RECENT DEVELOPMENTS IN EMPLOYMENT LAW - Significant Decisions and Legislation
By Lori A. Higuera
FEDERAL LAW*
A. THE WOMEN'S HEALTH AND CANCER RIGHTS ACT OF 1998.
Congress signed the Women's Health and Cancer Rights Act of 1998 (Women's
Health Act) into law on October 21, 1998. Under the Women's Health Act,
group health plans, insurance companies and health maintenance organizations
(HMOs) offering mastectomy coverage also must provide coverage for breast
reconstructions, prostheses and treatment of physical complications at
all stages of the mastectomy.
The Women's Health
Act contains two separate notice requirements. The first notice is a one-time
requirement, under which group health plans and their insurance companies
or HMOs must furnish a written description of the benefits required under
the Women's Health Act. The first notice should have been sent by January
1, 1999. The second notice also must describe the benefits required by
the Women's Health Act and must be provided upon enrollment in the plan,
as well as annually thereafter.
B. AMERICANS WITH
DISABILITIES ACT (ADA).
1. Proposed accommodations
that directly conflict with bona fide seniority provision in collective
bargaining agreement.
In Willis v. Pacific Maritime Ass'n, 162 F.3d 561 (9th Cir. 1998), the
Ninth Circuit considered for the first time whether the ADA requires an
employer to violate the seniority provisions of a collective bargaining
agreement (CBA) to accommodate a disabled employee. Under the CBA, work
assignments are determined by the employees' registration status as either
a Class A or Class B longshore worker. Class A workers have the greatest
seniority, first priority in being dispatched to jobs and are assigned
jobs requiring the least physical exertion. In addition, Class A workers,
who are either over 55 or disabled, may request placement on the Dock
Preference Board (DPB).
The DPB is governed
by the CBA. DPB members receive priority for light duty work assignments,
followed by Class A members, then Class B members. Because of the small
number of light duty work assignments, the DPB is limited to 30 positions
and has a waiting list, which consists of 60 to 70 people. Once a worker
is on the DPB, he or she cannot be "bumped" off the DPB by another
worker.
The CBA also governs
the transfer of longshore workers to Local 34, the work responsibilities
of which require less physical effort. Class A longshore workers with
over five years' seniority may request a transfer to Local 34.
In this case, the
plaintiffs were two injured employees, Willis and Gomez, who claimed their
employers' association violated the ADA by failing to provide them with
light duty work. Willis was a Class A employee whose two requests to be
on the DPB because of injuries were denied. He remained on the DPB waiting
list until his retirement. Gomez was a Class A worker, whose request to
transfer to Local 34 because of injuries was denied on the grounds that
he did not have 5 years' seniority as a Class A worker. Both plaintiffs
claimed that, by failing to make light duty accommodations for them, the
defendants violated the ADA. The district court ruled that the defendants
were not required to accommodate the plaintiffs by placing them on the
DPB or by transferring Gomez to Local 34, in violation of the seniority
provisions set forth in the CBA.
On review, the Ninth
Circuit affirmed the district court's ruling. In so doing, the Ninth Circuit
joined the majority of United States Courts of Appeal, which have held
that an employee's proposed accommodation under the ADA is per se unreasonable
if it conflicts with a bona fide seniority system established under a
CBA. The Ninth Circuit limited its holding, however, to an employee's
accommodation request that directly conflicts with a CBA's bona fide seniority
system.
2. Employee must show
reasonable accommodation was available; not reasonable to create exception
for employee within seniority system.
In Barnett v. U.S. Air, Inc., 157 F.3d 744 (9th Cir. 1998), the Ninth
Circuit addressed, among other matters, two issues of first impression:
(1) whether an employee's burden of showing that he or she was qualified
for a position includes the burden of showing that existence of specific
reasonable accommodation was available to the employer; and (2) whether
making an exception for an employee within the employee's seniority system
constituted a reasonable accommodation.
In the Barnett case,
all employees, including the plaintiff, were subject to the company's
seniority system, which determines, among other things, duty assignments.
After injuring his back on the job, the plaintiff used his seniority to
transfer to a mailroom position. Subsequently, all the company's mailroom
positions became open for bidding according to seniority. Plaintiff was
aware that employees senior to him were planning to bid for his mailroom
position, so he asked his manager for an accommodation under the ADA.
