosure doctrine.” According to this doctrine, a threat of harm warranting injunctive relief can be shown by facts establishing that an employee with detailed and comprehensive knowledge of an employer’s trade secrets and confidential information has begun employment with a competitor in a substantially similar position to that held during the former employment.

Aero could not establish that the inevitable-disclosure doctrine applied to its case. Compared to the product-specific data in Stoneham, which the court described as “tangible, highly technical, and specific,” Aero’s information was general marking data about the service industry in which the company competed. The court found that Aero’s competitors could have obtained the same data through their own research. Moreover, Aero failed to show that the Brock Study contained critical information, and further failed to explain how this information would have given the employee and his new employer any competitive advantage.

It certainly did not help Aero’s case that it waited so long to file for injunctive relief. The company waited three months after it filed its complaint, almost ten months after the employee left, and little more than two months before the employee’s non-competition and non-solicitation covenants expired to seek an injunction. The court found that this “lack of urgency” in filing for injunctive relief “militated against a finding of irreparable harm.” Finally, the court found that the company failed to treat the Brock Study as confidential.

Personnel transitions can be painless or painful. Depending on your business, they can also be harmful to your company’s best interests. Pick your lesson from this case, as there are several. First, be realistic about your non-competition agreements and what they should protect. Chances are that not every piece of paper or data under your roof is a protectable trade secret, even if you treat it as confidential property. Second, if your company actually considers certain materials to be confidential trade secrets, treat them that way: mark them appropriately, lock them up, restrict access to them and/or password-protect them. Finally, if a situation warranting legal action arises following a key employee’s departure, take appropriate action as soon as possible.

Z&R SHORTS


Zashin & Rich welcomes two OSBA Certified Specialists to its Employment & Labor Group

Zashin & Rich recently welcomed two attorneys to the firm and to its expanding Labor and Employment Group. Patrick Watts received his undergraduate degree from the College of Wooster and his law degree from The Ohio State University Moritz College of Law. Patrick was admitted to practice before the Ohio Supreme Court in 2002. He is also admitted to practice before the U.S. District Courts for the Northern and Southern Districts of Ohio as well as the U.S. Court of Appeals for the Sixth Circuit.

Patrick is certified by the Ohio State Bar Association as a Labor and Employment Law Specialist. He has litigated and advised clients on a wide variety of labor and employment law matters, including Fair Labor Standards Act compliance, Family and Medical Leave Act issues, and various anti-discrimination laws.

George Crisci also recently joined Zashin & Rich. George has practiced employment and labor law in both the public and private sectors for more than 23 years. George is an Ohio State Bar Association Certified Specialist in Employment and Labor Law. Law and Politics and Cincinnati magazines named George an “Ohio Super Lawyer” in Labor and Employment law in 2004, 2005, 2006 and 2007.

George received his undergraduate degree from the College of Wooster, where he graduated with Departmental Honors and Phi Beta Kappa. He received his law degree from Case Western Reserve University School of Law, where he was a member of the Case Western Reserve Law Review and graduated Order of the Coif. George is admitted to practice law in the State of Ohio, the United States District Courts for the Northern and Southern Districts of Ohio and the Eastern District of Michigan, the Sixth Circuit Court of Appeals, and the United States Supreme Court.

Please join us in welcoming Patrick and George to Z&R!

Steve Dlott Receives OSBA Certification as Specialist in Workers’ Compensation
Zashin & Rich is also proud to announce that Steve Dlott is now an Ohio State Bar Association Certified Specialist in Workers’ Compensation Law.

Andrew Zashin among Top 100 Ohio Super Lawyers
Andrew Zashin was recently included in Ohio Super Lawyer magazine’s list of the “Top 100 Super Lawyers” in the State of Ohio. Only four family law attorneys were similarly recognized from a field of almost 30,000 lawyers. Northern Ohio Live magazine also included Andrew in its list of the “Top 50 Super Lawyers” in the Cleveland area, an honor accorded to only two family law attorneys.


Upcoming Seminars
Steve Dlott and Stephen Zashin will present a free seminar with Dr. Kevin Trangle on March 30, 2007 at the Monarch Building, 5885 Landerbrook Road in Mayfield Heights, Ohio from 9:00 a.m. to 11:00 a.m. Zashin & Rich and Ben Katz of Cedar Brook Financial Partners invite you to attend this informative crash course on warning signs, protective tips, and other practical advice for avoiding workplace disasters like out-of-control absenteeism. Please contact Zashin & Rich at (216) 696-4441 or nee@zrlaw.com for more information or to register.

Steve Dlott will present “How to Defend a Workers’ Comp Claim” on April 24, 2007 at the Weymouth Country Club, 3946 Weymouth Road in Medina, Ohio. The seminar, sponsored by the Medina County Safety Council, begins at 9:00 a.m. and ends at 12:00 p.m. For only $25.00, attendees will receive three hours of Attorney Steve Dlott’s expertise in workers’ compensation matters and lunch. Please contact the Medina County Chamber of Commerce at safety@medinaohchamber.com or Zashin & Rich at (216) 696-4441 for more information.
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Tuesday, November 14, 2006

EMPLOYMENT LAW QUARTERLY | Fall 2006, Volume VIII, Issue iiii

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ALERT: Issue 2 Passes Raising Ohio’s Minimum Wage, Increasing Employer Obligations

By Lois A. Gruhin

On November 7, 2006, Ohio voters passed Issue 2 approving the adoption of an amendment to Ohio’s Constitution that will have significant ramifications for Ohio employers. Beyond simply raising Ohio’s minimum wage, the amendment imposes recordkeeping and disclosure requirements on employers and exposes them to liability for violations.  The amendment’s key provisions include the following:

Minimum Wage Increase
  • Effective January 1, 2007, Ohio’s minimum hourly wage is $6.85.
  • The minimum wage will increase annually, based on the rate of inflation, every September 30 starting in 2007, with the increased wage taking effect January 1 of the following year (e.g., the first increase to occur Sept. 30, 2007, effective Jan. 1, 2008).
  • Exceptions to the increased minimum wage include:  employees under the age of 16 and employees of businesses with annual gross receipts of $250,000 or less for the preceding calendar year (who must receive the federal minimum wage); and employees of solely family-owned and operated businesses who are family members of an owner. Other provisions apply for tipped employees and mentally or physically disabled individuals.
Recordkeeping and Disclosure Requirements
  • At the time of hire, an employer must provide an employee with the employer’s name, address, telephone number, and other contact information and update this information when necessary.
  • During an employee’s employment and for 3 years following his or her last day of employment, an employer must maintain a record of an employee’s name, address, occupation, pay rate, daily hours worked, and earnings.  An employer must provide this information to an employee or the employee’s representative upon request and without charge.
Enforcement
  • An employer may not discharge, discriminate or retaliate against any employee who exercises his or her rights under these provisions, or against any person who provides the employee with assistance or information regarding the exercise of his or her rights.
  • An employee or other interested party may file a complaint with the state for violations of these requirements.  The state may initiate its own investigation of an employer’s compliance with these provisions.
  • An employee or the Attorney General may bring an independent legal action against an employer for violations of these provisions within the later of the following time periods: (a) within 3 years of the violation or of cessation of the violation, if ongoing; or (b) within 1 year of notification to the employee of the state’s disposition of a complaint for the same violation.
Damages for Violation
  • If a court or the state determines that an employer violated these provisions, the employer must pay the employee back wages, damages, and the employee’s costs and attorney’s fees. The employer must pay the employee within 30 days of a finding of a violation.
  • Damages are calculated at twice the amount of the employee’s back wages. In the case of a violation of the anti-retaliation provision, the court or the state sets the amount of damages “sufficient to compensate the employee and deter future violations,” but at a minimum of $150.00 for each day that the violation continued.
These changes create many uncertainties, such as who may act “on behalf of an employee” for record inspection purposes; who constitutes an “interested party” for purposes of filing a complaint; whether employers must disclose all employee records to a requesting employee or just the requesting employee’s records; and if an employer must disclose all employee records to a requesting employee, what rights a coworker may have, if any, to prevent disclosure of his or her own records to the requesting employee.  Pending further clarification of these issues by legislation or a court decision, employers are urged to consult with legal counsel before responding to a disclosure request.

