Monthly Archives: June 2013

Big Win for Employers in Supreme Court Harassment Case

supctDo you have more than one supervisor? If so, you’re not alone. Plenty of people work for companies in which the power to hire, fire, promote, and discipline employees is vested in only a few employees, but many more employees are authorized to direct the work of others and actually keep the trains running on time. Well, the Supreme Court has news for the many lower-level employees who schedule, oversee, train, and direct the work of other employees: You’re not supervisors under Title VII.

In a racial harassment case (Vance v. Ball State University), the Supreme Court decided that employees count as supervisors under Title VII only if they are authorized to take tangible employment actions against an employee. A tangible employment action is a significant change in employment status, such as hiring, firing, promotion, or reassignment to a job with substantially different duties. In making this decision, the Court rejected the Equal Employment Opportunity Commission’s interpretation that employees who don’t have this authority might also be supervisors if they have the authority to direct an employee’s daily work activities.

The distinction between supervisors and regular employees is hugely important in determining an employer’s liability for harassment. An employee who is harassed by a coworker can hold the employer legally liable for the harassment only if the employer was negligent. This means that the employee has to show that the employer knew, or should have known, about the harassment and failed to take appropriate corrective action.

An employee who is harassed by a supervisor has an easier burden. If the supervisor’s harassment results in a tangible employment action (as defined above), the employer is strictly liable, period. If the supervisor’s harassment doesn’t result in a tangible employment action, the employer is liable unless it can prove that (1) it exercised reasonable care to prevent and promptly correct harassment (by, for example, training employees, adopting a policy prohibiting harassment, creating an appropriate complaint procedure, and investigating harassment complaints quickly and fairly), and (2) the employee unreasonably failed to take advantage of opportunities the employer offered to prevent or correct harassment (for example, by failing to make a complaint).

The distinction between supervisor harassment and coworker harassment takes into account the power an employer gives its supervisors. The employer’s decision to delegate authority to the supervisor is what makes this type of harassment possible, so it’s only fair to hold the company responsible for the actions of those who have this responsibility.

The practical effect of the Court’s decision is that fewer employees will qualify as supervisors and, therefore, that more victims of harassment will have to meet the more difficult negligence standard to win their cases. In other words, this case is a clear win for employers, who will have an easier time avoiding liability for harassment.

Interestingly, it’s much easier for an employee to qualify as a supervisor when that result benefits employers. For example, an employee is an exempt “executive” employee under the Fair Labor Standards Act – and, therefore, not entitled to earn overtime – if the employee directs the work of at least two other employees (among other things). The employee need not have the authority to hire and fire, as long as the employee’s suggestions or recommendations about personnel decisions like these are given “particular weight.” Similarly, under the National Labor Relations Act, an employee is a supervisor if he or she has the authority to perform one of 12 responsibilities, including assigning work and responsibly directing employees. If you’re a supervisor under the NLRA, you are not protected by the law and may not join a union.

Take This Internship and . . . Pay For It

blackswaneditLast week, two unpaid interns who worked on the film “Black Swan” won a lawsuit against Fox Searchlight Pictures. The interns claimed that they should have been paid for their work, which included such important cinematic tasks as taking out the garbage, ordering lunch, booking flights for their bosses, and assembling office furniture. The judge for the federal District Court in Manhattan agreed, finding that the two interns were treated as employees and were, therefore, entitled to compensation for their time.

These days, internships are an increasingly popular option, especially for students and recent graduates who can’t find paid work in their fields. CNN Money recently reported an 8.8% unemployment rate — and an almost 19% “underemployment” rate — among recent college grads, both rates still higher than before the economic downturn began. Many young people are willing (or desperate enough) to work without pay to get their foot in the door of their chosen profession. Of course, they’d rather get paid. But if the only way to break into a field is by doing grunt work day and night without pay, some people will take that deal.

This is where the law steps in to set some boundaries. Employment law pushes back against the metric of “whatever the market will bear” to require employers to pay at least the minimum wage, to protect employees from unsafe working conditions, and to prohibit harassment, for example — even if plenty of employees might tolerate mistreatment and subsistence wages just to get and keep a job. That desperate job seekers are willing to put up with almost anything in exchange for work doesn’t mean it’s legal.

That’s what Fox learned last week, and what employers in other popular industries are starting to understand. According to an article about the case in the New York Times, similar lawsuits have been filed against television, modeling, and fashion magazine employers, claiming interns should have been paid. Employers in these sexy fields have been some of the worst offenders in not paying interns, presumably because so many people are desperate to work in film and fashion.

There’s nothing shocking about desperate job seekers or employers willing to exploit them, sadly. There’s nothing surprising about the outcome of the case, either. The law about unpaid internships is very clear. Employers may hire people to work without pay only if the job meets a strict six-part test, including that the job must benefit the intern, must not provide the employer with an immediate advantage, must be closely supervised, and must not be a required stepping stone to a paid position. (You can find details on the six factors in Am I really an intern or just an employee who isn’t getting paid?) But Fox argued that the judge should forget the factors and instead simply weigh whether the intern or the employer gained more from the arrangement. If the intern benefitted more, then it’s a legal internship. The judge was not impressed by this argument, nor by the college credits offered for some internships, nor by the fact that the interns who sued undoubtedly did learn some things about the film industry during their unpaid time at Fox.

