FAA Preempts New Jersey’s Implied Restriction on Use of Arbitration Agreements, Court Finds

To the extent that it attempted to limit the prospective waiver of procedural rights in favor of arbitration or other alternative dispute resolution, the 2019 amendment to the New Jersey Law Against Discrimination (NJLAD) is preempted by the Federal Arbitration Act (FAA), a New Jersey federal court has ruled in an unpublished opinion. New Jersey Civil Justice Institute, et al. v. Grewal, No. 19-17518 (D.N.J. Mar. 25, 2021).

The NJLAD amendment in Section 12.7, passed in March 2019, sought to make unenforceable any provision in an employment contract that waived any substantive or procedural right relating to discrimination, retaliation, or harassment claims. The court reasoned that, in violation of Section 2 of the FAA, Section 12.7 effectively disfavors agreements to arbitrate certain types of claims.

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Out-of-State Employer Must Comply with Montana Wrongful Discharge Act, Montana Court Rules

Montana’s Wrongful Discharge from Employment Act (WDEA) requires that employers have just cause for discharge of employees after completion of an initial probationary period. A recent Montana case highlights state-specific issues for employers to consider if they have employees who work in Montana, even if those employees live in, or are based out of, another state.  McCue v. Integra Imaging, P.S., CV-19-147, 2021 U.S. Dist. LEXIS 30477 (D. Mont. February 18, 2021). In particular, out-of-state employers should be aware that Montana courts may disregard a choice of law provision in an employment contract selecting the laws of another state if an employee performs most of the employee’s work in Montana. Employers with workers performing most of their job duties in the state of Montana should be prepared to comply with Montana’s just cause standard for discharge and provide employees with a termination letter indicating the just cause basis for discharge.

In McCue v. Integra Imaging, P.S., Integra Imaging, a Washington-based medical group, merged with Missoula Radiology, then entered into employment contracts with Missoula Radiology’s employees, including Dr. Timothy McCue.  The parties’ employment contract contained a provision allowing Integra to terminate McCue’s employment without cause.  The employment contract also contained a Washington choice of law provision.

McCue’s practice was located in Missoula, Montana, where he completed all of his work duties. Following the merger, he provided medical services to citizens of both Montana and Washington.  McCue obtained a license to practice medicine in Washington and spent approximately 20% of his time reviewing radiology scans for Washington patients. He spent the rest of his time focused on Montana patients.

Following repeated performance deficiencies over an eighteen-month period, Integra’s Board voted to terminate McCue’s employment under the “without cause” provision of his contract.  Integra sent McCue a letter informing him that the Board had voted to end his employment based on the recommendation of the Board’s Quality Committee and offered him the option to voluntarily resign instead, which he did.  The letter did not mention McCue’s alleged performance problems or otherwise identify a specific reason for ending his employment.

McCue sued Integra, claiming among other things that by voting to terminate him under the “without cause” provision, Integra violated Montana’s WDEA.  McCue also argued that Integra was barred from relying upon any evidence of his performance deficiencies to substantiate the discharge because Integra did not cite them as reasons for his discharge in the termination letter.

McCue moved for summary judgment on his claims.  In ruling on the motion, the U.S. District Court for Montana first established that the employment contract was subject to Montana, not Washington, law because McCue primarily performed his duties in Missoula, Montana.  The court then denied his motion and concluded that certain issues of fact remained, including whether McCue’s termination had been “for cause.”

This case presents several important reminders and best practices for employers operating in Montana including, but not limited to:

  • If an employee is primarily performing their duties within Montana, any employment agreement will likely be subject to Montana law; and
  • If an employer voluntarily provides an employee with a written letter of termination, the employer should clearly articulate in the letter the bases for the discharge.

Jackson Lewis attorneys are ready and able to help employers navigate the complexities of employment law in Montana, and anywhere else in the U.S.  Please contact us if you have questions or need assistance.

How Little May an Employee Allege for Retaliation Protection?

