Pennsylvania Employment Lawyer & Attorney : Russell Krafft & Gruber Law Firm : Lancaster, York, Harrisburg

There is only one war story I ever tell because I don’t talk about my client’s problems with anyone no matter how humorous they might be.   The Connecticut Employment Law Blog and  Ohio Employer’s Law Blog have postings on an employer’s liability for the “mere presence” of pornography in the workplace. All I can say is sometimes the most obvious things are overlooked.

About ten years ago, I  was asked by corporate counsel to conduct sexual harassment training at a series of distribution centers. At one remote location space was tight so the plant manager had set up rows of chairs in the receiving department. What had escaped his notice was on the wall of the receiving department behind the podium from which I was to make my presentation was a collage of every Playboy Centerfold for the preceding 20 years. The pin up shrine went from floor to ceiling and encompassed an area about 40’ X 40’.  I thought I was on candid camera.

My first reaction (well maybe my second) was to cancel the training, but it was obvious that this company was in dire need of it.  In any event, I also realized that I had hit the mother lode of future business in defending  this company from discrimination claims.  I decided to orient the chairs in the other direction and go on with the training. Admittedly, I downplayed some training materials on the problems with sexually explicit materials in the workplace.

The training went surprisingly well, with no mention of the “wall”.  Perhaps it had been there so long, no one even notice it anymore, but you can bet it would have been the centerpiece of any sexual harassment claim.  After the training was over, I read the plant manager the riot act.

The next time I was in that plant, no mention was made of the shrine but it was gone.  In its place was one of those signs detailing the number of days since the last lost time accident.   I wasn't sure I had gotten my point across to this company until I drove out of the parking lot.  It was then that I saw the three guys from the  receiving department  standing in an open garage bay giving me the finger. I thought again about the mother lode of future business.

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The CEO of the American Red Cross resigned after disclosure of a relationship with an employee.  The Red Cross Board of Governors stated that his resignation was requested for using “poor judgment” that “diminished his ability to lead the organization in the future”.   It amazes me that this type of leadership gaff can be repeated across so many organizations.

Strictly speaking, “sexual favoritism” is not unlawful sex discrimination so long as the relationship is consensual and does not discriminate against other men and women in the workplace. The EEOC’s Guidance on Employer Liability for Sexual Favoritism which was last updated in 1999 states as follows:

It is the Commission's position that Title VII does not prohibit isolated instances of preferential treatment based upon consensual romantic relationships. An isolated instance of favoritism toward a "paramour" (or a spouse, or a friend) may be unfair, but it does not discriminate against women or men in violation of Title VII, since both are disadvantaged for reasons other than their genders.

Strictly speaking, sexual favoritism by a high level executive is an employee relations problem and an unacceptable legal risk. Organizations cannot rely on the relationship remaining consensual and hazard the legal and public relations consequences.

Nonetheless, office romance is more prevalent than I ever appreciated until I researched a prior post on Fishing off the Company Dock: A Legal Perspective. Here are some of the proactive steps an employer can take to anticipate and manage the situation:

Implement a Strong Policy against Sexual and other Harassment

The EEOC has issued extensive guidance on sexual harassment policies and there ability to reduce an employer's liability for harassment.   One of the most critical components of such a policy is an effective complaint procedure to redress claims of harassment. Obviously, the avenue for making a complaint cannot be exclusively with a supervisor.

Develop a Policy on Office Romance without calling it "Fraternization"

According to Office Politics, thirty-five percent of companies have no formal workplace romance policy. Develop a policy, but avoid overly broad definitions and in particular the word "fraternize' which was the court's primary objection in the in Guardsmark case.

Train Supervisors

Supervisory training on sexual harassment can demonstrate a company's good faith attempts to comply with the law. Such training should explain the types of conduct that violate the employer's anti-harassment policy; the seriousness of the policy; the responsibilities of supervisors and managers when they learn of alleged harassment; and the prohibition against retaliation.

Proactively Evaluate and Confront Situations

Most employers are content to sit passively and tolerate the employee relations fall out of an office romance. Many will not act unless it "becomes a disruption". Consider some proactive steps. If the romance is between co-workers, make sure they understand that it cannot impact productivity. If it is between a supervisor and subordinate, evaluate whether there should be changes in the reporting structure. Don't automatically transfer or reassign the female in the relationship or you will risk a discrimination claim. 