(PARTIAL) BONUS TIME:Prorating Production Bonuses Under the FMLA

By Stephen S. Zashin*

Most employers are well-informed about Family and Medical Leave Act (“FMLA”) basics, including returning an employee to his or her former position or its equivalent after a period of qualified leave.  Things get a little more complicated, however, when employers have to determine whether a restored employee is entitled to other benefits after a leave of absence.  For example, where do bonuses fit in?  Is an employee who takes twelve weeks of leave entitled to the same bonus as his or her co-worker who takes no leave?  Can an employer prorate the bonus amount of the employee who takes leave, or would taking such an action interfere with that employee’s FMLA rights?  As with so many other questions in this area of the law, the answer is—it depends.

The U.S. Court of Appeals for the Third Circuit (which covers Pennsylvania, New Jersey, Delaware, and the Virgin Islands) recently reviewed such questions in Sommer v. The Vanguard Group.  The employer in Sommer implemented a bonus plan to reward its employees’ “contributions to [the company’s] growth and success in a tangible way.”  The amount that the company distributed annually under the plan depended on a number of factors, including the company’s operating performance.  To qualify for the bonus, an employee had to be employed on the last calendar day of the year, on the date of the distribution, and on all days in between.  The amount an employee received under the plan depended on job level, length of service, and “hours of service.”

The plan defined “hours of service” as actual hours for which the employee was paid or entitled to payment for performance of duties, vacation, holidays, sick time, or certain leaves of absence (e.g., bereavement, jury duty, military)—but not disability leave. An employee had to meet an annual goal of 1,950 hours worked to receive his or her entire bonus.  If an employee did not meet the annual goal, the company prorated the payment by the amount of hours that the employee was deficient.

In this case, the employee took a short-term disability leave under the FMLA for eight weeks, from December 2000 through February 2001.  Because of his absence, the company prorated his bonus payment for 2001. The employee sued, alleging that the employer interfered with his FMLA rights by prorating his bonus payment for the time he spent on FMLA leave. The district court granted summary judgment to the employer, holding that the bonus was a “production bonus” for which prorating is allowed.

On appeal, the court described the case as the first “in which an appellate court had to distinguish between the two classifications of company bonus programs for purposes of an FMLA interference action.” The “two classifications” of bonus programs that the court distinguished were “production” bonuses and “absence of occurrence” bonuses. The difference determines whether prorating is permissible:
  • a production bonus requires some positive effort on the employee’s part (e.g., a monthly production bonus).
  • an absence of occurrence bonus rewards an employee for compliance with rules (e.g., bonuses for perfect attendance and safety); it does not require the employee’s performance but instead contemplates something not happening, like an absence.
Under the FMLA, an employer cannot reduce an “absence of occurrence” bonus to an employee who takes FMLA leave if the employee was otherwise qualified for it, but for the taking of the leave. However, the employer may prorate a “production” bonus to an FMLA leave taker by the amount of any lost production, in hours or otherwise, that the FMLA leave causes.

The court held that the employer’s bonus plan was more akin to a bonus program that rewards employee production:
Here, [the employer’s] focus throughout its policy appears to be on incentivizing employees to contribute to [the employer’s] performance and production by meeting a predetermined hours goal—1,950 hours a year….[The employer] then communicates this production goal to the employees throughout the policy—especially by indicating that qualifying employees’ bonus amounts are based on hours worked and will be prorated for every hour that they are under the annual goal.
Accordingly, the court held that the employer’s hours-based bonus plan was a bonus program designed to reward employee production, which may be prorated to account for the hours not worked by employees who take FMLA leave.

As this case illustrates, it is a good idea for employers to have a clear purpose with respect to their bonus programs. In other words, what are you rewarding? Is the plan to reward employees in sync with your obligations under the FMLA and other laws? Answering these questions will go a long way to resolve potentially complex FMLA issues.

*Stephen Zashin is an OSBA Certified Specialist in Labor and Employment Law and has extensive experience in both defending FMLA-based litigation and assisting employers with FMLA compliance. For more information about the FMLA, please contact Stephen at (216) 696-4441 or ssz@zrlaw.com.

ENFORCING SAFETY PROCEDURES: How One Employer Tamed the Intentional Tort

By Steve P. Dlott

A tort is simply a civil wrong or injury for which the law allows a remedy. An intentional tort is a “wrong perpetrated by one who intends to do that which the law has declared wrong.” (Black’s Law Dictionary, 5th Ed.) In the employment context, an intentional tort claim arises when an employee basically alleges that the employer intended to injure the employee on the job.

These actions typically arise when an injury occurs after an employer “knowingly” allows an employee to work on a machine that is missing a safety guard or when an employer forces an employee to use a piece of equipment after the employee has previously requested repairs. These are the extreme cases. There are many companies, however, operating under the belief that they are doing everything possible to protect their employees from injury and themselves from liability — who still get nipped by an intentional tort action.

One company recently beat the rap in Eilerman v. Cargill Inc. The employer had strict safety policies in place. Specifically, the employer instituted an elaborate six-step “lockout/tagout” procedure that required employees to do the following before performing maintenance work: 1) inform affected employees of the equipment’s shut down; 2) turn off the equipment; 3) disable the equipment’s circuit breakers; 4) place a lock and tag on switches that could restart the equipment; 5) eliminate any energy stored in the equipment; and finally 6) test the equipment’s controls to ensure that no power flowed to the equipment.

To ensure compliance with its lockout/tagout procedure, the employer trained all new hires on the procedure three separate times within the first ninety days of their employment. The employer also disciplined any employee who did not comply with its lockout/tagout procedure.

One of the employer’s employees worked as an elevator and meal load operator. The employee performed his duties from a control room, where he programmed a computer to load rail cars with meal from designated tanks. One day the computer signaled a problem with a tank’s gate. The employee grabbed a wrench to attempt to open the tank manually.

The employee knew the employer’s lockout/tagout procedures from attending four training sessions, viewing a video, and receiving a booklet about the procedure. The employee nonetheless ignored the procedure. He climbed on top of the tank and attempted to open the stuck tank’s gate with the wrench to manually rotate the motor operating the gate. The motor’s guard, which prevented access to the motor, had been removed long ago. The motor suddenly started to rotate while the employee worked on it, causing his wrench to spin around and hit him in the head.

