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Thank You

I’d like to thank my colleagues who voted me as one of the Top 100 lawyers in Minnesota in 2013:

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The Court giveth, and the Court taketh away

Kim Hansen has just learned the hard way about the adage: “you can win the battle but lose the war.” She sued her former employer, Robert Half International, for violations of the Minnesota Parenting Leave Act, Minn. Stat. §§ 181.940-181.944. She won on the first question presented to the court, which held that an employee is only required to state a qualifying reason for leave under the Act to invoke its protections, and need not specifically refer to the Act itself. Unfortunately for Ms. Hansen, the court went on to find that RHI terminated her employment as the result of a bona fide reduction in force, and there was no evidence that her pregnancy was a factor in the termination decision. Thus, she lost the war.

RHI is an international staffing service; part of its business is placing legal professionals on temporary and permanent basis. Hansen was hired in 2004 as a staffing manager. In 2006, she requested a transfer to a different division after return from maternity leave for the birth of her first child. Hansen wanted the transfer so that she could work a reduced schedule and better manage her child’s daycare schedule. The transfer was approved, and Hansen was promoted to division director in January 2008. Unfortunately she underperformed in her new role, and was demoted to her previous role later that year.

Hansen gave birth to her second child at the end of August 2008 and started her leave of absence that same day. RHI sent her a letter confirming that her leave was short-term disability/FMLA. She returned to work on December 1, 2008.

Unfortunately, the economic downturn that began in 2008 dramatically impacted RHI’s business, and the company was required to lay-off employees. Hansen’s position was selected for elimination because her production numbers were consistently the lowest of all employees in the Minneapolis office and the Central Zone.

After her lay-off, Hansen sued RHI, alleging that it violated the Parenting Leave act by failing to reinstate her to her position or a comparable position after her maternity leave. After discovery, RHI moved for summary judgment, and the district court concluded that Hansen had no right to reinstatement because employees must request leave under the Act by name (which Hansen failed to do). The Court also found that Hansen was terminated as a result of a bona fide reduction in force, which eliminated her reinstatement rights under Minn. Stat. § 181.942, subd. 1(b). After the Court of Appeals affirmed, the Supreme Court took up the issue.

The first issue, then, was whether an employee must use “magic words”; i.e. whether she must expressly request leave under the Act by name. Relying on its plain language, the Supreme Court agreed with Hansen that no magic words are required; an employee need only inform her employer of the conditions necessitating the leave (e.g. birth or adoption, school conference, or illness or injury to a child) to claim its protections.

This was a short-lived victory for Hansen, however, as the Supreme Court then affirmed the District Court’s finding that her termination resulted from a RIF and was not related to her pregnancy or maternity leave. Relying on the familiar burden-shifting framework of McDonnell Douglas v. Green, and its own holding in Dietrich v. Canadian Pacific that when an employee is discharged pursuant to a bona fide reduction in force she must make some “additional showing” that sex was a factor to establish a prima facie case, the Court concluded that Hansen offered no evidence from which a fact finder might reasonably conclude that RHI intentionally discriminated. Thus, her claim was properly dismissed.

So while employees need not invoke magic words to be protected, they better find some magic in increasing those production numbers before a RIF!

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New EEOC Guidance on Treatment of Arrests and Convictions in Hiring

I have written about this issue several times before, but now the EEOC has issued a new Enforcement Guidance addressing the use of arrest and conviction records in hiring. Its Guidance on Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 narrows the circumstances under which applicants can be excluded based on arrest or conviction records.

The most significant change in the EEOC’s new Guidance is that it places a higher burden on employers to prove that use of arrest or conviction records is “job related and consistent with business necessity.” As a result, employers should conduct an individualized inquiry into the circumstances surrounding each applicant’s arrest or conviction record, and then consider whether not hiring the individual based on that record is consistent with business necessity.

I continue to counsel employers to focus on conviction, not arrest, records, because it is much easier to defend decisions made on that basis.

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A Tale of Two FMLA Plaintiffs

Two different FMLA plaintiffs fared very differently in cases decided last week. In the first, Fries v. TRI Marketing Corp., Judge Joan Erickson denied TRI’s motion for summary judgment and allowed Ms. Fries’ FMLA interference and retaliation claims to be heard by a jury. In the second, Ballato v. Comcast Corp., the Eighth Circuit upheld a grant of summary judgment in favor of the employer by Judge John Tunheim.