Specifically, he asked for the company to make an exception for him within
its seniority system and, thereby, allow him to remain in his mailroom
position. Although the company permitted the plaintiff to remain in his
mailroom position longer than the permissible time, it eventually told
him that he lacked the seniority to remain in that position. After further
unsuccessful efforts of accommodation, the plaintiff sued his employer
under the ADA, and appealed when the district court granted judgment to
the employer.
On review, the Ninth
Circuit affirmed judgment for the employer. In so doing, the Ninth Circuit
determined that, following discovery in a case, the plaintiff in an ADA
discrimination suit must be able to point to at least one specific reasonable
accommodation that was available to the employer (but which the employer
presumably did not pursue) before the employer has the burden of proving
that such accommodation would constitute an undue hardship. Additionally,
the Ninth Circuit held that the ADA does not require employers to create
an exception for employees within their seniority system as an accommodation
of disability.
3. Employee's agreement
to arbitrate ADA disputes.
In Kummetz v. Tech Mold, Inc., 152 F.3d 1153 (9th Cir. 1998), the Ninth
Circuit held that the plaintiff did not waive his right to sue his employer
by agreeing to arbitrate any employment-related disputes. The employer
in this case claimed that the plaintiff waived his right to sue for disability
discrimination on grounds that, at the beginning of his employment, he
received a 32-page Employment Information Booklet (Booklet) and signed
an Information Booklet Acknowledgment (Acknowledgment). The Booklet contained
an arbitration provision, which declared that the company and employee
shall submit any employment-related dispute to arbitration and, thus,
waive all rights to a trial. The Acknowledgment, which the plaintiff signed,
did not mention or imply that the Booklet contained an arbitration provision.
On review, the Ninth
Circuit held that the arbitration provision was not enforceable because
it was neither explicitly presented to the plaintiff nor explicitly accepted
by the plaintiff. The court noted that the ADA requires that agreements
to arbitrate ADA disputes must be knowing, which means that "the
choice must be explicitly presented to the employee and the employee must
explicitly agree to waive the specific right in question." In this
case, the court found that, because the Acknowledgment did not alert the
plaintiff that the Booklet contained an arbitration provision, the plaintiff's
signature on the Acknowledgment was insufficient to waive his right to
sue.
C. FAIR LABOR STANDARDS
ACT (FLSA).
1. Employees may assert
claims under FLSA in federal court without resort to grievance-arbitration
procedures under collective bargaining agreement.
In Albertson's, Inc. v. United Food and Commercial Workers Union AFL-CIO
& CLC, 157 F.3d 758 (9th Cir. 1998), the Ninth Circuit held that members
of a labor union may assert claims under FLSA in federal court without
resort to grievance-arbitration procedures under the collective bargaining
agreement (CBA) between their union and their employer. In Albertson's,
the unions complained that their employer forced employees to work without
punching the time clock and without getting paid-work that is described
as "off-the-clock." When the unions threatened to sue the employer
to collect for off-the-clock work, the employer responded by filing an
action that, among other things, sought a declaratory judgment that the
unions would breach the CBAs by failing to submit their off-the-clock
claims to arbitration. The district court granted the unions' motion to
dismiss the employer's complaint.
On review, the Ninth
Circuit affirmed the district court's ruling and held that an employee
has the right to sue under the FLSA without having to resort to the collectively
bargained grievance-arbitration procedures. In so holding, the Ninth Circuit
noted that the rights of employees arising out of the CBA are separate
and distinct from those arising out of a statute, such as the FLSA. The
FLSA's minimum wage and overtime provisions are guarantees to individual
worker that may not be waived through collective bargaining. Thus, in
this case, it was irrelevant whether the employees' claims may have presented
an arbitrable dispute; the employees had an independent statutory right
under the FLSA that they were entitled to pursue in court.
2. Informal complaints
to employer are not protected by FLSA's antiretaliation provision.
In Lambert v. Ackerly, 156 F.3d 1018 (9th Cir. 1998), the Ninth Circuit
held as a matter of first impression that employees' actions, which included
complaints to their supervisor, but fell short of filing a formal complaint
or testifying at an FLSA proceeding, were not protected by the FLSA's
antiretaliation provision. The plaintiffs in Lambert: (1) complained to
their supervisor and to other company employees about overtime compensation;
(2) called the Department of Labor for information regarding overtime
requirements and informed their supervisors they had done so; (3) had
a lawyer send a letter to the company director regarding the overtime
issue; and (4) had a complaint delivered to the company. The employer
paid plaintiffs amounts due for overtime, then subsequently discharged
them. Thereafter, the plaintiffs sued the employer, alleging that their
discharge was in retaliation for complaining about the lack or overtime
compensation, in violation of the FLSA. The jury awarded a verdict to
the plaintiffs, and the company appealed.