The employee subsequently sued the employer alleging an intentional tort. The employee blamed his injury on the employer’s removal of the safety guard. The court rejected the employee’s argument and reaffirmed a longstanding legal principle: an employer is not liable for an intentional tort where an employee’s injury results from a knowing failure to follow a safety procedure that could have prevented the accident. By instituting such specific safety measures, the court held that the employer could not have had the required intent under the law to either harm the employee or expect that the employee might be harmed under these circumstances.

Take two important lessons from this case. First, taking extensive measures to train and enforce compliance with safety procedures may seem cumbersome and time-consuming, but the effort will pay off — with lower workers’ compensation premiums and a lock on intentional tort claims. Unfortunately, many well-intentioned companies have model safety measures “on the books”— but that is where they remain. Front line supervisors must also ensure strict compliance with safety procedures and hold employees accountable for failing to follow them.

The second lesson this case illustrates is that strict safety measures—that are strictly enforced — can also help defend against claims involving employer oversights or unintentional safety violations. Removal of safety guards, like the one in the Cargill case, is common in many factories and often used as evidence to establish an intentional tort.  Companies with iron-clad safety procedures, however, can avoid liability even for seemingly obvious safety violations.

HOURLY REQUIREMENTS FOR SALARIED EMPLOYEES: And Other Work Rules You Didn’t Know You Could Have

By Michele L. Jakubs*

Employers who pay their overtime-exempt employees on a salary basis (generally speaking, the same pay every pay period regardless of quality or quantity of work) sometimes run into an old problem…the one where they have to pay those employees the same pay every pay period — regardless of quality or quantity of work.

While nothing has changed in that regard, employers may not know that they can actually require their exempt employees to work a certain number of hours each week — and require them to make up work time lost due to partial-day absences.

Earlier this year, the Department of Labor (“DOL”) issued an Opinion letter in response to an employer inquiry concerning two new job requirements under its consideration. First, the employer wanted to require exempt employees to work a set number of hours per week. Second, the employer wanted to require exempt employees to make up work time lost due to personal absences of less than a day. The employer did not intend to dock employee salaries for failure to meet either requirement but rather would discipline employees for consistent failure to observe the requirements. The employer inquired as to whether it could implement these requirements without losing the exempt status of its employees.

The DOL opined that so long as the employer did not dock an employee’s salary for a violation of either rule, the employer was free to implement the rules without losing an employee’s exempt status. “The number of hours worked by an employee who is exempt under…the FLSA is a matter to be determined between the employer and the employee.” Likewise, the DOL explained that an employer may require an exempt employee to make up work time lost due to personal absences of less than a day without loss of the exemption.

The Opinion Letter cautioned, however, that failure to comport with either of the two rules would not constitute a violation of a “workplace conduct rule” for which an employer may impose a disciplinary suspension for one or more full days.

Guidelines like these may be a good idea for your company, especially if you are afflicted with “work when they wanna” exempt employees or if productivity is simply too low. While employers cannot dock an employee’s pay or impose disciplinary suspensions for noncompliance with such rules, otherwise disciplining an employee for consistent failure to observe such rules may have the required effect and will not affect the employee’s exempt status.

*Michele Jakubs practices in all areas of employment litigation and wage and hour compliance and administration. For more information concerning exempt status or any other aspect of the FLSA, please contact Michele at (216)696-4441 or mlj@zrlaw.com.

WHAT EXACTLY IS A SUPERVISOR? NLRB Finally Gives Guidance As to the Definition of Supervisor for Purposes of the National Labor Relations Act

By Robert W. Hartman

After confounding labor unions, employers and, ultimately, the U.S. Supreme Court for more than 60 years, the National Labor Relations Board (“NLRB”) finally provided clear guidance as to what constitutes a “supervisor” under the National Labor Relations Act (“the Act”). In a troika of cases issued in September, the NLRB devised a new test to determine whether a person meets the definition of supervisor in 29 U.S.C. § 152(11).

The Act specifically grants employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” See 29 U.S.C. § 157. These rights, however, exist only for “employees” as defined by Section 2(3) of the Act.

In response to a 1947 U.S. Supreme Court opinion, Congress enacted Section 2(11) of the Act, which specifically excludes “supervisors” from the definition of “employee.” Congress defined a supervisor as an individual who possesses the authority to take certain actions on behalf of the employer so long as the exercise of that authority is not clerical in nature and requires the use of independent judgment. The actions which indicate supervisory authority include the power “to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibly to direct them, or to adjust their grievances, or effectively to recommend such action.”

The NLRB and the courts recognized that the phrases Congress used to define a supervisor were vague and ambiguous. As a general principle, however, the NLRB construed the term “supervisor” narrowly because any employee deemed a supervisor under the Act lost his or her rights to engage in protected activity. In 2001, the U.S. Supreme Court held in NLRB v. Kentucky River that the NLRB’s definition of supervisor was too narrow and inconsistent with the Act.

In September, the NLRB adopted definitions for the terms “assign,” “responsibly to direct” and “independent judgment.” The NLRB construed the term “assign” to refer to the act of designating an employee to a place (such as a location, department or wing), appointing an employee to a time (such as a shift or overtime period), or giving significant overall duties, i.e., tasks, to an employee.” Significantly, “assign” refers to the putative supervisor’s designation of significant duties to an employee, not ad hoc instructions to perform a discrete task.

Next, the NLRB turned its attention to the problematic phrase “responsibly to direct.” Since the NLRB had not attempted to define this term with particularity in the past, a number of other federal courts had, on their own, attempted to reach a consensus definition of “responsibly to direct.” The NLRB adopted this consensus definition. Thus, the term “responsibly to direct” means that the person must direct or perform oversight of other employees and also must be accountable for the performance of the task by the employees over whom the supervisor directs or oversees. In other words, it must be shown that the employer delegated to the putative supervisor the authority to direct work and the authority to take corrective action if necessary.  Further, the putative supervisor must face adverse consequences if he or she does not take the above-listed steps.

Finally, the NLRB confronted the Supreme Court’s rebuke of its definition of the term “independent judgment.” Prior to the Supreme Court's 2001 Kentucky River decision, the NLRB interpreted the term “independent judgment” to exclude the exercise of “ordinary professional or technical judgment in directing less skilled employees to deliver services.” The NLRB disavowed this definition, holding that so long as an employee exercises independent judgment with respect to one of the 12 enumerated supervisory functions, it is irrelevant that the independent judgment is also a professional or technical judgment.

Left to define independent judgment, the NLRB held that the putative supervisor’s actions must be free of control by others, must involve a judgment by the individual and must involve a degree of discretion that rises above the routine or clerical. Thus, judgment will not be independent if dictated by detailed instructions set forth in a company policy, the verbal instructions of a higher authority or the terms of a collective bargaining agreement.

