On October 23, 2021, the Northern District of Illinois partially denied a motion to dismiss a transgender female police officer’s lawsuit, filed under federal civil rights law 42 U.S.C. § 1983 and 740 ILCS 23/5(a) of the Illinois Civil Rights Act.

In Arriaga v. Dart, No. 20 C 4498, 2021 U.S. Dist. LEXIS 204467, (N.D. Ill. Oct. 23, 2021), Selene Danielle Arriaga, a transgender female police officer, filed suit after her employer disclosed her transgender status and private medical information and because her employer allegedly failed to protect her from harassment and discrimination based on her transgender status.  In declining to dismiss the lawsuit, the judge cited U.S. Supreme Court case law holding that in some circumstances, a failure by municipal employers to train public employees on workplace violations for which the employer is on notice, may be tantamount to an official policy condoning the violations.  Connick v. Thompson, 563 U.S. 51, 1 (2011).

The Arriaga holding suggests claims for discrimination against transgender individuals under federal and state civil rights laws may be viable in the state and local government workplace.  Recent decisions similar to Arriaga not only address the standards for bringing discrimination claims based on transgender status, but also provide insight as to employer acts or omissions that can prevent or trigger such claims.

Federal and state laws recognizing discrimination based on gender identity or sexual orientation in the workplace are ever changing in their application and interpretation. To stay prepared for these changes, employers should regularly evaluate what policies and procedures they have in place to ensure they remain in compliance with the laws and create inclusive work environments.

Jackson Lewis, P.C. can provide counseling and advice to employers on changes in the law and the impact such changes may have on the rights of transgender employees in the workforce, as well as assistance in developing or amending workplace policies and procedures affecting those rights.

The Ninth Circuit Court of Appeals has ruled that an ex-Tinder employee must arbitrate her claims against her former employer and cannot pursue her claims in court, even though her claims arose before she executed an arbitration agreement. In reaching this decision, the Ninth Circuit not only enforced the broad language of the parties’ arbitration agreement, but also held that a unilateral modification clause (granting the employer the right to make changes to the agreement) does not, in and of itself, render an arbitration agreement unenforceable. Elizabeth Sanfilippo v. Match Group LLC et al., Case No. 20-55819, 2021 U.S. App. Lexis 29263 (9th Cir. Sept. 28, 2021).

In this case, the chronology of events is important to understanding how this lawsuit arose.  In September 2016, Tinder hired the plaintiff as a brand manager.  According to the plaintiff, in mid-2017 and January 2018, she complained to human resources about sexual harassment by her coworkers and supervisors. During that same time period, in July 2017, Tinder was acquired by Match Group, Inc. After acquiring Tinder, Match Group sent its employees a mandatory arbitration agreement. The plaintiff signed the agreement and continued to work for Match Group until Match Group discharged her in March 2018. The plaintiff sued in California state court for sexual harassment and retaliation.  The case was removed to federal court at which point Match Group successfully moved to compel arbitration. The plaintiff appealed, arguing that the arbitration agreement (1) is unenforceable, and (2) does not cover her claims, which predated the agreement.

On appeal, the Ninth Circuit held the arbitration agreement was enforceable and applicable to the plaintiff’s sexual harassment allegations, even though the plaintiff did not sign the agreement until after her claims arose. In ruling for Match Group, the court highlighted the broad nature of the arbitration agreement’s language that required arbitration for “all claims and controversies arising from or in connection with [the plaintiff’s] application with, employment with, or termination from the Company.” In enforcing the agreement, the court noted that the agreement’s reference to “all claims and controversies” arising out of the plaintiff’s employment necessarily included her claims that predated the arbitration agreement.

Moreover, the Ninth Circuit was not swayed by the fact that the arbitration agreement included a provision that allowed Match Group to modify the terms of the agreement unilaterally. While the court recognized that such a provision could be substantively unconscionable, it explicitly discussed how Match Group had not actually modified the agreement but was rather seeking to enforce the agreement as written. But the court went even further in enforcing the agreement. In addition to upholding the agreement, the Ninth Circuit determined that even if it assumed that a provision permitting unilateral modifications by the employer is substantively unconscionable, such a provision alone does not render the entire agreement unenforceable. Therefore, even taking the plaintiff’s argument as true, the agreement, as a whole, was still enforceable.

