Northwest Business Litigation

NLRB orders employers to post notice of employee rights

The National Labor Relations Board (NLRB) has issued a final rule that will require most private-sector employers to post a notice informing employees of their rights under the National Labor Relations Act (NLRA), starting November 14, 2011.  Exceptions exist for certain small employers with an annual income less than the specified jurisdictional amount.  Failure to post the required notice will be deemed an unfair labor practice. 

Notices must be posted, in a size and with language prescribed by the NLRB, that inform employees of their rights under the NLRA, contact information for the NLRB, and information concerning basic enforcement procedures.  The notice must be posted in a conspicuous place, including places where other personnel rules or policies are customarily posted.  Employers must also post the notice on an Intranet or Internet site if the employer customarily communicates with employees about personnel rules or policies by such means.  If 20 percent or more of the employer’s workforce is not proficient in English and speaks a language other than English, the notice must be posted in the language the employees speak.  Postings in multiple languages may be required, depending on the numbers of languages spoken by the employees.  The specific contents of the notice can be found in the Appendix to Subpart A of the final rule, starting at page 185.

Notices will be made available to the public free of charge at NLRB regional offices or by download from the NLRB website. 

Oregon wrongful discharge remedy available for Sarbanes-Oxley violation

The Oregon Court of Appeals last week revived a plaintiff's common law wrongful discharge claim against his former employer, based on his claim of retaliation for making complaints to his supervisors about management conduct and threatening to take his complaints to the corporate directors, and also for exercising his right to complain that his bonus was cut.  The trial court had dismissed the complaint for failure to state a claim.

In De Bay v. Wild Oats Market, Inc., the plaintiff alleged that he gave his supervisors a detailed written report questioning the management team's actions and motives in deviating from the company's strategic growth plan.  Plaintiff also alleged that his bonus was cut in half after he made the report, and that he was subsequently fired for threatening to bring his concerns to the board.  Plaintiff argued on appeal that these allegations were sufficient to state a wrongful discharge claim for exercising important societal rights and obligations protected under state and federal laws, specifically ORS 659A.230, ORS 652.355, and section 806 of the Sabanes-Oxley Act, 18 USC § 1514A. 

The Court of Appeals found that a wrongful discharge claim based on "whistleblowing" under ORS 659A.230 requires that the employee complain to a recognized outside authority with the power to take action on such complaints.  Plaintiff had not alleged a report to any outside authority and therefore failed to state a claim under that statute. 

Likewise, the court found that ORS 652.355, which prohibits retaliation for making a wage claim, did not apply to plaintiff's circumstances because he did not allege that he had filed or even discussed a "wage claim." 

However, for the purpose of a motion to dismiss, plaintiff's allegation that he was fired for reporting managerial wrongdoing to his supervisors fell within the scope of conduct protected by Sarbanes-Oxley, which prohibits a publicly-traded company from discharging an employee for reporting to a supervisor a violation securities laws or any federal law relating to fraud against shareholders.  In addition, the court found that Sabanes-Oxley did not provide the exclusive remedy for the alleged conduct because, unlike a wrongful discharge claim, the statute did not allow for the recovery of noneconomic or punitive damages.  On that basis, plaintiff was entitled to pursue a claim for common law wrongful discharge.

The opinion provides another reminder to employers that firing employees for internal reports of wrongdoing may provide the basis for "whistleblower" claims under both statutory and common law.

U.S. Supreme Court rejects class action against Wal-Mart

The Supreme Court today reversed the Ninth Circuit and pulled the plug on what would have been the largest-ever employment discrimination class action.  The Court rejected certification of a class of up to 1 million current and former female employees of Wal-Mart.  According to Justice Scalia, writing for the Court, Wal-Mart's decentralized employment practices make it impossible for the class to meet the "commonality" standard of FRCP 23, and claims for back pay are generally not available under FRCP 23(b)(2), which allows for injunctive or declaratory relief.

See the opinion in Wal-Mart v. Dukes here.  See our earlier coverage of the case here.

Ninth Circuit holds that pharmaceutical sales reps aren't entitled to overtime pay

Last month, in Christopher v. SmithKline, the Ninth Circuit held that pharmaceutical sales representatives are exempt from the Fair Labor Standard Act's overtime requirements. 

Two pharmaceutical sales representatives filed a lawsuit challenging defendant's practice of requiring overtime work without paying additional compensation, as a violation of the FLSA.  The FLSA requires overtime payment for employees for hours worked in excess of forty per week.  However, there are numerous exceptions to this rule, including an exemption for persons employed "in the capacity of outside salesman." The trial court did not allow the plaintiff's case to proceed to trial, finding that pharmaceutical sales representatives "unmistakably fit within the terms and spirit of the [FLSA's outside sales] exemption."  The plaintiffs appealed to the Ninth Circuit.

The Ninth Circuit affirmed the trial court's ruling.  Despite the fact that PSRs do not technically sell pharmaceuticals to doctors, a doctor's commitment to a PSR to prescribe his assigned product when medically appropriate is a "meaningful exchange."  This meaningful exchange, the Court held, fits within the FLSA's definition of a "sale," which includes "other dispositions."  In addition, PSRs are "rewarded with commissions when their efforts generate new sales.  They receive commissions in lieu of overtime and enjoy largely autonomous work-life outside of an office."  For these reasons, the Ninth Circuit Court held that PSRs are exempt from the overtime-pay requirement of the FLSA.