Fries worked for TRI as a telemarketer and administrative assistant for about four years. She suffered from a number of medical conditions, and had been warned by her supervisor about taking an excessive number of breaks. On Friday, Fries missed work because of severe pain. On Sunday, she went to the emergency room. While there, she contacted her supervisor by text and informed her that she was in the hospital and had a doctor’s note to miss work on Monday. Her supervisory texted her back, informing her that if she missed work on Monday she would be fired. Because she was in extreme pain that day, Fries did not go to work on Monday.

Fries did return to work on Tuesday, even though she was still in extreme pain and vomiting. She also had a catheter drainage bag which was visible to her co-workers. Her supervisor tried to send her home, but Fries refused to leave. On Wednesday, Fries was summoned to the office of the company’s owner. At first, he told her that she was being suspended. When she told him that that would be illegal and threatened to contact a lawyer and sue, the owner fired her. At deposition, the owner testified that her threat to sue the company was “a little bit” of the reason for her termination. He also provided her with a written statement that read: “Originally was suspended for 30 days, threatened to sue company and management. It was then decided that termination was the best option.” The owner later gave a similar written statement to Fries’ lawyer.

Fries sued, alleging both interference and retaliation under the FMLA. Her interference claim was premised on the fact that the company suspended and then terminated her as a result of missing work due to her medical condition. TRI raised four different arguments at summary judgment: (1) Fries was not qualified for leave because her condition did not qualify as a “serious health condition”; (2) she failed to provide the required notice of the need for leave; (3) the company did not deny her any FMLA benefit because it granted her leave; and (4) Fries’ termination was unrelated to her leave.

Judge Erickson rejected each of these arguments. As to the second argument, lack of notice, she indicated that an employee need not invoke the FMLA by name to put an employer on notice, and that the employer knew from Fries’ texts, doctor’s note and catheter bag that she was ill. Combined, these were sufficient to put the company on notice that her absence might be covered by the FMLA.

Fries’ retaliation claim survived largely because of the statements of the company’s president linking her termination to her threat of suing the company. “If the jury believes Fries’ testimony that her threatened lawsuit was related to the illegality of her suspension, . . . the [owner’s deposition] testimony, the termination letter, and [her supervisor’s] statement are direct evidence of retaliation.”

The lesson for employers: don’t fire an employee right after she threatens to sue you for violating her federally-protected rights, and don’t indicate that was the reason in a termination letter!

George Ballato did not fare as well as Ms. Fries in his FMLA case. Ballato worked as a customer account executive for Comcast. He applied for and was granted intermittent FMLA leave due to chronic fatigue and depression. Under Comcast’s policies, an employee approved for intermittent leave must contact a particular department at the company when he needs to use leave.

After Ballato returned from 11 days of FMLA leave and a week of bereavement leave following the death of his mother, he sent several emails to his HR representative expressing dissatisfaction with his job and the pressure he felt he was under. The next day, he met with the HR rep to ask if he could collect unemployment if he resigned. Over the course of the next several days, Ballato sent a series of emails to other Comcast employees, including one to a vice president asking that he stop sending Comcast “propaganda”. On June 4, he sent an email to his supervisor asking about his status as a Comcast employee. When he was assured that he was still an employee, Ballato wrote: “That’s great! I can’t wait to get back on the phones to truly educate our customers!”

Because Comcast viewed some of Ballato’s emails as “disturbing”, the company deactivated his access to Comcast’s computer systems and building that Friday. An HR manager called Ballato twice that afternoon and left messages asking him to call, but Ballato did not return the calls because he was afraid he was being terminated. Ballato did call the designated department before his shift that afternoon to request FMLA leave. That department told Ballato he should call his supervisor. Ballato did not do so. When Ballato went to the building and was denied entrance because his badge was deactivated, he went home but did not call anyone at Comcast about the badge issue.

Because he believed that he had been fired, Ballato did not report to work as scheduled on the following Monday and Tuesday. As a result, Comcast fired him for three consecutive unexcused absences.

Ballato alleged that Comcast had interfered with his rights under the FMLA. The 8th Circuit noted, however, that the act does not impose “strict liability” on employers for interference claims. Rather, if there is evidence of interference, the burden shifts to the employer to prove that there was a reason for the termination unrelated to the employee’s exercise of FMLA rights. “An employee who requests FMLA leave has no greater protection against termination for reasons unrelated to the FMLA than she did before taking the leave.”

(The court also offered this nugget that will gladden the hearts of management lawyers and worry plaintiff’s attorneys: “The employer is not bound strictly to the reason provided to the employee for termination.”)

 In the end, the court upheld Judge Tunheim’s grant of summary judgment because Ballato’s termination was consistent with Comcast’s three-day unexcused absence policy, and because Ballato had not tried to resolve any confusion over his status with the company.

The lesson for employees: passive-aggressive behavior is not usually a winning legal strategy.