The question of when a worker has raised concerns about discrimination sufficient to gain retaliation protection has not been answered consistently and clearly by courts. A case in Texas may provide clarification.

The Texas Supreme Court, in Apache Corp. v. Davis, has been asked to evaluate a lower court ruling on the subject.  The lower court had ruled that there must be some indication the protected characteristic at issue motivated the conduct opposed. Apache Corp. v. Davis, 573 S.W.3d 475 (Apr. 23, 2019).

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Ohio’s Employment Law Uniformity Act: New Prerequisites and Defenses for Discrimination Claims

Ohio employment discrimination claims filed on or after April 15, 2021, will be subject to certain prerequisites under the newly enacted Employment Law Uniformity Act (ELUA).  Jackson Lewis’ in-depth webinar regarding the ELUA is available here.

The ELUA updates the state’s antidiscrimination statute (Ohio Revised Code § 4112), which has been in effect since 2001. The law’s prohibition against employment discrimination on the basis of race, color, religion, sex, military status, national origin, disability, age, or ancestry remains the same. Changing, though, are the statutorily required prerequisites to filing a civil suit and the time within which a claimant may do so.

The changes represent further efforts to ensure federal and Ohio laws are more in line in dealing with employment discrimination claims.

The changes under the ELUA for employers with at least four employees include:

  • Much like federal discrimination lawsuits, which require that a plaintiff first file a charge of discrimination with the Equal Employment Opportunity Commission, Ohio employees must file a charge with the Ohio Civil Rights Commission (OCRC) before filing a lawsuit asserting state law claims.
  • The ELUA shortens the statute of limitations for employment discrimination lawsuits from six years to two years. The new two-year statute of limitations is tolled while a charge is pending before the OCRC. Claimants have two years to file an OCRC charge.
  • The ELUA codifies an affirmative defense to hostile work environment harassment claims created by federal case law. Employers may defeat a claim that an employee’s supervisor created a hostile work environment by proving: (1) the employer exercised reasonable care in preventing or promptly correcting harassment in the workplace; and (2) the employee unreasonably failed to invoke the employer’s complaint procedures or other preventive or corrective opportunities.
  • The ELUA limits personal liability for managers and supervisors.
  • Finally, the ELUA greatly simplifies Ohio’s age discrimination framework, aligning the process for filing age discrimination claims in Ohio with other forms of discrimination. While the old framework permitted employees multiple avenues to court, each with its own statute of limitations and remedies, the ELUA subjects all age discrimination lawsuits to a two-year statute of limitations and administrative exhaustion requirements.

The ELUA provides advantages to employers that prior law did not:

  • As its name implies, the ELUA makes the procedures for various employment discrimination claims more uniform. This makes litigating an alleged discrimination claim more predictable.
  • The shorter statute of limitations may reduce an employer’s burden and costs associated with retaining employee records.
  • Limited liability for individual supervisors and managers may mean simplified litigation.
  • The affirmative defense provides employers with steps to take to comply with Ohio employment discrimination law and potentially avoid hostile work environment liability.

Employers should therefore:

  • Review their policies against discrimination, harassment, and retaliation;
  • Make sure the policies are available to all employees and employees know where to find them;
  • Ensure proper procedures are in place to receive and respond to concerns;
  • Train all employees, especially managers and leadership, on these policies and available avenues to raise concerns; and
  • Train leadership and human resources to receive and respond to complaints, including proper investigation procedures and documentation practices.

If you have any questions regarding the ELUA or other workplace issues, please contact a Jackson Lewis attorney.


Seasonal Employee May Pursue Disability-Based Hostile Work Environment Claim, Court Rules

Reversing a district court’s grant of summary judgment, the Iowa Court of Appeals held an employee presented sufficient evidence for her disability-based hostile work environment claim to proceed to trial, despite the relatively short period of her employment. Munoz v. Adventure Lands of America, Inc., 2021 BL 37057 (Iowa Ct. App. Feb. 3, 2021).

