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

The subject of “ageism” is a hot topic in the press and among employment commentators. As Baby Boomers grow older so does the  percentage of the United State population perceived as old and protected by age discrimination laws.

According to AARP, the percentage of people 65 and older who work has grown from 10.8 percent in 1985 to 16 percent last year. For people ages 55 to 64, the numbers also are up, from 54.2 percent in 1985 to 63.8 percent in 2007. The statistics on the aging workforce are astounding as demonstrated by Ira Wolfe in his book  and blog called The Perfect Labor Storm 2.0. This effect is seen everywhere and plays out differently in different forums.

In politics age is a negative. Michael Hirsh of Newsweek writes about McCain’s Unseen Adversary: Ageism in which he cites some survey information and posits  that “Indeed, according to a survey done by the Pew Research Center, Americans are a lot less comfortable voting a man in his 70s into the Oval Office than they are voting for a woman or an African-American for president.”

In law, age is a positive. Mark Sherman of The Boston Globe notes that the Supreme Court considering 5 ageism cases the growing prevalence of which he attributes to the aging population. He also notes that it “There is only one antibias law - the one against discrimination based on age - that would cover all nine Supreme Court justices, if such laws applied to them.”

In the workforce age is both a positive and a negative. Kate Lorenz at CareerBuilder.com opines that Ageism on the Job can be turned into an advantage by older workers because of their education, sophistication and clout.

The tension between “young” and “old” is summed up in Granny verses the Mercedes: 

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In Federal Express Corp. v. Holowecki, the United State Supreme Court ruled that the EEOC’s Intake Questionnaire adequately meets the requirements of a “Charge” to trigger an employee’s rights to sue his or her employer in court. The plaintiff submitted to the EEOC an Intake Questionnaire with an affidavit contending that her employer was engaging in age discrimination. The EEOC did nothing with the Questionnaire for six months. The employer was not notified and no charge number was assigned. The employee subsequently filed a Charge of Discrimination and proceeded almost directly to court avoiding the EEOC’s conciliation process entirely. 

Justice Thomas the former Chairman of the EEOC points out the practical problems with the lack of a clear definition on what constitutes a Charge and the implications on notice to employers. His comments are somewhat ironic since the crux of the problem is the EEOC’s failure to turn the Intake Questionnaire into a Charge of Discrimination and mail it out to the employer. The Court does not hold the EEOC accountable for these administrative failings by allowing a vague assertions to trigger the judicial process:

The implications of the Court's decision will reach far beyond respondent's case. Today's decision does nothing—absolutely nothing—to solve the problem that under the EEOC's current processes no one can tell, ex ante, whether a particular filing is or is not a charge. Given the Court's utterly vague criteria, whatever the agency later decides to regard as a charge is a charge—and the statutorily required notice to the employer and conciliation process will be evaded in the future as it has been in this case. The Court's failure to apply a clear and sensible rule renders its decision of little use in future cases to complainants, employers, or the agency.

The EEOC issued a Memorandum addressing the timeliness of notice to employers noting that an Intake Questionnaire may constitute a Charge if it contains a “clear request for the agency to act.” The Memorandum also notes that notice of a charge must be sent to respondents within 10 days of receiving the charge.

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The United State Supreme Court issued its decision limiting the role of so called “me too” evidence in discrimination cases. In Sprint/United Management v. Mendelsohn, the Court ruled that an employee does not have an automatic right to introduce testimony by nonparties alleging discrimination at the hands of the company where the alleged discriminatory actions involve supervisors who played no role in the employment decisions related to the employee in the case.

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We have all witnessed dangerous driving maneuvers by individuals talking on cell phones. What if this driver is one of your employees? What if the employee causes an accident while conducting company business on a cell phone?

Employers may be liable for accidents where an employee’s job-related cell phone use contributed to the accident. Whether the cell phone use is within the scope of employment depends upon many factors including such things as the employee’s job duties, who provided the phone, when the accident occurred, whether it was a business call, and whether the employee was complying with the employer’s policy on cell phone use.