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An overview of “minor” employment claims in Minnesota

A recent decision by Federal District Court Judge David Doty in Laitinen v. Per Mar Security provides an excellent overview of some of the less common claims that can arise in employment disputes.

Laitinen was a general manager for Per Mar. He was fired for allegedly falsifying training certificates. Laitinen vigorously disputed this allegation and sued in response. His Complaint included five separate state-law claims. Per Mar moved to dismiss each for failure to state a claim under Rule 12.

Unpaid Commissions: Laitinen alleged that he was not paid commissions in violation of Minn. Stat. § 181.145. Per Mar correctly pointed out that that statute only applies to independent contractors, not employees. Laitinen should have sued under § 181.13.

Defamation: Laitinen’s boss allegedly told a former employee at a restaurant that he was going to terminate Laitinen for falsifying training certificates, which Laitinen maintains is untruthful. Because the allegedly untrue statement was made to a former employee at a public restaurant, it had no proper purpose and thus was not protected by any qualified immunity.

Breach of Contract: Laitinen alleged that the employee handbook created a unilateral contract, and that Per Mar breached it because it did not give him three written counseling reports before firing him as required. An employee handbook can create an employment contract if its terms are definite, they are communicated to the employee, the offer is accepted, and consideration is provided. (Most employers avoid these claims by including explicit contract disclaimer language in their handbooks; it’s not clear whether Per Mar’s had such language.) Here, the “meager” facts in the complaint, when viewed with “judicial experience and common sense”, were sufficient to survive a motion to dismiss.

Breach of Implied Covenant of Good Faith and Fair Dealing: There is no such implied covenant in employment contracts under Minnesota law.

Unjust Enrichment: Laitinen claimed that Per Mar was unjustly enriched because it did not compensate him for new customers that he acquired. This requires a showing that Per Mar “knowingly received something of value to which [it] was not entitled, and that the circumstances are such that it would be unjust for [it] to retain the benefit.” Because it is an equitable doctrine, however, no recovery is permitted where there is an adequate remedy at law. As Laitinen has a remedy under Minn. Stat. § 181.13, this claim was dismissed.

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Upcoming CLE on ADA issues

I will be presenting at this CLE on Thursday, March 29, 2012 from 9:30 a.m. to 12:00 p.m. with attorneys from the Minnesota Disability Law Center and the Housing Discrimination Law Project. If you have an interest in the ADA, this should be a good CLE.

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No CFAA Relief for Employer

There has been a vigorous dispute in the federal courts over the extent to which the Computer Fraud and Abuse Act (“CFAA”) may be used by employers to impose civil liability on employees who access confidential or trade secret information with an improper purpose (i.e. to start a competing company). Judge David Doty has now joined two of his Minnesota colleagues in adopting a narrow interpretation of the Act, holding that there must be allegations of unauthorized access, not just improper use, in order to state a claim under the Act.

Defendants Keith O’Brien, Ian Scott and David Serrano were officers of Plaintiff Walsh Bishop Associates, an architectural firm. As principals and members of the executive committee, all three were given access to the “highest level” of the company’s confidential and proprietary information. Walsh Bishop alleges that the three misused that information to start a competing company and, represented by Debra Weiss and Mary O’Brien of Meagher & Geer, sued the three and their new firm in federal court for violations of the CFAA, the Minnesota Trade Secret Act, and a variety of other statutory and common law claims. (Presumably attorney O’Brien is not related to Defendant O’Brien, or we might have an interesting variation on the “Adam’s Rib” scenario). Defendants, represented by George Wood of Littler Mendelson, moved to dismiss for failure to state a claim.

The CFAA subjects a person who “intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains . . . information from a protected computer” to imprisonment and a fine. A civil cause of action exists in certain circumstances, but courts have been split on whether the CFAA imposes civil liability on employees who access information with permission but with an improper purpose. Based upon his analysis of the statutory language and legislative purpose of the CFAA, Judge Doty followed the lead of two earlier decisions in Minnesota and adopted “a more narrow view and focus on the scope of access rather than the misuse or misappropriation of information.” “No language or history concerning the CFAA suggests that Congress intended to provide a federal cause of action for state-law breach of contract, fiduciary duty, trade secret or other business-tort claims.” Accordingly, the Court dismissed the CFAA claim (as well as federal claims under the Electronic Communications Privacy Act and the Lanham Act) and declined to exercise supplemental jurisdiction over the state law claims, requiring Walsh Bishop to re-file them in state court.

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When is a replacement “sufficiently younger” to establish age discrimination?

