Labor and Employment Update - Spring 2005

ALERT: Corporate Employers Do Not Need Attorneys for Representation at Unemployment Hearings

On June 16, 2005, Governor Rendell signed “Senate Bill 464” which amends the state’s unemployment compensation law – – in part – – to clarify that any party in an unemployment benefit proceeding can be assisted either by an attorney or other representative. The amended law effectively reverses the February 2005 Commonwealth Court’s ruling in Harkness v. UCBR which we advised you about in a prior newsletter and/or employer alert bulletin. This provision of the law is effective immediately.

Klehr Harrison Lawyers Honored

For the second year in a row, Charles A. Ercole, was named by other lawyers as one of Pennsylvania’s top employment litigation lawyers in a survey conducted by the polling organization Law and Politics. Details concerning the selection process and the overall results of the survey are published in the June 2005 edition of Philadelphia Magazine or at www.superlawyers.com. A total of ten Klehr Harrison lawyers were selected in various practice areas.

Retaliation May Not Require Termination, Demotion or Discipline

New Jersey’s whistleblower statute, Conscientious Employee Protection Act (“CEPA”) has been described as one of the most far-reaching whistleblower statutes in the country. CEPA makes it unlawful for employers to take adverse employment actions against employees who disclose, object to or refuse to participate in certain actions that an employee reasonably believes is either illegal or in violation of public policy. Under CEPA, the employee’s belief does not have to be “correct” about his/her complaint; it just has to be an objectively reasonable belief that the actions are unlawful. Furthermore, unlike other whistleblower statutes, the employee is not required to make a complaint to any governmental or regulatory agency for CEPA to apply. It is sufficient that the employee complain to their supervisor.

Recently the Appellate Division, the intermediate appellate court in New Jersey, addressed what types of “adverse employment actions” were covered by CEPA in Beasley v. Passaic County and in Nardello v. Township of Voorhees. Prior to these cases, employees had difficulty showing retaliation if they were not disciplined, terminated, or demoted.

After Beasley and Nardello, that is no longer the case. The plaintiff in Beasley v. Passaic County worked as a supervisor at the Passaic County Juvenile Detention Center. He claimed that after he testified at a public meeting of the Board of Freeholders regarding deficiencies in the department, including poor training and insufficient staffing, he was subject to retaliation. This allegedly included being disciplined and investigated when other employees were not (although the disciplines were later overturned); being denied the opportunity to work overtime; being improperly transferred to another shift; and the County improperly opposing his request for workers’ compensation. The court recognized that all actions do not qualify as retaliation “merely because they resulted in a bruised ego or injured pride on the part of the employee.” Nonetheless, retaliation need not raise to the level of discharge or demotion to be actionable under CEPA. Ultimately, the court held that a pattern of conduct by an employer that adversely affects an employee’s terms and conditions of employment can qualify as retaliation under CEPA. Thus, Beasley’s claims were sufficient under CEPA.

Nardello involved a police officer who claimed he was retaliated against because he made complaints to his superiors and reported what he believed were illegal actions to the Prosecutor’s Office. Nardello was not demoted or fired and did not suffer any reduction in his salary. However, other action was taken against him, including denying him permission to attend a firearms training; removal from the detective bureau; and assigning him demeaning tasks. The Court held that this was enough under CEPA, saying “[w]hile many of the incidents are relatively minor . . . a jury could conclude that they combine to demonstrate a pattern of retaliatory conduct.”

The Beasley and Nardello cases demonstrate a further expansion of CEPA. An employee need not be discharged, demoted or disciplined to have a CEPA case. It may be enough for them to be subjected to several “minor” incidents, that when viewed together, may rise to the level of retaliatory conduct.

Blogs – The Latest Twist on Regulating Employee Behavior

For years, employers have wrestled with regulating employee use of the newest forms of electronic communication. That trend continues as the number of Internet “bloggers” grows exponentially and invades the mainstream.

The term “blog” refers to a personalized Web log, a form of on-line digest or diary, where a user or “blogger” can share opinions, commentary, news stories or Internet links with an audience of millions. Sound boring, unimportant, or irrelevant to your business? Don’t tell that to IBM, the New York Times, the State of Pennsylvania and just about any political candidate you can name, all of whom have used or have encouraged the use of blogs. Nevertheless, the vast majority of bloggers remain individuals with a story to tell, an opinion to share or some dirty laundry to air.

As of January 2005, more than eight million blogs had been published on the Internet and have reached more than 32 million blog readers. That equates to eight million employees, or worse, former employees, enforcing their free speech rights in a mostly unedited, uncensored and unauthorized manner.