The NLRB’s expanded definition of supervisor will have immediate effects on election petitions. As stated above, supervisors do not have Section 7 rights to choose a representative for the purposes of collective bargaining or to engage in another other activity protected by the Act. Accordingly, these employees should be excluded from any proposed bargaining unit for the purposes of an election. Moreover, an employee is permitted to instruct a supervisor to refrain from engaging in activities on behalf of a labor union.

With the NLRB’s guidance, employers are now in a better position to determine who is a supervisor for purposes of the Act and ensure that those employees are not included in proposed bargaining units. Employers should carefully consider the various job classifications within any election proposal to determine whether the positions are excluded.

Z&R SHORTS


November 2006

Zashin & Rich continues its brain•food•breakfast law series with Volume III, a 2-part Seminar on Absenteeism presented by attorneys Stephen Zashin and Steve Dlott of Z&R’s Cleveland office and Dr. Kevin Trangle. Part One, “Preventing Common Workplace Injuries,” takes place on November 16, 2006 from 8:30-10:00 a.m. at the Monarch Building, 5885 Landerbrook, Mayfield Heights, Ohio, 44124.

December 2006

Lois Gruhin of Z&R’s Columbus office will moderate the Council on Education in Management (“COEM”) Ohio Employment Law Update 2006 on December 4-5, 2006. Registration begins at 8:00 a.m. on Day 1. The seminar will take place at the Concourse Hotel, 4300 International Gateway, Columbus, Ohio, 43219. Lois will also present two topics, “Update on New and Emerging Employment Law Challenges in 2006” and “Steering Clear of Common Costly Mistakes Made When Conducting Workplace Investigations.” Other speakers include:
  • Stephen Zashin of Z&R’s Cleveland office, who will speak on two topics, “Preventing Improper Denial of the FMLA’s Intermittent and Reduced Schedule Leave, and other Requirements” and “Curtailing Legal Challenges that Arise from Protected Absenteeism When Untangling the FMLA, ADA, PDA, and Workers’ Comp Laws.”
  • Michele Jakubs of Z&R’s Cleveland office, who will speak on the topic “Avoiding Misclassifications and Improper Salary Deductions for Exempt Employees Under the Revised FLSA White-Collar Exemption Regulations.”
Stephen Zashin of Z&R's Cleveland office will present "The Leave of Absence Puzzle" to the Greater Cleveland Chapter of the American Payroll Association on December 14, 2006 at 1:00 p.m. The seminar will take place at the Sheraton Hotel, 5300 Rockside Road, Independence, Ohio, 44131.
January 2007

At Part Two of Zashin & Rich’s brain•food•breakfast law series, Volume III, attorneys Stephen Zashin and Steve Dlott of Z&R’s Cleveland office and Dr. Kevin Trangle will discuss “Managing the Existing Injury” on January 18, 2006 from 8:30-10:00 a.m. at the Monarch Building, 5885 Landerbrook, Mayfield Heights, Ohio, 44124.

Stephen Zashin and Steve Dlott of Z&R’s Cleveland office will also speak at Lorman Education Services' “Best Practices In ADA, FMLA and Workers’ Compensation” seminar on January 31, 2007 at the Sheraton Hotel, 5300 Rockside Road, Independence, Ohio, 44131.  Registration begins at 8:30 a.m.  Stephen will present two topics, “Baby FMLA:  the Basics” and “Mastering the Leave of Absence Puzzle.”  Steve will also present two topics, “Winning Strategies at the Industrial Commission” and “Using the Court System to Defeat Claims.”

February 2007

Lois Gruhin of Z&R’s Columbus office will moderate and speak at the “COEM Discrimination, Harassment, and Retaliation Update 2007: Critical Prevention and Response Strategies to Reduce Liability Risks” seminar in Cuyahoga Falls, Ohio on February 20, 2007.  Other speakers include Stephen Zashin, Michele Jakubs, Christina Janice, and Robert Hartman of Z&R’s Cleveland office. Look for details in January 2007.

Stephen Zashin and Steve Dlott of Z&R's Cleveland office will provide an Employment Law Update on February 28, 2007, sponsored by the Middleburg Heights Chamber of Commerce and the Cleveland Southwest Safety Council. The seminar will take place at the Middleburg Heights Chamber of Commerce, 16000 Bagley Rd., Middleburg Heights, Ohio, 44130 from 8:30 a.m. to 10:00 a.m. Look for more information about this seminar in coming months.

March 2007

Stephen Zashin will present "The Leave of Absence Puzzle" at the National Business Institute's Labor and Employment Law Update 2007 on March 2, 2007. The seminar will take place at the Holiday Inn Independence, 6001 Rockside Road, Independence, Ohio, 44131. Registration begins at 8:30 a.m. Look for more information about this seminar in coming months.
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Wednesday, July 12, 2006

EMPLOYMENT LAW QUARTERLY | Summer 2006, Volume VIII, Issue iii

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RAIN ON YOUR COMPANY PARADE: Workers' Comp Liability Can Dampen Employer-Sponsored Social Events

By Steven P. Dlott

Summertime ranks a close second to the holiday season as the most popular time for employer-sponsored social events. Many of us fondly (or not so fondly) recall attending company picnics as kids. These days, events such as company-sponsored amusement park days are more common than company picnics. Regardless of the activity, every employer hosting a summer social event for its employees should be aware of its potential liability for employee injuries occurring during such an event.

Some employers mistakenly assume that an employee's voluntary participation in a company-sponsored recreational event eliminates any employer liability. While some states have adopted that concept, Ohio has not. The event also need not occur on the employer's premises to impose employer liability for an employee's injury.

The seminal case in Ohio, Kohlmayer v. Keller, involved an employee who injured himself during a company picnic and sued to participate in the workers' compensation fund. In finding the employer liable for the injury, the Ohio Supreme Court articulated the factors that indicated that the employee's attendance at the picnic was "logically related to his employment":
  • the employer sponsored the event;
  • the employer paid for the event;
  • the employer supervised the event; and
  • the employer's purpose was to provide employees with an outing to improve employee relations.
The Court reasoned that the "improved employee relationships" resulting from an employer-sponsored event benefited the employer and thus related to the person's employment:
[i]mproved employee relationships which can, and usually do, result from the association of employees in a recreational setting produce a more harmonious working atmosphere. Better service and greater interest in the job on the part of the employees are its outgrowths...Thus, business-related benefits...which may be expected to flow to the employer from sponsoring a purely social event for his employees, are sufficiently related to the performance of the required duties of the employee so that it is 'correct to say that the Legislature intended the enterprise to bear the risk of injuries incidental to the company event.'
As a result, the key to ascertaining workers' compensation liability for an employee injury at a company-sponsored event is the degree of employer involvement. Assuming the employer sponsored the event, the next question is whether the company paid for the event. Resolution of that issue becomes murky if the company paid for only a portion of the event (especially in the case of a company-sponsored amusement park day).

Courts will also consider the amount of employer supervision. The amusement-park-day example likely favors employers because employers rarely have any control or supervisory authority over the amusement park's site. However, the analysis might change if the company rented out an entire park or the particular site where an injury occurred (e.g., a picnic area). Finally, an analysis of whether the event produced "improved employee relationships" will almost always result in employer liability. An employer's very purpose in sponsoring such events is often to improve employee relations.

