Category Archives: Discrimination

May 6, 2014

Separation Agreements Targeted By EEOC Again

The Equal Employment Opportunity Commission (EEOC) recently filed a lawsuit seeking to stop a Colorado employer from using its form separation and release agreement and to allow employees who have signed the form agreement to file charges of discrimination and participate in EEOC and state agency fair employment investigations. In its federal court complaint, the EEOC alleges that CollegeAmerica Denver violated the Age Discrimination in Employment Act (ADEA) by conditioning employees’ receipt of severance benefits on signing a separation and release agreement which, according to the EEOC, chills and interferes with the employees’ rights to file charges and/or cooperate with the EEOC and state fair employment practice agencies.

As we wrote on this blog earlier, the EEOC has been scrutinizing employers’ separation agreements. This is the second such lawsuit challenging language in the separation agreements that does not permit the filing of discrimination or retaliation charges with the EEOC or other government agencies. As in the EEOC’s earlier complaint against a national pharmacy, the recent complaint against CollegeAmerica Denver targets numerous provisions in the separation agreement, including the release of claims, a non-disparagement clause and provisions in which the employee represents that he/she has not filed any claims, has disclosed to the company all matters of non-compliance and will continue to cooperate with and assist the company with any investigation or litigation.

Many of the targeted provisions are standard clauses in form separation agreements. Although it remains to be seen whether the courts will agree with the EEOC’s claims, it is always a good idea for organizations to review their agreements and ensure they do not raise any red flags for the EEOC while still protecting the company from future payouts for employment-related claims. We will continue to provide updates as new developments arise.

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April 16, 2014

EEOC Loses Kaplan Credit Check Appeal

By Brad Cave

In 2010, the Equal Employment Opportunity Commission (EEOC) sued Kaplan Higher Education Corporation, claiming that Kaplan’s use of credit reports had a disparate impact on black applicants. The trial court threw out the EEOC’s suit because it used an invalid method for determining the race of Kaplan’s applicants. The EEOC appealed, and lost again. In a stinging opinion, the Sixth Circuit Court of Appeals agreed with Kaplan and rejected the methodology promoted by the EEOC’s expert witness. The Sixth Circuit’s opinion dooms the agency’s background check disparate impact lawsuit against Kaplan and slaps the EEOC for suing a private employer “for using the same type of background check that the EEOC itself uses.” The ruling also illustrates the EEOC’s failure to show that an employer’s use of neutral background checks results in a disparate impact on African-American applicants. EEOC v. Kaplan Higher Educ. Corp., No. 13-3408 (6th Cir. April 9, 2014).

Credit Checks Aimed At Preventing Employee Abuses

Kaplan is a for-profit test preparation and higher education provider. Because some Kaplan students receive financial aid, some Kaplan employees have access to students’ financial information, including information that is subject to the U.S. Department of Education confidentiality regulations. Years ago, Kaplan discovered that some of its financial-aid officers had stolen aid payments and some executives had engaged in self-dealing by hiring relatives as vendors for the company. To help stop these abuses, Kaplan began conducting credit checks on applicants for senior-executive positions as well as accounting, financial aid and other positions where employees have access to company or student financial information. Neither Kaplan nor its credit check vendor provided or linked the applicant’s race with the applicant’s credit report.

EEOC Alleges Kaplan’s Credit Checks Screen Out More African-Americans

Consistent with its efforts to target employers who use background check policies to screen applicants, the EEOC sued Kaplan alleging that Kaplan’s use of credit checks resulted in more African-Americans being rejected than whites, creating a disparate impact in violation of Title VII. To support its claim, the EEOC hired industrial and organizational psychologist Kevin Murphy to analyze Kaplan’s credit check data and offer an expert opinion based on the statistics. However, because the credit check information did not include the applicant’s race, Murphy and his team needed another method to determine race. They created a process that the EEOC called “race rating” in which a team of five “race raters” reviewed drivers’ license photos for a portion of the applicants to visually identify their race. Despite having credit information for 4,670 applicants, Murphy based his “expert” analysis on only 1,090 applicants, of whom 803 had been racially classified using Murphy’s “race rating” process.

“Homemade Methodology” Rejected by Court

The Sixth Circuit wholeheartedly rejected Murphy’s “race rating” process, stating that “[t]he EEOC brought this case on the basis of a homemade methodology, crafted by a witness with no particular expertise to craft it, administered by persons with no particular expertise to administer it, tested by no one, and accepted only by the witness himself.” The Court upheld the exclusion of Murphy’s testimony not only due to his faulty methodology, but also because the group of 1,090 applicants in Murphy’s statistical analysis was not representative of the applicant pool as a whole. Of Kaplan’s entire pool of 4,670 applicants, only 13.3% of the applicants were rejected on the basis of credit checks, but Murphy’s smaller pool of applicants had a fail rate of 23.8%. The Court found that Murphy’s unrepresentative sample might not equate to the respective fail rates of black versus white applicants and therefore, was an unreliable method for the EEOC to show disparate impact.