This result creates a split with the Second Circuit, and raises the possibility that the U.S. Supreme Court will take up the issue.

Ninth Circuit to review en banc grocery antitrust case

The Ninth Circuit this week agreed to review en banc a case in which a Mutual Strike Assistance Agreement entered into by four supermarket chains was held to be a violation of antitrust law.  In an opinion issued last year, a three-judge panel of the court directed the entry of summary judgment against the supermarkets, which had agreed to redistribute and share profits during a strike by unionized employees.

See our earlier coverage of the case here. 

US Supreme Court: Fiance of an individual who engaged in protected conduct can sue for retaliation

In Thompson v. North American Stainless, the US Supreme Court last week held that the fiancé of an individual who filed an EEOC complaint could bring a claim for retaliation under Title VII.

In this case, the plaintiff was terminated three weeks after the EEOC notified his employer that his fiancé had filed a charge alleging sex discrimination against that employer. The plaintiff sued, alleging that the employer fired him in retaliation for his fiancé’s actions. The Sixth Circuit held that he did not engage in activity protected by the antiretaliation provision of Title VII, and therefore was not part of the class of persons for protected by the law.

In a unanimous opinion written by Justice Scalia, the Supreme Court overruled the Sixth Circuit and held that the plaintiff had alleged facts sufficient to state a retaliation claim under Title VII. The Court noted that the Supreme Court had previously held that the Title VII antiretaliation provision prohibits “any employer action that well might have dissuaded a reasonable worker from making or supporting a charge of discrimination.” The Court held that it is “obvious that a reasonable worker might be dissuaded from engaging in protected activity if she knew that her fiancé would be fired.” While the Court did not “identify a fixed class of relationships for which third-party reprisals are unlawful,” it noted that firing a close family member would almost always qualify, whereas “inflicting a milder reprisal on a mere acquaintance will almost never do so.”

The Court also clarified the question of who may sue under Title VII, which allows civil actions to be brought by “the person claiming to be aggrieved.” The Court rejected an argument that this language should be construed as allowing anyone with Article III standing to bring a claim. The Court instead applied the test from the Administrative Procedures Act, “under which a plaintiff may not sue unless he falls within the zone of interests sought to be protected by the statutory provision whose violation forms the legal basis for his complaint.”

Oregon Supreme Court tosses single-digit ratio for punitive damages in employment case

On Thursday, a divided Oregon Supreme Court affirmed a jury award of punitive damages of $175,000 in a case in which compensatory damages were only $6,000.  In Hamlin v. Hampton Lumber Mills, Inc., plaintiff was a former employee of defendant who was not rehired after recovering from a workplace injury.  He claimed discrimination based on his filing of a workers' compensation claim. 

The Court of Appeals, in reviewing the verdict in 2008, had held that the punitive damages of 30 times compensatory damages was grossly excessive under the Due Process Clause of the U.S. Constitution, and stated that the ratio of punitive to compensatory damages in non-personal-injury cases should generally not exceed 4:1.  In this week's ruling, the Supreme Court disagreed and declined to apply the single-digit ratio, holding that where the compensatory award is small -- $12,000 or less -- and where defendant's conduct is sufficienly reprehensible, an award in excess of a single-digit ratio is not grossly excessive.  

Justice Martha Lee Walters wrote the majority opinion for five members of the Court.  Retiring Justice Michael Gillette wrote a dissenting opinion.  He noted that judges have struggled to apply Due Process limitations in cases such as this, and ended with a plea to the United States Supreme Court to give state courts more guidance on the issue.

See our earlier posts on Hamlin in the Court of Appeals and other Oregon cases addressing punitive damages here, here and here.

U.S. Supreme Court to review Wal-Mart class action

The U.S. Supreme Court today agreed to review whether a huge employment discrimination class action can proceed against Wal-Mart.  The review follows rulings by judges in the Northern District of California and the Ninth Circuit Court of Appeals certifying the largest-ever employment discrimination class action.  According to plaintiffs in Dukes v. Wal-Mart Stores, Inc., up to one million or more past and current female employees of Wal-Mart suffered discrimination in pay and promotions.

See our earlier coverage of the case here and here.

Employers should continue planning for Health Care Reform

The Health Care Reform Acts adopted earlier this year remain in the news as several members of Congress have announced they intend to seek repeal some or all of the new laws.  However, even if the new Congress manages to pass such a repeal, it is uncertain whether there is enough support to overcome a likely Presidential veto. Employers and their health insurers should, therefore, move ahead with preparations to comply with the new laws' provisions, many of which become effective on January 1, 2011 for calendar year plans.  Ater Wynne's Health Care Reform Timeline lists some of the major provisions of the new laws and when they become effective.

  

Ater Wynne's December 9 Employment Law Seminar in Portland will include an overview of Health Care Reform provisions that become effective in 2011 and beyond.  Watch your e-mail for an invitation or see our website for details.

Healthcare reform without the hype: What it means for your business

Join us on October 7, at Ater Wynne's Seattle office, for a seminar on the new healthcare reform law.  John Walch, chair of the firm's Employee Benefits Group, will talk about how the new law impacts employers.  See details here.