Don Heyrich at the Washington Labor, Employment & Employee Benefits Law Blog notes a $5.2 million settlement by an employer whose employee caused a serious traffic accident while talking on her company-supplied cell phone. Details of the case appearing in a newspaper account describe a very typical scenario for employees who multi-task while driving. There is no mention as to whether the employer had a policy prohibiting or limiting employee cell phone use while driving, so the impact of such a policy on the employer’s liability is unclear.

• Company’s can try to manage their liability by adopting a policy on cell phone use and then enforcing it. A policy should consider the following:
• Directing employees to comply with all applicable state and local laws governing cell phone use. Banning cell phone use while driving.
• Requiring employees to use hands-free devices while driving.
• Providing company cell phones with hands free features.
• Prohibiting the use of text message and e-mail features while driving.
• Requiring employees to pull over to take phone calls.
• Instructing employees to avoid or to terminate phone calls involving stressful or emotional conversations.
• Limiting the scope of job descriptions for some positions exclude using cell phones while driving.
• Prohibiting cell phone use in adverse weather or difficult traffic conditions.
• Restricting driver cell phone use to brief conversations.
• Emphasizing safety while taking phone calls on the road.

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The United State Supreme Court ruled that ERISA allows individual claims by plan participants for breach of fiduciary duty that result in losses to an individual account rather than only to the entire plan. In LaRue v. DeWolff, Boberg, & Assoc., Inc., an employee brought an ERISA claim against his employer who was the plan administrator of a 401k plan. The employee claimed $150,000 in losses to his 401k account caused by his the failure to make the changes the employee directed in the investments held in his account. The employee claimed that the failure to make the changes was a breach of fiduciary duty under ERISA. The Court noted the change in the retirement plan landscape from defined benefit plans to defined contribution plans necessitates the recovery of fiduciary breaches in a participant’s individual account. The Court did not decide whether the employer breached its fiduciary duty.

The effect of allowing breach of fiduciary duty claims by individual participants is yet unknown. John Phillips at The Word on Employment Law observes that “Many are predicting that the Court’s ruling will result in a slew of meritless litigation from employees whose 401(k) plans aren’t doing as well in a shaky economy.” Some additional observations about ERISA plan administration may help evaluate this premise:

• Defined Contribution Plans typically identify the employer as the Plan Administrator but very few employers actually administer their plans.
• The Employer acting as Plan Administrator will contract out investment and other day-to- day “administrative” activities to other providers such as banks, mutual funds, consultants, etc.
• These other providers may or may not be “fiduciaries” within the meaning of ERISA. So ERISA-type claims by participants may not lie against them.
• An ERISA fiduciary breaches its duty if it fails to discharge his duties with respect to a plan with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.
• An employer may limit its fiduciary liability by selecting competent expert advisors and then monitoring their performance. The Boston ERISA & Insurance Litigation Blog’s post on The Benefits of Relying On Investment Managers is a great summary of this concept. The DOL also has tips for selecting and monitoring service providers including consultants and auditors.
• If other providers fail to perform there responsibilities their liability may be limited to contractual damages and subject to limitations of contractual indemnity. Employers should carefully review contacts with providers that limit liability of a provider with terms like “gross negligence.”
• The result may be that the employer faces the ERISA claims alone and is left with contract claims against the providers for resulting damages.
• ERISA provides for attorney’s fees for successful employee claims.

The answer may be that LaRue opens another avenue for lawsuits against employers, but an employer that carefully selects and monitors its relationships with pension plan providers will be in a better place to defend claims that it breached its fiduciary duty.

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I consulted the on line Encarta Encyclopedia for the origins of Valentine’s Day and found the following description:

The holiday probably derives from the ancient Roman feast of Lupercalis (February 15), also called the Lupercalia. In an annual rite of fertility, eligible young men and women would be paired as couples through a town lottery. Briefly clad or naked men would then run through the town carrying the skins of newly sacrificed goats dipped in blood. The women of the town would present themselves to be gently slapped by the strips and marked by the blood to improve their chances of conceiving in the coming year.