EEOC’s Own Background Check Policy Contradicts Its Attack on Private Employers For Use of Credit Checks

Although not central to the exclusion of the EEOC’s expert, the Court put the EEOC’s own background check policy front and center. Through the discovery process, Kaplan had successfully obtained information on the EEOC’s background check policies and pointed to the agency’s personnel handbook which states “[o]verdue just debts increase temptation to commit illegal or unethical acts as a means of gaining funds to meet financial obligations.” To address those potential concerns, the EEOC runs credit checks for 84 of the 97 positions within the agency. The Court highlighted the disconnect between the EEOC attacking Kaplan for a credit check policy that the agency used itself.

Future EEOC Challenges to Employer Use of Credit Checks

The Kaplan decision is the latest in a string of EEOC losses in class actions alleging disparate impact based on an employer’s use of a neutral background check process. The EEOC seems unable to provide evidence to support a finding that African-Americans, Hispanics or other groups are being rejected for employment at higher rates than whites based on background checks. In addition, the EEOC’s own use of credit checks in hiring will be used against it in any future similar lawsuits. Although it remains to be seen whether the EEOC will back off of its systemic enforcement efforts related to the use of background checks, the trend for employers is positive.

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March 13, 2014

Harassment Training for Supervisors is Key in Minimizing Risk

By Mark Wiletsky

Most employers today have policies prohibiting harassment. But if your supervisors and employees are not trained on those policies, and if harassment is allowed to occur, your organization could face significant liability.

Female Bailiff Alleges Egregious Sexual Harassment By Her Supervisor

Camille Kramer was employed as a jailor and later as a bailiff by the Wasatch County Sheriff’s Department. While working at the jail, male co-workers allegedly made offensive comments about Kramer’s breasts, she was subjected to sexually explicit materials on work computers and had to listen to graphic sexual conversations. Kramer complained to Sheriff Kenneth Van Wagoner, the head of the Sheriff’s Department. Sheriff Van Wagoner said he’d “take care of it” and proceeded to call a staff meeting at which he used Kramer as a volunteer to act out the exact harassing scenarios that she had reported to him. Van Wagoner told the group: “[t]hat’s harassment. Don’t do it.” When the harassment got worse after the meeting, Kramer complained again to the Sheriff, who told her she might want to avoid that area.

Kramer transferred to the courthouse to work as a bailiff. Sergeant Rick Benson, also a bailiff, supervised both Kramer and one other bailiff. According to Kramer, Benson subjected Kramer to a campaign of sexual harassment and sexual assault that ranged from demanding foot rubs to groping and rape. Kramer did not report Benson’s conduct to the Sheriff because Benson threatened her job if she said anything and she believed nothing would be done about it anyway.

Later, Kramer told female co-workers about the rape and assault. She also told them that she was having a consensual affair with another man and was pregnant from that relationship. Sheriff Van Wagoner found out about Benson’s sexual assault of Kramer and her pregnancy from one of Kramer’s co-workers. He assigned a detective who was not trained in human resources or in conducting sexual harassment investigations to look into the misconduct. The detective focused his investigation exclusively on finding out who fathered Kramer’s baby, not on Benson’s conduct. When it was learned that Kramer was involved with a married county firefighter, the detective urged Kramer to resign and Kramer was disciplined with her certification suspended for six months for “actions unbecoming an officer.” Although the Sheriff decided to terminate Benson, Benson resigned before that could happen.

Benson directly supervised Kramer’s work as a bailiff. He wrote her performance evaluations, which could cause her to be promoted, demoted or fired. He could create a corrective action plan for her which might include transfer, reassignment or separation, if he deemed her performance was substandard. At all times, however, the Sheriff was the final decision-maker and the only person who had the actual authority to take tangible employment actions against Kramer.

Kramer sued the County and the Sheriff for sexual harassment in violation of Title VII, among other claims. The district court granted summary judgment to the County, holding that because Benson did not have the actual authority to unilaterally fire Kramer, the County could not be vicariously liable for Benson’s conduct. It also ruled that supervisor status could not be based on Benson having apparent authority over Kramer because no reasonable juror could find that Kramer reasonably believed that Benson had the power to fire her. On appeal, the Tenth Circuit Court of Appeals reversed the grant of summary judgment in favor of the County and remanded the case to the trial court for further proceedings. Kramer v. Wasatch Cty. Sheriff's Office, No. 12-4058 (10th Cir. Feb. 25, 2014).

Delegation of Power and Apparent Authority

The Tenth Circuit pointed to wording in the Supreme Court’s recent case, Vance v. Ball State, 570 U.S. ___ (2013), to determine whether the County could be vicariously liable for Benson’s conduct. Vance held that a “supervisor” for purposes of determining employer liability for workplace harassment under Title VII includes only those individuals who have the authority to take tangible employment actions against the victim. Although that seemed like a bright-line test, the Tenth Circuit stated that if Benson had or appeared to have the power to take or substantially influence tangible employment actions or used the threat of taking such actions to subject Kramer to a hostile work environment, then the County could be vicariously liable for Benson’s severe or pervasive sexual harassment. Because the Court found sufficient evidence in the record that raised genuine issues of fact as to whether the Sheriff effectively delegated to Benson the power to cause tangible employment actions by relying on Benson’s recommendations and performance evaluations when making decisions regarding firing, promotion, demotion and reassignment, the Court reversed the grant of summary judgment to the County. The Court stated that even if the Sheriff took some independent analysis when considering input from Benson on employment decisions, Benson could qualify as a supervisor if his recommendations were among the proximate causes of the Sheriff’s decision-making. The Court also found that there was evidence to suggest that Kramer reasonably believed that Benson had the power to take tangible employment actions against her meaning Benson qualified as a supervisor under apparent authority principles.

