Labor and Employment Update - Winter 2007

 DEFENDING AGAINST SEXUAL HARASSMENT CLAIMS – 101

Even the most basic training materials related to an employer’s best practices to avoid liability for sexual harassment claims will include these three tips: 1) adopt and implement a strong anti-sexual harassment policy; 2) take immediate steps to investigate all complaints; and 3) employ necessary remedies to eliminate inappropriate or offensive conduct. A recent decision from the New Jersey Appellate Division highlights the benefits to be gained from following this advice.

In Fernandez v. Pathmark Stores, Inc. and Flores, the Appellate Division court affirmed summary judgment in favor of Pathmark on claims brought pursuant to the New Jersey Law Against Discrimination (“NJLAD”).

THE FACTS

Rafaela Fernandez, an employee in the bakery department of the Linden, New Jersey, Pathmark store, entered into a intimate relationship with Jesus Flores, who worked in the meat department of the same store. Fernandez ended the relationship against the wishes of Flores. Sometime thereafter, while Fernandez was leaving work, Flores followed her to her car, slapped her in the face, and made a derogatory remark. Fernandez reported the incident to store managers, who promptly investigated the incident. Pathmark management warned Flores to stay away from Fernandez or he would be fired.

Over the course of the next seventeen months, Flores confronted Fernandez on five separate occasions, both at and outside of work. However, Fernandez did not inform her work supervisors, and Pathmark was otherwise unaware of these incidents.

Early in 2001, Flores was transferred to another Pathmark store after Pathmark supervisors learned that Flores had confronted Fernandez in the bakery department and grabbed her by her wrist. Thereafter, Fernandez was diagnosed with posttraumatic stress disorder and major depressive disorder, and consequently was unable to continue working.

THE LAWSUIT

Fernandez sued Pathmark under the NJLAD, alleging that Pathmark failed to adequately investigate and remedy Flores’ sexual harassment. Pathmark filed a motion for summary judgment on the basis that (1) Flores’ actions were not related to Fernandez’s gender; (2) Flores did not hold a supervisory position; (3) Flores’ conduct was not severe or pervasive; and (4) Pathmark took timely and appropriate action to remedy the situation.

In affirming the trial court’s decision to grant Pathmark’s motion, the Appellate Division held that Flores’ conduct did not rise to the level of actionable conduct under the NJLAD and that vicarious liability could not be established under the circumstances. Equally important, the court specifically noted Pathmark’s procedure for reporting sexual harassment along with its swift and appropriate response to each of Fernandez’s complaints.

But for this proactive policy and procedure, Flores’ egregious behavior could have escalated to a level that exposed Pathmark to liability and exposed Fernandez to risk of serious injury.

APPLICATION

Getting back to the three tips to avoid liability for sexual harassment, a few annotations need to be added:

1) adopt and implement a strong anti-sexual harassment policy – such a policy should apply to all employees, regardless of pay grade, level of responsibility, or number of hours worked;

2) take immediate steps to investigate all complaints – small steps now can avoid big problems in the future; and

3) implement necessary remedies to eliminate inappropriate or offensive conduct – effective remedies do not necessarily include drastic measures, sometimes a company wide e-mail, lunch room posting, and/or brief training session can eliminate known and unknown problems.

TIME HANGS ON

Rehiring ex-employees is a prevalent practice. It has many advantages, but consider this: an employee who worked for you in the past for about 10 months returns back to work for you after a couple of years, and after about 7 months of long 50 hour weeks, requests 12 weeks of medical leave. Do you have to grant that request? At least one court says “Yes”. Here is why:

Under The Family and Medical Leave Act, (“FMLA”) a Qualified Employee is one who has worked for an employer for 12 months (the “12 Month Period”) and has worked for 1,250 hours in the preceding 12 months. There are regulations and previous cases about how the 1,250 hours are calculated. Employers use different formulas. However, it was not until the First Circuit decided Kenneth Rucker v. Lee Holding Co., that the issue of how the 12 Month Period should be calculated was addressed.

In a case of first impression, the First Circuit held that the 12 Month Period not only relates to consecutive employment, but also relates to non-consecutive employment. Therefore, if an employee has worked for 1,250 hours in the preceding 12 months, and worked for a total of 12 months with an employer, whether or not those 12 months were consecutive, the employee is a “Qualified Employee” under the FMLA.

Kenneth Rucker worked with Lee Auto Malls (“Lee”) for five years, after which he left. Five years later he rejoins as a full time employee. Seven months after rejoining, Rucker took medical leave. Lee terminated Rucker’s employment. Rucker questioned his termination and filed a suit. In his complaint, Rucker contended that under FMLA he was entitled to medical leave without being terminated as he had completed 1,250 hours of work since he rejoined and had worked for Lee for a total of 12 months. In support of his contention, he argued that the 12 Month Period should comprise of the months he worked during his first employment as well as the months he worked during his second employment.

