The EEOC has filed suit in Chicago against pharmacy giant CVS to stop it from using certain terms in its settlement agreements with employees. The EEOC claims that the company unlawfully violated employees' rights to communicate with the EEOC and to file discrimination charges, in violation of Section 707 of the Civil Rights Act of 1964.
According to the EEOC, CVS conditioned the receipt of severance benefits for certain employees on an overly broad severance agreement set forth in five pages of small print. The agreement purportedly interferes with employees' right to file discrimination charges and/or communicate and cooperate with the EEOC. The terms objectionable to the EEOC include the following:
1. A cooperation clause that requires employees to notify CVS' general counsel upon receipt of a subpoena, deposition notice, or inquiry in connection with a suit or proceeding, including an administrative investigation;
2. A non-disparagement clause prohibiting employees from making statements that disparage the business or reputation of the company, its directors, officers, or employees;
3. A confidentiality clause prohibiting the disclosure of Confidential Information, including personnel data revealing the skills, abilities or duties of employees, wage and benefits structures, succession plans, and information pertaining to affirmative action plans and planning;
4. A general release of claims; and
5. A covenant not to sue that encompasses any claims, actions or proceedings and requires the employees to reimburse the company for any attorney fees incurred as the result of a breach of the agreement. The covenant not to sue contains a qualification explaining that it is not intended to interfere with an employee's right to cooperate with or participate in a state or federal agency proceeding to enforce discrimination laws.
CVS reportedly used the foregoing terms in more than 650 agreements in 2012 alone. All of the foregoing types of clauses are common in employment-related separation agreements, and often provide much of the incentive for employers to enter into such agreements. Consequently, the EEOC's case against CVS is one that employers will want to monitor closely.
A copy of the EEOC complaint is available here.
The National Labor Relations Board (NLRB) announced this week that it will not seek U.S. Supreme Court review of two Court of Appeals decisions invalidating its controversial posting rule. The rule required most private sector employers to post a notice advising employees of their rights under the National Labor Relations Act, including the right to:
Since the initial injunction barring the NLRB from enforcing the posting requirement, the NLRB has increased its scrutiny of employer rules and policies that could be interpreted as chilling employees' rights to engage in concerted activity. The policies and rules that tend to be problematic are those that could be construed as limiting employee communication about working conditions and terms of employment, including social media, confidentiality, and non-disparagement policies. Such policies routinely come under review when the NLRB receives a charge alleging an unfair labor practice (ULP), even when the ULP does not implicate the particular rule or policy. Given the NLRB's decision to abandon the posting rule, its scrutiny of employer policies is likely to continue in 2014.
Last month, in Cejas Commercial Interiors, Inc., v. Torres-Lizama, the Oregon Court of Appeals adopted the “economic realities test” for determining whether an individual is an employee under Oregon's minimum wage statute. The statute, ORS 653.025, provides that “no employer shall employ * * * any employee” at a wage lower than the “Oregon minimum wage.” A challenge for courts is to determine whether a worker is an employee of the purported employer.
Before last month’s ruling, trial courts in Oregon applied two different tests to determine whether an individual is an “employee” for purposes of the minimum wage statute. One test, called the “right-to-control test,” looks at whether the presumed employer has formal control over the individual workers. A second test, the one adopted by the Court of Appeals, focuses more broadly on whether “an entity has functional control over workers even in the absence of the formal control.” The goal of the economic-realities test is to determine whether, “as a matter of economic reality,” the worker is dependent on the alleged employer.
In Cejas Commercial Interiors, Inc., v. Torres-Lizama, the workers alleged that Cejas, a drywall contractor, was their employer while they did drywall work that Cejas had subcontracted to Viewpoint Construction, LLC. The workers sought compensation from Cejas when Viewpoint disappeared without paying them, claiming that Cejas and not Viewpoint was their employer. The Court of Appeals agreed with the trial court that, even applying the broader economic-realities test, the workers were not “employees” of Cejas, and therefore Cejas did not owe them minimum wages. The court found that Cejas “neither formally nor functionally controlled the terms and conditions of employment.” Further, the court found that the workers were not economically dependent on Cejas and Cejas was a “mere business partner” of the workers' direct employer, Viewpoint.
