July Legal Roundup: Employee Pulls a Fast One to Preserve Discrimination Lawsuit

Here’s the latest on some discrimination lawsuits that have gone before the courts:

Litigation | Fair Labor Standards Act & Personal Liability | Race | Disability


Deceptive employee allowed to keep severance money and still sue; company should have reread the agreement before paying.

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A terminating employee was offered a severance and release agreement. She carefully edited the release section, using the same type font and margins, to change the language from a release “including” various employment laws to the word “excluding” all the laws. She returned the release without any indication of her sneaky change. After pocketing the $15,000 severance pay, she then sued the company for age discrimination.

The court refused to dismiss the case, in spite of the employee’s deceptive trick. It ruled that she had not waived her rights, and the employer could have seen that before making the payments.

Allen v. Chanel, Inc. (S.D. N.Y., 2013)

Duty to double-check your professional consultants

A company’s plan administrator was held liable for failure to double-check the advice of the professional-benefits consulting firm it retained for advice on its 401(k) plan. The company followed the consultant’s advice in its choice of investment options but failed to include alternative funds (from the same mutual-fund provider, which could be cheaper to enter but with the same results). This resulted in alleged higher costs/lower results for plan participants.

In the ensuing Employee Retirement Income Security Act (ERISA) suit, the company and plan administrator blamed the consultant and cited its reasonable reliance on professional advice. The court, though, ruled that an organization is traditionally liable for the acts of the agents it selects.

Though the consultant made recommendations, the organization and the plan administrator adopted the advice and actually made the final decisions. A plan administrator has a duty to be on top of the situation and “probe” the expert consultant’s qualifications and recommendations and “make certain that reliance on the expert’s advice is reasonable justified under the circumstances.”

Tibble v. Edison International (9th Cir., 2013)

Fair Labor Standards Act and Personal Liability

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Illegal workers can still collect damages; company president and directors personally liable to pay.

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Several production workers were not paid for overtime work. They sued. The company defended by claiming the workers were undocumented, not legal to work in the U.S. and entitled to nothing.

In Hoffman Plastic v. NLRB (2002), the U.S. Supreme Court ruled that undocumented workers could not sue or claim damages under the National Labor Relations Act. Since they were here illegally, they had no rights. An employer could commit any sort of infraction or any abuse of the employees, free of liability. An illegal worker was open to abuse by being illegal, and abusive employers get a free pass.

However, in this case the federal court ruled that the Fair Labor Standards Act (FLSA) is a different law and has a different coverage of employee-employer than the NLRA. All workers are covered, undocumented or not. So the court found in favor of the employees and ordered back pay and additional damages. Also, since the FLSA provides for personal liability (damages paid from your own bank account, assets or sale of your personal home), the company president and two directors of the company were held individually liable for the damages.

Lamonica v. Safe Hurricane Shutters, Inc. (11th Cir., 2013)

Race Discrimination

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Harassment policy was “unreasonable” on its face.

A court found that a construction company’s anti-harassment policy was “unreasonable as a matter of law” because it directed employees to report concerns to their supervisor but provided no alternative to bypass the supervisor. African-American employees complained about racial slurs and racist graffiti. The supervisor was aware of and condoned the situation. When the employees complained to the supervisor, no action was taken, and one of those who complained was fired in retaliation.

The EEOC and the company have agreed on a resolution involving $50,000 to $130,000 payments to each of the affected workers, plus the company will have several years of compliance and training requirements. All harassment policies should have a “bypass” provision for those who do not wish to go to their supervisor or have received no action from their local management. There should be both a local and a remote (i.e., central HR) component to the complaint policy.

EEOC v. Holmes & Holmes Industrial, Inc. (E.D. Utah, 2013)

Disability Discrimination

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Professor’s erratic behavior justified fitness-for-duty evaluation.