On review, the Ninth
Circuit reversed the jury's verdict, in part, and adopted the Second Circuit's
analysis of this issue. That is, the Ninth Circuit found that "[t]he
plain language of [the FLSA antiretaliation provision] limits the cause
of action to retaliation for filing formal complaints, instituting a proceeding,
or testifying, but does not encompass complaints made to a supervisor."
Because none of the plaintiffs in the case had filed a formal complaint
or instituted or testified in a FLSA proceeding, the Ninth Circuit determined
that they failed to state a retaliation claim under the FLSA.
D. TITLE VII OF
THE CIVIL RIGHTS ACT OF 1964.
1. National origin
discrimination.
In Dawavendewa v. Salt River Project Agric. Imp. and Power Dist., 154
F.3d 1117 (9th Cir. 1998), the Ninth Circuit held that: (1) discrimination
in employment on the basis of membership in a particular tribe constitutes
national origin discrimination; and (2) as a matter of first impression,
Title VII's Indian Preferences exemption does not permit an employer to
discriminate on the basis of tribal affiliation. The case stemmed from
a lease that Salt River Project ("SRP") entered with the Navajo
Nation, which allows SRP to operate a generating station on Navajo land,
provided that it, among other things, grants employment preferences to
members of the Navajo tribe living on the reservation, or, if none is
available, to other members of the Navajo tribe. Plaintiff, a member of
the Hopi tribe who unsuccessfully applied of a position at the SRP generating
station, filed a lawsuit claiming that SRP was engaging in national origin
discrimination in violation of Title VII. SRP moved to dismiss the complaint
on the grounds that discrimination on the basis of tribal membership (as
opposed to discrimination on the basis of status as a Native American)
does not constitute "national origin" discrimination, and that
Title VII expressly exempts tribal preferences under ß 703(i), 42
U.S.C. ß 2000e-2(i) (the "Indian Preferences exemption").
The district court granted Salt River's motion, and the plaintiff appealed.
The Ninth Circuit
reversed and remanded. In so doing, the court explained that a national
origin discrimination claim arises when discriminatory practices are based
on the place in which one's ancestors lived, and that the current political
status of the nation or place at issue makes no difference for Title VII
purposes. Thus, "[b]ecause the different Indian tribes were at one
time considered nations, and indeed still are to a certain extent, discrimination
on the basis of tribal affiliation can give rise to a ënational origin'
claim under Title VII." In addition, the court held that SRP's policy
of favoring members of the Navajo tribe does not fall within the Indian
Preferences exemption of Title VII. Here, the Ninth Circuit noted that
the purpose of the Indian Preferences Exemption is to authorize an employer
to grant preferences to all Indians (who live on or near a reservation).
The court found that an employment practice that gives preference to a
member of a particular tribe and affords preference because that person
is a member of "a particular tribe," and not because that person
is "an Indian," is inconsistent with the Indian Preferences
Exemption and, thus, impermissible.
2. Gender Discrimination.
In Harper v. Blockbuster Entertainment Corp., U.S. Supreme Court No. 98-200,
the United States Supreme Court declined to review the decision by the
Eleventh Circuit that Blockbuster Entertainment Corp.'s policy prohibiting
men, but not women, from wearing long hair did not violate Title VII of
the 1964 Civil Rights Act.
In denying review,
the justices let stand the Eleventh Circuit's finding that the male employees
who were discharged for not cutting their hair and for protesting the
grooming policy were prohibited from bringing retaliatory discharge claims
under Title VII. According to the Eleventh Circuit, every circuit to have
examined this issue also has determined that work rules dictating different
permissible hair lengths for men and women employees does not constitute
unlawful gender discrimination.
3. Punitive damages
in a Title VII case.
Until 1991, successful plaintiffs in Title VII cases could only get "equitable"
relief. In the Civil Rights Act of 1991, Congress authorized a wider range
of monetary remedies to plaintiffs in Title VII cases. The Act now provides
that a plaintiff who proves "intentional discrimination" in
violation of Title VII may recover compensatory and punitive damages in
addition to the equitable relief available under prior law. A separate
provision limits the recovery of punitive damages to cases in which the
plaintiff demonstrates that the defendant engaged in a discriminatory
practice with malice or with reckless disregard.