The Ninth Circuit’s decision is encouraging for employers seeking to enforce their arbitration agreements for a few reasons. First, the court made clear that a unilateral modification clause will not, in of itself, render the agreement unenforceable. Second, the court  enforced the broad language in the employer’s arbitration agreement and compelled arbitration of claims that pre-date the execution of the agreement.

The legal landscape surrounding the enforceability of arbitration agreements is constantly changing, and employers must be sure to stay on top of developments in this area.  If you have any questions or concerns regarding your business’s arbitration agreements or about arbitration agreements in general, please reach out to the attorneys at Jackson Lewis P.C.

Relying on the parties’ written employment agreement and compensation plans, a California federal district court held that an at-will employee who was laid off due to COVID-19 could not recover commissions that were not fully earned prior to his termination.  Peak v. TigerGraph, Case no. 21-cv-02603 (Sept. 7, 2021).

Background

The employee, a sales professional residing in Massachusetts, was recruited by the Information Technology company based in California, to work as a sales manager.  In January 2018, the parties entered into a written employment agreement, which provided, in relevant part, that (1) employee’s compensation consisted of base-salary plus a commission; (2) his employment was “at will”; and (3) disputes regarding his employment would be governed by California law and decided by California courts.  The parties also executed a sales compensation plan at this time.

In August 2018, the employee began to develop a relationship with a potential client.  In 2019 and 2020, the employer executed new compensation plans, which replaced the one entered when the employee began his employment.  The new compensation plans stated:  “Commissions are considered ‘Earned’ when the Company received payment in full from the customer.”

After executing the new compensation plans, on May 13, 2020, the employee received Statements of Work (SOW) for 20 anticipated projects from the client, from which the employee would have earned substantial commissions.  The employee forwarded the SOW to the employer’s Chief Operating Officer to execute.  The next day, the employee was informed that he was “being laid off due to the financial impact on the COVID-19 pandemic.”  No other sales representatives were laid off, and the employee did not receive any commissions.

The employee filed suit in Massachusetts, and the case was transferred to the California federal district court based on the forum-selection clause of the employment agreement.  The employee brought claims against his former employer for breach of contract/covenant of good faith and fair dealing, intentional interference with contractual relations, civil conspiracy, and violations of the Massachusetts Wage Act.

No Breach of Contract or Implied Covenant of Good Faith and Fair Dealing

The court held that there was no breach of contract, reasoning that there was no commission earned at the time the employee was terminated and, thus, the employer’s “refusal to pay him does not constitute breach.”

The court also rejected the employee’s implied covenant of good faith and fair dealing argument that the employer should be prohibited from terminating him in order to avoid paying the commissions owed when he was “on the brink” of earning the commissions.  The court cited the “at will” relationship set forth in the employment agreement and the fact that the company’s annual commission plans included the following clause:  “As a reminder, employment is on an at-will basis (except as otherwise provided by law) and may be terminated with or without cause, and with or without notice, at any time.”

Based on these express provisions to which the employee had consented by signing, the court concluded that the employer “cannot be held liable for breach of contract or breach of the implied covenant for doing what they were expressly permitted to do by the terms of the employment agreement:  terminate [employee] for any reason.”  The court also relied on the clear language in the commission plans that the employee was only entitled to a commission on a deal that resulted in a payment to the employer.  The court reasoned that the employer could not be held liable for a breach of the implied covenant for doing what it was entitled to do pursuant to the commission plans, namely “refuse to pay [employee] a commission for which [employer] did not receive payment.”

No Violation of Massachusetts Wage Act

Massachusetts Wage Act (“Wage Act”) section 148 expressly states that it only protects claims for a commission that has “been definitely determined and has become due and payable.”  While Massachusetts court have found employers in violation of the Wage Act and breach of the covenant of good faith and fair dealing where they terminate an employee for the purpose of avoiding payment of commissions, those cases involve a commission that the employee has earned under the terms of the commission structure.  The court concluded that the protection under the Wage Act did not apply because the employee did not yet earn the commissions under the express terms of the new compensation plans with his employer.

Conclusion

This case underscores the importance of written employment agreements that reflect the intentions of the employer, as well as having employees agree to the fact that he/she is an at-will employee (or other key contract terms) if subsequent agreements are signed with that employee, as they were in this case.  Jackson Lewis attorneys are available to answer any questions you may have regarding employment-related litigation, including COVID-related suits, and to assist with any other employment law issues, including drafting employment agreements.

