EMPLOYMENT LAW LETTER SUMMER 2005 Whistleblowers Win NATIONAL NEWS - - PDF document

SUMMER 2005

NATIONAL NEWS

Connecticut employers should be aware of these im- portant developments at the national level. More information is available by contacting any member

• f the Labor and Employment Law Department of

Shipman & Goodwin LLP.

• Retiree Health Benefits: A federal court has is-

sued a permanent injunction against implementa- tion of a proposed EEOC regulation that would have specifically authorized health insurance plans for retirees that coordinate with Medicare by reducing benefits at age 65. The court said that the intent of Congress in enacting the ADEA was to prohibit arrangements that treat older workers less favor- ably than younger ones. Some observers fear the result may be that fewer employers will offer any retiree insurance at all.

• Surveillance Cameras: An NLRB requirement that

an employer must negotiate with the union repre- senting its employees before installing hidden sur- veillance cameras in the workplace has been up- held by a federal appeals court. In fact, the court went farther than the Board, which had declined to void the discipline of several employees caught on tape engaging in misconduct. The judges sent the case back to the Board with instructions to explain why it allowed the discipline to stand, when in some analogous cases it has overturned disciplinary ac- tions tainted by employer misconduct.

• Lawyers and FLSA: The US Labor Department

has issued an opinion letter stating that attorneys are professionals who are excepted from the sal- ary or fee requirements of the FLSA, and there- fore do not lose their exempt status if they are not paid on a salaried basis, e.g. if deductions are made for partial day absences. The same rule apparently applies to doctors and certain other professionals who have to be licensed to perform their work. ROUTE TO: ______ ______ ______

EMPLOYMENT LAW LETTER

Whistleblowers Win Broader Protection

People who complain about corporate fraud or miscon- duct are protected under various statutes. However, a recent Superior Court decision in Stamford expanded that protec- tion beyond the limits of those laws. An HR director for the baking operations of Unilever claimed he was fired because he conducted a successful multi-state investigation of fraud and corruption involving employees at some of the company’s best-known subsidiar-

• ies. He asserted he was retaliated against when he failed to

heed warnings from superiors to back off because he was “pissing people off.” When he went to court, however, the plaintiff had a prob- lem because laws protecting whistleblowers didn’t protect

• him. One such statute only applied to employees complain-

ing to state or federal regulatory agencies, and his activities were only within the company. Another statute applied to publicly held companies, and the entity for which he worked was not publicly held. The judge, however, found that the public policy behind these statutes prohibited retaliation against employees for disclosing corporate wrongdoing. In other words, termina- tion for an employee under these circumstances constitutes wrongful discharge under common law principles, even if there is no statute that specifically applies. After all, requir- ing an employee to complain to a public agency in order to

• btain legal protection would tend to discourage internal in-

vestigations. In another case, two vice presidents of Fairfield-based Competitive Technologies were recently awarded over $400,000 each after the U.S. Department of Labor ruled they had been fired in violation of the 2002 Sarbanes-Oxley

• Act. The two had been on the company’s disclosure com-

mittee, and apparently incurred the wrath of the CEO when they insisted that certain oral contracts he had entered into with consultants should be disclosed on the company’s 10- Q reports to the Securities and Exchange Commission.

is published quarterly as a service to clients and friends by the firm’s Labor and Employment Law Department, with the cooperation and assistance of the Litigation Department and Employee Benefits Group. The contents are intended for general informational purposes only, and the advice of a competent professional is suggested to address any specific situation. Reproduction or redistribution is permitted only with attribution to the source.

EMPLOYMENT LAW LETTER

The employer is contesting those awards in federal court, but a District Court judge recently upheld the DOL decision. In addition to monetary damages, the judge also said the two executives were entitled to reinstatement. He rejected claims that the discharges were for performance reasons and “re- structuring,” citing the suspicious timing and other circum- stances indicating the real reason was retaliation for the ethi- cal stand the employees took. Our advice to employers is to assume that in this post- Enron era, new and more stringent standards will be applied to corporate treatment of those who take a stand against their employer’s mismanagement or misconduct, even in situ- ations where Sarbanes-Oxley does not strictly apply.