The federal circuits
are split on the issue of what type of misconduct is enough to put the
question of punitive damages before the jury in a Title VII case. Five
circuits have held that egregious misconduct beyond mere intent to discriminate
is required for punitive damages under Title VII. Three other circuits
have held that a finding of intentional discrimination, without more,
is sufficient to put the question of punitive damages before the jury
in the usual Title VII case.
In Kolstad v. American
Dental Ass'n, 139 F.3d 958 (D.C. Cir. 1998), the plaintiff sued her employer
for gender discrimination under Title VII and, in so doing, sought punitive
damages. At the close of evidence, the district court dismissed the plaintiff's
punitive damages claim and, thereby, refused to instruct the jury on punitive
damages. On review, the court of appeals affirmed the district court's
decision, holding that punitive damages in a Title VII case may be imposed
only on a showing of egregious conduct. On November 2, 1998, the United
States Supreme Court accepted review of Kolstad, to determine what the
appropriate standard is for punitive damages in a Title VII case. The
Supreme Court has yet to issue an opinion.
E. WORKERS' COMPENSATION.
In Amos v. Director, Office of Workers' Compensation Programs, 153 F.3d
1051 (9th Cir. 1998), amended, 1999 WL 8000 (9th Cir. Jan. 12, 1999),
the Ninth Circuit held that, when an injured employee is faced with competing
medical opinions about the best way to treat his or her work-related injury,
each of them medically reasonable, it is for the employee, not the employer
or the administrative law judge (ALJ), to determine what is the best for
the employee. There, the claimant injured his shoulder on the job, and
his treating physician referred him to an orthopedic surgeon specializing
in the treatment of the upper extremities, Dr. Pedegana, who recommended
surgery. After obtaining Dr. Pedegana's recommendation, the employer arranged
for two other orthopedic surgeons to examine the claimant. The first,
Dr. Sawyer, opined that surgery might improve the claimant's condition,
but did not recommend it. The second, Dr. Sears, who characterized his
practice as 30 percent knee problems, 30 percent spinal problems, and
40 percent "a little bit of everything," opined that the claimant
would not be helped with surgery, but conceded that he could not opine
one-hundred percent that surgery would not help the claimant. Based on
Drs. Sawyer's and Sear's opinions, the company denied authorization for
the claimant's surgery, and the claimant requested a hearing. Finding
that Dr. Pedegana's testimony was less persuasive than the other two physicians,
the ALJ determined that the requested shoulder surgery was not reasonable
and appropriate. The claimant appealed.
On review, the Ninth
Circuit held that, "[a]lthough the employer is not required to pay
for unreasonable and inappropriate treatment, when the patient is faced
with two or more valid medical alternatives, it is the patient, in consultation
with his own doctor, who has the right to chart his own destiny."
Here, Dr. Pedegana was the treating physician and, thus, his recommendation
was entitled to special deference. Because Dr. Pedegana's opinion was
not shown to be unreasonable, the ALJ's choice of one reasonable option
over the other was not hers to make. Accordingly, the Ninth Circuit reversed.
F. FEDERAL ARBITRATION
ACT (FAA).
In Craft v. Campbell Soup Co., 161 F.3d 1199 (9th Cir. 1998), the Ninth
Circuit held, as a matter of first impression, that the FAA does not apply
to labor or employment contracts. The plaintiff in Craft, an employee
of Campbell Soup and a labor union member, filed a claim against the company
alleging, among other things, race discrimination and retaliation in violation
of Title VII, while his grievance alleging similar claims was pending.
The district court granted Campbell Soup summary judgment on the plaintiff's
state law claims, however, and held that the arbitration of the plaintiff's
Title VII claims could not be compelled. Campbell Soup appealed.