In Munoz, from May 2017 until September 2017, an amusement park employed a seasonal employee with a medical condition that caused her to lose consciousness without warning. Although the amusement park initially moved the employee to a safer department and assignment in case she lost consciousness on the job, the employee alleged that several of her supervisors subjected her to almost daily derogatory comments about her medical condition or its symptoms. One supervisor allegedly asked her: “why the hell [are you] even working with restrictions like that?” Another supervisor told her she “need[ed] to work less because [she was] being a b****.” A third supervisor called her a “gangbanger” and “worthless” on multiple occasions. According to the employee, her supervisors also ridiculed her almost daily due to her frequent need to use the bathroom. The employee reported these incidents to the director of her department, but the director failed to take any action and even participated in belittling the employee by calling her names in a group email.

The employee eventually filed suit alleging workplace harassment and hostile work environment based on disability, among other claims of discrimination. The amusement park moved for summary judgment on all claims and the district court granted the motion.

On appeal, the Iowa Court of Appeals reversed the district court’s ruling on the disability-based hostile work environment claim. The appellate court noted that hostile workplace claims are difficult to prove and typically require an employee to produce evidence of severe and pervasive harassment that affects the terms and conditions of employment – i.e., extreme mistreatment over an extended period of time. Nonetheless, duration of time is just one of several factors to be considered when assessing a hostile work environment, the court stressed. In the case of a seasonal worker who was employed only for a few months, the court said, other factors may weigh more heavily. In this case, the court ruled the employee presented evidence that the harassing remarks were made almost daily, that the remarks were made by direct supervisors (as opposed to coworkers), and that the mistreatment allegedly left the employee traumatized. Accordingly, the appellate court concluded a jury could find that a hostile work environment existed, so summary judgment must be denied.

This decision demonstrates that employers can face liability for discrimination and harassment regardless of how long the employee was employed or whether the employee is classified as a full-time, part-time, or seasonal employee. Indeed, the frequency of the alleged discriminatory treatment, and the identity of the alleged harassers, must always be considered.

If you have any questions regarding this decision or other workplace issues, please contact a Jackson Lewis attorney.

New Connecticut CROWN Act Bans Natural Hair Discrimination in the Workplace

Connecticut has joined the growing list of states that prohibit discrimination on the basis of traits historically associated with race, including hair. On March 10, 2021, Connecticut adopted legislation to ban natural hair discrimination in the workplace.

In 2019, California was the first state to implement a law called the CROWN Act, an acronym for Creating a Respectful and Open World for Natural Hair. Other states that have joined California include Colorado, Maryland, New Jersey, New York, Virginia, and Washington.

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Regular Attendance is Essential Even if Employer was Lenient in the Past, Fifth Circuit Holds

An employer’s past leniency in applying and enforcing its attendance policy did not contradict the employer’s later position that regular worksite attendance was required for employment, the U.S. Court of Appeals for the Fifth Circuit has held. Weber v. BNSF Railway Co., No. 20-10295 (5th Cir. Feb. 24, 2021).

This provides guidance for employers unsure whether accommodating an employee’s absences creates a “precedent” making it harder in the future to establish that regular attendance is an essential job function. The Fifth Circuit has jurisdiction over Louisiana, Mississippi, and Texas.

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Employer Not Liable for Spouse’s COVID-19 Infection, California Court Rules

One year into the COVID-19 pandemic, U.S. courts are wrestling with a growing number of new legal theories related to COVID-19.  Not surprisingly, California – the most populous state with some of the most employee friendly laws and courts – leads the way with the most COVID-19 employment lawsuits filed. See Jackson Lewis COVID-19 Employment Litwatch.  Nonetheless, a Northern District of California decision, dismissing an attempt by an employee and his wife to hold an employer liable for COVID-19-related injuries, provides employers with some welcome relief.