Requiring a fitness-for-duty evaluation does not mean the employee is “perceived as disabled” under the American With Disabilities Act (ADA) or the Rehabilitation Act. A university professor engaged in a series of erratic behaviors, including yelling at students in class, making sexual comments, touching female students and grabbing a female faculty member and sticking his tongue in her ear.

Students complained that they were afraid of the professor. The professor repeatedly told others that because of his tenure and seniority, “no one could touch him.” The school, however, ordered a fitness-for-duty evaluation, and then fired him for refusal to comply. The professor sued, claiming the university “perceived him as disabled” by ordering the evaluation.

The court dismissed the case. It found that the evaluation was “consistent with business necessity,” given the professor’s overt behavior and the school’s valid concern for the safety of students and staff. Further, a fitness evaluation simply based on observed work behaviors is not an indication that the employer views a person as having a disability.

Coursey v. University of Maryland Eastern Shore (D. Md., 2013)

Blind employee denied deserved awards, promotions and accommodation may proceed with intentional-infliction-of-distress case.

A disabled employee pursued a state tort action for intentional infliction of emotional distress, without an ADA or other discrimination component. A legally blind (macular degeneration) employee had a stellar performance record. However, he was bypassed for promotion, had interference with accommodations he requested, was denied awards and was transferred to an area where management knew the lighting was harmful to his condition in an effort to force him to leave.

At one point, a manager told others that the employee had earned and deserved a company award, a trip to Hawaii, but they bypassed him because the company did not believe he could use the trip because he was blind. The company also ignored the employee’s complaints that the lighting hurt his eyes and was causing further deterioration in his condition. He left employment due to the eye pain and its effect on his condition. Other employees had also complained about the lighting. Their complaints were promptly addressed once the disabled employee was gone. When they asked why it had taken so long to replace the bad lighting, a manager stated that the company was waiting “until that blind guy had left.”

The court found sufficient evidence to allow a case to proceed on constructive discharge and “extreme and outrageous” intentional infliction of harm. Unlike the ADA and other discrimination laws, there is generally no “cap” on the amount of damages which can be awarded in a tort action.

Russo v. Clearwire US, LLC (D. Nev., 2013)

State legal-activities law did not save employee from discharge for use of medically prescribed marijuana.

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Colorado has legalized medical marijuana. It also has a law prohibiting employers from discharging employees due to their having engaged in off-the-job legal activities. A disabled employee had a legal marijuana prescription and used it only off the job. However, he was fired after a positive drug test at work. He sued in the Colorado courts, citing violations of the state “legal activities law.”

The court ruled in favor of the employer. Though marijuana may be legal under Colorado law, it is still illegal under federal law.

Coats v. Dish Network, LLC (App. Colo., 2013)

Chemical sensitivity made employee unable to come to work or go to the doctor’s office for medical evaluation of a disability.

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An employee for the Red Cross suffered from extreme chemical sensitivity. The Red Cross provided many and ongoing accommodations, including six changes to her office location, customized scent masking and air purifiers. Then the building itself had to be upgraded and remodeled. The employee stated that she could not return to the building due to the many new scents from the construction, carpets, paint, etc.; the entire building was a problem. The employee requested to do all work from home. The employer requested medical verification. However, the employee did not provide this, claiming that she could not see her doctor due to the smells in the doctor’s clinic lobby.

The Red Cross stated that the job required being present in the building since the job was processing incoming mail and contributions, and mailing out invoices. It could not deliver and pick up all mail to her house, especially the contribution checks which required a security process. Several other people were also involved in the process, and they all needed to work together. The Red Cross terminated the employment due to inability to reasonably accommodate.

In the ensuing ADA case, the court ruled that the employee was not a “qualified person with a disability” because the employee could not come to the building. The job required presence at the building and working remotely was not reasonable, since the essential functions could not be done remotely.

Ikemoto v. American Red Cross (M.D. Tenn., 2013)

Bob Gregg, a partner in Boardman & Clark LLP, shares his roundup of diversity-related legal issues. He can be reached atrgregg@boardmanlawfirm.com.

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