Employment Law Update

By Jones Waldo11.13.2017

Employment Law Update

Jones Waldo

Since Congress has been unable to repeal the Affordable Care Act, President Trump recently issued an executive order aimed at (1) expanding lower-cost insurance plans, (2) allowing employers to provide employees with funds to purchase their own insurance coverage and (3) increase choice and competition and reduce consolidation in the healthcare and hospital industries. The order directs governmental agencies, including the Department of Labor, to relax current restrictions on “association health plans” and selling low-cost, short-term limited duration insurance (STLDI). The goal is for small employers in the same line of business anywhere in the country to be able to join together to offer healthcare coverage to employees. This order is intended to undo the Obama administration’s regulations which limited the use of STLDI.  The order also calls for expanded utilization of health reimbursement arrangements (HRAs) (i.e., employer-funded accounts that reimburse employees’ medical expenses on a tax-free basis) by allowing employees to use HRA funds to pay health insurance premiums - something restricted by the Obama administration. 

ADA and Extended Leaves of Absence

A federal appeals court has decided that extended leaves of absence are not required by the Americans with Disabilities Act (ADA). In a September 20, 2017 decision captioned Severson v. Heartland Woodcraft, Inc., the Seventh Circuit (the federal appeals court for Indiana, Illinois, and Wisconsin) held that “a multi-month leave of absence is beyond the scope of a reasonable accommodation under the ADA.” The employee in the case, who underwent a back surgery, exhausted his 12 weeks of FMLA leave, and then asked for a two to three month additional leave of absence to continue his recuperation. The employer terminated the plaintiff’s employment and invited him to reapply when he was able to return to work. The employee did not reapply—he sued, alleging that the employer had violated the ADA. The Seventh Circuit ruled in favor of the employer and found that “long term leave is the domain of the FMLA” and is not required by the ADA.  The court found that a short leave of absence (e.g., “a couple of weeks”) may be required by the ADA in some circumstances. However, the court is clear in its opinion that a “multi-month” leave period is not a reasonable accommodation and is not required under the ADA. This decision finds some support in a 2014 decision from the Tenth Circuit (the federal appeals court for Utah) captioned Hwang v. Kansas State University, where the court also ruled in favor of an employer in an extended leave case. In that case, the court found that an employee’s request for a six-month leave of absence was not required by the ADA. The court held “it perhaps goes without saying that an employee who isn’t capable of working for so long isn’t an employee capable of performing the job’s essential functions, and that requiring an employer to keep a job open for so long doesn’t qualify as a reasonable accommodation.” The court added, that the ADA is “all about enabling employees to work, not to not work.” Employers should take note that these two decisions are contrary to EEOC guidance on this same point and that a number of court decisions have held that an extended leave of absence may be required by the ADA. Thus, at least for now, employers may face risk unless they take a case-by-case approach to all leave requests and get legal advice before denying an extended leave of absence.   

Denial of Transfer May Be Adverse Action 

To prevail on a Title VII claim for employment discrimination, a plaintiff must show that he or she suffered a materially adverse employment action. Over the years, federal courts have found that purely lateral transfers, unaccompanied by material changes in working conditions, aren’t actionable under Title VII. So the denial of a lateral transfer would be no problem, right? Not so fast. The D.C. Circuit Court of Appeals recently determined that denial of a lateral transfer may be actionable under Title VII if the denial could have an “adverse impact on the employee’s potential for career advancement.”  See http://caselaw.findlaw.com/us-dc-circuit/1870567.html.

The case involved a minority employee at the US Department of Housing and Urban Development (HUD) who sought a transfer to escape the supervision of his allegedly racist supervisor. The employee approached the supervisor twice about a transfer and the supervisor denied the request both times without explanation. Within months, the employee resigned, took a lower-paying position at HUD, and sued HUD for employment discrimination. The trial court ruled that the transfer request was purely lateral and dismissed the case; but the appeals court disagreed, holding that denial of a transfer request made to escape from a potentially racist boss was a materially adverse employment action. The takeaway? While the court’s opinion is silent on the point, it is virtually certain that the supervisor in this case didn’t think he was a racist; thus, all supervisors should take employee requests for lateral transfers seriously and should document any legitimate business reasons for denying such transfers.

Employer Wins Case by HR Manager Fired for Dating Subordinate 

The Seventh Circuit Court of Appeals recently upheld the grant of summary judgment in favor of an employer (Old Wisconsin Sausage Company) that terminated its HR manager (Owens) for overseeing the hiring of a man with whom she had been in a six-year relationship without first disclosing that relationship to Old Wisconsin. See http://caselaw.findlaw.com/us-7th-circuit/1872710.html. Not long after the hiring of her boyfriend, other employees began to complain about preferential treatment by Owen regarding her boyfriend. Although Old Wisconsin had no written policy about dating subordinates, its practice was to question supervisors in relationships with subordinates to avoid conflicts of interest. When confronted, Owens initially lied about the relationship and, when pressed further, she refused to answer on the grounds that the questions constituted “borderline sexual harassment.” Old Wisconsin eventually terminated Owens for dishonesty and professionalism concerns and replaced her with a female HR manager. Owens sued, but lost because she was unable to adduce any evidence that Old Wisconsin treated male employees differently than female employees. In fact, Old Wisconsin presented two instances where male supervisors were questioned about dating female subordinates in the same way Old Wisconsin had questioned Owens. In the words of the court, “rather than demonstrating that similarly-situated individuals were treated differently, the evidence indicated they were treated similarly.” The takeaway? Employers must apply its policies and procedures in a uniform and consistent way. Although Owens happened to be the only female manager at Old Wisconsin, the company avoided liability because it was able to point to evidence that it treated managers similarly regardless of their gender.

Changes Coming for California Employers

HR professionals know that the only constant is change, and California can be counted on to deliver employment law changes. The state recently enacted the New Parent Leave Act, which expanded the reach of parental leave. The law applies to employers with at least 20 employees, and allows an eligible employee to take up to 12 weeks of job-protected leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement. An employee may be eligible for this bonding leave if he or she: (a) has worked for the employer for at least 12 months, (b) has worked at least 1,250 hours in the past 12 months, and (c) works at a worksite where the employer has at least 20 employees within a 75-mile radius. The Act requires an employer to provide an eligible employee who requests leave with a guarantee of employment in the same or a comparable position, or be deemed to have refused the leave request. The employer must also maintain and pay for the employee’s coverage under a group health plan during the leave. The law takes effect on January 1, 2018. Affected employers should carefully review the law and update their leave policies to ensure compliance. Additionally, California recently joined the growing group of states and cities that prohibit employers from inquiring about the salary history of their job applicants. On October 12, 2017, Governor Jerry Brown signed AB 168 into law, barring employers from seeking information about an applicant’s salary history, as well as from considering such salary history as a factor in deciding whether to hire the applicant or what salary should be offered. The law contains additional requirements, as well as certain exceptions. Employers who hire in California should review their recruiting policies and practices to ensure they do not run afoul of this new law. This law also takes effect on January 1, 2018.

Utah law firm Jones Waldo provides legal services to a variety of businesses and community organizations, including credit unions.