Perhaps the best advice for an employer planning a summertime social event for employees is – less is more. The less company involvement, the greater the likelihood that a court will not hold an employer liable for an employee injury sustained during a company-sponsored activity.

SIXTH CIRCUIT CONFIRMS IT: Pregnancy Discrimination Act Does Not Demand Better Treatment for Pregnant Employees

By Michele L. Jakubs*

How does an employer accommodate a pregnant employee when the employee's condition affects her ability to work? In Reeves v. Swift Transportation, the Sixth Circuit Court of Appeals recently confirmed that employers must treat pregnant employees the same as all other employees--no better, no worse.

The employee in this case worked as a truck driver beginning in August 2002. When she applied for the job, the company informed her that the job required bending, twisting, climbing, squatting, crouching, and balancing. The company also informed her that the job sometimes required strenuous physical activity, including pushing or pulling up to 200 pounds of freight with a dolly, pushing up to 100 pounds without mechanical aid, and lifting sixty pounds over her head. During the application process, the employee represented that she could bear the level of physical strain that the job required.

In November 2002, the employee learned that she was pregnant. She saw her doctor, who restricted her to light work pending her first appointment with an obstetrician. When the employee returned to work with her doctor's note, the employer told her it had no light work for her to do and sent her home.

The employer had a policy of providing light-duty work--but only to employees who had been injured on the job. Injured employees received light-duty assignments like office work.

The employee visited her obstetrician, who told the employee that she could continue working if she performed light work only and did not lift more than twenty pounds. The obstetrician gave the employee a letter setting forth these restrictions.

The employee told her employer that she could not perform regular truck driver duties but continued to request special light duty work assignments. The employer continued to inform her that it had no light duty work for her. The employee continued to contact her employer every day to request light duty work, which the employer continued to inform her it did not have for her. The employee was also not entitled to leave under the Family and Medical Leave Act because she had worked for the company for less than one year. The employer terminated the employee in late November 2002.
The employee filed suit in federal court, alleging violations of the Pregnancy Discrimination Act ("PDA"). The PDA provides, in part:
[w]omen affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes, including receipt of benefits under fringe benefit programs, as other persons not so affected but similar in their ability or inability to work...
The lower court found in favor of the employer, and the Sixth Circuit Court of Appeals affirmed. The employee attempted to argue that the employer's light-duty policy was direct evidence of discrimination. The Court disagreed because "the Act merely requires employers to 'ignore' employee pregnancies" and the employer's policy was "indisputably pregnancy-blind." It did not grant or deny light work on the basis of pregnancy, but on the non-pregnancy basis of whether there had been a work-related injury or condition. The court found, therefore, that the policy's express terms could not serve as direct evidence of discrimination.

The court then performed an indirect evidence analysis. The court found that the employee met her initial burden of establishing a prima facie case. The employer met its burden of establishing a nondiscriminatory reason for terminating the employee, i.e., she could not perform the heavy lifting required of truck drivers.

The employee could not establish that the employer's reason was pretext for discrimination. As a result, her claim failed. The court also noted that the employee failed to produce evidence tending to prove a discriminatory motive, nor did she even allege that the employer acted with discriminatory intent. Finally, the court accepted the reasoning of other courts that the PDA requires only equal treatment.

The employer had two things going for it: a clear policy and supervisors who understood its application. Employers should have policies that are "pregnancy-blind." In addition, employers should ensure that their supervisors apply their policies uniformly. Finally, keep in mind that any analysis of a situation like this should include an understanding of other state and federal law implications. When in doubt, consult your legal counsel.

*Michele Jakubs practices in all areas of employment litigation. For more information about light-duty work policies or pregnancy discrimination, please contact Michele at (216) 696-4441 or mlj@zrlaw.com.

TURNING A BLIND EYE: When Technology Policies At Work Aren't Put To Work

By Helena Oroz*

Employee email and internet monitoring are really nothing new. Most employers have had such policies and practices in place for years. An employer's right to monitor the use of its own equipment and communication systems is pretty solid if employees are on notice. So why does a New Jersey state case involving internet monitoring have everyone so excited? Instead of a case about employee privacy, the court was confronted with questions about an employer's duty and liability to third parties when it turns a blind eye to harmful computer use.

The case. In Doe v. XYC Corporation, an accountant used his work computer to not only access pornographic websites but also to store and transmit child pornography. Several individuals at his company knew of the employee's activities but failed to take further action. The court's decision describes at least six incidents of managers learning of the employee's activities but doing virtually nothing. Starting in 1998 or 1999, the employer's Internet Services Manager and Senior Network Administrator noticed that the employee's computer log reports showed visits to porn sites, told the employee to stop, but informed no one else.

The employer's conflicting company policies concerning internet and email monitoring apparently also contributed to the inertia. In early 2000, the employee's immediate supervisor told the Senior Network Administrator that the employee was visiting inappropriate websites. The Administrator reviewed only the employee's logs, which again showed visits to porn sites, and informed the employee's supervisor and the Director of Network and PC Services. The Director told the Administrator to never again access employee internet logs. Her concern was a 1999 policy communicated to certain management personnel forbidding any employee from monitoring any other employee's computer use "just for the sake of monitoring."

However, the employer also had an email and internet policy that stated that all email messages were the property of the employer and reserved the employer's right to review and access all email messages. The policy further stated that employees were permitted to access only business-related websites and provided that any employee aware of a violation of the policy was to notify personnel. Further, the policy warned that violators would be subject to discipline, up to and including termination.

The employee continued his activities through 2000 and 2001. In March 2001, after a co-worker complained about the employee, the employee's supervisor learned that the employee was again accessing porn sites – as well as at least one that mentioned children. The employee's supervisor told the employee to stop his inappropriate computer usage. In June 2001, although he noticed that the employee had reverted to his old behavior, the supervisor told no one and left on a business trip. By the time he returned, the employee had been arrested on child pornography charges. Days before the arrest, the employee had transmitted three photos of his stepdaughter from his work computer to a child porn site to gain access to it.

The child's mother, who had married the employee the year before, sued the company. The mother alleged that the Company knew or should have known that the employee was using its equipment to view and download child pornography and had a duty to report the conduct to the proper authorities, which it breached. The trial court granted summary judgment for the employer, finding that the company "acted as a reasonably prudent corporation" and had "no duty to investigate the private communications of its employees."

On appeal, the court first addressed the fact that the employer had the ability to monitor employee Internet use. Second, the court addressed the employer's right to monitor employee Internet use. The company had a technology policy in place, the employee was aware of it, his office had no doors, and his screen was visible to everyone. The court held that the employee "had no legitimate expectation of privacy that would prevent his employer from accessing his computer to determine if he was using it to view adult or child pornography." Next, the court determined that the employer was on notice of the employee's activities and that further investigation would have "readily uncovered the full scope of Employee's activities." Individuals at the Company were also aware that the employee resided with a young child.

Finally, the court had to determine the heart of the matter – did the employer have a duty to act on its knowledge? The court concluded that the duty exists, based on the strong public policy against child pornography reflected in state and federal laws, coupled with the public policy favoring exposure of crime. The court thus agreed with the plaintiff that the company had a duty to report the employee's activities to the proper authorities and to take effective internal action to stop the employee's activities, whether by termination or otherwise.