In one sense, the holiday’s evolution to cards and candy has been well received, at least by the goat population. I don’t think Lupercalis is celebrated at the EEOC. Nonetheless, workplace romance gone bad accounts for a significant number of sexual harassment claims as noted on my prior post Fishing off the Company Dock: A Legal Perspective. Similar advice and anecdotal observations appear at the Ohio Employer’s Law Blog’s post on When office romances go bad and the Washington Labor, Employment & Employee Benefits Law Blog’s post on Romance in the Workplace & “Love Contracts”.

So what are the legal ins and outs of office romance and how can a business employ prophylactic measures to protect itself. Here is a list of things I can recommend:

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.

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

It doesn't take a NASA scientist to realize organizations may need a policy addressing workplace romance (or maybe it does). 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

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A very interesting article by Matthew Teague entitled  The Last Union Town appears in Philadelphia Magazine. It chronicles the dominance of labor unions in Philadelphia’s political, social and economic life by examining the fight over non-union workers bidding on work for the Convention Center Expansion. The article is a lightning rod for disagreement as one can see by the venom in the User Comments. There is also a great deal of interesting blog commentary on Philadelphia’s Union dominance including the following:

The Union-Free Employer

• Philadelphia: The Last Union Town
• Are Labor Unions the Reason Pennsylvania is not as Productive as it Used to Be?:

PAWaterCooler

• Unions are Lacking in Leadership!

Blonde Sagacity

• Philly Unions: Now I Understand Why so Many of You Don’t…

PhillyBlog.Com

• Non-Union workers at Conv. Center?!?

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Employment Practices Liability Insurance (EPLI) may be a relative bargain in the continued “soft” insurance market and employers should consider adding or increasing insurance coverage to protect against employment claims. EPLI insurance is somewhat quirky and the following are some considerations when evaluating policies:

1. Coverage:  EPLI policies typically cover claims of wrongful discharge, workplace harassment and discrimination. Many offer a more comprehensive list of covered acts, including negligent hiring/supervision/evaluations, invasion of privacy, defamation and intentional infliction of emotional distress.  Coverage typically applies to claims made by full time employees so as to exclude those by part-timers, temporary, seasonal and independent contractors.  In comparing policies, look for one that has the most expansive coverage. 
2. Exclusions.  EPLI policies exclude many claims based on the statute that creates the legal right or the activity that gives rise to the claim. Exclusions apply to the Fair Labor Standards Acts; the National Labor Relations Act; the Worker Adjustment and Retraining Notification Act (WARN); the Consolidated Omnibus Budget Reconciliation Act (COBRA); the Employee Retirement Income Security Act (ERISA); the Occupational Safety and Health Act (OSHA); the costs associated with providing "reasonable accommodation" under the Americans with Disabilities Act (ADA); as well as  claims arising out of downsizing, layoffs, workforce restructurings, plant closures or strikes. Punitive damages are always excluded. Carefully evaluate the excluded claims in light of your business practices. In the case of multi-state operations, be aware that some state laws create substantial employment rights that must also be evaluated under the policy language.
3. Policy Limits and Deductibles: Policy limits and deductibles usually apply on a per claim and aggregate basis. For example, coverage may be limited to $250,000 for each separate claim with an overall aggregate cap of $1 million for all claims. Employers must formulate their insurance goals in setting the appropriate deductibles and limits. Some employers view EPLI insurance as catastrophic coverage and are willing to accept a high deductible that allows them to handle smaller claims themselves.  However, other employers are looking for more blanket coverage.
4. Defense Costs, Selection of Counsel and Settlement: Defense costs are usually included within the EPLI policy’s limits, which has good and bad points. Many times, the legal expense is the largest cost to an employer in dealing with merit less claims. However, including defense costs means that every dollar an employer spends defending a claim reduces the amount available for settlement or to pay a judgment.  Since the existence of insurance coverage must be disclosed as part of discovery in most law suits, a plaintiff’s attorney will factor insurance coverage into his or her case evaluation. The defense cost feature may influence plaintiffs’ counsel to try to settle early, rather than force an employer to incur litigation costs that will only erode the insurance dollars available for potential settlement.  Employment claims often have significant employee relations ramifications making settlement a particularly important issue. Insurers view employment claims the same as any other insurance matter by evaluating only the potential for liability and the amount of damages. The employer and insurer may be at odds over settling a case. EPLI policies address this stalemate by either giving the insurer the right to settle without the employer’s approval or, more frequently, giving  an employer control over settlement, but adding a “hammer clause”. These clauses are designed to limit the insurer’s potential exposure if the policyholder passes up an opportunity to settle a claim recommended by the insurer.  Hammer clauses provide that if there is an offer to settle a claim that the policyholder refuses accept, then the insurer will not be liable for a subsequent settlement or judgment in excess of a rejected settlement amount.  
5. Policy Types and Insurance Company Notification: EPLI policies are typically written on a “claims  made” basis meaning that the claim must be incurred during the coverage period and reported to the insurer during an extended reporting period. Since employment actions may take years to turn into a claims, an employer may be left with no coverage if the policy is dropped or tail coverage isn’t purchased.  Untimely notice to an insurance carrier can void coverage for and employment claim.

