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July 2008 Newsletter In this issue: • “RECKLESS DISREGARD” SAME AS “WILLFUL” FOR PURPOSES OF FCRA LIABILITY • HEALTHCARE EMPLOYERS: ARE YOUR POSITIONS CORRECTLY CLASSIFIED UNDER THE FLSA? • RETALIATION CLAIMS UNDER SECTION 1981 • RESTRICTIONS ON GRIEVANCE PROCEDURES NOT DISCRIMINATORY OR RETALIATORY • AMENDMENTS TO FMLA INCLUDING DOL POSTING REQUIREMENTS • NEW I-9 FORM ISSUED • NEWS AROUND THE FIRM SUPREME COURT FINDS “RECKLESS DISREGARD” SAME AS “WILLFUL” FOR PURPOSES OF FCRA LIABILITY Before hiring a new employee or promoting an existing employee, employers often wish to obtain a background check or a credit check. Checks such as these fall into a category of information called “consumer reports.” These reports contain information about an applicant or employee’s personal or credit characteristics, character, general reputation, and lifestyle, and must be compiled by a consumer reporting agency that assembles such reports for third parties in exchange for a fee. Employers who order a background, credit, or reference check are obligated to comply with a federal statute known as the Fair Credit Reporting Act (FCRA), 15 U.S.C.A. § 1681 et. seq. Under the statute, a consumer report user’s “willful” failure to comply with the FCRA’s requirements may result in the user being held liable for actual and punitive damages, court costs, and attorneys’ fees. What constitutes a “willful” failure to comply with the FCRA? In Safeco Ins. Co. of America v. Burr, 127 S. Ct. 2201 (2007), the United States Supreme Court found that “reckless disregard” for user obligations under the FCRA is enough to constitute a willful failure to comply. In Safeco, the defendants were insurance companies which had used consumer reports in order to determine premium rates for their insured. Based on these reports, the plaintiffs were not offered the lowest premiums. Under the FCRA, the user of a consumer report is obligated to give notice to the individual who is the subject of the report if the user plans to take “adverse action” based on the contents of the report. “Adverse action” is defined by the statute and includes increasing the rates for insurance on the basis of information contained in consumer credit reports. Because the defendants in Safeco did not provide any notice to the plaintiffs that their consumer reports were the basis for their higher premiums, the plaintiffs sued for violations of the FCRA. The defendants argued that because they did not know their actions violated the FCRA, failure to send the notices was not “willful.” The U.S. Supreme Court disagreed with the Safeco defendants and held that where “willfulness” is a statutory condition of civil liability, it is generally taken to cover not only knowing violations of a standard, but reckless ones as well. The Court did hold that a company does not act in reckless disregard of the statute unless the company (1) follows an unreasonable interpretation of the statute and (2) does so in a manner greater than mere negligence. Ultimately, the Supreme Court found that the Safeco defendants were not liable under the FCRA because one defendant’s reading of the statute, although erroneous, was not reckless, and the other defendant did not take adverse action because the rate it offered its insured was the same rate it would have offered him even if it had not used a consumer report. However, all users of consumer reports should be cognizant of this case because, under its holding, they can no longer avoid liability under the FCRA just because they did not know they were violating the statute. If you are not sure whether your organization is in compliance with the FCRA, please contact any of our attorneys for assistance. SUPREME COURT PERMITS RETALIATION CLAIMS UNDER SECTION 1981 In CBOCS West Inc. v. Humphries (No. 06-1431), the U.S. Supreme Court opened wider the door to retaliation claims in a May 27, 2008 ruling that employees may sue for retaliation under Section 1981 of the Civil Rights Act of 1866 Employers can expect more retaliation claims because claims under Section 1981 may be brought against employers that fail to meet the threshhold number of employees for Title VII. Further, Section 1981 does not require the administrative prerequisites for filing a charge of discrimination under Title VII. Hedrick Humphries, a former assistant manager of a Cracker Barrel restaurant in Bradley, Ill., sued under Title VII and Section 1981 claiming that he was fired because of racial bias and because of unlawful retaliation for complaining that a fellow assistant manager allegedly had dismissed a colleague for race-based reasons. The district court dismissed Humphries’ Title VII claims as untimely and dismissed his two Section 1981 claims. The Seventh Circuit Court of Appeals, however, revived his Section 1981 retaliation claim, rejecting the restaurant chain’s argument that Section 1981 did not provide for retaliation claims. On appeal, the Supreme Court agreed with the Seventh Circuit, noting that retaliation claims are allowed under Section 1982 of the Civil Rights Act of 1866, the law that prohibits discrimination in real estate transactions. While Section 1981 prohibits discrimination in making and enforcing contracts, the Supreme Court stated that the two sections otherwise were worded similarly and that courts had interpreted them similarly. The Section 1981 decision will impact employers because retaliation claims may survive longer under Section 1981. Under Title VII, which applies only to employers with fifteen or more employees, charges must be filed within 180 days of the discrimination or 300 days in deferral states, and lawsuits must be filed in court within 90 days of disposal by the Equal Employment Opportunity Commission. Section 1981 applies to all employers, regardless of size, and claims are not bound by the Title VII time lines. The statute of limitations for claims brought under Section 1981 is four years. Employers are advised to take steps to prevent exposure to retaliation claims, because any kind of complaint, internal