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The OSHA PPE Final Rule generally requires employers to pay for PPE, and sets forth specific exceptions where employers are not required to pay for such equipment.    Employers are responsible for paying for the minimum level of PPE required by the standards and must amend their policies within six months.  If an employer decides to use upgraded PPE to meet the requirements, the employer must pay for that PPE. If an employer provides PPE at no cost, an employee asks to use different PPE, and the employer decides to allow him or her to do so, then the employer is not required to pay for the item. The employer must also pay for the replacement of PPE used to comply with OSHA standards except in circumstances in which an employee has lost or intentionally damaged the PPE issued to him or her, an employer is not required to pay for its replacement and may require the employee to pay for such replacement.

The rule enumerates the following exceptions to the employer pay requirement:

1. Non-specialty safety-toe protective footwear and non-specialty prescription safety eye wear. Employers are not required to pay for ordinary safety-toe footwear and ordinary prescription safety eye wear, so long as the employer allows the employee to wear these items off the job-site.

2.   Metatarsal protection. Employers are not required to pay for shoes with integrated metatarsal protection as long as the employer provides and pays for metatarsal guards that attach to the shoes.

3.    Logging Boots. Employers are not required to pay for the logging boots required by 1910.266(d) (1) (v), but leaves the responsibility for payment open to employer and employee negotiation.

4.   Everyday clothing.  OSHA recognizes that there are certain circumstances where long-sleeve shirts, long pants, street shoes, normal work boots, and other similar types of clothing could serve as PPE. Nonetheless, employers are not required to pay for such everyday clothing. Similarly, employers are not required to pay for ordinary clothing used solely for protection from weather, such as winter coats, jackets, gloves, and parkas. In the rare case that ordinary weather gear is not sufficient to protect the employee and special equipment or extraordinary clothing is needed to protect the employee from unusually severe weather conditions, the employer is required to pay for such protection. However, clothing used in artificially-controlled environments with extreme hot or cold temperatures, such as freezers, is not considered part of the weather gear exception.

The most interesting part of OSHA’s final rule, as noted by Michael Fox at Employer’s Lawyer, is that it took 8 years to promulgate the rule.

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As credit related losses ripple through the financial and construction sectors, many organizations will be forced to consider job cuts. Selecting employees for lay off must be collaboration between managers and human resources. HR must be able to influence the process to reduce legal risks and assuage the anxiety of remaining employees:

1)     Establishing Business Justification and Layoff Selection Criteria:

The business justification for the reduction in force or layoff must be established. The justification for layoff typically gives rise to the selection criteria. For example, if a large contract was lost, the production and support functions related to the lost contract will be the focus or the layoff.

Layoff decisions may be challenged under discrimination laws, so it is advisable to develop selection criteria that support the business reasons for selecting one employee over another. Unless dictated by union contract, employers have discretion in developing the selection criteria which can include factors like, seniority, relative skills, performance, and/or disciplinary record.  More than one factor may be used.

Forced Ranking Systems are sometimes utilized to rank employees against one another from the top down based on performance criteria. The subjectivity in forced ranking can be challenged as discriminatory unless uniformly and rationally applied.

2)     Evaluating Impact of Selection Criteria including Bumping, Transfer and Recall Rights:

Once employees are identified for layoff, the results of the section criteria must be assessed in terms of disparate impact and other special circumstances. A disparate impact analysis should be conducted to assess whether the selection criteria have resulted in the disproportionate layoff of members of a protected class. Likewise, special circumstances should be evaluated such as employees with recent employment complaints, union activity, FMLA leaves, etc.  Consider documenting the final layoff decisions, but not the deliberations leading up to them.

Thought must be given to collateral job rights employees may have under employment policies and practices. Typical areas involve shift or department transfers, supervisor demotion in lieu of layoff, and voluntary layoffs. Likewise, the parameters of recall, if any, should be described.

3)     WARNA Obligations:

Federal and state plant closing/mass layoff laws must be considered. Although Pennsylvania has no state law equivalent to WARNA, employers with multi-state operations must assess the application of such laws. Coverage under WARNA can be complex as it has look back rules which aggregate layoffs for determining triggering events. WARNA coverage will trigger the sixty notice period which has a tremendous impact on layoff planning raising issues of pay in lieu of notice, retention, and publicity.

4)      Severance Benefits and Releases:

Careful consideration must be given to describing the benefit package, if any, offered to employees. If an employer is offering benefits that exceed those already provided by policy or mandated by law, it should consider obtaining a release. The federal Age Discrimination in Employment Act (ADEA) contains special rules for waivers of rights of claims of age discrimination including a 45-day consideration and seven day revocation period for such releases. Furthermore, the ADEA contains informational requirements that mandate publication of summary of employee demographic information in connection with the release.