Last week the Oregon Court of Appeals reinforced the challenges facing parties seeking prejudgment interest. In Davis v. F.W. Financial Services, Inc., defendant asserted a counterclaim for conversion of funds, and sought interest accruing on that sum of money through the date of judgment.
According to the court, a claim for prejudgment interest is properly pleaded when the claimant alleges the exact amount due and the dates during which the claimant was deprived of the funds. While the defendant in Davis did allege in its counterclaim the exact amount converted by plaintiff, defendant was denied prejudgment interest because it incorrectly stated the date on which the conversion began. The court reached that result even though the plaintiffs themselves had properly stated in their complaint the date on which they took control of the funds. Because defendant "pleaded only legally erroneous dates" it was not entitled to prejudgment interest.
The Oregon Supreme Court earlier this month refined its test for personal jurisdiction, rejecting thirty-year-old precedent and adopting a flexible approach consistent with more recent U.S. Supreme Court case law.
Robinson v. Harley-Davidson Motor Co. focuses on the test courts use to determine whether a lawsuit arises from or is related to the out-of-state defendant's contacts with the forum. In Robinson, plaintiff was a resident of Oregon who purchased a motorcycle in Oregon, had the motorcycled serviced by defendant dealership in Idaho, and was injured in Wyoming due to defendant's allegedly negligent repair. Plaintiff sued defendant in Oregon, and defendant sought to dismiss on the ground that it was not subject to personal jurisdiction in an Oregon court.
Plaintiff argued for specific jurisdiction, claiming that defendant was subject to suit because it engaged in activity in Oregon and the claim arose from or related to that activity. While the defendant dealership had no physical presence in Oregon, its contacts with the state included selling a limited number of products to Oregon residents through its interactive web site, advertising in publications distributed in Oregon, and selling products to Oregon residents who visit its Idaho location.
In 1982 the Oregon Supreme Court held in State ex rel. Michelin v. Wells that a court may exercise personal jurisdiction when at least one of the defendant's contacts with the forum state is substantively relevant to the cause of action. The court in Robinson acknowledged that this so-called "substantive relevance" test has been rejected by certain federal courts as "mechanical and rigid" and not consistent with more recent U.S. Supreme Court opinions on personal jurisdiction. The court accordingly disavowed Michelin, and stated that litigation arises from and relates to the defendant's activity in the forum if the activity (1) is a but-for cause of the litigation and (2) provides a basis for a determination that the litigation was foreseeable.
Applying this test, the supreme court concluded that defendant's contacts in Oregon were not such that it was reasonably foreseeable that it would be sued in Oregon as a result of work performed in Idaho. On that basis the court affirmed dismissal of the claim against the dealership.
State Representative (and Ater Wynne attorney) Shemia Fagan is hosting a free Cover Oregon training for businesses and individuals interested in learning about the new online health insurance marketplace. This hands-on training will be more extensive than the presentations Cover Oregon has conducted, as attendees can bring their laptop computers, connect to Wi-Fi ,and walk through the website and options during the training. A representative from Cover Oregon will be on hand to answer questions and guide the training.
Wednesday, October 30, 7:30am - 9:00am
Monarch Hotel, Pacific Ballroom, 12566 SE 93rd Ave Clackamas, OR 97015
Bring your laptop! Wireless access is available, and a Cover Oregon representative will be on hand to walk you through the process of getting signed up.
RSVP to firstname.lastname@example.org
Last week the Oregon Supreme Court invalidated a statutory cap on noneconomic tort damages. The plaintiffs in Klutschkowski v. PeaceHealth asserted a medical malpractice claim to recover for injuries their son had sustained during birth. Plaintiffs contended that the damages cap violated the right to a remedy of Article I, Section 10 of the Oregon Constitution, and the right to jury trial of Article I, Section 17. The Court applied the reasoning of the 2001 case Smothers v. Gresham Transfer, which held that if the common law recognized a right to recover when the Oregon Constitution was adopted in 1857, then a court may enforce a statute abolishing the remedy only if the legislature provides a constitutionally adequate substitute remedy. The Court concluded that the claim at issue in this case did exist in 1857 and could not be limited by a statutory cap.