or external, that could be construed as protected could give rise to substantial exposure. The employer should involve its human resources department and take care to properly document issues when complaints are made and when taking employment action. Employers must be certain that they can show that adverse employment decisions are well-founded. HEALTHCARE EMPLOYERS: ARE YOUR POSITIONS CORRECTLY CLASSIFIED UNDER THE FLSA? In 2007, the United States Department of Labor indicated that Radiology Technologists (RTs) must be paid in accordance with the minimum wage and overtime pay provision of the Fair Labor Standards Act (FLSA). What’s the buzz? Some healthcare industry employers sought to classify their RTs as FLSA overtime-exempt employees. Under the FLSA, employers are not required to pay overtime to exempt employees, such as those considered to be “learned professionals,” which requires that the employee pass both the salary basis and primary-job duties tests. Under the salary test, the employee must be compensated on a salary or fee basis at a rate of not less than $455 per week, exclusive of board, lodging, or other facilities. According to the DOL opinion, the primary duty test under the learned professional exemption includes three elements: (1) the employee must perform work requiring advanced knowledge; (2) the advanced knowledge must be in a field of science or learning; and (3) the advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction. The DOL commented that RTs primarily perform, among other things, the following duties: • Review physicians’ orders for patient examinations and ensure that the examining room is properly prepared for the procedure; • Visit patients to determine their tolerance to the examination and positioning; • Prepare patient information cards that are included on the film for identification; • Position the patients to assure that the radiologist can see and access the proper area for the imaging procedure; • Administer contrast and other chemicals orally or intravenously; • Set technical factors on equipment, such as penetration and length of imaging power; • Check radiation and imaging power factors for safety to the patient, technologist and equipment; • Evaluate the adequacy of the film for reading by the radiologist; and • Assist the radiologist in understanding particular cases and images taken. These job duties, according to the DOL, did not meet the primary duty requirements of the exemption because the duties did not appear to require “knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction,” and did not meet the educational requirements of an exempt learned professional because that position only required the completion of a two to three year radiology technology program. The DOL concluded that RTs do not qualify for the “learned professional” exemption, and they must be paid in accordance with the minimum wage and overtime pay provisions of the FLSA. Have you checked to ensure that your employment classifications are accurate? The DOL’s opinion regarding RTs may be interpreted to have broader implications to other technical job classifications as well. If you have further questions about job classifications in your healthcare practice, please contact Amber Bagley with our firm. RESTRICTIONS ON GRIEVANCE PROCEDURES NOT DISCRIMINATORY OR RETALIATORY The Eighth Circuit recently examined whether an employer’s altering of its grievance procedures, specifically with regard to a disruptive employee and his ability to make additional complaints, demonstrated a discriminatory or retaliatory intent. Soto v. Core-Mark International, Inc., 521 F.3d 837 (8th Cir. 2008). Jose Soto, a driver for Core-Mark, injured his back at work. After an examination by a physician, he was temporarily reassigned to a light duty position. Soto’s doctor imposed bending, twisting, and lifting restrictions and indicated that he needed to perform back-stretching exercises periodically. While on light duty, Soto repeatedly complained to his supervisors that he was being discriminated against on the basis of his national origin, claiming that only white employees were permitted to wear jackets over their uniforms and use their cell phones. The company posted a memo reiterating its policy prohibiting the use cell phones, and Soto’s supervisor’s explained to him on numerous occasions that it was against company policy for any worker to wear a jacket over his uniform. Notwithstanding, Soto began wearing a jacket over his uniform, and he continued to complain to his supervisors that only white workers were allowed to wear jackets. Because Core-Mark felt that it adequately addressed Soto’s repeated complaints, it sent Soto a letter concerning his “continued unacceptable conduct and behavior,” advising him that he could no longer contact the human resources manager about previously resolved issues, and that in the future, if he wanted to speak with the human resources manager, he would need to make an appointment through his supervisor. Shortly thereafter, Soto was directed to clean an office. While performing this task, he allegedly experienced back pain and sat down, leaned forward, put his head on his forearms, and stretched his back. A co-worker observed Soto and, believing he was asleep, notified a manager. The manager went to Soto’s location, stood next to Soto for approximately three minutes, and concluded that he was sleeping. Another co-worker who was present also concluded that Soto was sleeping. Core-Mark subsequently terminated Soto for sleeping on the job. Soto filed suit under Title VII, claiming that he was not sleeping, but instead stretching his back as his doctor had recommended. Therefore, according to Soto, because he was not sleeping on the job, Core-Mark’s reason for terminating him was a pretext for discrimination due to his national origin and for retaliation for his earlier complaints about disparate enforcement of the jacket and cell phone policies. The Eighth Circuit, however, ruled that the issue was not whether he was in fact sleeping but whether the employer in good