5)     Communications Plan:

Effective communication is paramount in reducing employee legal claims and assuaging the anxiety of remaining employees. Everything that is said about the reasons for the layoff will be scrutinized in litigation. Consider scripting communications for group meetings and avoid individual discussions of the reason for selection. Large layoffs may generate news media interest for which a press release is a helpful way to influence the message.

*Not meant to be exhaustive.

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A state court judge ordered Wal-Mart to pay over $36.5 million in attorneys’ fees to the plaintiffs’ lawyers who represented the 186,000 present and former Pennsylvania employees in a class action lawsuit filed in state court. The total hit to Wal-Mart was $187.8 million which breaks down as follows:

• $78.8 million in a jury verdict for off the clock work by employees.
• $62.3 million in liquidated damages under PWPCL.
• $10.2 million in interest.
• $36.5 in attorney’s fees and costs to the Plaintiff’s lawyers.
• $?? in Wal-Mart legal fees to its own legal counsel.

The employee class members were ordered to pay their lawyers $12.7 million in fees out of the damage award of $141.1 million plus $10.2 in interest. The average employee award for the 186,000 class members appears to be $745.16 (less taxes and withholding). 

Michael Donovan of Donovan Searles, LLC was the lead plaintiffs counsel. As reported by the Philadelphia Inquirer, “Donovan's firm will not get the entire $49.2 million. He and his firm were assisted by other attorneys across the nation who share discovery strategies and expertise in these large and data-intensive cases. All together, 26 attorneys and 17 paralegals worked five years on the plaintiffs' case.” 

In awarding the fees, Judge Mark I Bernstein noted that “Plaintiffs' success has delivered a message to employees and employers across the commonwealth, which proclaims that work without pay is not tolerated in Pennsylvania." Appeals to the award are pending.

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The Ohio Employment Law Blog has a couple of posts that highlight court decisions involving the employers’ sexual harassment policies and practices. The posts put bring home the “real life” implications of an employer’s actions.

In EEOC v. V&J Foods, the court considered the language of an employer’s sexual harassment policy and found it to be “unreasonable” thereby invalidating the employer’s defense to a hostile environment sexual harassment claim. The case makes several good points about sexual harassment policies. The policy must be reasonable in light of the employment circumstances which means cookie cutter policies may not be enough. The policy must be tailored to the employer’s business. The court noted several problems:

• A policy is not effective for those employees who do not speak English unless it is translated into a language that can be understood.
• A policy must be tailored to the educational level of the average employee such as part timers, high school students, etc.
• There must be more than one individual or class of individuals with whom a complaint may be filed so that a victim’s sole remedy doesn’t begin with the alleged harasser.
• For a toll free hot line reporting mechanism to be effective, it should be answered by trained personnel who identify themselves as part of the human resource department.   

I have review hundreds of these policies in employee handbooks.  I almost always find some important deficiencies that need to be addressed.   Here are the typical problems I see:

• Lack of dual avenues for filing complaints including one outside the chain of command.
• Requirements that the complaint be in writing in order to be investigated.
• Failure to advise complainants and witnesses that they will be protected from retaliation.
• Assurance about confidentiality of the allegations, to the extent possible, while conducting an effective investigation.

The EEOC has scant guidance on the content of sexual harassment polices; however, there is one controversial position taken by the EEOC with regard to informing employees of their legal rights to file a complaint:

It also is important for an employer's anti-harassment policy and complaint procedure to contain information about the time frames for filing charges of unlawful harassment with the EEOC or state fair employment practice agencies and to explain that the deadline runs from the last date of unlawful harassment, not from the date that the complaint to the employer is resolved.

In Engle v. Rapid City School District, the Court reviewed an employer’s response to a complaint of sexual harassment, specifically, the adequacy of the remedial action. This post lists factors to consider upon receipt of a complaint.