Thankfully, most blog content is unrelated to the employer-employee relationship. However, when an employee broaches the subject, the result is often strained employer-employee relations and/or potential damage to the bottom line. For example, eleven employees were fired in 2004 for “blog-related” activity, including a Delta airline flight attendant who posted suggestive pictures of herself in uniform in various poses throughout the plane on her blog; a Google employee who discussed company finances on his blog; and a Starbucks employee who posted comments about the company, management and customers on his blog.

It is not a long leap from these infractions to something with much greater consequences, like publishing customer lists, secret processes or other trade secrets. In fact the danger to employers grows stronger every day as the blogging community doubles every 5 months, a new blog is created every 2.2 seconds, and 5.8 blog posts are recorded every second.

Many argue that blogging is no different from conversations held around the water cooler. However, blogs present the opportunity to be the journalist, editor, and publisher of your own Internet newspaper with a subscriber base of virtually anyone with access to a computer.

What does this mean to employers? The answer to this question is still unclear as the case law continues to develop. In the mean time, it is worth the time and effort to update your HR policies or employee handbooks to include blogging guidelines. These guidelines should address, among other items, inappropriate subject material, any applicable non disclosure agreements, proper use of company time and resources and the possibility of adverse action being taken for policy violations.

The good news is that many employers already have well-thought-out and well-written policies governing Internet usage, e-mail and other electronic communication. Updating these policies to include blogging could prevent many future headaches.

Disparate Impact Claims Under the ADEA: A Sheep in Wolf’s Clothing?

The United States Supreme Court stunned the employment law community with its recent decision in Smith v. City of Jackson, Mississippi. In Smith, the City of Jackson was sued by police officers and public safety dispatchers who alleged that a pay plan discriminated against older workers by giving substantially larger salary increases to younger officers with five or fewer years of service. The intended effect of the pay raises was to bring police officers’ starting salaries up to the regional average. However, Plaintiffs asserted that even if the compensation plan was age neutral on its face, it adversely affected older officers (those age 40 and over), in violation of the Age Discrimination in Employment Act (ADEA). The lower courts had ruled – – following longstanding precedent – – that the ADEA does not provide “disparate impact” claims.

The Supreme Court held on March 30, 2005, that an employee-claimant can establish liability under the ADEA by demonstrating that employer policies and procedures have a disparate impact on older workers even if there is no intent to discriminate. In a disparate impact case, a plaintiff need only show that his or her employer’s policies or practices had a discriminatory effect on one or more protected groups. A showing of discriminatory intent is not required.

Since its 1971 decision in Griggs v. Duke Power Co., the Supreme Court has recognized disparate impact claims under Title VII. The Civil Rights Act of 1964 created Title VII, which bans discrimination based on sex, religion or race. The ADEA, which prohibits discrimination on the basis of age, was passed shortly thereafter. In 1993, Justice O’Connor’s opinion in Hazen Paper Co. v. Biggins, established a requirement that discriminatory intent be demonstrated in disparate treatment claims under the ADEA. Justice O’Connor opined that proof of discriminatory intent, “captured the essence of what Congress sought to prohibit in the ADEA.”

The Smith case however represents a departure from the Hazen case by doing away with the discriminatory intent requirement. The Supreme Court held that Congress, in enacting identical language in the two statutes must have intended them to have the same meaning. The Court noted that Section 4(a)(2) of the ADEA, and Title VII’s original section 7.03(a)(2) contain identical language, including a prohibition against employer actions that “otherwise adversely affect” protected employees.

Where the two statutes differ, however, is that the ADEA contains a special exemption, the “reasonable factor other than age” test (RFOA). The ADEA exempts “otherwise prohibited” employer actions if the policy or practice was based on a RFOA. Contrarily, Title VII exempts such actions only if the policy or practice was based on a “business necessity.” In other words, an employer defending a disparate impact claim under the ADEA need only show that its policy is based on “reasonable” age-neutral factors. Under Title VII, the employer must show that the policy or practice was “necessary” in that it had no alternative means to achieve its business goals.

Therefore, while the Smith decision creates more opportunities for disgruntled employees to bring claims of age discrimination under the ADEA, it simultaneously provides employers with a generous affirmative defense. Employers merely have to show that their policies and practices are “reasonable.” In light of Smith, proactive employers now need to review their employee handbooks and policies, considering whether they negatively affect any group of protected individuals. Such policies and practices should be reviewed to determine whether, pursuant to the ADEA, they are based on “reasonable” factors, such as cost cutting, to justify any unintentional disparate impact on older workers.

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, of the Labor and Employment Group, at (215) 569-4282 or visit the firm’s Web site at www.klehr.com