faith believed he was sleeping. Thus, because Core-Mark perceived that Soto was sleeping on the job, there could be no basis for concluding that the employer’s motive was discriminatory, even if Soto was not actually sleeping on the job. Additionally, Soto alleged that Core-Mark’s letter to him regarding contact with the human resources manager, prohibited him from exercising his right to oppose discriminatory practices, and therefore, demonstrated Core-Mark’s intent to discriminate and retaliate against him. The court disagreed, noting that the letter did not prohibit Soto from opposing discriminatory practices, reasoning that the letter only prevented Soto from contacting the human resources manager directly. Accordingly, employers should be mindful that they are able to implement restrictions on the reporting procedures of employees reporting complaints of discrimination. AMENDMENTS TO THE FAMILY MEDICAL LEAVE ACT (INCLUDING NEW DOL POSTING REQUIREMENTS) The new amendments to the Family Medical Leave Act (FMLA) were signed in law by President Bush on January 28, 2008. Included in these amendments is the first expansion to the FMLA since it was enacted fifteen years ago. The language expanding the FMLA is contained in Section 585 of a broader Defense Department authorization measure. These amendments expand the FMLA in three important ways that will affect employers’ current policies. First, the bill adds two categories of covered conditions permitting an eligible employee to take FMLA leave: (1) an eligible employee may now take FMLA leave due to a “qualifying exigency” related to active military duty; and (2) an eligible employee may now take FMLA leave to care for a family member with a “serious illness or injury” incurred in the line of duty. The Department of Labor is currently in the process of defining “qualifying exigency.” Many believe these exigencies will include overseas assignments, recalls to active duty, and troop mobilizations. The exigency leave will be subject to the normal twelve (12) workweek limitation on FMLA leave in a twelve (12) month period. Second, the bill allows an eligible employee to take up to twenty-six (26) weeks of FMLA leave on one occasion to care for an injured servicemember. This twenty-six week leave is combined with any other FMLA leave the employee takes and the combined total of leave cannot exceed twenty-six (26) weeks. Third, the bill adds “next of kin” to the family members allowed to take FMLA leave to care for an injured servicemember. “Next of kin” is defined as the nearest blood relative of the servicemember. The Department of Labor has issued a new insert for the Family and Medical Leave Act (FMLA) Poster. In order to maintain compliance with Department of Labor regulations, all covered employers must obtain a copy of the new insert and post it in a conspicuous location where all employees and applicants for employment can see it. Failure to comply with the posting requirement can have serious consequences. An employer that fails to post the required notice cannot take any adverse action against an employee, including denying FMLA leave, for failing to furnish the employer with advance notice of a need to take FMLA leave. A copy of the new FMLA poster insert may be downloaded at NEW I-9 FORM ISSUED The United States Citizenship and Immigration Services (USCIS) issued a new I-9 Form on June 16, 2008. No substantive changes have been made to this form. The updated form has a new date, and the Office of Management and Budget (OMB) expiration date has been adjusted. Under the Paperwork Reduction Act, the OMB must have current expiration dates on all approved forms. Be sure that you and your HR staff are using the latest I-9 form for employment verification. To get the new form go to: http://www.uscis.gov/ and click on immigration forms at the top of the page. NEWS AROUND THE FIRM Russell Gunter provided a legislative update to NOARK, the North Arkansas Human Resource Association on June 12, 2008.
Donna Galchus spoke at the Best of CLE program in Springdale, Arkansas on “Immigration and Ethics” on June 20, 2008. Donna Galchus and Allen Dobson delivered presentations at the Arkansas Community Action Agencies Association workshop on May 29, 2008 at the Wydham Hotel in Little Rock. Scotty Shively was elected chair of the ADR Section of the Arkansas Bar Association on June 12, 2008 at its annual meeting in Hot Springs. Rick Roderick has made several presentations this spring to various professional groups. He spoke on harassment in March to the Arkansas Water and Wastewater Managers Association. He has made presentations on discipline, termination, and documentation to the Arkansas Tech University Professional Development Institute in April. He presented the same topic to the 2008 Central Arkansas Human Resources Association Supervisor’s Conference and the 2008 Electric Cooperatives Human Resources Conference in May. Mr. Roderick also covered the discipline, termination and documentation at the CGWG Basic Supervisor Training in Rogers on May 14, 2008. Brian Vandiver presented a seminar at the Little Rock offices on June 24, 2008, on the topic of background checks and the Fair Credit Reporting Act (FCRA). Also, Mr. Vandiver was elected to the Arkansas Bar Association Legislation Committee at the June 14 House of Delegates meeting. Jimmy Cline delivered a speech for the Arkansas Small Business Development Center on June 25, 2008 discussing workers’ compensation issues. Jess Sweere spoke at the Arkansas Municipal League Annual Conference on June 18, 2008, on pending federal legislation requiring collective bargaining with firefighter and police unions. Mr. Sweere also spoke at the Associated Builders and Contractors on smaller commercial motor vehicles on June 25. Next month, he will present a seminar entitled “Dealing with Problem Employees” at the 2008 Northeast Arkansas Health Education Conference on July 28 in Jonesboro. Amber Bagley was elected chair of the Health Law Section of the Arkansas Bar Association on June 12.
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