The court also rejected the trial court's analysis of the employer's duty to control the employee while he was acting outside the scope of his employment to prevent him from harming others. The court determined that the employer was "under a duty to exercise reasonable care to stop Employee's activities, specifically his viewing of child pornography, which by its very nature has been deemed by the state and federal lawmakers to constitute a threat to 'others;' those 'others' being the children who are forced to engage in or are unwittingly made the subject of pornographic activities." The court remanded the case for determination of proximate cause.

The analysis. Analyses of Doe have resulted in fearful employers wondering how far courts may eventually extend this duty to report employee activities to authorities. While the duty discussed in Doe may be new, the case reinforces "dos and don'ts" that already exist:
  • DO promulgate an effective technology policy and ensure that all employees are aware of it. While it is not necessary or desirable to have employees feel like "Big Brother" is constantly watching their every move, you do need to ensure that employees are on notice that their workplace communications are subject to monitoring.
  • DO enforce your technology policy. Determine in advance what the internal course of action will be if you discover an employee accessing inappropriate websites or the like.
  • DON'T have conflicting policies in place. You cannot issue or review your technology policy in a vacuum – ensure that your policies are in sync with each other to avoid confusion and misapplication.
  • DON'T assume that a verbal warning will end what could be compulsive, destructive, or even harmful behavior.
  • DON'T turn a blind eye to criminal behavior. This is really the baseline rule illustrated by the Doe case.
*Helena Oroz practices in all areas of employment law and compliance issues.

WRONGFUL DISCHARGE: It Is Just for At-Will Employees

By Robert W. Hartman

For a while, under Ohio law it was a foregone conclusion that only an at-will employee could bring a lawsuit alleging wrongful discharge in violation of public policy. The Ohio Supreme Court first recognized an exception to the employment-at-will doctrine – when an employee is discharged or disciplined for a reason that violates Ohio's public policy – in 1989 in Greeley v. Miami Valley Maintenance Contractors, Inc. 

Then, in 2003, the Ohio Supreme Court issued its decision in Coolidge v. Riverdale Local School District, and no one was sure anymore. In Coolidge, the Ohio Supreme Court held that an employee receiving temporary total disability under the Workers' Compensation Act may not be discharged solely on the basis of absenteeism if the inability to work is directly related to the condition for which the employee is on disability. The employee in that case was a teacher who was subject to a collective bargaining agreement, so the question became: could unionized employees bring claims for wrongful discharge?

The employee in Urban v. Osborn Manufacturing, Inc. apparently thought this was the case--and brought her case for wrongful discharge in violation of public policy to court. The employee was a union member and subject to a collective bargaining agreement ("CBA"). Under the terms of the CBA, she could not be fired without just cause. The CBA also provided a comprehensive dispute resolution program for disputes concerning discipline or termination.

The employee initially worked as an operator, but the employer eliminated the position and transferred her to another department. The employee complained to management that her new work area was infested with pigeon droppings and asked the company to remove the droppings. The employee told her supervisor that she would contact the Occupational Safety and Health Administration (“OSHA”) if the company did not remove the droppings. The employee never filed a formal complaint with OSHA, but continued to complain to her employer. She next complained to the company president about the droppings.

At about the same time, the employee began receiving warnings about her work performance. About one month later, the employer terminated the employee for continued poor performance. The employee's union filed a grievance on her behalf but later withdrew it. The employee then filed suit in court alleging wrongful discharge in violation of public policy. The trial court granted summary judgment in the employer's favor.

On appeal, the employee argued that the trial court erred in dismissing her claim. The employee urged the court to ignore prior cases that declined to extend wrongful discharge to union employees. In 1995, in Haynes v. Zoological Society of Cincinnati, the Ohio Supreme Court held that a CBA specifically limited the power of the employer to terminate the employee, and thus took the employee outside the context of employment at-will, and outside the class of employees for whom the wrongful-discharge tort provides protection.

The employee nonetheless urged the court to expand the holding in Coolidge to find that members of a union who are subject to a CBA can assert a claim for wrongful discharge in violation of public policy. The court rejected this argument, stating that " Coolidge does not address a union employee of a private employer nor does it allow any other expansion of wrongful termination claims outside the at-will context." The court also noted that the employee's CBA provided her with a comprehensive grievance procedure, and that she "cannot now claim wrongful discharge merely because she was dissatisfied with the outcome of the grievance process." Moreover, even if she were an at-will employee, the court was not convinced that the employee alleged facts demonstrating that her employer's act of terminating her contravened a "clear public policy." There was no evidence that she was terminated for any reason other than poor performance.

The court concluded that the employee could not bring a claim for wrongful discharge because she was not an at-will employee, finally ending the mystery of Coolidge's meaning, at least to this court of appeals.

GIVE ME AN S-S-N-V-S... Social Security Administration Implements New Online Verification System

By Lois A. Gruhin

It doesn't spell anything, but it stands for Social Security Number Verification System, or SSNVS for short. The Social Security Administration recently implemented the new online system for easier employer verification of employee social security numbers.

The Immigration Reform and Control Act of 1986 (“The Act) requires employers to verify both the employment eligibility and identity of all new hires. The Immigration and Naturalization Service (now called the Citizenship and Immigration Service) designated the Form I-9 for this purpose.

The Act's implementing regulations provide for three lists of documents to accomplish verification. Acceptable "List A" documents establish both identity and employment eligibility. Acceptable "List B" documents establish identity only. Acceptable "List C" documents establish employment eligibility only. A "U.S. social security card issued by the Social Security Administration" is among the "List C" documents and is often used in conjunction with a "List B" document to establish new hire employment eligibility and identity.

SSNVS allows employers to verify those social security numbers quickly, via the internet, and in large numbers if desired. The new online system offers registered employers the ability to either:
  • receive instant verification of up to ten names and social security numbers per screen; or
  • receive results usually within one business day for uploaded batch files of up to 250,000 names and social security numbers.
The SSNVS may be used only to verify current or former employees and only for wage reporting purposes. Registration is required and may be completed at www.socialsecurity.gov/bso/bsowelcome.htm .
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Friday, April 14, 2006

EMPLOYMENT LAW QUARTERLY | Spring 2006, Volume VIII, Issue ii

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STAND AT ATTENTION: New USERRA Rights and Obligations

By Ryan L. Long

The U.S. Department of Labor ("DOL") recently adopted final regulations implementing the Uniformed Services Employment and Reemployment Rights Act of 1994, or USERRA. USERRA protects the rights of persons who voluntarily or involuntarily leave employment positions to undertake military service. It applies to all U.S. public and private employers, regardless of size. USERRA's regulations provide guidance concerning both employer and employee rights and obligations under USERRA and became effective on January 18, 2006.

Since the regulations apply to all employers, employers should take the time to ensure full compliance. USERRA's regulations are divided into six subparts. Subpart A provides a general introduction, defining certain terms for purposes of USERRA. Subpart B describes prohibited employer conduct, including USERRA's anti-retaliation and anti-discrimination provisions, and defines the applicable legal framework for analyzing such claims. Subpart C states the procedural requirements for reemployment, including notice, coverage and time limits for service. Subpart D describes the manner in which employees accrue benefits they would otherwise be entitled to as an employee. Subpart E explains the reemployment rights of service members. Finally, Subpart F contains the compliance and assistance provisions.