A federal court in Indiana dismissed the disability discrimination and retaliation claims of a DOT-regulated driver who failed a random drug test due to prescription opioid use, holding that he did not sufficiently adhere to the employer’s policy or DOT regulations when he failed to produce a Safety Concern Letter from the prescribing physician.  Ross v. FedEx Freight, No. 1:20-cv-00642-JMS-MJD (S.D. Ind. September 21, 2021).

 

Click here to read the complete article on the Jackson Lewis P.C. Drug and Alcohol Testing Advisor blog.

The Federal Arbitration Act (FAA) only partially preempts California’s bar on mandatory arbitration agreements in employment, the U.S. Court of Appeals for the Ninth Circuit has held, vacating the preliminary injunction that had been in place since early-2020 and enjoining enforcement of the law with respect to arbitration agreements governed by the FAA. Chamber of Commerce of the U.S., et al. v. Bonta, et al., No. 20-15291 (9th Cir. Sept. 15, 2021).

Click here to read the full article on Jackson Lewis’ website.

 

In the U.S. Congress’ latest proposal to strike against arbitration, Judiciary Committee Chairman Jerrold Nadler and Labor Committee Chairman Robert C. “Bobby” Scott introduced the Restoring Justice for Workers Act.  The proposed legislation seeks to put an end to pre-dispute arbitration clauses in the employment context.  Significantly, a similar bill was introduced in October 2018 but did not receive a U.S. Senate vote and died in session.  The 2021 version of the bill will likely suffer a similar fate.  Although frequently under attack, pre-dispute arbitration agreements remain an important and effective tool for employment dispute resolution.

Latest Attempt at Federal Legislation

The stated purpose of the Restoring Justice for Workers Act is to:

  • Prohibit pre-dispute arbitration agreements that require arbitration of work disputes;
  • Prohibit retaliation against workers for refusing to arbitrate work disputes;
  • Provide protections to ensure that post-dispute arbitration agreements are voluntary and with informed consent of workers; and
  • Amend the National Labor Relations Act to prohibit agreements and practices that interfere with the employee’s right to engage in concerted activity regarding work disputes.

The Restoring Justice for Workers Act would also do away with class and collective action waivers, and effectively would reverse the United States Supreme Court’s 5-4 decision in Epic Systems v. Lewis, 538 U.S. ___ (2018), in which the Court affirmed that employers may require workers to sign arbitration clauses containing class and collective action waivers.

Arguing in support of the bill, Rep. Nader reasoned that “…[f]or far too long, corporations have used mandatory arbitration clauses – which are often buried in the fine print of employment contracts – to tie the hands of American workers and strip them of their right to take employers to court when their rights are violated.”  Rep. Scott added that “[w]orkers should not be coerced into signing away their rights as a condition of their employment…[e]mployers are increasingly using mandatory arbitration agreements to deny employees a fair venue to seek recourse…”  Supporters of the bill opine that employees have a fundamental right to have their day in court.

The Restoring Justice for Workers Act is only the latest effort to do away with arbitration agreements and is likely to encounter stiff resistance.  Indeed, in February of this year, U.S. Representative Hank Johnson re-introduced the Forced Arbitration Injustice Repeal (FAIR) Act, which passed the U.S. House of Representatives in 2019 (and which we reported on at the time), but it was not taken up by the U.S. Senate.  The FAIR Act would have eliminated the use of pre-dispute arbitration agreements that are often used to resolve antitrust, employment, civil rights, and consumer disputes in an effective, efficient, and private manner.

Opponents of the Restoring Justice for Workers Act argue that passage of the bill will lead to an increase in costly and time-consuming class and representative action litigation.  This, in turn, will place a further strain on our already overburdened court system.  They further posit that the parties best served by the proposed legislation are the attorneys filing the class action lawsuits, who stand to rake in potentially sizable class action attorneys’ fees.

Although these bills are far from becoming law, employers should pay close attention to these and any future efforts to disturb the efficacy of arbitration agreements, which have been protected by the Federal Arbitration Act (FAA) since 1925.

Recent State Laws

Although the Restoring Justice for Workers Act faces an uphill climb, several states also have passed their own laws purporting to restrict the use of arbitration agreements.  We have recently reported on some of these laws, including in California, New Jersey, New York, Illinois, Maryland, Washington, and Kentucky.  Many of these laws are currently being challenged in court on FAA preemption grounds.  Several courts already have issued such decisions.