No Tangible Employment Actions

If Benson is a supervisor under the definition established in Vance, the County would be strictly liable for Benson’s harassment if it resulted in a tangible employment action. Kramer asserted that four actions constituted tangible employment actions. First, she argued that Benson’s rape was a tangible employment action. The Court disagreed, stating that while the rape was inarguably a severe form of sexual harassment, Benson did not commit the rape in an official company action. Next, Kramer asserted that Benson prepared a negative performance evaluation of her and argued that was a tangible employment action. However, Benson improved the evaluation after speaking with Kramer and before submitting it to the Sheriff, so even though the threatened poor evaluation contributed to a hostile work environment, it did not constitute a tangible employment action. The Court similarly rejected the final two alleged employment actions, a denial of leave time and assigning Kramer to an unfavorable duty that denied her the training needed for a promotion. The Court found that the loss of one day’s leave time was not a “significant” change in Kramer’s benefits and the assignment to an unfavorable duty did not have a deleterious economic consequence for Kramer or reduce her opportunity for advancement. Finding that Kramer did not suffer a tangible employment action, the Court remanded for consideration of whether the County established the Faragher/Ellerth defense.

Teachable Moments from the Tenth Circuit

The Court’s thorough discussion of Benson’s conduct and what the Sheriff did/did not do when he learned of potential misconduct reveals many teachable moments for employers. First and foremost, make sure to train your supervisors and employees on prohibited forms of harassment, and how important it is to promptly and appropriately address issues when they arise. For example, when an employee reports harassing behavior, as Kramer did when she first worked at the jail, take it seriously. Do not simply tell workers to “stop it” or tell the person who complained to “avoid the area” or stay away from the perpetrators. Make sure that the person conducting the investigation is trained in workplace harassment investigations. Do not focus the investigation solely on the potential wrongdoing of the complaining party, as the detective did when trying to determine the father of Kramer’s baby. Talk to all parties implicated in the misconduct, including any witnesses who may have knowledge of the hostile work environment. If the investigation reveals harassing behavior, take immediate steps to correct it and prevent it from happening again. Follow up with the person who reported it to make certain your corrective actions are effective and that no further incidents have occurred. And finally, do not retaliate against the complaining employee. Learning from these missteps will go along way in minimizing your risk of harassment liability.

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March 10, 2014

Safety Violation Or Too Much Intermittent FMLA Leave? Tenth Circuit Says Jury Must Decide Wyoming Employee’s FMLA and ADA Case

By Brad Cave

Did Solvay Chemicals fire long-time employee Steven Smothers because of a first-time safety violation or because the company was tired of his frequent absences due to an ongoing medical disability? The Tenth Circuit Court of Appeals recently ruled that Smothers provided sufficient evidence to suggest that Solvay’s stated reason for his termination was pretextual, allowing his claims for unlawful retaliation under the Family and Medical Leave Act (FMLA) and discrimination under the Americans with Disabilities Act (ADA) to proceed. Smothers v. Solvay Chem., Inc., No. 12-8013 (Jan. 21, 2014). The Court affirmed the grant of summary judgment on his state law claim for breach of an implied employment contract.

Medical Treatments and Severe Pain Lead to Frequent FMLA-Protected Absences

For eighteen years, Smothers worked as a surface maintenance mechanic in Solvay’s trona mine in Sweetwater County, Wyoming. The company considered him to be an excellent mechanic who did great work and got along with everyone. In 1994, Smothers injured his neck and developed degenerative disc disease in his spine. Over the next five years, Smothers had three surgeries to his neck as well as numerous other medical procedures. Despite treatment by a specialist, Smothers continued to have severe ongoing neck pain, severe migraine headaches and lower back problems. At times, Smothers was unable to work without pain treatments and he often was able to sleep only a few hours each night due to the pain.

Smothers asked for and was granted FMLA leave for intermittent absences caused by his condition. Managers and co-workers began to complain about his absenteeism, especially because he worked on the graveyard shift where there were fewer workers to absorb his absences resulting in increased overtime costs. Solvay’s production superintendent Melvin Wallendorf pressured Smothers to change to the day shift, but Smothers refused as the shift change would have cost him about $7,000 a year. Solvay’s human resources department advised Wallendorf that urging Smothers to switch shifts would violate the FMLA so Wallendorf stopped pressuring Smothers but did not stop complaining about his absences.

At one point, Wallendorf and Rick Wehrle, Smothers’ direct supervisor, gave Smothers a poor performance rating on his evaluation due to his absenteeism. In 2005 or 2006, Smothers applied for a promotion but was told that he was rejected because of his absences.