The District Court disagreed with Rucker’s position and reasoned that the termination was valid, and Rucker could not combine the term of his first employment with the term of his second employment to satisfy the 12 Month Period requirement of the FMLA.

On appeal, the First Circuit reversed the District Court’s decision, and held that an employee who has had a break in service may count previous periods of employment with the same employer toward satisfying the 12-month requirement of FMLA.

With this Opinion, the First Circuit has expanded the job security provided by FMLA.

MANDATORY ARBITRATION POLICIES AND RELATED COMMUNICATIONS MUST

BE DRAFTED CAREFULLY

On January 26, 2007, Judge Timothy Savage of the United States District Court for the Eastern District of Pennsylvania ruled that a mandatory arbitration provision implemented by Sunoco, Inc. was unenforceable because of its vague and ambiguous language.

The case involved claims brought by a former Sunoco employee who alleged that he had been terminated on the basis of age and race in violation of federal law. Once suit was filed, Sunoco moved to compel arbitration of the complaint under the Company’s mandatory arbitration policy. The court reviewed the arbitration policy at issue and the communications and procedures that had surrounded the announcement of the policy, and denied the Company’s motion, holding that the “purported arbitration agreement is unenforceable because its ambiguous and conflicting language does not definitively state that arbitration of employment claims is mandatory.” (emphasis added).

The arbitration agreement at issue was part of an “ERA” program, which the Company had adopted just three months prior to the termination of employment. The program was announced in an email to all non-unionized employees, which stated that:

The Company has developed the Employee Resolution in Action (“ERA”) Program, effective May 1, 2004. ERA provides a system to more effectively handle problems that arise in the workplace.

The majority of the problems will be resolved through the first and second phases of the program, which are called the Open Door phase and the Internal Conference phase. However, if no resolution is reached through these phases and there is a legally protected right, an employee has the option to proceed to phase three, mediation, and phase four, Binding Arbitration.

The email concluded by stating that a booklet explaining the program would be distributed to employees and was also available via the internet. A second email referred to the ERA program as “provid[ing] a variety of options for resolving work-related concerns” and stated that “if no resolution is reached [during the first two phases] . . . an employee may then proceed to phase three, Mediation, and phase four, Binding Arbitration.”

Finally, the ERA booklet itself stated that “[i]f the issue . . . has not been resolved through the first three phases, you or the company can request arbitration.” Nowhere in the booklet was there a clear and definite statement that employees were waiving their right to a jury trial on employment-related claims. In a Q&A section of the booklet, the question was posed as to whether employees could sue Sunoco in court. Rather than answering with a short and direct “no,” the document stated that “[i]f you file a lawsuit, Sunoco attorneys will go before a judge, inform him or her of the Sunoco ERA Program, and ask that the case be dismissed and sent back to the ERA Program.”

In reviewing the record, Judge Savage found several problems with the Company’s approach to implementing its arbitration program. First, the Company was unable to establish that the employee had actually received notice of the program. The employee claimed he never read the email or saw the booklet, and the Company had no evidence to contradict these assertions, as there was no evidence that the employee ever opened the email or received a booklet. Moreover, even if he had read the email and documents at issue, the Court found that they were far too vague and indefinite to be enforceable. The Court noted that agreements to arbitrate are upheld only where it is clear that the parties have agreed to arbitrate their disputes in a “clear and unmistakable manner.” Sunoco’s communications, with the repeated use of “optional” rather than “mandatory” language, failed to give adequate notice to employees that they were waiving their rights to a jury trial in the courts. There was no clear and unmistakable statement that the arbitration process was exclusive and mandatory. As such, the arbitration agreement and policy was unenforceable.

Employers who have implemented mandatory arbitration agreements (or who are considering implementing such policies) are advised to review the terms of their policies and their policy-related communications to make sure that they are clear and unmistakable in alerting employees that the arbitration process is mandatory and that they are waiving their right to trial. While it may be tempting to couch the language announcing these provisions in soft or positive-sounding statements, in an attempt to preserve employee morale or try to “sell” the policy to employees, doing so may render the entire policy unenforceable.

The Labor and Employment Group represents and counsels employers in all aspects of the employment relationship, including EEO litigation, union avoidance, negotiations, arbitrations, executive compensation, corporate transactions, and non-competition/non-solicitation agreements, as well as compliance with federal and state laws such as the Family and Medical Leave Act, the Americans with Disabilities Act, the Health Insurance Portability and Accountability Act, the Fair Labor Standards Act and the Occupational Safety and Health Act. This document is published for the purpose of informing clients and friends of Klehr Harrison about developments in the areas of labor, employment and benefits, and should not be construed as providing legal advice on any specific matter. For more information about this publication or Klehr Harrison, contact Charles A. Ercole, Chair of the Labor and Employment Group, at (215) 569-4282 or visit the firm’s Web site at www.klehr.com

 ©Klehr, Harrison, Harvey, Branzburg LLP 2007. All rights reserved.