Additionally, employers in states like California should be mindful of critical state laws such as the State’s Private Attorney’s General Act (PAGA), as they provide alternative mechanisms for employees to circumvent arbitration agreements and file suit.  For more on PAGA and arbitration agreements, see our discussion of PAGA and FAA preemption here.

Arbitration Agreements Remain an Important and Effective Option

Despite these attempts to limit the efficacy of arbitration agreements, employers should not be deterred, as customized, well-drafted dispute resolution agreements still well-serve employers and employees alike in providing alternative dispute mechanism.

Jackson Lewis attorneys are available to answer any questions you may have regarding arbitration agreements, employment-related litigation, or any other employment law issues.

A Pennsylvania court recently addressed whether a deponent could be compelled to remove a face mask during his deposition after the deponent refused, citing health concerns.  After rescheduling the deposition once, plaintiff’s counsel asked the Court to order the deponent to testify maskless given that he would be doing so alone in a room with an unmanned camera taping him.

Judge Charles H. Bradford in the Court of Common Pleas of Lebanon County, Pennsylvania compelled the deponent to remove his mask, finding the refusal unreasonable given the minimal risks of COVID-19.  The case is Espinosa v. Luthercare, et al., Case No. 2019-02130 (Pennsylvania Court of Common Pleas, Lebanon County, July 28, 2021).

Emphasizing that finders of fact must be able to assess the credibility of testifying witnesses, Judge Bradford noted that one of the key tools to doing so is the ability to evaluate the facial expressions of witnesses.  Judge Bradford held “sometimes, facial expressions that accompany verbal testimony are of critical importance in assessing whether somebody is unsure, or perhaps even lying.”  On balance, affording finders of fact the ability to view testifying witnesses’ facial expressions outweighs concerns of COVID-19 exposure, especially when other preventative measures are taken.

In light of the ongoing pandemic, courts continue to take protective measures within reason, striking a balance between safety and traditional practices.  And while courts permit parties to think creatively to develop balanced solutions, wearing a mask while testifying alone in a room at a video-deposition serves no reasonable medical purpose and will not suffice.

If you have any questions regarding mask requirements in the workplace or during civil litigation, or any other questions regarding employment law or lawsuits, please reach out to the attorneys at Jackson Lewis P.C.

The Pennsylvania Superior Court has found, as a matter of first impression, that medical marijuana users may maintain a private action under the Pennsylvania Medical Marijuana Act (MMA), including a wrongful discharge action.  See Scranton Quincy Clinic Company, LLC, et al. v. Pamela Palmiter, Case No. 498 MDA 2020 (Pa. Super. Ct. Aug. 5, 2021).  As we previously discussed in our summary of the trial court’s decision, the MMA expressly prohibits employers from discharging, or otherwise discriminating or retaliating against an employee solely on the basis  of the employee’s status as an individual who is certified to use medical marijuana. However, it does not create an express private right of action.

The Court determined that the General Assembly “proclaimed a public policy” prohibiting employers from discriminating against medical marijuana users.

Click here to read the full article in Jackson Lewis P.C.’s Drug and Alcohol Testing Law Advisor blog.

 

 On July 27, 2021, Pittsburgh Mayor Bill Peduto signed Section 626B of the City of Pittsburgh Code—also known as the Temporary COVID-19 Paid Sick Leave Ordinance.  Under the Ordinance, employers with over 50 employees must provide up to 80 hours of emergency paid sick leave for full-time employees, and a prorated amount of leave for part-time employees, to use for COVID-19 related reasons.  While these measures are intended to help keep the workforce and workplace safe and healthy, confusion over employers’ responsibility remains and may be fueling COVID-19-related disability, leave and accommodation litigation.

While the first iteration of the Temporary COVID-19 Paid Sick Leave Ordinance, Section 626A, was in effect from December 8, 2020 to June 17, 2021, Section 626B is nearly identical and now in effect until at least July 27, 2022.  Minor differences in the new iteration of the Ordinance include allowing leave for employees or family members of employees to obtain a vaccine or booster vaccine dose and expanding the definition of COVID-19 to include any variant forms of the virus.  The new iteration of the Ordinance maintains the spirit of the original—urging that paid sick leave be granted where appropriate for COVID-19 related reasons as employers and employees continue to navigate the current public health crisis.