All beside the point, as the judge made clear. The six-part test is strict for a reason: Internships are a somewhat disruptive exception to the usual workplace exchange of labor for money. As such, they are intended to be rare.

 

Is There an Employer Mandate Loophole in Obamacare?

pillsIn the last few weeks, a number of articles have been published on a possible way for employers to game Obamacare. (The most influential one was Employers Eye Bare-Bones Health Plans Under New Law, in the WSJ.) Here’s the basic strategy: Offer a minimal health benefit plan (called a “skinny” plan), which doesn’t meet the essential benefits requirements. Then, pay the secondary penalty under the employer mandate if any employee wants more comprehensive coverage, gets it through a state exchange, and is eligible for a tax subsidy based on income.

Surprised? Me too, although not that employers are trying to avoid costs. What surprised me was that, based on reporting so far, it sounds like the Obama administration isn’t coming out loudly to say this won’t work. (Much more information is still needed here before anyone can say definitively whether employers can get away with this.)

The first step is to get a plan that offers “minimal essential coverage.” If you think that means it has to cover the ten categories of “essential benefits” we keep hearing about, like mental health services, prescription drugs, and hospitalization, you are not alone. But you are wrong. Those rules apply to individuals and small businesses, but not to the larger businesses that are subject to the employer mandate. For these employers, nearly any plan will do, as long as it covers certain preventive services without an annual or a lifetime limit (according to the WSJ article). It doesn’t have to provide coverage for surgery or hospitalization. As long as the plan offered meets this very low bar, the employer can avoid the primary penalty under the employer mandate: $2,000 per employee, not counting the first 30 employees.

The second step is to be ready to pay the secondary penalty under the mandate, for having inadequate coverage. Employers must pay $3,000 per employee for this penalty, which is imposed on employers whose plans don’t offer minimum value or are not affordable to their employees. If you’re wondering why an employer would want to pay a $3,000 penalty to avoid a $2,000 penalty, the answer is that this penalty is imposed only per employee who buys insurance through a state exchange and is eligible for a tax subsidy. Some employers are clearly betting that this won’t add up to many employees. For example, low-wage workers might not be able to afford comprehensive coverage, even with subsidies. High-income workers likely won’t be eligible for a tax subsidy if they want more comprehensive coverage. And, there are places to buy insurance outside of the exchanges, which eliminates the penalty.

Is this going to work? It’s unclear: Because it so obviously skirts the intent of the law, this strategy comes with plenty of legal risk. And who came up with the idea of letting the larger employers who provide so much health coverage in this country somehow skirt the “ten essential benefits” requirements? The WSJ article quoted a former White House adviser saying, “Our expectation was that employers would offer high quality insurance.” Which kind of makes it sound like this was a surprise to them, too.

EEOC Settles Its First GINA Case

Last month, the EEOC announced that it had settled the first lawsuit it had ever filed alleging violation of the Genetic Information Nondiscrimination Act (GINA). The employer in the case (Fabricut, a distributor of decorative fabrics) agreed to pay $50,000, post a notice regarding discrimination, and provide anti-discrimination policies and training. Not a lot of clams, but it’s still important: Not only was this the agency’s first GINA case, but it also involved employer conduct that seemed inadvertent, at least as regards GINA. The employee might have had a nice little ADA claim, on the other hand.

The employee, Rhonda Jones, had a temporary job as a memo clerk. When that job ended, she applied for a regular position in the same job. As part of its usual hiring practices, the company sent her to its contract medical examiner for a post-offer physical exam. That’s when the GINA violation happened: The examiner asked her to fill out a health questionnaire, which asked a bunch of questions about her family medical history. That alone violates the law. Employers (or their contract medical examiners) may not request or require genetic information from applicants or employees. That the employer apparently never acted on the basis of this information doesn’t matter. Requesting it violated GINA. This part of the case is a good reminder to employers that all of this information is now off-limits, period.

But back to the ADA claim: The medical examiner’s actual exam revealed that further evaluation was necessary to find out whether Jones had carpal tunnel syndrome. The examiner told Fabricut of this finding, and Fabricut told Jones to go to her personal physician for testing. Her physician gave her a number of tests and concluded that she didn’t have carpal tunnel. She provided this result to Fabricut, but it didn’t hire her anyway, on the basis of the examiner’s original finding. And it ignored Jones’s request for reconsideration of the decision.

So to review: The employer regarded her as having a disability, although her own physician said she did not. She had already been performing the job for which she applied, and one presumes she was doing fine, as they offered her the position. And, at least based on the facts in the EEOC’s release, the employer made the decision based solely on her disability, without any consideration of reasonable accommodation. Of course, if she had no disability, she wouldn’t be entitled to accommodation. But Fabricut thought she did have a disability — and rejected her on that basis — so it had an obligation to consider possible accommodations. All in all, a pretty strong argument that the employer violated the ADA.