Subpart A essentially restates the statutory definitions contained within USERRA, and also excludes federal employees from the ambit of the regulations. Subpart B prohibits employers from denying employment, re-employment, retention, promotion, or any benefit of employment to an individual on the basis of his or her membership or service in the uniformed services, and also prohibits retaliation against employees for exercise of USERRA rights. This subpart also describes the applicable burdens of proof for a USERRA claim.

In Subpart C, the regulations establish the general eligibility requirements for reemployment, then describe the applicable procedures for reinstatement of employees. Thus, an employee will be eligible for reemployment following uniformed service if: 1) the employer had advance notice of the employee's service; 2) the employee's cumulative service totals five years or less during his or her employment relationship with a particular employer; (3) the employee timely returns to work or applies for reemployment; and (4) the employee was not separated from service with a disqualifying discharge or under other than honorable conditions.

As stated in the regulations, USERRA protects any absence that service in the uniformed services necessitates. To invoke USERRA rights, an employee (or appropriate officer of the employee's uniformed service) must give his or her employer advance notice that the employee intends to leave his or her job to perform military service. USERRA does not establish a specific time period for notice nor does USERRA prescribe the manner in which an employee gives notice.

In general, an employee retains reemployment rights if his or her unformed service during the employment relationship totals no more than five years. At the end of his or her service period, the employee is required to either report to work or submit a timely application for reemployment to his or her pre-service employer, depending on the length of his or her service. There are only three circumstances in which an employer may be excused from its obligation to reemploy the employee: 1) where the employer's circumstances have changed so much that reinstatement of the employee is impossible or unreasonable; 2) where assisting the employee in becoming qualified for reemployment imposes an undue hardship on the employer; or 3) where the employee's position was for a brief, non-recurrent period with no reasonable expectation that the employment would continue indefinitely or for a significant period.

Subpart D reiterates that an employer must consider an employee who is on military leave as being on a leave of absence. Thus, the employee is entitled to all non-seniority rights and benefits that an employer generally provides to other employees with similar seniority, status, and pay that are on leave of absence, as well as all non-seniority rights and benefits that an employer provides to similarly-situated employees pursuant to company policy. The regulations also grant employees absent due to service obligations for more than 31 days COBRA-like continuation of health care benefits for up to 24 months.

Subpart E describes with particularity the reemployment rights of eligible employees. An employer must promptly, e.g. as soon as practicable, reemploy an eligible employee who returns from a period of service.Moreover, an employer must reemploy an employee in a position that reflects with reasonable certainty the pay, benefits, and seniority that he or she would have attained if not for the period of service. The employee also is entitled to the seniority rights and benefits that he or she would have been reasonably certain to attain if he or she had remained continuously employed.

USERRA also provides returning employees with protection from discharge. Thus, an employer cannot terminate a reemployed service member except for cause, for a period of time based on the length of service. USERRA defines "for cause" as reasons related to either the employee's conduct or other legitimate nondiscriminatory reasons.

As demonstrated above, employers will want to review their policies and procedures to reflect USERRA's new regulations.Such preventative policies will ensure compliance with USERRA, and avoid costly litigation.

Brain • Food • Breakfast Law Series: Volume II

Please join us for breakfast refreshments at the third session of our 3-part seminar series, Volume II on April 27, 2006:

April 27, 2006
Interplay: solving the FMLA-ADA-workers' comp leave of absence puzzle.
Even FMLA aficionados sometimes face confusion when other leave issues enter the mix. If an employee with a disability requests leave as a reasonable accommodation, what of the FMLA? What are an employee's rights and your obligations if an employee cannot return to work for an extended period of time due to a workplace injury? And what do you do with their health insurance in the meantime? It is imperative for employers to understand where the FMLA, ADA, and workers' compensation laws intersect in situations like these. This seminar will discuss that interplay and include a brief discussion of COBRA-related issues (and breakfast-related pastries). Look for more information about this important seminar in coming weeks. All brain · food · breakfast seminars:
  • take place at our offices. Call (216) 696-4441 for directions or more information.
  • begin with registration at 8:30 a.m. and conclude at 10:00 a.m.
  • are strictly limited to 20 attendees. You may register in advance by calling (216) 696-4441 (please ask for Nicale) or sending an email to nee@zrlaw.com.
  • cost $30.00 per attendee.
  • include breakfast refreshments.
  • are led by Zashin & Rich attorneys who practice only workplace law all day, every day.
  • include time for your questions.
Join us for the brain · food · breakfast law series. It's just good for you.

COMPENSATION INOCULATION: Vaccinating Your Workers’ Compensation Premium Against Rising Health Care Costs

By Steve P. Dlott

Between 2000 and 2005, the number of workers' compensation claims filed in Ohio has dropped by approximately 10 percent (from 208,301 in 2000 to 178,015 in 2005). Clearly, employers have made significant inroads in workplace safety.

Unfortunately, the news is not all good for employers. Even as the number of filed claims has fallen, the cost of those claims has increased dramatically. Between 2000 and 2005, medical costs for workers' compensation claims jumped by almost $300 million. This increase represents a nearly 30 percent increase in medical costs over five years. Indeed, the Bureau of Workers' Compensation ("BWC") altered its system for setting reserves to account for medical costs in response to this increase.

What accounts for this sharp rise in medical costs? Unquestionably, the number one culprit is the BWC's exceedingly generous reimbursement rates. It is a well-known secret that the BWC's reimbursement rate for medical services is much higher than that of private health insurers and other government-funded insurance programs. The Columbus Dispatch recently reported that from 1998 through 2004, the Bureau paid $543.6 million more for the medical treatment of injured workers than the actual cost of providing those services.

Relying on the BWC offers little hope of staunching these hemorrhaging medical costs. Relief by way of reduction of reimbursement rates for medical services is not very encouraging. State-funded employers are at the BWC's mercy when it comes to establishing those generous reimbursement rates.

Although the BWC offers little hope for relief, there is one important first step available to employers in this battle to control medical claims costs. Employers can contract with medical facilities, such as an urgent care facility, for the initial post-injury treatment. While this contract only applies to non-emergency type injuries, such injuries comprise the vast majority of soft-tissue injuries, such as back or neck strains, which often develop into more serious, and more costly, ailments.

Getting that initial diagnosis and, equally important, return-to-work recommendation from a physician of the employer's choice is essential to controlling overall claims costs. Presenting documentation from the employer's doctor releasing the claimant to work (even on light duty) is of critical importance at a hearing in challenging the claimant's certification disabling the claimant from employment for an extended period of time.

Unquestionably, the most common mistake employers make is taking a "wait and see" attitude before deciding to fight a workers' compensation claim. Often, by the time the employer discovers the claim's impact on its workers' compensation premiums, the damage has already occurred. A medical report from the employer's doctor returning the claimant to work immediately after the injury is the best prescription for fighting a medically suspect claim. Armed with such a report, the employer can stave off frivolous claims and limit the effect such claims exert on workers' compensation premiums.