Employers should be mindful of the lack of clarity on whether leave provided by the Ordinance offsets time an employee has already used throughout the year for COVID-19 related reasons or if the leave provided by the Ordinance is in addition to it.  No guidance has been issued by the Mayor’s Office to clarify, but Employers should err on the side of caution in reviewing and granting leave under the Ordinance until further guidance is provided.

Due to breakthrough COVID-19 cases in fully vaccinated individuals, emerging variants of the virus causing repeat infections, and increasing number of employees returning to in-person workspaces, we anticipate the recent uptick in litigation filed across the country related to denial of COVID-19 leave and accommodations will continue.  According to, Jackson Lewis’ COVID-19 Employment LitWatch, from April 1, 2021, to August 3, 2021, nearly 48% of all COVID-19-employment-related lawsuits filed nationwide (402 of 842 lawsuits) should be categorized as “Disability, Leave & Accommodation,” which is a 10% increase from March 12, 2020, to March 31, 2021 (747 of 1962 lawsuits, or approximately 38%).  In Pennsylvania, however, approximately 79% of all COVID-19-employment-related lawsuits (27 of 34 lawsuits) should be categorized as “Disability, Leave & Accommodation,” compared to 52% (35 of 67 lawsuits) from March 12, 2020, to March 31, 2021.

Jackson Lewis attorneys will continue to monitor and report any further developments.  If you need guidance navigating the Temporary COVID-19 Paid Sick Leave Ordinance, or any other employment law issue, contact a Jackson Lewis attorney.  Our team stands ready to help.

The Iowa Supreme Court has ruled that Iowa state law preempts the City of Waterloo’s restriction on employers’ use of applicants’ criminal record history when making hiring decisions.  Other aspects of the ordinance, however, remain legal and enforceable.  The case is Iowa Ass’n of Bus. & Indus. v. City of Waterloo, Case No. 20-0575, 961 N.W.2d 465 (Iowa 2021).

In 2019, the City of Waterloo, Iowa passed Ordinance 5522, a “ban the box” law that prescribes when an employer may legally inquire into an applicant’s criminal record history during the hiring process, and restricts an employer’s use of an applicant’s criminal record history in hiring decisions.  The Iowa Association of Business and Industry (ABI) challenged Ordinance 5522 in court, seeking injunctive and declaratory relief on the grounds that the ordinance violates state law, namely Iowa Code section 364.3(12)(a).   Section 364.3(12)(a) prohibits cities from adopting ordinances that provide for terms or conditions of employment that exceed or conflict with federal or state law.

The trial court upheld the legality of Ordinance 5522 and ABI appealed.

On appeal, the Iowa Supreme Court focused on Iowa Code section 364.3(12)(a) and whether Ordinance 5522’s restrictions: (1) exceed or conflict with federal or state law; and (2) amount to terms and conditions of employment.  The Court first determined that the ordinance’s restrictions exceed the requirements of both Title VII of the Civil Rights Act of 1964 and the Iowa Civil Rights Act.  In reaching this decision, the Court considered the U.S. Equal Employment Opportunity Commission’s guidance that an employer could be liable under Title VII if its use of a criminal background check had a “disparate impact” on job applicants of a particular race and if the background check was not “job related and consistent with business necessity.”

Having satisfied the first prong of the analysis, the Court next concluded that Ordinance 5522’s restrictions on an employer’s use of an applicant’s criminal history in making employment decisions amounts to a term and condition of employment, and therefore satisfies the second prong.  However, the Court only extended its ruling to the employer’s “use” of the criminal history, not the employer’s “inquiry.”  The Court then severed the ordinance’s preempted “use” restriction and upheld the legality of the ordinance’s remaining limitation on “inquiries.”

This case offers three important takeaways for employers.  First, Iowa courts will sever all or parts of county or municipal statutes deemed to exceed or conflict with federal or state law. Second, businesses operating in Waterloo should be aware of Ordinance 5522, and its scope in light of the Iowa Supreme Court ruling. Third, periodically check the laws for the city/county in which your business is based.  Do not assume that only state and federal law apply.

If you have any questions regarding Iowa Ass’n of Bus. & Indus. v. City of Waterloo, “ban the box” laws and regulations, or any other employment law issues, do not hesitate to contact the attorneys at Jackson Lewis P.C.