Safety Issue Explodes into Argument

In 2008, the graveyard crew conducted a routine maintenance acid wash to remove build up in its equipment. After a line ruptured, Smothers saw that a damaged “spool piece” had caused the problem and prepared to remove it. Another mechanic, Dan Mahaffey, suggested that Smothers wait for a line break permit, which is a form that certifies that employees have completed a checklist of precautions before a line can be safely disconnected. Smothers said that a permit wasn’t required because the line was already broken. Mahaffey and Smothers then argued. Mahaffey offered help on the repair which Smothers refused. Mahaffey took offense and accused Smothers of hypocrisy since Smothers had previously reported others for safety violations. Smothers made an offensive comment to Mahaffey and told him he did not want his kind of help. Smothers removed the broken piece and began the repair.

Mahaffey immediately reported the argument and Smothers’ removal of the spool piece without a line break permit to the area supervisor. Later that same day, three managers called Smothers in to discuss the safety violation. Although completing the line break permit may not have been absolutely necessary, Smothers later conceded that he should have locked out the pump valve before removing the part according to Solvay’s safety policies. Smothers apologized for not locking the pump valve before removing the piece and promised it wouldn’t happen again. Smothers was sent home pending an investigation.

Six managers were involved in deciding what to do about the argument and the safety violation. Three of the managers personally talked with Mahaffey about the argument but no one spoke to Smothers about it. About eight days later, Solvay fired Smothers. Smothers sued in Wyoming federal court, alleging, among other claims, unlawful FMLA retaliation, ADA discrimination and breach of an implied employment contract based on Solvay’s employee handbook.

FMLA Claim Bolstered By Disparate Treatment and Previous Retaliatory Acts

The trial court granted summary judgment to Solvay on Smothers’ FMLA and ADA claims. On appeal, the Tenth Circuit decided that Smothers presented enough evidence for a trial about whether Solvay’s real reason for his termination was his use of FMLA leave or his disability. Smothers provided evidence that other employees who committed similar safety violations were not fired. Five of the six decision-makers who fired Smothers were also involved in at least one decision in which a similarly situated employee was treated more favorably after violating the same or comparable safety rules. Smothers also pointed to the negative comments, negative performance rating, failure to promote and pressure to change shifts because of his FMLA-protected absences as evidence that the safety violation was a pretext for firing him for his FMLA leave. Moreover, Smothers showed that the decision-makers had failed to sufficiently investigate the argument he had with Mahaffey, basing their decision almost entirely on Mahaffey’s version of events. The Court decided that a reasonable jury could find that Solvay’s investigation into the quarrel was not fair or adequate. Based on this evidence, the Court found that there were issues of fact on whether Solvay’s termination reasons were pretextual and reversed the dismissal of Smothers’ FMLA retaliation claim.

Smothers Was Disabled Under ADA

Smothers also asserted that his firing was in violation of the ADA. He presented evidence that his medical condition was an impairment that substantially limited a major life activity, specifically his ability to sleep. Because the facts would allow a reasonable jury to conclude that Smothers’ sleep was substantially limited, Smothers satisfied his burden of establishing a prima facie case of disability discrimination. As with the FMLA claim, the Court found sufficient evidence that Solvay’s stated termination reasons may have been a pretext for disability discrimination. Therefore, the Court reversed the dismissal of Smothers’ ADA claim as well.

No Breach of Implied Contract Based on Employee Handbook

Smothers also alleged that Solvay violated the terms of its employee handbook, giving rise to a claim for breach of implied contract under Wyoming law. The Court disagreed. Wyoming recognizes a claim for breach of implied contract if an employer fails to follow its own required procedures, such as the procedures laid out in an employee handbook. Solvay’s handbook contained a four-step progressive disciplinary process, with termination as the last step. But it also contained a provision that allowed Solvay to terminate an employee immediately for a serious offense, including a safety violation. Because the discipline policy unambiguously gave Solvay the discretion to fire employees who violate safety rules, the Court found that Solvay’s decision to terminate Smothers for violating a safety rule did not violate the terms of the employee handbook. Therefore, the appeals court upheld the trial court’s dismissal of Smothers’ breach of implied contract claim.

Back To Court They Go

We don’t know whether Smothers or Solvay will prevail if this case goes to trial but we do know that the appellate court thought that some of the evidence about the actions of Solvay managers could demonstrate that Solvay acted with a discriminatory motive:

Supervisors and co-workers gave Smothers a hard time about taking FMLA-protected leave.
Solvay failed to properly investigate all sides in the quarrel, accepting one employee’s version of events as fact.
The decision-makers treated Smothers more harshly than other similarly-situated employees who had violated similar safety rules.
Managers and supervisors considered Smothers’ FMLA absences when providing his performance evaluation and rejecting him for a promotion.

Evidence of these actions prevented Solvay from obtaining a grant of summary judgment on appeal. While Solvay may dispute Smothers’ evidence when the case actually goes to trial, this case stands as a lesson about the kinds of supervisory comments and actions that can feed into a discrimination claim, and a good reminder of how carefully employers must manage employees with injuries or disabilities.