In Kuciemba v. Victory Woodworks Inc., husband and wife Robert and Corby Kuciemba alleged that Robert worked at a construction site in San Francisco and that, in July 2020, Robert’s employer transferred employees from the company’s Mountain View, California job site to the San Francisco site, despite knowing the transferred employees had likely been exposed to COVID-19 in Mountain View.  No. 3:20-cv-09355-MMC (N.D. Cal. Feb. 22, 2021).  Once in San Francisco, the transferred employees allegedly worked closely with Robert, without adequate safety precautions being put in place.  Soon thereafter, both Robert and Corby tested positive for COVID-19 and were hospitalized.  Corby, a high-risk individual, was hospitalized for an extended period.

The Kuciembas sued Robert’s employer in state court, alleging claims for negligence and violation of public nuisance laws (that resulted in Corby contracting COVID-19), and loss of consortium (suffered by Robert because of Corby becoming sick).  All of these claims were rooted in the assertion that the employer knew or should have known that the transferred employees had been exposed to COVID-19, and that the employer failed to follow local and federal guidelines and orders for maintaining a safe workplace.

The employer successfully removed the case to federal court on diversity jurisdiction grounds (because the company is based in Nevada), and then moved to dismiss all claims. On February 22, 2021, the district court dismissed the case, without prejudice.  First, the court ruled that Corby’s public nuisance claim failed for lack of standing.  Next, the court ruled that Corby’s various negligence claims, as well as Robert’s loss of consortium claim, were all barred by California workers’ compensation provisions, which provide the sole and exclusive remedy for the employee and the employee’s dependents. See Cal. Labor Code §§ 3600, 3602.

The court’s ruling is gratifying for management-side defense attorneys who have been arguing that states’ workers compensation laws preempt most allegations of COVID-19-related injuries or damages resulting from exposure to the virus in the workplace. The combination of worker’s compensation protections (which here extended to the spouse) and the myriad of states that have passed various forms of immunity for COVID claims – including, but not limited to, Georgia, Ohio, Indiana, Wisconsin, and South Carolina – provide employers with their own form of vaccine to the onslaught of litigation created by COVID-19.

Many COVID-19 employment lawsuits raise novel legal issues, so it is important for employers to monitor COVID-19 employment litigation trends. Fortunately, Jackson Lewis has a dedicated team tracking and responding to these developing issues.  Please contact Jackson Lewis if you have questions or need assistance regarding any COVID-19 workplace concerns.

Texas Amended Rule 106 on Substitute Service: Have You Been Served?

Attempting to align the Texas legal system with current realities, effective December 31, 2020, Rule 106 of the Texas Rules of Civil Procedure is amended to allow substitute service by “social media, email, or other technology ….”  Indeed, any plaintiff faced with the previous options for substitute service (essentially, publication in a physical newspaper or posting a note on the courthouse bulletin board) sees the value in modernizing the rules for service of process.  Nonetheless, the new rule and comments to the rule are sparse in guidance and arguably create more problems.

The comments to amended Rule 106 state, “a court may, in proper circumstances, permit service of citation electronically,” but they provide no real guidance as to the standard of evidence required. Tex. R. Civ. P. 106 (cmts).  Thus, it may fall to plaintiffs to educate the judiciary on the technology proposed for substitute service, its limitations and capabilities, and how to prove a defendant regularly or recently used that technology.  This, in turn, may open a Pandora’s box of privacy issues, including what role (if any) social media providers may play if they are expected to share user membership or activity information.

The comments also state that the court should “consider whether the technology actually belongs to the defendant and whether the defendant regularly uses or recently used the technology.”  Tex. R. Civ. P. 106 (cmts).  This implies that a defendant could be served by email or a social media account, but the text of Rule 106(b)(2) is silent with regard to the defendant’s ownership of the utilized technology.  Surely, if a celebrity posts about a class action lawsuit on their Twitter feed that would not “be reasonably effective to give the defendant notice of the suit,” simply because the defendant follows the celebrity’s Twitter feed. But, what if that defendant retweeted the post?

The rule is also silent as to joint or multi-user accounts, profiles, or emails, and the possibility of an authorized user deleting the email/service of citation prior to the targeted defendant reading it.