* Not intended to be Exhaustive.

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The Department of Labor released the new proposed FMLA regulations on Monday, February 11, 2008. I am in the process of digesting the new regs and will post a summary shortly. Thanks to Michael Fox at Jottings By An Employer’s Lawyer for the early release tip.

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Rush Nigut of Rush on Business tagged me.  The rules of “tag” are simple:

• Link to the person that tagged you and post the rules on your blog.
• Share 7 random and or weird things about yourself.
• Tag 7 random people at the end of your post and include links to their blogs.

I wondered if this “tag” is a blogosphere version of a chain letter. I quickly did some research and discovered that it’s a meme. A meme (pronounced /mi:m/), as defined by memetic theory, constitutes a theoretical unit of cultural information, the building block of culture or cultural evolution which spreads through diffusion propagating from one mind to another analogously to the way in which a gene propagates from one organism to another as a unit of genetic information and of biological evolution. To avoid the bad luck that will befall me if I don’t send this “meme” on to seven other bloggers, I will dutifully comply.

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What motivates a terminated employee to sue his or her employer is a complex issue. In my experience, the manner in which an employee is “fired” is at least as likely to lead to a lawsuit as the “reason” given for his or her termination. Many lawyers spend all their time on justifying the reasons for why an employee is being let go which are important because they form the basis for the legal defense. However, I believe that not getting sued at all is better for my clients than having a great defense.

I advocate planning both the “How” and the “Why” of an employee termination.  Managing the manner of termination reduces the risk of lawsuits and incidents of workplace violence. The following are ten suggestions I have on handling a workplace termination:

• Treat the employee with dignity and respect. Don’t get personal in the termination meeting.
• Avoid humiliation. Don’t make the employee do the walk of shame or leave your business under circumstances that lead others to think he or she stole from you or committed some other serious misconduct. I have several cases where the employee’s major motivation for suing is being lead to an exit escorted by a security guard while carrying a cardboard box containing personal items. Allow the employee to come back later to collect personal affects or clean out an office or locker.
• Select an appropriate time and location. Avoid times and locations that are highly visible to other employees. Many employers select the end of the business day at the end of the work week, but this may be the wrong time for employees who may need access to support services like the EAP.
• Consider giving a reason. When asked in a deposition why an employee sued, the most common answer I hear is that “I was never given a reason for being fired.” There may be legal circumstances for avoiding an explanation, but they are rare. Formulate a reason and articulate it to the employee. Reserve some latitude to supplement the reason, but at least have some explanation. Once given, don’t debate its merits, but listen to the employee’s response. You might hear something that makes you reconsider your decision, like “this all started when I refused to sleep with my supervisor”.
• Plan your communication. Consider scripting what you will say and formulate responses to typical questions, like “Can I resign.” Don’t text message termination or layoff decisions unless there is just no other way to communicate. Consider a follow up letter that gives your reasons and preserves your right to supplement it with additional reasons. Don’t blame the decision on others like the “home office” or “management”.
• Agree on a Reference, if possible. If the employee knows what the company will say in response to a reference request, then he or she can address it in an interview or on an application. If the reference is inconsistent then the employee won’t get a new job and will be more likely to sue the company.
• Offer Assistance like the EAP or Outplacement. Consider resources that may help an employee with emotional problems or assist them in a job search.
• Protect your employees and business assets. Plan the termination to protect your employees from violence in the workplace and your business assets from sabotage or damage, but don’t overreact. Armed guards and lock changing may not be necessary. Retrieving keys, credit cards, passwords and canceling computer access are.
• Communicate with remaining employees. Plan some formal communication with other employees and individuals outside the company. This is difficult and uncomfortable, but necessary.
• Control the rumor mill. Don’t allow gossip to incorrectly communicate any information.