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February 20, 2014

EEOC Challenges Separation Agreements

By Mark Wiletsky

If you use standard separation agreements to secure a release and waiver of claims from employees who are laid off, fired, or who otherwise threaten a claim, you might want to review your agreement. In a lawsuit filed recently in Illinois federal court, the EEOC alleges that a company with national operations interfered with its employees’ right to file charges with the EEOC and state fair employment practices agencies by conditioning the employees’ receipt of severance pay on signing an overly broad separation agreement.

According to the EEOC, five separate paragraphs (which are commonly found in separation agreements) are improper:

Cooperation: Employee agrees to promptly notify the Company’s General Counsel by telephone and in writing if the employee receives a subpoena, deposition notice, interview request or other process relating to any civil, criminal or administrative investigation or suit.
Non-Disparagement: Employee will not make any statements that disparage the business or reputation of the company or any of its officers or employees.
Non-Disclosure of Confidential Information: Employee agrees not to disclose to any third party or use for him/herself or anyone else Confidential Information without the prior written authorization of the company.
General Release of Claims: Employee releases company for any and all causes of action, lawsuits, charges or claims, including any claim of unlawful discrimination, that the employee may have prior to the date of the agreement.
No Pending Actions; Covenant Not to Sue: Employee represents that he/she has not filed or initiated any complaints prior to signing the agreement and agrees not to initiate or file any actions, lawsuits or charges asserting any of the released claims.

Disclaimer Allowing Workers to Bring Claims to the EEOC Not Enough

Recognizing that employers may not prevent workers from filing charges with the EEOC or participating in EEOC or state agency investigations, the paragraph containing the covenant not to sue contained a sentence stating “[n]othing in this paragraph is intended to or shall interfere with Employee’s right to participate in a proceeding with any appropriate federal, state or local government agency enforcing discrimination laws, nor shall this Agreement prohibit Employee from cooperating with any such agency in its investigation.” In its complaint, the EEOC says this disclaimer is insufficient as it is contained in only one of the paragraphs that contain limits on the employees’ rights.

What does this mean for employers?

It’s important to remember that the Court has not agreed with the EEOC’s allegations—and, in fact, it might reject them outright. Regardless, the risk of such actions is enough to justify a closer look at your standard separation or release agreement. Even an agreement that has been repeatedly reviewed and revised can likely be improved for clarity. Make sure the agreement is understandable, does not contain excessive “legalese,” and it should not contain provisions that interfere with an employee’s right to file a charge with the EEOC or state agency.

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January 30, 2014

Firing for Off-Duty Medical Marijuana Use to be Reviewed by Colorado Supreme Court

By Emily Hobbs-Wright

The Colorado Supreme Court announced that it will review last year’s lower court decision that upheld the termination of an employee who tested positive for marijuana but was unimpaired at work following his off-duty marijuana use for medical reasons. As we previously wrote on this blog (see this post), last April, the Colorado Court of Appeals ruled that using pot during non-working hours is not a “lawful activity” under the state’s lawful off-duty activity statute (C.R.S. §24-34-402.5). Coats v. Dish Network LLC, 2013 COA 62. The Court of Appeals reached its decision by relying on the fact that marijuana use remains illegal under federal law and therefore, medical marijuana use, though legal in Colorado, was not “lawful” for purposes of the Colorado lawful off-duty activity statute.

The Colorado Supreme Court will review two questions:

1. Whether the Lawful Activities Statute protects employees from discretionary discharge for lawful use of medical marijuana outside the job where the use does not affect job performance; and

2. Whether Colorado’s Medical Marijuana Amendment makes the use of medical marijuana “lawful” and confers a right to use medical marijuana to persons lawfully registered with the state.

Over the next few months, the parties will submit written briefs to the Court presenting their positions on these two questions. With the importance of this case for both Colorado businesses and the marijuana industry, watch for additional groups to ask permission to submit briefs advocating their respective viewpoints. Though the case before the Colorado Supreme Court deals with medical marijuana, the Court’s decision could establish precedent that would apply to the legal use of recreational marijuana. We will watch this case very closely and will report on any new developments as they occur.

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December 17, 2013

Colorado Raises Minimum Wage for 2014: Checklist for Complying with New Employment Developments

By Jude Biggs

A new year is just around the corner. Along with champagne toasts and resolutions to lose weight, January 1 typically brings new laws and regulations in Colorado. 2014 is no different. Colorado employers should plan now for the changes going into effect in 2014. It is also a good time to make sure you are in compliance with the new laws that took effect in 2013. Here is a checklist to help you stay on the right side of the law.

