MANDATORY ARBITRATION AGREEMENTS

The News From Lake Wobegon – EEOC sues Ralph’s

“Pretty Good” Grocery

If you’ve ever listened to Garrison Keillor’s Saturday afternoon radio show “A Prairie Home Companion,” you’re familiar with his weekly report on “The News from Lake Wobegon,” a fictional town in rural Minnesota. Businesses in Lake Wobegon include Wally’s Sidetrack Tap, and Ralph’s Pretty Good Grocery.</p> The world of fiction aside, there is a real business called Ralph’s Grocery which is a division of Kroger Company. More importantly, the EEOC has recently sued Ralph’s in Federal Court in Illinois for maintaining a program under which Ralph’s employees must submit all employment disputes to binding arbitration instead of resolving them through the EEOC or the courts. <p>Actually, the EEOC does not object to mandatory arbitration programs. But Ralph’s arbitration policy told employees that they could not file charges with the EEOC or file lawsuits over employment disputes. The EEOC’s position has been and remains that employees cannot be restricted in any way from filing a charge with the Agency, and thereby triggering the Agency’s investigative processes. Employees can (per EEOC) waive their right to receive any relief (money damages or other relief) from the EEOC, but employees must at all times remain free to file charges.

The EEOC’s lawsuit against Ralph’s is very similar to other lawsuits the Agency has filed to invalidate severance agreements and release documents that contain a waiver of an employee’s right to file a charge.

The Federal Court in Illinois has agreed with the EEOC and has issued a preliminary injunction instructing Ralph’s that it cannot use its arbitration agreements to try and prevent employees from filing charges with the EEOC.

Things never get this complicated in Lake Wobegon.

GOING BEHIND THE “DOCTOR’S RELEASE” – DANGER

Auto parts maker Delphi Corporation has a policy of requiring a doctor’s release before reinstating employees who are returning from sick leave. No problem there – many companies have such policies because they want some assurance that employees are indeed healthy enough to return to work without endangering their own health, or that of other employees.

But Delphi, according to the EEOC, goes one step further and demands that employees agree to allow the company to access the treating physician’s records so that Delphi can double check the validity of the doctor’s release. The EEOC says that Delphi routinely discharges employees who refuse to allow the company to access their confidential medical records.

This “show me” approach has landed Delphi in Federal Court after the EEOC filed suit against the company for violating the Americans With Disabilities Act. The ADA outlaws medical inquires that might reveal whether an employee is disabled unless the inquiry is “job related and consistent with business necessity.” The EEOC lawsuit says that by demanding access to employee medical files Delphi is making a prohibited medical inquiry and that by discharging employees who refuse, Delphi is engaging in unlawful job retaliation against those who oppose Delphi’s unlawful policy.

From this vantage point, it looks like the EEOC has a good case, but stay tuned, because we will continue to follow this case.

RELIGIOUS DISCRIMINATION – INCREASE IN CASES BAFFLING

In the past decade (1997-2006), the overall number of EEOC charges involving all types of workplace discrimination has dropped – from 80,680 in 1997 to 75,768 in 2006 – a decrease of roughly 5%. Yet, during the same time period, the number of religious discrimination charges surged from 1,709 to 2,541, an increase of nearly 50%. Why?

Many of the new cases involved unusual circumstances – Muslim taxi drivers who refuse to carry passengers who have been drinking or who are carrying alcohol, or a Catholic pharmacist who refuses to dispense contraceptives or Muslim workers who want a 5-minute break at sundown to pray. Most, however, involve the more familiar disputes about time off work to attend religious observances.

courts tend to support employers, especially when the company can show that it seriously and thoughtfully considered an employee’s request for time off before rejecting it for good business reasons.

Touchy issues can include employee requests to wear religious garb at work, create religious displays at their work stations, or proselytize other employees. While the latter (proselytizing) is generally taboo, other religious observance issues generally involve an attempt to balance one employee’s right to display religious beliefs with others’ rights to be free from such activity. It is often a touchy balancing act, but most companies follow an informal general rule – if it creates controversy, don’t do it at work.

WHAT IS “WORK” – A LESSON FROM THE FAIR LABOR STANDARDS ACT

Previous Tip Sheet articles and the featured presentation at the recent Maynard & Gale Client Seminar have emphasized one very important reality in the world of employment law today: the danger every company faces from “collective action” lawsuits under the wage-hour laws. The plaintiff trial lawyers believe that all they need to do is recruit a plaintiff and file a lawsuit because the “discovery” process will allow them to find FLSA violations in any company. The types of possible violations include– misclassifying employees as exempt, shaving time or requiring employees to work “off the clock,” and failure to pay for “donning and doffing” time before or after work.

These “collective action” cases often result in big settlements. A recent Business Week article chronicled the story of one high profile plaintiff’s lawyer who has earned over $50 million from these cases in the past five years – enough to cause him to move to Nevada from California to avoid higher taxes on his windfall.

A recent decision from the Federal Appeals Court in Philadelphia highlights one of the many quirks in the wage and hour law – the definition of “work.”

For many years, the Department of Labor and courts have followed the “suffer or permit” rule, which basically says that if one manager or supervisor is aware that an employee is working – even if no one asked the employee to report or even if the employee was expressly told not to report – the employee must be paid for the time until the company takes affirmative steps to send the employee home. This rule applies to employees who “volunteer” to come in on an off day to attend training sessions.

In the Philadelphia case, the company argued that the employees in question were not “working” because they were merely putting on or taking off their work clothes – an activity that did not require any significant degree of physical exertion and which was admittedly not a “cumbersome” activity. The company lost that argument because the FLSA does not require that “work” require any degree of physical or mental exertion. Rather, under the FLSA, if an employee is physically present and not free to leave the company’s premises and is engaged in some form of activity (waiting is an activity) controlled or required by the company, the employee is considered to be “working.”

Any company could benefit from an FLSA “checkup.” If your company has not conducted a self-review of practices in this area of the law, now would be a good time.