SNET Must Refund Strike-Related Profits

In 1998, the Communications Workers of America struck SNET for 26 days, and during that period the phone com- pany earned $2.8 million in “unreasonable profits,” accord- ing to a DPUC ruling. The company appealed through the court system, but the Connecticut Supreme Court has now upheld the DPUC ruling, requiring SNET to refund the money to its customers. The profits at issue were the result of wage savings from paychecks the striking workers didn’t get. SNET argued those profits were not unreasonable, because the company never earned a higher return on investment than the maxi- mum authorized by DPUC regulations. The lower court ac- cepted this view, and ruled that SNET could keep the money. The Supreme Court pointed out that during the strike, the level of service to customers declined because SNET’s abil- ity to provide various services was impaired. The justices said it would be unreasonable to allow SNET to keep money that it saved as a result of diminished service to its custom-

• ers. They found the appropriate comparison for determining

whether the company should be required to give up the profits was not the maximum allowable rate of return, but rather the level of profits immediately before the strike. Our opinion is that computing strike-related income and expense is not an exact science, and that redistributing “un- reasonable” profits to customers is even less so. After all, how many phone customers actually experience any reduc- tion in services during a strike?

Part Time Workers May Get Jobless Benefits

In a little noticed court decision issued recently, a Superior Court judge has called into question a longstanding rule that in order to receive unemployment compensation benefits, a claimant has to be available for full time work. The decision holds that if a worker’s inability to work full time is the result

• f a mental or physical disability, he or she cannot be denied

benefits on that basis. The case involved two claimants. One was a woman with bipolar disorder and back injuries, whose clinical social worker said could not work full time but would benefit from part time work. The other was a man who suffered a dis- abling leg injury and had difficulty walking. His doctor re- stricted him to six hours of work per day. Both were denied benefits under the rule requiring claimants to be available for full time work, and both went to court alleging disability discrimination. One Connecticut statute says that every state agency must perform its services to the public without discrimination based on mental or physical disability, and another says that mental or physical disabilities may not be considered as lim- iting factors in administering programs involving distribu- tion of funds. The judge said the regulation requiring those seeking jobless benefits to be able to work full time violated both laws. The Labor Department has filed an appeal, and has asked the legislature to address the situation, but the General As- sembly adjourned in June without taking any action. Among

• ther things, the Labor Department is concerned that if the

full time requirement is eliminated, it is possible that some-

• ne who is able to work only an hour or two a day could be

eligible for benefits. The impact of this decision is potentially significant. In theory, someone who is only available for part time work could get benefits based on full time wages earned during the base period. Also, unlike the federal laws regulating disability discrimination, Connecticut law includes almost any mental

• r physical impairment, whether temporary or permanent,

and regardless of whether or not it substantially interferes with a major life activity.

LEGAL BRIEFS and footnotes

Labor Board Nixes Lecture of Teacher

What goes on in a teachers union meeting apparently is none of the school administration’s business. That’s the les- son to be learned from a State Board of Labor Relations decision involving teachers at Brookfield High School. The case involved a union officer who complained that the day after a union committee meeting, the principal called him out of the teachers’ room in a stern voice, in front of

• ther teachers. They went to the school office, where the

principal said he heard the teacher had “attacked” a guidance counselor during the committee meeting, and told him he (the principal) was upset about it. The teacher denied the allegation, and no disciplinary ac- tion was taken against him, but he complained to the union, which filed a charge alleging the principal’s conduct con- stituted “interference, restraint or coercion” of the teacher in the exercise of his right to engage in union activity. The Board acknowledged this was a minor incident, and no real harm had come of it, but said it was nevertheless a viola- tion of the Teacher Negotiations Act. This is the first time the SBLR has had occasion to ad- dress such a case, although there are some NLRB deci- sions that are analogous. The logic is that if an employee has reason to feel disapproval from management if he en- Deadly Labor Dispute: An argument between a union member and a steward

• ver the super-seniority clause in their

contract escalated into a fight in which the steward struck and killed the other

• man. The decedent’s estate sued the

union, which claimed immunity based on a Connecticut statute protecting unions from liability for the unlawful acts of their members in “labor disputes”. Although anyone involved in labor relations knows that term refers to strikes and lockouts, the judge found the statutory definition was broad enough to cover a fight be- tween two union members over work- ing conditions, and dismissed the suit. Supervisory Bias: The only black ma- chinist at a Connecticut stamping plant was fired and replaced by a white worker, and brought suit under Title VII. The judge found that while the owner of the company had no discriminatory mo- tivation, he was acting on the recom- mendation of the head machinist, who assigned the plaintiff menial tasks, and refused to give him machinist work, de- spite repeated requests. She said the plaintiff produced enough evidence of disparate treatment to justify a jury trial. In effect, the owner could be held re- sponsible for the supervisor’s bias. Sarcasm vs. Insubordination: A panel

• f arbitrators from the State Board of

Mediation and Arbitration reduced an Enfield police officer’s suspension to a warning because he wasn’t technically

• insubordinate. After arguing with a ser-

geant about an assignment, he was told to “just do it,” and he responded in a sarcastic tone, “yes sir,” and complied. The panel said insubordination means dis-

• bedience, but the officer obeyed.