Colorado Minimum Wage Goes Up to $8.00 per Hour on January 1. The Colorado Division of Labor has adopted Minimum Wage Order 30 which raises the state minimum wage from $7.78 (2013) to $8.00 per hour, effective January 1, 2014. The state minimum wage for tipped employees increases to $4.98 per hour, also effective January 1, 2014. Colorado’s minimum wage is adjusted annually for inflation pursuant to the Colorado Constitution. If this applies to any of your workforce, update your payroll practices to comply with the new rate on the first of the year.
Marijuana may be Legally Purchased and Possessed on January 1. Adults may legally buy, use and possess small amounts of marijuana in Colorado beginning January 1st. Because marijuana is still illegal under federal law, Colorado employers may continue to have workplace policies banning its use by employees and prohibiting possession of marijuana on company premises. Review and if necessary, update your policies to reflect that use of controlled substances and drugs that are illegal under either state or federal law are not permitted. The new year is a good time to communicate this to your employees.
Rules Implementing Employment Opportunity Act (Credit History Law) Effective January 1. Colorado’s Employment Opportunity Act, section 8-2-126, C.R.S., was enacted last spring and went into effect on July 1, 2013, restricting an employer’s use of credit history information on employees and applicants. (See our post on that new law.) The Division of Labor has adopted new rules, 7 CCR 1103-4, that go into effect on January 1 to implement the provisions of the act. The new rules include a couple of new definitions and clarifications not found in the act itself, including that “consumer credit information” does not include income or work history verification and that “prevailing party” means the employee who successfully brings, or the employer who successfully defends, the complaint. The new rules also describe the enforcement mechanism for violations, including how complaints must be filed, the investigation process, initial decisions and appeals.
Rules Implementing Social Media and the Workplace Law Effective January 1. Last spring, Colorado enacted a law, found at section 8-2-127, C.R.S., that restricts an employer’s access to personal online and social media sites of employees and applicants. (We previously wrote on that law here.) The law went into effect on May 11, 2013 but new rules implementing the law go into effect on January 1, 2014. In large part, the rules, 7 CCR 1103-5, mirror the act itself but add that it is OK for an employer to access information about employees and applicants that is publicly available online. The new rules also detail the complaint, investigation, decision, appeals and hearing process.
2013 Family Care Act Extends FMLA Coverage to Care for Civil Union and Domestic Partners. Effective August 7, 2013, Colorado’s Family Care Act, section 8-13.3-201 et seq., C.R.S., extends leave benefits under the federal Family and Medical Leave Act (FMLA) to eligible employees to care for their civil union and domestic partners with a serious health condition. If you are a covered employer under the FMLA, ensure that your FMLA forms, policies and practices provide that eligible employees may take leave to care for a seriously ill or injured civil union or domestic partner. Also, for multi-state employers subject to the FMLA, remember that if you have employees in states that recognize same-sex marriages, the FMLA definition of “spouse” will include employees’ same-sex spouses due to the U.S. Supreme Court’s decision in United States v. Windsor (further discussed here).
Age 70 Cap on Colorado Age Discrimination Claims Eliminated in 2013. Colorado’s legislature enacted changes to the Colorado Anti-Discrimination Act (CADA). Effective August 7, 2013, there is no longer an upper age limit of 70 years old for age discrimination claims under CADA, section 24-34-301, et seq..C.R.S. This brings Colorado’s age discrimination law in line with the federal Age Discrimination in Employment Act which makes it unlawful to discriminate against employees and applicants on the basis of age 40 or older with no upper age limit.
Prepare for Changes in Remedies Available for Colorado Discrimination Claims Beginning January 1, 2015. Colorado added new remedies, including punitive damages, that may be recovered for violations of CADA for claims alleging discrimination or unfair employment practices that accrue on or after January 1, 2015, section 24-34-405. C.R.S. With a year to prepare, now is the time to get policies in place to address reasonable accommodations, complaint procedures and other good faith measures to resolve workplace discrimination issues.

Start the year off right by making sure you comply with these new developments in Colorado employment laws. We wish you a happy, healthy, prosperous and compliant 2014!

For more information, contact Jude at 303-473-2707 or jbiggs@hollandhart.com.

Disclaimer: This article is designed to provide general information on pertinent legal topics. The statements made are provided for educational purposes only. They do not constitute legal advice and are not intended to create an attorney-client relationship between you and Holland & Hart LLP. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.

December 9, 2013

Holiday Party Checklist—Plan Ahead to Minimize Employer Risks

By Mark Wiletsky

Delicious food, fine wines, music, camaraderie, laughter – all ingredients for a great holiday get-together. What could go wrong? Too much, unfortunately. Employees may drink too much, act inappropriately, offend co-workers or guests, hurt themselves or others, or even start a brawl. Depending on the circumstances, your company may find itself potentially liable for the inappropriate or unlawful actions of your employees at company-sponsored parties. You can help minimize the risks associated with holiday parties by following these five tips.

Avoid or Limit Alcohol

Employers face potential liability when providing alcohol at a company holiday event when someone gets hurt due to drunk driving, falling down, etc., or when inappropriate behavior crosses the line from embarrassing to unlawful, such as sexual harassment or violence during an argument. You can limit your company’s exposure for such conduct by either banning alcohol entirely (we know that may not be well-received in some situations), or limiting each person’s consumption through the use of drink tickets or a 2-drink limit. If you choose to allow alcohol at your events, don’t allow free access to the alcohol (e.g., open bar, self-serve beer or unlimited wine bottles). Instead have a professional, licensed bartender serve the alcohol as they are trained not to over-serve patrons. Be sure to offer plenty of food and non-alcoholic beverages. Arrange for taxis or hotel stays if someone over-indulges. Schedule the event during the week so folks are less inclined to get carried away. Set an end time for the party and shut down the bar at least a half hour before the event closes. Do not authorize or condone “after parties.” Finally, designate some supervisors or managers to refrain from drinking alcohol to make sure things don’t get out of hand.