I have previously posted on sexual harassment issues as follows:

High Profile Sexual Harassment: Outsiders must Investigate

Sexual Harassment Complaints require Prompt and Carefully Planned HR Actions

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A revised I-9 Employment Verification Form was issued by the Homeland Security that includes the following changes to the Form I-9 process:

• Five documents have been removed from List A of the List of Acceptable
  • Documents:Certificate of U.S. Citizenship (Form N-560 or N-561)
  • Certificate of Naturalization (Form N-550 or N-570)
  • Alien Registration Receipt Card (I-151)
  • Unexpired Reentry Permit (Form I-327)
  • Unexpired Refugee Travel Document (Form I-571)
• One document was added to List A of the List of Acceptable Documents:
  • Unexpired Employment Authorization Document (I-766)
• All Employment Authorization Documents with photographs have been consolidated as one item on List A:
  • I-688, I-688A, I-688B, I-766
• Instructions regarding Section 1 of the Form I-9 now indicate that the employee is not obliged to provide his or her Social Security number in Section 1 of the Form I-9, unless he or she is employed by an employer who participates in E-Verify.
• Employers may now sign and retain Forms I-9 electronically. See instructions on page 2 of the Form I-9.

Note: The Spanish version of Form I-9 may be filled out by employers and employees in Puerto Rico ONLY. Spanish-speaking employers and employees in the 50 states and other U.S. territories may print this for their reference, but may only complete the form in English to meet employment eligibility verification requirements.

The electronic form is available for fill in and download.  The PDF versions in English and Spanish are also available.  Download I-9Download I-9 (Spanish version) 

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Rising costs have motivated many employers to adopt High Deductible Health Plans (HDHP) increasing the amount paid by employees for health care coverage. The Towers Perrin 2008 Health Care Cost Survey notes that employees are responsible for 22% of the cost of coverage or about $2000 per employee plus the cost of deductibles and co-pays. The average out of pocket expense for an employee is has doubled in the last 5 years.

Employers face employee relations challenges when attempting to pass along the out of pocket increases to employees without offering some funding assistance on either a transitional or ongoing basis. There is a significant learning curve for many of the accounts both in terms of evaluating the amount of employee/employer contributions and navigating the claims/reimbursement process.

Several options exist for employers to bridge the funding gap created by migrating to a HDHP from a more traditional indemnity arrangement including the following:

Health Savings Accounts (HSA) HSAs can be funded by both voluntary tax deductible employee contributions and/or tax exempt employer contributions allowing the combination of employer employee contributions to fully fund the deductible (up to the IRS limit). The contributions remain in the HSA and accumulate interest on a tax free basis. Distributions are tax free as long as the funds are used for Qualified Medical Expenses. An HSA may be moved to successive employers or used in retirement. The advantages or an HSA are portability; tax-free contributions, accumulations, and distributions; ownership of the account by the employee. The disadvantages of HSAs are that they can only be used with a HDHP; must be uniformly funded by employers; may discourage employees from seeking medical treatment; and are limited in their use with other types of accounts like FSAs and HRAs. Other problems have been identified in a previous post.

Medical Savings Accounts (MSA) MSAs may be established by self-employed individuals or employees of small employers (less than 50). The MSA is a tax exempt trust held by a financial institution and operates like an HSA.  Employers may contribute to an Archer MSA, but if they do, the employee may not contribute for that year. Contributions are limited to 75% of the annual HDHP deductible. Employers must make uniform contributions to their employees if they choose to contribute. The additional advantage of an MSA is that it may be established by an employee without employer sponsorship.

Flexible Spending Accounts (FSA)  Employees may contribute to an FSA on a pre-tax basis as part of an employer sponsored cafeteria plan. Both employers and employees can contribute to an FSA.      FSAs fund Qualified Medical Expenses, except health insurance premiums and long term care expenses. The big disadvantage of an FSA is that any money remaining in the account that is not used to reimburse expenses is forfeited. There is no accumulation of money in the account from one year to the next.

Health Reimbursement Arrangements (HRA) HRAs may only be funded by employers on a uniform basis for all participating employees. Employees may not contribute. There are no limits on the amount of employer contributions, but HRA funds may only be used for Qualified Medical Expenses which include health insurance premiums. HRA contributions are tax free and unused amounts may be carried over to subsequent years. HRAs are not portable and do not accumulate earnings on account balances. They compare favorably with FSA because there is no use it or lose it. An employer may offer both an HRA and FSA, but there are complex ordering rules coordinating the interaction of FSA and HRA payments and prohibitions on funding the HRA with FSA contributions.

Combined Accounts (MSA, HRA and FSA)   It is possible, but complex, to offer multiple arrangements in an attempt to bridge the funding gap. There is IRS guidance on the interaction of HSAs and other Health Arrangements.

Obviously, legal advise is paramount in plan design and drafting.

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