Despite its shortcomings, amended Rule 106 is clearly an overdue step toward embracing technology.  Even before the pandemic relegated a good portion of the country to virtual concerts and Zoom happy hours, many were already “living” online.  Indeed, this rule change may be helpful for companies or employers frustrated by evasive former employees.  Consider an employee who failed to update their home address, left the company, and subsequently began competing in violation of their non-compete agreement.  Serving that employee with a cease and desist letter or the petition may prove difficult, especially now when many people are working from “anywhere.”  This amended rule may provide the opportunity for an employer to simply serve the former employee through the former employee’s LinkedIn or Facebook account.

Amended Rule 106 signals a recognition that communication methodologies are changing.  Employers should be cognizant of their social presence and how individuals managing the company’s online interactions handle communications (legal and otherwise).  Jackson Lewis attorneys can help employers develop policies regarding social media and technology use, including cybersecurity, to better manage their workforce and communications in this dynamic environment.

U.S. Supreme Court Denies Petition Seeking to Scrap McDonnell Douglas Burden-Shifting Analysis

Arguing the decades-old analysis is no longer helpful to anyone, Reginald Sprowl petitioned the U.S. Supreme Court to scrap application of the McDonnell Douglas burden-shifting analysis in Title VII race discrimination and retaliation claims. On January 19, 2021, the Supreme Court rejected Sprowl’s petition and denied certiorari. Sprowl v. Mercedes-Benz U.S. Int’l, Inc., 815 Fed. Appx. 473 (11th Cir. 2020), petition for cert. denied (No. 20-790).

Sprowl, a Black technician for a major car company, filed an internal complaint against his team lead for allegedly making racist remarks. Following an investigation, the team lead was fired. Sprowl later felt his supervisor and coworkers blamed him for his team lead’s discharge and that he had been denied promotions because of his race and his previous complaint. Sprowl resigned from the company and filed a federal lawsuit alleging discrimination and retaliation in violation of Title VII.

The company moved for summary judgment on Sprowl’s claims. The trial court applied the McDonnell Douglas test. The test requires a complainant in a Title VII case who does not have direct evidence of discrimination to carry the initial burden under the statute for establishing a prima facie case of racial discrimination. In this case, he must show (i) that he belongs to a racial minority; (ii) that he applied and was qualified for a job for which the employer was seeking applicants; (iii) that his job application was rejected; and (iv) thereafter, the company continued to seek applicants. After the prima case is established, the burden shifts “to the employer to articulate some legitimate, nondiscriminatory reason” for its action. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973). Then, the burden shifts back to the plaintiff to present evidence to show that the employer’s stated reason is a “pretext,” which, if proven, gives rise to an inference of unlawful discrimination.

Applying McDonnell Douglas to Sprowl’s claims, the trial court held that, even if Sprowl made a prima facie case of discrimination and retaliation, the company provided several legitimate, non-discriminatory reasons for not promoting him, including the fact that Sprowl had not demonstrated the requisite skills for a promotion, while other candidates had. Because Sprowl failed to show the company’s explanation was mere pretext, the court granted summary judgment and dismissed the case. Sprowl appealed and the U.S. Court of Appeals for the Eleventh Circuit affirmed the trial court’s ruling.

In his petition to the U.S. Supreme Court, Sprowl argued that the McDonnell Douglas burden shifting analysis is unhelpful, overly complicated, and should be replaced by a “but-for” standard. When it comes to Title VII, the adoption of the but-for causation standard means a defendant cannot avoid liability just by citing some other factor that contributed to its challenged employment decision. So long as the plaintiff’s race was one but-for cause of that decision, that would be enough to impose liability. Sprowl cited several recent U.S. Supreme Court cases in support of his petition. Nonetheless, on January 19, 2021, the Court declined to hear his case.

If you have any questions about this case, or any other employment law issues, do not hesitate to contact Jackson Lewis attorneys.