Keep Harassing Behavior in Check

Make sure that your sexual harassment policy is up-to-date and that it applies to company parties, even if held off company premises. Send out a reminder to employees in advance of the party that all company policies, including those prohibiting harassment and other inappropriate conduct, apply to the party. Consider making the event a family party where employees may bring their spouse, significant other, or children as the presence of family members and children often deters inappropriate behavior which could give rise to a harassment complaint. Make sure that supervisors and managers watch out for potentially harassing conduct and are trained to intervene as necessary.

Respect Religious Differences and Keep the Party Neutral

Although many holidays toward the end of the year are religious in nature, be sensitive to your employees’ varying religious beliefs and avoid any conduct that could be construed as favoring one religious group over another. Refrain from calling your party a “Christmas Party” and stick with the neutral “Holiday Party” instead. Do not make attendance at the company-sponsored events such as parties, volunteer activities, food drives or other holiday outings mandatory. Make sure the timing of the company party does not exclude any employees for religious reasons. For example, because the Jewish Sabbath starts on Friday night, a party on a Friday evening may exclude Jewish employees. Avoid decorating with religious symbols, such as nativity scenes, menorahs or angels. There are plenty of neutral decorations, such as snowflakes, holly and reindeer, that can be used instead.

Be Wary of Gift Exchanges

Gift exchanges between employees may seem innocuous enough, but consider the potential issues a gift exchange may cause. Employees may not be able to afford to participate, even within a recommended cost guideline. Other employees may give sexy or “funny” gifts that end up offending others. The best practice is to avoid a company or department sponsored gift exchange altogether. If you decide to allow one among your employees, make sure it is entirely voluntary and no one is pressured or made to feel uncomfortable for not participating. Set cost guidelines and remind participants that gifts must be appropriate for the workplace.

Remember Wage and Hour Laws

If you assign any non-exempt employees to plan, prepare for and staff the party, their hours are likely work hours for which they must be paid. For example, if your office receptionist is required to be at the door of your holiday party to greet guests and hand out name tags, that individual is likely working and you need to include those hours in his or her weekly work hours when determining regular and overtime wages. You do not need to pay employees who are attending the party if their attendance is voluntary and they are not expected to provide services that benefit your organization.

Follow this checklist and you’ll avoid last minute holiday headaches and keep your organization out of trouble.

November 14, 2013

No Age Discrimination Established by “Shelf Life” Comment

By Mark Wiletsky

An HR manager asks about an employee’s “shelf life” in an instant message to another HR manager. Evidence of age discrimination? The employee argued it was, but the Tenth Circuit Court of Appeals ruled it was not. In Roberts v. IBM, the Court recently held that the comment did not amount to direct evidence of age discrimination and “was nothing worse than an inartful reference to [the employee’s] queue of billable work.” The employee’s alternative argument that the term “Project Blue” somehow constituted evidence of age discrimination similarly failed.

Employee Terminated For Poor Performance

George Roberts worked for IBM and was assigned to provide technical assistance to one of IBM’s clients, the Williams Companies (Williams). Williams’ employees repeatedly complained about Roberts’ work, resulting in a critical performance review. Although a subsequent review reflected some improvement, he later received more criticism. IBM offered Roberts the option of resigning with a severance package or committing to a 60-day performance improvement program with the understanding that failure to show sustained improvement would lead to termination. Roberts chose to complete the program. Once again, although he showed some improvement, the client continued to complain. IBM terminated Roberts for his continued negative performance.

Absence of Direct Evidence of Age Discrimination

Roberts sued IBM in federal court, alleging that instant messages between two HR managers showed that IBM fired him because of his age. The HR managers were discussing whether IBM should eliminate Roberts’ position because he did not have enough billable work to do. One of the HR managers questioned Roberts’ “shelf life,” which he argued referred to his age. The Court, however, disagreed, finding that the fair reading of the comment within the context of their discussion was that it referred to his workload, not his age. The Court found that any inference related to the “shelf life” comment would, at most, be circumstantial rather than direct evidence of age discrimination.

Roberts then asserted that the name “Project Blue,” which was IBM’s program of eliminating positions that were not cost-justified, constituted direct evidence of age discrimination. Surmising that Roberts believed that “blue” referred to older people who sometimes have blue hair, the Court rejected the argument, stating that the HR department’s use of the color blue cannot reasonably be taken as a reference to anyone’s age, especially in light of the fact that IBM is itself often called “Big Blue.” Moreover, because Roberts was not terminated as part of that project but through a different process months later, the project name could not lead to the conclusion that IBM fired him because of his age.

No Evidence of Pretext

Leaving no stone unturned, the Court then considered whether Roberts’ claim could proceed as a circumstantial case of age discrimination. Under the McDonnell Douglas burden-shifting analysis, if a terminated employee can establish a prima facie case of discrimination, the burden shifts to the employer to provide a legitimate, non-discriminatory reason for firing the employee. Upon such showing, the employee can still succeed on his or her claim by establishing that the employer’s reason is a mere pretext for discrimination. In this case, assuming (without deciding) that Roberts could establish a prima facie case of discrimination, the Court held that Roberts could not show that IBM’s legitimate, non-discriminatory reason for terminating him was pretext.