Justice Jack Landau wrote a lengthy concurring opinion, acknowledging that the majority properly applied the Smothers analysis, but questioning Smothers and other cases requiring "imaginative reconstruction of nineteenth-century case law" in order to resolve issues of state constitutional law. Justice Landau challenged "the notion that this state's constitution today means no more than what it meant in 1857" and characterized the "hyper-originalism" required by the case law as "untenable." He next disputed the historical interpretation of the remedy clause adopted in Smothers: "My own view is that it is unlikely that the framers intended the remedy clause to serve as a limitation on legislative authority." He suggests that the Court in future cases "should invite advocacy . . . to address the issues that I have raised."
The question now is whether other members of the judiciary will take up Justice Landau's call to broadly re-think how they interpret the Oregon Constitution.
Ater Wynne invites you to attend its next employment law seminar, on Thursday, September 19, 8 a.m. to 10 a.m., at Portland's World Trade Center. A panel will discuss Gender Equality: Emerging LGBT Issues in the Workplace. For details and on-line registration, go to the Ater Wynne Resources Page.
The Court of Appeals last week thwarted an effort to unwind a sale of real property, holding that the disappointed purchaser had imputed knowledge of problems with the property at the time of the sale.
In Atkeson v. T&K Lands, LLC, the plaintiff contended that he was not aware of a number of problematic conditions when he purchased land for a vacation home, including improvements that had been built without the necessary permits, and violation of a riparian setback from a creek.
Plaintiff claimed he later learned of the problems which restricted his use of the property, and he sued to rescind on the grounds of mutual mistake and misrepresentation. But the lawyer whom plaintiff had hired to research the property testified during pretrial discovery that he was aware of the problems and had informed plaintiff.
While plaintiff disputed that he received the information from the lawyer, the trial court nonetheless granted summary judgment for the sellers. The result turned on the imputed knowledge doctrine: plaintiff was deemed to know facts learned by his lawyer, regardless of his actual knowledge. The Court of Appeals affirmed, noting that the relationship between a lawyer and a client is one of agent and principal, and the knowledge that the agent obtains within the scope of the agency is imputed to the principal as a matter of law.
Starting in November 2013, a new Seattle ordinance will severely restrict when and how a private employer may ask about and use the criminal conviction history of its job applicants and employees. The new law applies to all employees who spend at least 50% of their time in Seattle. Under the law, employers will no longer be able to ask about a job applicant’s criminal history at the initial application stage. No longer can an employer’s job advertisements or postings automatically or categorically exclude individuals with any arrest or conviction records.
The ordinance allows employers to perform a criminal background check on a job applicant or require a job applicant to provide criminal history information only after the employer has completed an initial screening of applications or resumes to eliminate unqualified applicants. Before taking any adverse employment action based on an applicant’s criminal history, an employer must identify the source of the criminal records and give the applicant a reasonable opportunity to explain or correct the information. Employers must hold a conditional job offer open for two business days to allow an applicant time to respond, correct, or explain the information.
The ordinance allows employers to inquire about conduct related to an arrest. Employers may not take an adverse employment action based on an employee’s or applicant’s arrest record unless the employer has a legitimate business reason. The ordinance defines “legitimate business reason” as an employer’s good-faith belief that the nature of the criminal conduct underlying the charge or conviction will either have a negative impact on the employee’s or applicant’s fitness or ability to perform the position or will harm people, property, or the business reputation or business assets of the employer. Employers must consider factors such as: the seriousness of the underlying criminal conviction or pending criminal charge, the number and types of convictions or pending criminal charges, the time elapsed since the conviction or charge, rehabilitation and good conduct, the duties and responsibilities of the position, and the place and manner in which the position will be performed.
The ordinance does not create a private right of action for an applicant to sue a prospective employer if the applicant is not hired for the position. Violation of the ordinance may subject employers to monetary penalties of up to $750 to $1,000, depending on the number of violations, and payment of the City’s attorney’s fees.
Employers should to review their job application forms and remove questions about criminal history in order to comply with the ordinance. Job postings should also be reviewed to eliminate any language such as “felons need not apply.” Background checks are still useful, but employers must be wary of how they are used.