CHECK YOURSELF: Gathering the Information Necessary to Require Employees to Submit to a Medical Examination

By Robert W. Hartman

The Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12101, et seq. , severely restricts the manner in which employers obtain and use medical information from employees. Despite these restrictions, employers may require current employees to undergo medical examinations when job-related and consistent with business necessity. As demonstrated in Ward v. Merck & Co., Inc. , an employer can legitimately require an employee who poses a threat to his co-workers to undergo a medical examination, if the employer properly documents the situation.

The employee in Ward performed his position without incident for approximately six years. In 2002, supervisors observed that the employee became socially withdrawn and his work performance began to decline. The next year, local police had to be called to Merck's worksite because the employee "backed himself up against the food tables" in the cafeteria and "was screaming at people, telling them not to eat any of the vegetables."

Following this incident, the employee returned to work but maintained a "catatonic" demeanor. Indeed, co-workers complained that this employee's behavior was frightening, and co-workers were uncomfortable working around the employee. As a result, the employer requested that this employee submit to a medical examination to determine if he was capable of performing his job duties. The employee refused to submit to an examination and was subsequently fired. The employee then filed a lawsuit alleging that his former employer violated the ADA by requiring him to submit to a medical examination.

The Court held that the employer's request that the employee undergo a medical examination did not violate the ADA. In doing so, the Court stated the general rule that medical examinations are permitted only to the extent that they are job-related and consistent with business necessity. Citing to EEOC regulations, the Court stated that an examination is acceptable if the employer "has a reasonable belief based on objective evidence, that: (1) an employee's ability to perform essential job functions will be impaired by a medical condition; or (2) an employee will pose a direct threat due to a medical condition."

Applied to the facts at hand, the Court held that the employee's behavior posed a direct threat to himself and a direct threat to other employees. Specifically, the Court cited anecdotal evidence gathered by the employer which indicated that co-workers were frightened to work with this employee and were concerned for their safety. Moreover, co-workers and management expressed concerns about the employee's own safety. In addition, a significant decline in work performance accompanied the changes in the employee's behavior. As a result, the employer's decision to require a medical examination of this employee did not violate the ADA.

As demonstrated by Ward, employers must plan and document prior to requesting an existing employee to take a medical examination. In such cases, the ADA places the burden on the employer to establish that the medical examination is job-related and consistent with business necessity. To satisfy this burden, the employer should collect evidence demonstrating that either the employee 1) cannot perform the functions of his job or 2) presents a direct threat to himself or coworkers. With respect to performance, employers must instruct supervisors to review employee performance accurately. In the event that an employee potentially presents a direct threat to himself/herself or other employees, employers must document the incidents which lead to this belief, and make an attempt to corroborate this belief.

By possessing comprehensive documentation, an employer will be in a better position to convince a court that its requested medical examination was job-related and consistent with business necessity. In this manner, employers satisfy their obligations under the ADA while ensuring a safe and productive work environment.

COBRA ADMINISTRATION: Clarity = Bliss.

By Helena Oroz*

It is an unconfirmed theory, but it may be that many COBRA issues could be avoided if only one ingredient was added to the mix: clarity. If all the interested parties have the pertinent information, know their own obligations, and understand everyone else's obligations, how can they go wrong?

In Krippendorf v. Mitchell , the U.S. District Court for the Eastern District of Arkansas recently decided, quite simply, that the employer just got it wrong. The employee worked as a salesperson for the employer, an Arkansas company apparently subject to that state's "baby COBRA," or state version of the federal law that mandates continuation of health care coverage under certain circumstances. (This generally means that the employer is small enough to be exempt from COBRA). While this is not exactly a COBRA case, it is nonetheless instructive.

The employee received health insurance benefits under the employer's group health insurance policy. Under the plan, the employee paid a portion of the health insurance premium for himself and his family ($86.89), which the employer deducted from each of the employee's bimonthly paychecks. The employer paid the rest of the premium. The employee quit his job on Monday, April 18, 2005 without advance notice. His last paycheck covered half the month--April 1 through Friday, April 15, 2005--and as usual, the company deducted $86.89 for the employee's portion of the heath insurance premium. The company's benefits administrator gave the employee the forms required to continue his health insurance coverage--and that is apparently where everyone ceased being on the same page.

The employee returned the forms with a check for the first month's premium ($768.15) at the beginning of May. The company cashed the employee's check, but for some reason sent neither the employee's premium payment nor his continuation of coverage form to the insurance company. Instead, the company cancelled the employee's coverage retroactive to April 1, 2005. The employee, unaware that the company had cancelled his coverage, sent the company his second month's premium payment. The employee learned of the cancellation only when his wife sought medical treatment and was informed that her health insurance had lapsed.

The employer finally sent the employee's continuation of coverage form to the insurance company in early June 2005--but still did not pay his health insurance premium. The employee's attorney contacted the Company on June 13, 2005 to warn that he would file suit in federal court if the employee's health insurance benefits were not reinstated before June 16. The company actually did reinstate the employee's insurance on or about June 16, 2005, but did not notify the employee or his attorney of the reinstatement until June 27, 2005.

By this time, the employee, left in the dark about the status of his insurance, had filed suit in court alleging ERISA and state law claims. The employee alleged that the company breached its fiduciary obligation under ERISA to send the appropriate premiums to the insurance company each month. He sought the amount equal to the portion of the premium that the company should have paid for the time period of April 1 to 18, 2005, as well as attorneys' fees and costs.

The court found that, under the plan, the employee was supposed to receive the benefit of health insurance coverage for the time period of April 1 through April 15 at a cost of only $86.89 to himself, and that the company had actually deducted that amount from his last paycheck.

The court further found that when the company accepted the employee's first monthly premium check in early May 2005, it did not apply the money toward the employee's continuation coverage, which should have started after his employment ended on April 18, 2005. Instead, the employer applied the funds retroactive to April 1, a problem because:
  • the employee was still working on April 1. His last paycheck covered his last pay period (April 1 through April 15, 2005), and the employer had already withdrawn the regular $86.89 employee share from that paycheck to cover that period of time;
  • the employer should already have paid its share of the employee's premium for this time period as well;
  • and, essentially, because the employer did not prorate the employee's premium payment appropriately, the employee overpaid.
The court found that the employee overpaid by $384.08--half of his $768.15 premium payment for the whole month. The court ordered a refund of that amount so that the employee would receive the benefit of his April 1-15 health coverage at the proper price of $86.89. The court also awarded the employee legal fees and costs, noting that the company offered no convincing explanation as to why they refused to timely pay the insurance premium, and that the employee should not, in any event, be penalized for the company's failure to abide by the terms of the plan.

At least in this case, the employer was out of the loop. To avoid a similar situation, make sure that the "COBRA person" at your company sticks to the cardinal rule: abide by the plan. Ensure that COBRA notices and other paperwork are forwarded expeditiously to the proper parties and that premium payments are applied accurately. Finally, keep the lines of communication open, especially if the company has made a mistake. The employer in this case had a chance to work things out before heading to court and blew it. In most cases, all employees really want is health insurance, not a battle in court.

*Helena Oroz practices in all areas of employment law and compliance issues.
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