On review, the Ninth
Circuit dismissed Campbell Soup's appeal, holding that the FAA does not
apply to labor or employment contracts. In so holding, the court found
that the wording of ß 2 of the FAA, which provides for the enforcement
of an arbitration provision in "a contract evidencing a transaction
involving commerce," does not appear to encompass employment contracts
at all. The court further found that, "[b]ecause Congress drafted
the employment exclusion clause [of the FAA] to exclude all employment
contracts which it then had the power to regulate, Congress clearly intended
the that FAA not apply to any contracts of employment." In addition,
the court found that the legislative history of the FAA indicates that
the FAA's purpose was solely to bind merchants who were involved in commercial
dealings. Finally, the court relied upon suggestions by the United States
Supreme Court in Textile Workers Union v. Lincoln Mills, 353 U.S. 448,
77 S.Ct. 912 (1957), Gilmer v. Interstate/Johnson Lane Corp., 500 U.S.
20, 111 S.Ct. 1647 (1991), and Allied-Bruce Terminix Cos. V. Dobson, 513
U.S. 265, 115 S.Ct. 834 (1995), that the FAA does not apply to employment
contracts.
G. COBRA BENEFIT.
In Geissal v. Moore Medical Corp., U.S. Supreme Court No. 97-689, the
U.S. Supreme Court ruled that an employer may not cancel its former employee's
medical coverage under COBRA because the employee also was insured under
his wife's group health plan. Geissal answers a split of decisions among
the Tenth and Seventh Circuits, which disallow termination of the benefits
under COBRA, and the Eighth, Eleventh and Fifth Circuits, which uphold
these types of benefit termination.
II. ARIZONA LAW
A. CHALLENGE TO EMPLOYMENT
PROTECTION ACT (EPA).
On September 10, 1998, the Arizona Supreme Court dismissed Beeles v. Offset
Separations Corp., Supreme Court No. CV 97-0016-CQ, because the parties
in the case settled after the court heard oral arguments, but before the
court issued its opinion. The plaintiffs in Beeles had challenged the
constitutionality of Arizona's EPA, A.R.S. ß 23-1501, enacted in
1996. Specifically, the plaintiffs posed four separate constitutional
challenges to the EPA: (1) the EPA violates the Arizona Constitution,
Art. 18, ß6 by abolishing the ability of employment discrimination
victims to bring common law tort actions and limiting their remedies;
(2) the EPA violates the separation of powers clause of the Arizona Constitution,
Art. 3, by usurping the Arizona Supreme Court's authority to define the
common law and its ability to declare that conduct is violative of public
policy; (3) the EPA violates the equal protection clause of the Arizona
Constitution, Art. 2, ß13 by discriminating between victims of similar
misconduct because the EPA limits employees to protection under Arizona
and federal statutes, which do not apply to employers with less than 15
employees; and (4) the EPA violates the Arizona Constitution, Art. 2,
ß5, by impairing contract rights because the EPA makes it public
policy that employment is presumed to be at-will, absent a written employment
contract.
On January 15, 1999,
the supreme court accepted special action jurisdiction of two consolidated
cases, Cronin v. Hon. Steven D. Sheldon and Denny's Restaurants, Supreme
Court No. CV 98-0495-SA, and Finley v. Hon. John H. Seidel And Calvary
Rehabilitation Center, Supreme Court No. CV 98-0580-SA. Cronin and Finley
raise the same constitutional challenges to the EPA as Beeles. The supreme
court has yet to issue an opinion in Cronin and Finley.
B. UNEMPLOYMENT BENEFITS.
In California Portland Cement Co. v. Arizona Dep't of Economic Security,
192 Ariz. 19, 960 P.2d 65 (App. 1998), the Arizona Court of Appeals addressed
the issue of whether a former employee quit her job or was discharged,
so as to qualify for unemployment benefits. The plaintiff, a human resources
manager, brought a discrimination claim against the company while still
employed there. The parties sought to settle the claim and, as part of
the proposal to do so, the employer required the plaintiff to resign from
her job. The plaintiff testified that she had not planned on retiring
and, in fact, did not want to retire. She only retired because the settlement
agreement required it.
Based on these circumstances,
the Department of Economic Security (DES) granted the plaintiff's claim
for benefits, finding that the plaintiff did not want to resign, but only
did so to settle the claim. Although the plaintiff voluntarily entered
the settlement agreement, DES found that it was the employer that made
the plaintiff's retirement a condition of settlement.
On review, the court
of appeals affirmed DES' decision on the same reasoning. In so doing,
the court announced: "[I]t is important for employers and employees
to understand that if the employer, as a condition of the settlement of
disputes with employees, insists upon a termination of employment for
reasons that do not otherwise disqualify the employee for benefits, the
termination will be a discharge and not a quit for purposes of unemployment
benefits."
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