The Eighth Circuit Court of Appeals issued an opinion this week that contains a couple of interesting nuggets for age discrimination claims.

Karen Chambers sued her former employer, The Travelers Companies, on a variety of claims, including age discrimination. At the time of her discharge, Chambers was 52; she was initially replaced by a 51-year-old, and then several months later by a 44-year-old. The district court had assumed, without deciding, that Chambers was replaced by a “sufficiently younger” employee to establish a prima facie case and raise an inference of age discrimination. The Court of Appeals concluded that this “cautious assumption” was unwarranted, and held that the grant of summary judgment to Travelers was appropriate because Chambers failed to show that either of her replacements was sufficiently younger. (Not surprisingly, the Court offered no guidance on what age spread might be sufficient.)

The other interesting holding was the Court’s rejection of Chambers’ argument that Travelers’ failure to follow its own personnel policies might indicate pretext or create a reasonable inference that age was the reason for her discharge. Relying on its previous decision in Haas v. Kelly Services, the Court reaffirmed that an employer’s failure to follow its policies does not create an inference of discrimination.

Maybe those plaintiffs’ lawyers who complain about how hard it is to win before the 8th Circuit have a point after all!

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Section 1981 is alive and well

I recently told the students in my Employment Discrimination class that we don’t see many claims brought under Section 1981 of the Civil Rights Act of 1866. As if to prove me a liar, the Eighth Circuit just this week affirmed a grant of summary judgment in a retaliation case under that very Civil War era statute.

Richard Gacek worked for Owens & Minor Distribution in its warehouse. In 2008, one of his black co-workers sued the company for race discrimination and Gacek, who is white, provided deposition testimony supporting his claim. Several months later, following an investigation into another employee’s complaint about him, the company fired Gacek for “violations of company policy, including but not limited to creation of a hostile and intimidating work environment and engaging in unsafe work practices.” Gacek filed a lawsuit under 42 U.S.C. § 1981 alleging that he had been fired in retaliation for “attempting to vindicate the rights of minorities” protected by the statute when he gave favorable deposition testimony.

Section 1981 claims are analyzed under the same McDonnell-Douglas framework as Title VII cases. Owens & Minor claimed that it terminated Gacek for legitimate reasons unrelated to his deposition testimony: his multiple violations of company policies. Gacek argued that this reason was pretextual because other employees who had violated the same policies were not terminated. The Court rejected Gacek’s argument, however, finding that these other employees were disciplined for single incidents, whereas he was terminated for accumulating multiple violations. “Because none of the proffered single incidents is of comparable seriousness to the litany of violations accumulated by Gacek, the purported evidence of disparate treatment fails to meet the ‘rigorous’ test at the pretext stage for determining whether employees who were treated differently are similarly situated to the plaintiff.” As Gacek presented no evidence from which a jury could conclude that the employer’s proffered reason for his termination was pretextual, summary judgment was appropriate.

Other than serving as a reminder that section 1981 is still a viable cause of action, this case illustrates the difficulty of finding similarly-situated employees when a plaintiff is terminated for multiple reasons.

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Rights under FMLA may begin before leave itself

Although it is not directly applicable to Minnesota employers, an appellate court in Florida recently held that the Family and Medical Leave Act protects a pregnant worker who was fired after she requested leave, even though she was not eligible for FMLA leave when she made the request, because she would have been eligible at the time the leave was to have been taken.

Ms. Pereda began working for Brookdale Senior Living Facilities in October 2008. In June of 2009, before she had met the 12-month eligibility requirement for the FMLA, Ms. Pereda told her employer that she was pregnant, and due to give birth at the end of November. According to Ms. Pereda, after she disclosed her pregnancy and her future need for leave, she was subjected to harassment and retaliation when she used accrued sick and vacation days to deal with pregnancy-related complications. Ultimately, in September 2009 she was fired, after eleven months of employment and more than two months before her leave was scheduled to begin. She sued for interference and retaliation under the FMLA, claiming that Brookdale denied her rights under the FMLA to which she was entitled and terminated her for attempting to exercise those rights.

The appellate court held that if employees are not protected against pre-eligibility interference with their rights under the FMLA, it would create a loophole and allow employers the freedom to terminate an employee before she can ever become eligible for leave. Because the FMLA requires thirty days’ advance notice of intent to take leave whenever possible, the Court continued, logic mandates that the FMLA must protect employees who, like Ms. Pereda, meet or exceed the notice requirement. Accordingly, the Court held that a pre-eligible request for post-eligible leave is protected activity under the FMLA.

This decision is a good reminder that employers should take care before terminating an employee who has discussed or requested FMLA leave, even if that the employee is not yet eligible for leave.

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