Let’s face it, it’s a bad situation. But it is one that can be made worse through poor communication. Respect and empathy go a long way. Take for example the infamous Cheers episode entitled the Executive’s Executioner in which Norm becomes his employer’s designated terminator because he is so empathetic. Since no YouTube clip is available, the following is the dialog between Norm and his boss:

[Mr. Hecht, Norm's boss, confronts him in Cheers' restroom]
Mr. Hecht: We want you to be our corporate killer.
Norm: The guy who fires people?
Mr. Hecht: That's right. You see, we decided that terminating employees puts too much stress on our executives. We think you'll be perfect.
Norm: Why me?
Mr. Hecht: Because studies have shown that, uh, it's particularly humiliating when you're fired by somebody who's clearly and markedly superior to yourself. And, uh, that just wouldn't be the case with you, Norman. See, uh, you're just an ordinary Joe. As a matter of fact, we, uh, we checked out your homelife. You have absolutely nothing anyone could possibly envy or resent.
Norm: I'm honored, sir. But I, this, this sounds like a horrible job, frankly.
Mr. Hecht: It's a 300% raise and if you don't take it you're fired.
Norm: Sir, I will have you know that I cannot be bought... and I cannot be threatened; but you put the two together and I'm your man.

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Microsoft Corp. tendered an unsolicited takeover offer of $44.6 billion for Yahoo, Inc. As with any acquisition/merger, both businesses need to calm the troops by making assurance of job security. In today’s world, every employee knows that the buzz words like “business synergies” and “market overlap” mean layoffs for employees whose jobs are “redundant”. As reported by MSNBC,  Microsoft said” it sees at least $1 billion in cost savings generated by the combination, and intends to offer significant retention packages to Yahoo engineers, key leaders and employees.”

Retention Bonuses are an important talent management tool for all size companies when the organization faces uncertainty due to merger, bankruptcy or other business transition that creates uncertainty for employees. I have seen retention bonuses used successfully by businesses in financial hardship because of the loss of a large contract, exiting form bankruptcy protection, or to counter a competitors raiding of its talent. However, the communications and documentation of a bonus program must be carefully managed to avoid unintended consequences.

Kate DCamp takes the contrary view in her posting “Do Retention Bonuses Work? She believes that the money motivator almost never works:

In most situations, what works is specific to the problem diagnosed. In a business turnaround, tripling communications and sharing some of the "upside" can be very effective to keep critical talent. An opportunity to have more impact on the business and a chance to earn extra money by achieving business goals sends a clear signal about someone's importance to the company.

Dr. John Sullivan posting on “Retention Bonuses – Are they a good idea?” has a great laundry list of “unintended consequences” including:

• Creating uncertainty in those who are not offered the bonus
• Exacerbating a we verses them mentality in the case of a merger of two companies
• Having those employees who will depart anyway conduct their job search on your time
• Denigrating the principle that performance matters
• Creating job security for those who may not deserve it

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