Stealth Contract Proposal: In labor negotiations in Jewett City, management proposals were in the form of a com- plete draft contract. After a series of re- visions to the draft, the parties signed

• ff on a new agreement. Only later did

the union realize that none of the drafts contained language on personal days from the old contract. The union alleged bad faith bargaining, but the Labor Board found no evidence of intentional decep-

• tion. While management never pointed
• ut the deletion specifically, the union’s

negotiators were experienced and should have noticed it. Pot Problems: Different arbitration panels produced seemingly inconsistent results in two recent cases involving dis- charges stemming from marijuana. One SBMA panel upheld the discharge of a Newtown school custodian who was ar- rested at 5:30 a.m. in front of an elemen- tary school with a bag of pot and an empty bottle of bourbon, and refused to answer questions about the incident at a school board hearing. Another SBMA panel, however reduced the dis- charge of an Enfield public safety dis- patcher to a five-day suspension, de- spite the fact that a search of his home turned up drug paraphernalia and pot growing in the basement. He also ad- mitted involvement with a drug dealer. The management member dissented, but the majority relied on testimony from an attorney who said courts usually treat marijuana offenses as less serious than a speeding ticket. Thoughtless Misconduct? An unem- ployment compensation administrator awarded benefits to a Home Depot worker fired because he let a customer leave without checking to see if he had a receipt for his merchandise. An ap- peals referee and the Board of Review denied the benefits, however, because he had knowingly violated the employer’s clearly stated rule. The em- ployee went to court, and the judge re- instated the award of benefits, because the employee’s offense could have re- sulted from “thoughtlessness or inad- vertence,” not wilful misconduct. S & G Notes: Our annual fall employ- ment law seminar will be held on Octo- ber 27 at the new Marriott next to the Hartford Convention Center. Please save the date.

One Constitution Plaza Hartford, CT 06103-1919 gages in protected activity, such as attending a union meet- ing or speaking out on issues discussed there, he may be dissuaded from participating. While the principal in Brookfield may have harbored no anti-union animus, the Labor Board says that’s irrelevant. Although the published opinion doesn’t specify the nature

• f the “attack” of which the teacher was accused, presum-

ably it was verbal. A physical assault on a co-worker would not be protected activity, even if it did occur during a union meeting.

Mayor Plays Hardball; Employee’s Suit Fails

Let’s say you are the electrical inspector for a municipal- ity, and you run for the City Council on the ticket of a chal- lenger to the incumbent mayor. Your slate loses, and in the next annual budget, the mayor proposes elimination of your

• position. Not only that, but the mayor prevents you from

bumping into another city position based on your seniority and qualifications. What do you do? Well, a West Haven employee who claimed he was a vic- tim of these same circumstances decided to bring a lawsuit. He said his treatment constituted a violation of Connecticut’s “free speech law,” Section 31-51q. The mayor claimed the suit should be dismissed, because he had the right and re- sponsibility to make governmental decisions by virtue of his position. The court said that under Connecticut law, state and local politicians have absolute immunity from liability for legisla- tive actions. Since the mayor’s budget-making function con- stitutes legislative action, his proposal to eliminate the employee’s position could not be the basis for a lawsuit, even if his motive was retaliation for the employee’s exer- cise of his right to run for office. However, the judge said the same protection did not apply to the alleged blocking of the electrical inspector’s right to displace a less senior employee in another position. Such conduct, if it occurred, was not legislative action, and there- fore could constitute a violation of Section 31-51q. How- ever, the inspector was unable to present any solid evidence

• f the mayor’s involvement in the decision not to give him

bumping rights, so his lawsuit was dismissed. Our opinion is that there is truth in the old saying, “poli- tics is a blood sport.” In the words of the late Mayor Rich- ard Daley of Chicago, “don’t back no losers!”