Roberts’ poor performance was well-documented and even if there were times where his performance improved, the prior improvements were not sufficient to show that later unsatisfactory evaluations were pretextual. Roberts also tried to show pretext by pointing to a handful of other employees for whom IBM received customer complaints but who were not disciplined for it. The Court found that some of the other employees were not similarly situated as they were not supervised by the same HR manager as Roberts. In addition, none of the other employees had the extensive history of performance issues as Roberts. Therefore, the Court held that Roberts failed to establish any sign of pretext.

The Court went on to reject Roberts’ state law claims as well.

Even Informal Communications Can Land You in Court

While IBM won this case, it also serves as an important reminder for managers and human resources personnel to be careful when discussing employees via e-mail and instant messaging. Avoid using words or phrases that can be taken out of context or have multiple meanings. It is sometimes easy to use shorthand or be informal when communicating via e-mail, or text or instant messaging. But such communications are discoverable, and when taken out of context or misinterpreted, they can turn an otherwise legitimate termination into a hotly contested case. To avoid that from happening, train your managers, supervisors and HR personnel to draft all communications carefully and deliberately, even if using more informal communication technology.

October 14, 2013

“Pretaliatory” Firing Recognized as Wrongful Discharge Claim in Utah

By Elizabeth T. Dunning

Does an employee have to actually file a workers’ compensation claim to be protected from retaliatory termination? No, says the Utah Court of Appeals. In the recent Stone v. M&M Welding and Constr. Inc. decision, the Court ruled that an employee who was fired after expressing his intention to file a workers’ compensation claim could pursue a retaliatory discharge claim even though he failed to actually file his worker’s comp claim until eight months after he was fired.

Employee Discusses Desire to File Workers’ Compensation Claim

Terry Lee Stone was injured at a party hosted by M&M Welding and Construction in November of 2009. Within days of the injury, Stone informed the company president that he wanted to file a workers’ compensation claim. The president dissuaded Stone from doing so, instead holding his position open for two months until he could return to work. Upon his return, however, Stone’s hours were reduced. In March and April of 2010, Stone again informed the company that he intended to file a workers’ compensation claim, but failed to do so.

In early May, a customer demanded that Stone be fired, believing that he exaggerated in reporting a spill of contaminated water at the customer’s site. A few days later, Stone contacted M&M to obtain insurance information for his workers’ compensation claim. M&M fired him the following day. Stone sued, alleging that M&M terminated him in retaliation for expressing his intent to file a workers’ compensation claim. M&M argued that because Stone did not file his workers’ compensation claim until eight months after he was fired, his termination could not be in retaliation of the filing. The trial court agreed, awarding summary judgment to M&M.

Utah Court of Appeals Rules that Notifying Employer of Intent to File Workers’ Compensation Claim is Enough

On appeal, the Court pointed to the Utah Supreme Court’s decision in Touchard v. La-Z-Boy Inc. which recognized that “retaliatory discharge for filing a workers’ compensation claim violates the public policy of this state; thus, an employee who has been fired or constructively discharged in retaliation for claiming workers’ compensation benefits has a wrongful discharge cause of action.” In Stone, the Court of Appeals extended the basis for a wrongful discharge claim by concluding that conduct short of actually filing a workers’ compensation claim was protected conduct. The Court wrote that preparing a claim, notifying the employer of the intent to file a claim or discussing his claim with coworkers could be sufficient to support a claim of retaliatory discharge. In Stone’s case, he had repeatedly expressed to the company president and others that he intended to file a workers’ compensation claim so that conduct was sufficient to proceed with his retaliatory discharge lawsuit.

Policy Behind Recognizing “Pretaliatory” Discharge

The Court recognized that a rule that protected employees only after they actually filed a workers’ compensation claim “would create a perverse incentive for an employer to discharge an injured employee as soon as the employer learns of the employee’s intention to file a claim.” The Court found such a rule would contradict the important public policy embodied in the state’s workers’ compensation act.

The Court’s ruling also squares with the conduct that can underlie a retaliation claim under other employment laws. For example, retaliation claims under Title VII can be based on conduct where the employee either opposes workplace discrimination or participates in a discrimination claim, investigation or proceeding. “Opposing” discrimination can include the threat of filing a discrimination charge as well as complaining about or reporting discrimination at work. The Stone decision recognizing a retaliation wrongful discharge claim based on an employee’s expressed intent to file a workers’ compensation claim is analogous to the “opposition” retaliation claims recognized in such other employment laws.

Employer Take-Aways

Employers should be careful when making adverse employment decisions related to an employee who has either filed a workers’ compensation claim or is preparing to do so. Decisions should be unrelated to the claim or threat of claim and should be based on a reason that can be clearly articulated and is supported by thorough documentation. Anything less may lead the affected employee to conclude that the adverse action was in retaliation for the workers’ compensation claim and make it difficult to defend a retaliation lawsuit.